MCQ Collection
Financial Accounting MCQs
Practice Financial Accounting questions with answers and explanations.
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Correct Answer: A. depreciation
Explanation:
depreciation is the term that matches the description: systematic allocation of a depreciable asset’s cost over useful life
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Correct Answer: B. an amount owed to the entity
Explanation:
receivable refers to an amount owed to the entity
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Correct Answer: A. contra entry
Explanation:
contra entry is the term that matches the description: an entry affecting both cash and bank columns in a cash book
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Correct Answer: D. net profit
Explanation:
net profit is the term that matches the description: profit remaining after all relevant expenses
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Correct Answer: B. spending that creates or improves a long-term asset
Explanation:
capital expenditure refers to spending that creates or improves a long-term asset
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Correct Answer: D. going concern
Explanation:
going concern is the term that matches the description: the assumption that an entity will continue operating for the foreseeable future
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Correct Answer: C. current ratio
Explanation:
current ratio is the term that matches the description: current assets divided by current liabilities
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Correct Answer: C. payment made before the related benefit is consumed
Explanation:
prepayment refers to payment made before the related benefit is consumed
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Correct Answer: C. credit
Explanation:
credit is the term that matches the description: the right side of a ledger account
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Correct Answer: A. bank reconciliation
Explanation:
bank reconciliation is the term that matches the description: a comparison of cash-book and bank-statement balances
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Correct Answer: B. a statement of assets, liabilities and equity at a point in time
Explanation:
balance sheet refers to a statement of assets, liabilities and equity at a point in time
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Correct Answer: B. current assets divided by current liabilities
Explanation:
current ratio refers to current assets divided by current liabilities
