Financial Statements 1 MCQ for Class 11 Accountancy Chapter 9 Answers

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MCQ Questions for Class 11 Accountancy with Answers: Financial Accounting

Q1. Computers purchased for re-sale is:

(i) Capital expenditure.
(ii) Revenue Expenditure.
(iii) Deferred Revenue Expenditure.
(iv) None of these.

(ii) Revenue Expenditure.

Q2. Which of the following items is included in the adjustment of net income to obtain cash flow from operating activities?

(i) Depreciation expense for the period.
(ii) The change in deferred taxes.
(iii) The amount by which equity income recognized exceeds cash received.
(iv) All of the above.

(iv) All of the above.

Q3. Direct Expenses are entered in:

(i) Trading Account
(ii) profit & Loss Account
(iii) Balance sheet
(iv) None of these

(i) Trading Account

Q4. Profit earn through normal activities of business

(i) operating profit
(ii) net profit
(iii) gross profit
(iv) manufacturing profit

(i) operating profit

Q5. How would revenue from sales of goods and services be classified?

(i) Operating outflow.
(ii) Operating inflow.
(iii) Investing inflow.
(iv) Financing inflow.

(ii) Operating inflow

Q6. Goodwill is a-

(i) Fixed Asset
(ii) Current Asset
(iii) Fictitious Asset
(iv) None of these

(i) Fixed Asset

Q7. Which is an example of fictitious assets?

(i) Building
(ii) Bill receivable
(iii) Adverting suspense
(iv) Cash

(iii) Adverting suspense

Q8. What is a limitation common to both the current and quick ratio?

(i) Accounts receivable may not be truly liquid.
(ii) Inventories may not be truly liquid.
(iii) Marketable securities are not liquid.
(iv) Prepaid expenses are potential sources of cash.

(i) Accounts receivable may not be truly liquid.

Q9. Drawing is deducted from:

(i) Sales
(ii) Purchase
(iii) Returns outward
(iv) Capital

(ii) Purchase

Q10. Trade Mark is _.

(i) Tangible assets
(ii) Current assets
(iii) Fixed assets
(iv) Liability

(i) Tangible assets

Q11. What does an increasing collection period for accounts receivable suggest about a firm’s credit policy?

(i) The credit policy is too restrictive.
(ii) The firm is probably losing qualified customers.
(iii) The credit policy may be too lenient.
(iv) The collection period has no relationship to a firm’s credit policy.

(iii) The credit policy may be too lenient.

Q12. Trading Account discloses-

(i) Gross profit
(ii) Net profit
(iii) Net loss
(iv) Gross profit or Gross loss

(iv) Gross profit or Gross loss

Q13. Balance Sheet shows :

(i) Profit or Loss
(ii) Financial Position
(iii) Errors of Accounts
(iv) Total Debtors

(ii) Financial Position

Q14. Subtracting all expenses from revenues yields?

(i) Net profit/Loss
(ii) Carrying value
(iii) Long-term assets
(iv) Net liabilities

(i) Net profit/Loss

Q15. Outstanding Salaries is shown as

(i) an asset in the Balance Sheet.
(ii) a liability in the Balance Sheet.
(iii) adjusted in Profit and Loss Account.
(iv) both (ii) and (iii).

(iv) both (ii) and (iii).

Q16. The primary source of revenue for a wholesaler is?

(i) Investment income
(ii) Service fees
(iii) The sale of merchandise
(iv) The sale of fixed assets the company owns

(iii) The sale of merchandise

Q17. Final Accounts are prepared :

(i) At the end of calendar year
(ii) At the end of Assessment year
(iii) On every Diwali
(iv) At the end of Accounting year

(iv) At the end of Accounting year

Q18. What information can be gained from sources such as Industry Norms and Key Business Ratios, Annual Statement Studies, Analyst’s Handbook, and Industry Surveys?

(i) The general economic condition.
(ii) Forecasts of earnings.
(iii) Elaboration’s of financial statement disclosures.
(iv) A company’s relative position within its industry.

(iv) A company’s relative position within its industry.

Q19. Balance Sheet is a

(i) a list of all the accounts in the books of a business.
(ii) an account showing trading activities of a business.
(iii) an account showing the financial position of a business as on a certain date.
(iv) a list of assets, liabilities and capital of a business at a certain date.

(iv) a list of assets, liabilities and capital of a business at a certain date.

Q20. Which ratio or ratios measure the overall efficiency of the firm in managing its investment in assets and in generating return to shareholders?

(i) Gross profit margin and net profit margin.
(ii) Return on investment.
(iii) Total asset turnover and operating profit margin.
(iv) Return on investment and return on equity.

(iv) Return on investment and return on equity.

Q21. Purchase of machinery for production is

(i) Revenue Expenditure.
(ii) Capital Expenditure.
(iii) Deferred Revenue Expenditure.
(iv) None of these.

(ii) Capital Expenditure.

Q22. What do the asset turnover ratios measure?

(i) The liquidity of the firm’s current assets.
(ii) Management’s effectiveness in generating sales from investments in assets.
(iii) The overall efficiency and profitability of the firm.
(iv) The distribution of assets in which funds are invested.

(ii) Management’s effectiveness in generating sales from investments in assets.

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Financial Statements 1 MCQ Questions for Class 11 Accountancy Chapter 9 with Answers