Financial Accounting MCQs and Notes

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📊 Financial Accounting
Q. If you start with cash book favorable balance in Bank Reconciliation Statement, which item will be added?
  • (A) Cheque deposited but not credited by the bank
  • (B) Cheques omitted to be deposited into bank
  • (C) Any amount directly collected by bank on behalf of customer but not recorded in cash book
  • (D) Debit side of cash book was overcast
💬 Discuss
✅ Correct Answer: (C) Any amount directly collected by bank on behalf of customer but not recorded in cash book
📊 Financial Accounting
Q. Purchase of Fixed Assets on credit is originally recorded in
  • (A) Purchases Book
  • (B) Ledger
  • (C) Cash Book
  • (D) Journal Proper
💬 Discuss
✅ Correct Answer: (D) Journal Proper
📊 Financial Accounting
Q. Which of the following statements is false?
  • (A) Credit side total of Discount column of Cash Book is an income
  • (B) Credit balance of Bank Pass Book is an overdraft
  • (C) Debit balance of Bank column of Cash Book is an Asset
  • (D) Debit balance of Cash column of Cash Book is an Asset
💬 Discuss
✅ Correct Answer: (B) Credit balance of Bank Pass Book is an overdraft
📊 Financial Accounting
Q. The periodical total of discount column on receipts side of a Triple Column Cash Book is recorded to the
  • (A) Credit side of Discount Account
  • (B) Credit side of provision for Discount Account
  • (C) Debit side of Discount Account
  • (D) Credit side of Debtor‘s Account
💬 Discuss
✅ Correct Answer: (C) Debit side of Discount Account
📊 Financial Accounting
Q. If Office Equipment is purchased for cash, what effect will this transaction have on the financial position of the company?
  • (A) There is no change in the Assets, Liabilities and Owners‘ Equity
  • (B) There is a decrease in Assets, increase in Liabilities and no change in Owners‘ Equity
  • (C) There is a decrease in Assets, no change in Liabilities and a decrease in Owners‘ Equity
  • (D) There is an increase in Assets, decrease in Liabilities and no change in Owners‘ Equity
💬 Discuss
✅ Correct Answer: (A) There is no change in the Assets, Liabilities and Owners‘ Equity
📊 Financial Accounting
Q. R Ltd. makes purchases on credit. If the purchases are not as per the specifications, the company returns them to the suppliers. The book, that is used to record such returns is
  • (A) Returns Inward Book
  • (B) Returns Outward Book
  • (C) Cash Book
  • (D) Journal Proper
💬 Discuss
✅ Correct Answer: (B) Returns Outward Book
📊 Financial Accounting
Q. ABC Ltd. makes payments to its Sundry Creditors through cheques and the Cash Discount received on these payments is recorded in the Triple-columnar Cash Book. In the event of dishonour of any such cheques, the discount so received should be written back through
(i) A debit to discount column of the Cash Book
(ii) A credit to discount column of the Cash Book
(iii) A credit to bank column of the Cash Book
(iv) A debit to Discount Account through Journal Proper
(v) A credit to Creditor‘s Account through Journal Proper
  • (A) Only (i) above
  • (B) Only (ii) above
  • (C) Both (i) and (iii) above
  • (D) Both (iv) and (v) above
💬 Discuss
✅ Correct Answer: (D) Both (iv) and (v) above
📊 Financial Accounting
Q. The entry to record the collection of cash from Sundry Debtors would involve a
(i) Debit to Sundry Debtors
(ii) Debit to Cash Account
(iii) Credit to Sundry Debtors
(iv) Credit to Cash Account
  • (A) Only (i) above
  • (B) Only (iii) above
  • (C) Both (ii) and (iii) above
  • (D) Both (i) and (iv) above
💬 Discuss
✅ Correct Answer: (C) Both (ii) and (iii) above
📊 Financial Accounting
Q. Which of the following statements is/are true?
(i) Drawings Account is a Nominal Account
(ii) Capital Account is a Real Account
(iii) Sales Account is a Nominal Account
(iv) Outstanding salaries account is a Nominal Account
(v) Patents Account is a Personal Account
  • (A) Only (i) above
  • (B) Only (iii) above
  • (C) Both (ii) and (iii) above
  • (D) Both (ii) ,(iv) and (v)above
💬 Discuss
✅ Correct Answer: (B) Only (iii) above
📊 Financial Accounting
Q. Which of the following transactions of a business is/ are recorded in Journal Proper?
(i) Purchase of goods on credit
(ii) Sale of Office Furniture for cash
(iii) Discounting of Bill of Exchange with a bank
(iv) Endorsement of a Bill of Exchange in settlement of debt of the business
  • (A) Only (i) above
  • (B) Only (iv) above
  • (C) Both (ii) and (iv) above
  • (D) (i),(iii) and (iv) above
💬 Discuss
✅ Correct Answer: (B) Only (iv) above

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