Finance and Accounting Sample Questions

F&A Sample Questions

1 Which of the following can a high net profit margin of any company be indicative of ?

a. Demonstrates company's effectiveness in converting its sales into profits.

b. Demonstrates company's effectiveness in controlling its expenses/ costs.
c. Demonstrates that company is planning to close some of its operations.
d. All of the above
e. A and B

Answer: E

2 The Pass of an Account holder is a copy of:

a. Bank columns in cash book of an A/c holder

b. Relevant Account of the customer in the books of the bank.
c. Cash column in the Cash book of the Account holder.
d. None of the above.

Answer: B

3 A Bank Reconciliation statement should be prepared:

1. Whenever bank requires lending money.

2. When an employee is suspected of fraud.
3. by the person who is authorized to sign the cheque.
4. to explain the difference between depositors Cash book and Bank book.

a. All of the above

b. 3 and 4
c. None of the above
d. 4
Answer: D
 Finance and Accounting Sample Questions

4 Complete the journal entry -

Kapil A/c Dr. 500

To ______________ 500

(Being goods returned to Kapil)

a. Goods A/c
b. Sales A/c
c. Return Outward A/c
d. Return Inward A/c
Answer: C

5 ____________ are generally prepared by the accounting department on the basis

Of Invoices or returns that serve as the evidence od expenditure.

a. Accounts
b. Ledgers
c. Vouchers
d. Operations
Answer: C

6 Which of the following errors will cause mismatch between Dr & Cr side of trial balance

a. Error of Principle
b. Error of partial omission
c. Error of complete omission
d. Compensating errors

Answer: B

7 List price per unit is Rs. 10. Quantity purchased is 500. Trade discount 10%.

What is the amount of purchase recorded in books-

a. Rs. 5,000
b. Rs. 4,500
c. Rs. 5,500
d. Rs. 4,000

Answer: B
 Finance and Accounting Sample Questions

8 Manufacturing costs are also known as product costs. Which of the following best describes those costs
that are considered to be manufacturing costs?

a. Direct Material and Direct labour

b. Direct Material ,Direct labour and factory overhead
c. Direct Material ,Direct labour, factory overhead & administrative overhead
d. Direct labour and factory overhead
Answer: B

9 Prime Cost + Works overhead + opening WIP - Closing WIP =

a. Cost of goods Sold
b. Cost of Production
c. Works Cost
d. Cost of Sales
Answer: C

10 For a company Current ratio is 1.4 and Quick ratio is 0.6, the current liabilities are Rs. 7,00,000.
Find out the current assets and stock.

a. Currents assets - Rs. 5,60,000 and Stock - 9,80,000

b. Current Assets - Rs. 9,00,000 and stock - 9,80,000
c. Current Assets - Rs. 9,80,000 and stock - 5,60,000
d. Data is insufficient
Answer: C

11 To harmonise the diverse accounting policies & practices in use in India, Accounting standards are
formulated
a. TRUE
b. FALSE
c. Sometimes True
d. Sometimes False
Answer: A

12 Under Written Down value method, the amount of depreciation to be charged goes on ____________
Increasing every year

b. remains same for all years

c. Declining every year
d. Sometimes increasing, sometimes decreasing
Answer: C
 Finance and Accounting Sample Questions

13 Purchased Machinery by cheque - Rs. 8,000. How will this appear in a three column Cash book ?

a. By Machinery A/c in Cr side of Cash column

b. By Machinery A/c in Cr side of Bank column
c. To Machinery A/c in Dr. side of Bank Column.
d. It appears in Journal proper only.
Answer: B

14 ABC ltd. Purchased machinery for Rs. 1,00,000. Depreciation charged @ 20% WDV method

What is the depreciation charged at the end of second year?

a. 20,000
b. 18,000
c. 16,000
d. 12,800
Answer: C

15 Which of the following is not a subsidiary ledger

a. Plant
b. General
c. Accounts Receivable
d. Accounts Payable
Answer: B

16 Purchases Book records

a. All type of Credit purchases made during the year

b. All credit and cash purchases made during the year with discounts.
c. Only credit purchases of goods in trade.
d. None of the above

Answer: C

17 All tangible and Intangible Assets are classified as-

a. Real Accounts
b. Nominal Accounts
c. Personal Account
d. None of the above
Answer: A

18 Bad debts should be debited to Bad debts A/c and credited to -

 Finance and Accounting Sample Questions

a. Provisions A/c
b. Creditors A/c
c. Reserves A/c
d. Debtors A/c
Answer: D

19 If Cost of Goods sold is Rs.1,20,000. Sales is Rs. 2,25,000. Closing Stock is Rs 35,000. Purchase return
Rs.5,000, the Gross Profit will be

a. Rs. 70,000
b. Rs. 1,05,000
c. Rs. 75,000
d. None of the above
Answer: B

20 Bad debts written off earlier, and later recovered are credited to

a. Profit and loss Account

b. Debtors Account
c. Bank Account
d. Not shown in Books of Business
Answer: A

21 Preliminary expenses in Balance sheet is an example of-

a. Intangible Assets
b. Fictitious Assets
c. Prior period adjustment
d. Current Liability
Answer: B

22 Heavy Cost of advertisement on a new product is a-

a. Deferred revenue expenditure

b. Capital expenditure
c. Revenue expenditure
d. None of the above
Answer: A

23 Currents Assets include

 Finance and Accounting Sample Questions

a. Patent
b. Investments in Securities
c. Advertisement expenditure not written off
d. None of the above
Answer: D

24 There was an error in Trial Balance due to which difference was put into suspense Account.
Later it was discovered that opening stock of Rs. 1800 was brought into books as Rs. 1080.

What will be the rectification entry?

a. Opening stock account - Dr 720

To Suspense Account 720
b. Opening Stock Account- Dr 1800
To Suspense Account 1800
c. Opening Stock Account Dr 720
To Trading Account 720
d. Suspense Account Dr 720
To Opening Stock 720

Answer: A

25 Construction of Additional floor of an administrative building for a business is a-

a. Capital Expenditure
b. Revenue Expenditure
c. Deferred Revenue Expenditure
d. None of the Above
Answer: A

26 Which of these entry will be entered in Journal Proper-

a. Credit Sales
b. Purchase returns
c. Purchase of Asset in cash
d. Income Accrued entry
Answer: D

27 If an effect of an error is cancelled by the effect of some other error, it is commonly known as ________
 Finance and Accounting Sample Questions

a. Errors of Commission
b. Errors of Principle
c. Errors of Omission
d. Compensating Errors

Answer: D

28 Manipulation of accounting data prior in order to present the Financial statement so that they look
better than they actually are is called

a. Fraud
b. Window Dressing
c. True and fair disclosure
d. Unaudited Financial statements

Answer: B

29 A transport Company purchases a truck for Rs 100,000 on 1st January, 2012. It charges depreciation
@20% p.a. according to SLM method.

The truck was sold on 30th June, 2013 for a sum of Rs. 65,000. There is a

a. Profit of Rs. 5,000

b. Loss of Rs. 5,000
c. Profit of Rs. 10,000
d. Loss of Rs. 10,000

Answer: B

30 Which of the following activities would generally be regarded as a financing activity in preparing a
statement of cash flows?

a. Dividend distribution
b. Proceeds from the sale of stocks of other firms
c. Loans made by the entity to other businesses
d. Employees' salaries and wages paid

Answer: A