ACCOUNT QUIZ

📘 Unit 1: Introduction to Financial Accounting

  1. Which of the following is an internal user of accounting information?
    a. Government
    b. Creditors
    ✅ c. Managers
    d. Customers

  2. What is the primary purpose of accounting for owners or shareholders?
    a. To determine tax obligations
    ✅ b. To assess the efficiency of resource allocation and track investment progress
    c. To ensure regulatory compliance
    d. To evaluate the financial stability of customers

  3. Which external user relies on accounting information to measure a company’s creditworthiness?
    a. Employees
    b. Managers
    ✅ c. Creditors, Bankers and Other Lending Institutions
    d. Shareholders

  4. Government agencies use accounting information primarily for which of the following purposes?
    a. To assist managers in decision-making
    ✅ b. To ensure compliance with labour and corporate laws
    c. To evaluate job security for employees
    d. To analyze customer satisfaction

  5. Which of the following external users would be most interested in a company’s financial stability for the purpose of maintaining long-term business relationships?
    ✅ a. Customers
    b. Employees
    c. Regulatory Agencies
    d. Managers

  6. Which of the following accurately differentiates between tangible and intangible assets?
    a. Tangible assets have a physical presence and can be easily liquidated, whereas intangible assets cannot be valued.
    b. Tangible assets are short-term and depreciate quickly, while intangible assets are long-term and appreciate over time.
    ✅ c. Tangible assets can be physically seen and touched, while intangible assets lack physical substance but provide economic benefits.
    d. Tangible assets do not generate future revenue, whereas intangible assets are exclusively responsible for future profitability.

  7. Which of the following conditions would not classify an asset as a current asset?
    a. The asset is expected to be converted into cash within the next 12 months.
    b. The asset is held primarily for the purpose of being traded.
    ✅ c. The asset is intended to be used in the production process for more than one operating cycle.
    d. The asset is cash or a cash equivalent at the end of the reporting period.

  8. Which of the following statements best describes the relationship between revenue and equity in financial accounting?
    a. Revenue increases the total liabilities of a company and decreases the owner's equity.
    ✅ b. Revenue directly contributes to the increase in equity, except for cases involving owner contributions.
    c. Revenue does not impact equity but affects the total assets of the company.
    d. Revenue is subtracted from expenses to decrease owner's equity on the balance sheet.

  9. What does an aging report help businesses assess in relation to accounts receivable?
    a. The company’s profit margin
    ✅ b. The duration of outstanding receivables and credit risk
    c. The company's total liabilities
    d. The number of invoices issued

  10. Which of the following best describes the concept of opportunity cost in relation to a business’s decision-making process?
    a. The fixed cost incurred by the business to maintain production levels.
    b. The variable cost that fluctuates with production levels.
    ✅ c. The potential benefit that is forgone when one alternative is chosen over another.
    d. The total cost of raw materials and labor in the production process.

  11. When a company pays off a liability, how will the transaction be recorded in the double-entry bookkeeping system?
    ✅ a. Debit the liability account; Credit the asset account
    b. Credit the liability account; Debit the equity account
    c. Debit the asset account; Credit the liability account
    d. Credit the liability account; Debit the revenue account

  12. Which of the following statements best explains the importance of the balance sheet in assessing a company's financial condition?
    a. The balance sheet provides a detailed record of the company's revenue and expenses, helping to analyze profitability.
    b. The balance sheet highlights the company's cash inflows and outflows, crucial for short-term financial planning.
    ✅ c. The balance sheet offers a snapshot of a company's assets, liabilities and equity, allowing stakeholders to evaluate liquidity and creditworthiness.
    d. The balance sheet shows the company’s overall operational performance over a specific period, including profit margins.

  13. In the context of financial statements, which of the following is not a primary purpose of the income statement?
    ✅ a. To assess a company's profitability by comparing revenue with expenses over a given period.
    b. To provide insights into the company’s cash generation and short-term liquidity.
    c. To help track and analyze unexpected expenses that could affect the budget.
    d. To offer investors a detailed view of the company’s financial performance for making investment decisions.

📘 Unit 2: Accounting Process & Rules

  1. Which of the following is a Real Account?
    a. Salaries A/c
    b. Rent A/c
    ✅ c. Furniture A/c
    d. Commission Received A/c

  2. What is the correct journal entry for paying rent via bank?
    a. Debit Bank, Credit Rent
    b. Debit Rent, Credit Cash
    ✅ c. Debit Rent, Credit Bank
    d. Debit Rent, Credit Capital

  3. When a business is started with cash ₹1,00,000 by Mr. Raj and ₹50,000 by Mrs. Anita, what is the journal entry?
    ✅ a. Debit Cash ₹1,50,000; Credit Mr. Raj’s Capital ₹1,00,000; Credit Mrs. Anita’s Capital ₹50,000
    b. Debit Capital ₹1,50,000; Credit Cash ₹1,50,000
    c. Debit Bank ₹1,00,000; Credit Raj Capital ₹1,00,000
    d. Debit Cash ₹50,000; Credit Anita Capital ₹50,000

  4. If cash is deposited into the bank, what is the correct journal entry?
    ✅ a. Debit Bank A/c; Credit Cash A/c
    b. Debit Cash A/c; Credit Bank A/c
    c. Debit Bank A/c; Credit Capital A/c
    d. Debit Bank A/c; Credit Drawings A/c

  5. Which is not a feature of the double-entry system?
    a. Every transaction has two aspects
    ✅ b. Transactions are recorded in a single entry
    c. Every debit has a corresponding credit
    d. Helps in preparation of Trial Balance

📘 Unit 3: Financial Statements

  1. Which of the following is classified as a Fixed Asset?
    a. Inventory
    b. Prepaid Rent
    ✅ c. Land
    d. Bank Overdraft

  2. Assets in the balance sheet are generally recorded at:
    ✅ a. Historical Cost
    b. Market Value
    c. Revaluation Value
    d. Discounted Value

  3. Which asset is not subject to depreciation?
    a. Furniture
    ✅ b. Land
    c. Machinery
    d. Building

  4. Current assets are listed in the balance sheet based on:
    ✅ a. Liquidity
    b. Alphabetical order
    c. Purchase value
    d. Use in production

  5. Which item falls under Non-Current Assets?
    a. Cash
    b. Inventory
    c. Accounts Receivable
    ✅ d. Plant & Machinery

📘 Unit 4: Preparation of Financial Statements

  1. If net sales = ₹10,00,000 and COGS = ₹3,00,000, what is gross profit?
    ✅ a. ₹7,00,000
    b. ₹13,00,000
    c. ₹3,00,000
    d. ₹1,00,000

  2. What is the effect of sales returns on gross profit?
    ✅ a. Decreases it
    b. Increases it
    c. No effect
    d. Doubles it

  3. Which of the following is the correct formula for COGS?
    ✅ a. Opening Stock + Purchases – Closing Stock
    b. Purchases – Closing Stock
    c. Sales – Gross Profit
    d. Opening Stock – Closing Stock

  4. Which of these is a non-operating income?
    a. Sales
    ✅ b. Bank Interest
    c. Commission
    d. Rent Received

  5. Revenue is recognized when:
    ✅ a. Goods are delivered
    b. Invoice is raised
    c. Order is received
    d. Cash is collected

📘 Unit 5: Financial Reporting Standards I

  1. Why were Accounting Standards introduced?
    ✅ a. To improve comparability and consistency
    b. To allow flexibility
    c. To eliminate taxes
    d. To support only small firms

  2. Which body issues accounting standards in India?
    ✅ a. ICAI
    b. RBI
    c. SEBI
    d. BSE

  3. ASB stands for:
    ✅ a. Accounting Standards Board
    b. Accounting Standard Base
    c. Advanced Standards Body
    d. Audit Standards Bureau

  4. Which of these is NOT a benefit of Accounting Standards?
    a. Comparability
    b. Transparency
    ✅ c. Tax benefit
    d. Reliability

  5. Compliance with accounting standards is:
    ✅ a. Mandatory
    b. Optional
    c. Advisory
    d. Temporary

📘 Unit 6: Financial Reporting Standards II

  1. IFRS stands for:
    ✅ a. International Financial Reporting Standards
    b. Indian Financial Reporting Standards
    c. Investment Financial Ratio Standards
    d. Interim Financial Ratio Summary

  2. Which organization governs IFRS globally?
    ✅ a. IASB
    b. SEBI
    c. RBI
    d. ICAI

  3. India’s version of IFRS is called:
    ✅ a. Ind AS
    b. INDGAAP
    c. IGAAP
    d. I-IFRS

  4. Convergence with IFRS in India is handled by:
    ✅ a. ICAI
    b. IRDA
    c. SEBI
    d. FICCI

  5. The main benefit of IFRS is:
    ✅ a. Global comparability of financial statements
    b. Increasing taxation
    c. Encouraging inflation
    d. Avoiding disclosures

📘 Unit 7: Corporate Financial Statements

  1. Which is shown under shareholders’ equity?
    ✅ a. Share Capital
    b. Creditors
    c. Cash
    d. Buildings

  2. Dividend paid is shown in:
    ✅ a. Statement of Changes in Equity
    b. Income Statement
    c. Cash Flow from Investing
    d. Notes to Accounts

  3. Exceptional items are disclosed in:
    ✅ a. Income Statement
    b. Balance Sheet
    c. Trial Balance
    d. Audit Report

  4. Deferred Tax is part of:
    ✅ a. Non-Current Liabilities
    b. Current Assets
    c. Cash Flow
    d. Revenue

📘 Unit 8: Statement of Cash Flows

  1. Which of the following is not a cash equivalent?
    a. Treasury Bills
    b. Marketable Securities
    ✅ c. Equity Shares
    d. Commercial Papers

  2. Which method is used for reporting Operating Activities in Cash Flow?
    ✅ a. Indirect Method
    b. Direct Method
    c. Accrual Method
    d. Cash Accounting

  3. Depreciation is classified under:
    ✅ a. Operating Activities (add back)
    b. Financing Activities
    c. Investing Activities
    d. Extraordinary Items

  4. Which of the following is a cash inflow from financing activity?
    ✅ a. Issue of shares
    b. Purchase of machinery
    c. Payment of rent
    d. Sale of inventory

📘 Unit 9: Analysis of Financial Statements I

  1. Return on Investment is a measure of:
    ✅ a. Profitability
    b. Liquidity
    c. Solvency
    d. Efficiency

  2. Current Ratio is calculated as:
    ✅ a. Current Assets ÷ Current Liabilities
    b. Net Income ÷ Total Assets
    c. Sales ÷ Assets
    d. Equity ÷ Liabilities

  3. Debt to Equity Ratio is a measure of:
    ✅ a. Solvency
    b. Liquidity
    c. Profitability
    d. Turnover

  4. Inventory Turnover Ratio assesses:
    ✅ a. Efficiency
    b. Solvency
    c. Liquidity
    d. Valuation

📘 Unit 10: Analysis of Financial Statements II

  1. Common-size analysis expresses items as a % of:
    ✅ a. Base figure (e.g., Sales or Total Assets)
    b. Net Income
    c. Equity
    d. Cash

  2. Trend analysis shows:
    ✅ a. Performance over time
    b. Market share
    c. Competition level
    d. Departmental growth

  3. Comparative statements help in:
    ✅ a. Identifying changes over years
    b. Auditing
    c. Valuation
    d. Shareholding

📘 Unit 11: Ethics in Accounting

  1. Ethics in accounting means:
    ✅ a. Doing the right thing even when no one is watching
    b. Following tax laws
    c. Using accounting software
    d. Hiring a CA

  2. Which of these is part of professional code of ethics?
    ✅ a. Integrity
    b. Sales
    c. Networking
    d. Negotiation

📘 Unit 12: Emerging Trends in Accounting

  1. Which technology allows automated processing of repetitive tasks?
    ✅ a. RPA (Robotic Process Automation)
    b. CRM
    c. ERP
    d. IoT

  2. Which technology is known for immutable ledgers?
    ✅ a. Blockchain
    b. Excel
    c. Virtual Reality
    d. Python

  3. AI is used in accounting to:
    ✅ a. Predict trends & detect frauds
    b. Print invoices
    c. Hire employees
    d. File taxes

  4. Which accounting method uses remote server access?
    ✅ a. Cloud Accounting
    b. Legacy Systems
    c. Paper Ledger
    d. Excel


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