51. Final accounts are the summaries of ledger accounts organized in such a manner as to show the profit or loss of the business for the accounting year. (True / False)
Answer: True
52. To determine the ___, income statement or trading and profit and loss a/c is prepared.
Answer: Profit or loss
53. ___ means that information is available to decision-makers in time to be capable of influencing their decisions.
Answer: Timeliness
54. ___ in final accounts simply means bringing into the record all those items which have not been included in the trial balance.
Answer: Adjustments
55. The provision made for meeting the loss arising on account of the discount that will have to be allowed to the debtors is known as___.
Answer: Provision for discount on debtors
56. Persons who owe us money are called “creditors”. (True / False)
Answer: False
57. The basic principle of a closing entry is that the account to be closed should be credited if it has a debit balance and the account to which it is transferred should be debited. (True / False)
Answer: True
58. For closing the sales returns account ___ account should be debited and ___ account should be credited.
Answer: Sales and sales returns
59. For closing sales Account, the entry will be ___.
Answer: Sales Account should be debited and Trading Account should be credited.
60. Credit means:
(a) An increase in the asset
(b) An increase in liability
(c) A decrease in liability
(d) A decrease in owner’s equity
Answer: (b)
61. Trading account is prepared to find out the Gross profit or Gross loss of the organization. (True / False)
Answer: True
62. Opening stock is shown on the ___ side of the Trading Account.
Answer: Debit
63. Trading account is prepared to find out ___.
Answer: Gross profit
64. Profit and loss account is prepared to calculate the net profit or net loss of the business.
(True / False)
Answer: True
65. ___ account is prepared from nominal accounts and its balance is transferred to ___.
Answer: Profit and loss account; Capital account
66. Selling and distribution expenses are shown on the debit side of the ___ account.
Answer: Profit and loss account
67. ___ is a statement prepared to measure the financial position of the business on a certain fixed date.
Answer: Balance sheet
68. ___ are assets that are usually converted to cash within one year.
Answer: Current Assets
69. ___ are those tangible assets with a useful life greater than one year.
Answer: Fixed assets
70. ___ given outside the trial balance has the two-fold effect to complete a double-entry system.
Answer: Adjustments
71. If any expense has been incurred, but not paid during the period should be adjusted by creating ___ for unpaid expenses.
Answer: Liabilities
72. ___ on the asset should be deducted from the asset.
Answer: Depreciation
73. Interest on capital is added to the capital on the Asset side of the Balance sheet. (True / False)
Answer: True
74. Office furniture is shown on the ___ side of the Balance sheet.
Answer: Asset
75. State true or false:
a. If the debit side is more than the credit side, the balance is shown as by balance c/d on the credit side of its account and it indicates debit balance.
Answer: True
b. If the credit side is more than the debit side, the balance is shown as to balance C/D on the debit side and it indicates debit balance.
Answer: True
Conclusion
We hope that our Financial Accounting Multiple Choice Questions and Answers proved to be helpful in giving you a deeper understanding of accounting principles. As we all know, financial accounting is an integral part of modern-day businesses, so it is important for every businessperson to stay up to date on this subject.
If you found our questions beneficial or have any further queries, please do not hesitate to get in touch with us. We wish you the best of luck with your upcoming examinations!
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