BANKING PROFESSIONAL KNOWLEDGE

Accounting Concepts MCQS

FOLLOWING MCQS ARE UPLOADED JUST FOR GENERAL BANK OFFICER
EXAMINATIONS.THESE QUESTIONS ARE RELATED TO SOME BASIC CONCEPTS OF
ACCOUNTING WHICH A BANKER SHOULD KNOW TO

Q1.

The statements prepared to indicate the profit and loss, and financial position of a
business are called _______.

i. Trial balances
ii. Financial statements
iii. Bank Reconciliation Statements
iv. All of the above

Q2.

Profit and loss account shows the ________.

i. Profit earned or loss suffered by the business

ii. Total capital employed
iii. Profit and loss through the sale of assets
iv. None of the above

Q3.

Expenses related to the sale of goods are shown in the _______.

i. Trading account
ii. Trading profit and loss account
iii. Balance sheet
iv. Profit and loss account

Q4.

The credit side of a profit and loss account records _______.

i. Indirect income
ii. Indirect expenses
iii. Direct income
iv. Direct expenses

Q5.
Revenue expenditure is recorded in the _______.

i. Trading account
ii. Profit and loss account
iii. Balance sheet
iv. None of the above

Q6.

The profit and loss account reveals the ___________.

i. Cost of goods sold during a particular period

ii. The financial results of a business during a particular date
iii. The financial position of the business for a period
iv. The financial results of the business for a period

Q7.

Excess of debit in the profit and loss account is known as_______.

i. Gross loss
ii. Gross profit
iii. Net loss
iv. Net profit

Q8.

Profit and loss account is also known as _______.

i. Statement of earnings
ii. Statement of income
iii. Statement of operations
iv. None of the above
Q9.

A company that manufactures cars is preparing its profit and loss account. Under
which heading will it include production labour costs?

i. Cost of sales
ii. Distribution costs
iii. Salary
iv. Administrative expenses

Q10.

Net loss in a profit and loss account should be _______ in the balance sheet.

i. Added to liabilities
ii. Deducted from liabilities
iii. Added to capital
iv. Deducted from capital
Q11.

The provision for bad debts is created by _______ to the profit and loss account.

i. Deducting
ii. Adding
iii. Debiting
iv. Crediting

Q12.

Which of the following are included in the profit and loss account?

i. Depreciation
ii. Wages and salaries
iii. Freight and carriage on sales
iv. All of the above

Q13.

The term financial statement covers _______.

i. Balance sheet
ii. Posting
iii. Entry
iv. None of the above

Q14.

The _______ is a statement that shows the financial status of a company at any given
time.

i. Balance sheet
ii. Trading account
iii. Profit and loss account
iv. Both a and c

Q15.

Which of the following items gets recorded on the credit side of a profit and loss
account?

i. Discount received
ii. Profit on sale of an asset
iii. Dividend on shares
iv. All of the above

Q16.

The balance from the profit and loss account is transferred to the ________.

i. Balance sheet
 ii. Trial balance
iii. Cash flow statement
iv. None of the above

Q17.

Excess of credit in the profit and loss account is known as_______.

i. Gross profit
ii. Gross loss
iii. Net profit
iv. Net loss

Q18.

Capital Expenditure is a part of ___________.

i. Balance sheet
ii. Trading account
iii. Profit and loss account
iv. Trial balance

Q19.

Profit and Loss account is prepared for a year by following the _________.

i. Periodicity concept
ii. Going concern concept
iii. Cost concept
iv. Consistency concept
Q20.
Gross profit is
i. Cost of goods sold + Opening stock
ii. Excess of sales over cost of goods sold
iii. Sales fewer Purchases
iv. Net profit fewer expenses of the period
Q21.
Copyrights, Patents and Trademarks are,
i. Current assets
ii. Fixed assets
iii. Intangible assets
iv. Investments
Q22.
Long term assets having no physical existence but, possessing a value are called
i. Intangible assets
ii. Fixed assets
 iii. Current assets
iv. Investments
Q23.
Following is not shown under current asset, loans and advances ____.
i. Closing stock
ii. Bills receivable
iii. Balance payable
iv. Preliminary expenses
Q24.
Debit balance on statement of profit and loss is shown under _______.
i. Expenses
ii. Surplus
iii. Current assets
iv. Miscellaneous Expenditure
Q25.
Any amount payable within 12 months from date of balance sheet is called ____.
i. Capital
ii. Loan
iii. Current Liabilities
iv. Contingent Liabilities
Q26.
Prepaid Insurance is shown under _____.
i. Current Assets
ii. Loans and advances
iii. Current Liabilities
iv. Secured Loans
Q27.
Short term loan is the loan due for not more than ___.
i. 1yr
ii. 2yrs
iii. 3 yrs
iv. 5 yrs
Q28.
Recommendation and declaration is necessary for ___.
i. Interim Dividend
ii. Final Dividend
iii. Interest on Debentures
iv. None of the above
Q29.
Final Dividend can be declared by _____.
i. Share holders
ii. SEBI
iii. Board of Directors
iv. Registrar of Companies
Q30.
Advance Tax is shown under ____
i. Current Liabilities
ii. Provisions
iii. Prepaid Expenses
iv. Current Assets
Q31.
Bank Deposits with more than 12 months maturity are disclosed under________.
i. Investment
ii. Other Financial Assets
iii. Loans
iv. Investments
Q32.
Which of the following items do not come under, reserves and surplus?
i. Capital Redemption Reserve
ii. General Reserve
iii. Provident Fund
iv. Sinking Fund
Q33.
Accounting policies are prescribed by _____.
i. Companies Act
ii. Accounting Standard Board
iii. Income Tax Act
iv. Institute of Chartered Accountants of India
Q34.
Goodwill is a ____.
i. Fixed Asset
ii. Current Asset
iii. Fictitious Asset
iv. None of the above

Notes:
Goodwill, though is regarded as an intangible asset in accounting, is also considered as a fixed

asset in the balance sheet because it adds value to the business over an extended period of

time.

Q35.
Drawings is deducted from____.
i. Sales
ii. Purchases
iii. Expenses
iv. Capital

Notes:

Drawing means when the owner withdraws something from business for personal use.

Capital is the amount that is invested by the owner in the business. Thus, drawing results in a
decrease in the capital of the firm.

Q36.
Preference shareholders have
i. Preferential right as to dividend only
ii. Preferential right in the management
iii. Preferential right as to repayment of capital at the time of liquidation of the
company
iv. Preferential right as to dividend and repayment of capital at the time of
liquidation of the Company
Q37.
To whom dividend is given at a fixed rate in a company?
i. A. To equity shareholders
ii. To preference shareholders
iii. To debenture holders
iv. To promoters
Q38.
A company cannot issue
i. Redeemable Equity Shares
ii. Redeemable Preference Shares
iii. Redeemable Debentures
iv. Fully Convertible Debentures
Q39.
Equity shares cannot be issued for the purpose of
i. Cash Receipts
 ii. Purchase of assets
iii. Redemption of debentures
iv. Distribution of dividend
Q40.
Capital of a Company is divided in units which is called:
i. Debenture
ii. Share
iii. Stock
iv. Bond
Q41.
The liability of members in a Company is
i. Limited
ii. Unlimited
iii. Stable
iv. Fluctuating
Q42.
Liability of a shareholder is limited to _____of the shares allotted to him:
i. Paid up Value
ii. Called up value
iii. Face value
iv. Reserve Price
Q43.
Salvage value means
i. Definite sale price of the asset
ii. Cash to be received when life of the asset ends
iii. Cash to be paid when asset is disposed off
iv. Estimated disposal value
Q44.
Retained Earnings is classified as which type of account?
i. Asset
ii. Liability
iii. Expense
iv. Stockholders' equity
Q45.
All of the following are stockholders’ equity accounts except?
i. Investment in Stock
ii. Capital Stock
iii. Common Stock
iv. Retained Earnings
 Q46.
The unfavourable balance of Profit and Loss account should be:
i. Subtracted from liabilities
ii. Subtracted from capital
iii. Subtracted from current assets
iv. Added in liabilities
Q47.
Which one of the following most closely defines 'Amortization'?
i. The depreciation of tangible fixed assets
ii. The depreciation of intangible fixed assets
iii. The depreciation of current assets
iv. The revaluation of land and buildings
Q48.
Book value = cost minus _____________?
i. Current liabilities
ii. Salvage value
iii. Accumulated depreciation
iv. Residual value
Q49.
Depreciation is calculated under diminishing balance method, based on
i. Original value
ii. Book value
iii. Scrap value
iv. None of them
Q50.
___________ is a structured representation of the financial performance and financial
position of a business and changes over a period.
i. Profit and loss account
ii. Financial statement
iii. Balance sheet
iv. Internal audit

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