Financial Accounting MCQ Quiz in தமிழ் - Objective Question with Answer for Financial Accounting - இலவச PDF ஐப் பதிவிறக்கவும்
Last updated on Mar 29, 2025
Latest Financial Accounting MCQ Objective Questions
Top Financial Accounting MCQ Objective Questions
Financial Accounting Question 1:
A company measures the average time to collect receivables as:
[Receivables at end of financial year/Annual credit sales] 365 days
Accounting ratios have just been calculated from the financial statements for the financial year that has just ended. These show an abnormally high average time to collect receivables, compared with ratios calculated for the previous financial year.
Which of the following may help to explain this unusually high turnover period for trade receivables?
Answer (Detailed Solution Below)
Financial Accounting Question 1 Detailed Solution
The correct option is option 1 ti
Additional Information:
- If there has been a large credit sale near the end of the financial year, the amount owed will be included within receivables at the year end and trade receivables may be unusually high. If so, the average time for receivables to pay may be distorted, because year-end receivables are used to calculate the turnover ratio.
- A large volume of sales in the final quarter of every year may explain why the measurement of the average collection period is long every year, but not why the collection period should be unusually long compared with the previous year.
- Comparatively low sales in the final quarter would be more likely to result in a shorter-thannormal measurement of the average collection period.
Financial Accounting Question 2:
Which of these statements about research and development expenditure are correct in accordance with IAS 38 Intangible Assets?
- If certain conditions are satisfied, research and development expenditure must be capitalised.
- One of the conditions to be satisfied if development expenditure is to be capitalised is that the technical feasibility of the project is reasonably assured.
- The amount of capitalised development expenditure for each project should be reviewed each year. If circumstances no longer justify the capitalisation, the balance should be written off over a period not exceeding five years.
- Development expenditure may only be capitalised if it can be shown that adequate resources will be available to finance the completion of the project
Answer (Detailed Solution Below)
Financial Accounting Question 2 Detailed Solution
The correct option is option 3
Financial Accounting Question 3:
The closing inventory of Specter amounted to $284,000 at 30 September 20X1, the reporting date.
This total includes two inventory lines about which the inventory taker is uncertain.
(1) 500 items which had cost $15 each and which were included at $7,500. These items were found to have been defective at the end of the reporting period. Remedial work after the reporting period cost $1,800 and they were then sold for $20 each. Selling expenses were $400.
(2) 100 items which had cost $10 each. After the reporting period they were sold for $8 each, with selling expenses of $150.
What figure should appear in Specter's statement of financial position for inventory?
Answer (Detailed Solution Below)
Financial Accounting Question 3 Detailed Solution
The correct option is option 1
Additional Information:
| $ | ||
| 284,000 | ||
| Item 1 | - | No change as NRV exceeds cost |
| Item 2 | (350) | Reduce to NRV (1,000-650) |
| 283,650 |
Financial Accounting Question 4:
If the current ratio for a company is equal to its quick ratio, which of the following statements is true?
Answer (Detailed Solution Below)
Financial Accounting Question 4 Detailed Solution
The correct option is option 2
Additional Information:
- The company does not carry any inventory. The calculation for the quick ratio excludes inventory.
- So, if the current ratio (including inventory) and the quick ratio (excluding inventory) are the same, this must mean that 'inventory' is zero.
Financial Accounting Question 5:
Where, in a company's financial statements complying with IFRS Standards, should you find the proceeds of non-current assets sold during the period?
Answer (Detailed Solution Below)
Financial Accounting Question 5 Detailed Solution
The correct option is option 4
Additional Information:
- Proceeds of a sale of non-current assets will only be presented in the statement of cash flows.
Financial Accounting Question 6:
Lewis Co entered into the following transactions:
(1) He made a credit sale to Alex allowing a 5% trade discount on the list price of $640, and a further 5% discount for immediate cash payment.
(2) He purchased goods with a list price of $600 and received a 10% trade discount and further 2% discount for payment within seven days. He paid three days later.
How much discount should be recorded in the Discounts Received account as a result of the above transactions?
Answer (Detailed Solution Below)
Financial Accounting Question 6 Detailed Solution
The correct option is option 1
Additional Information:
- Discounts received account for cash/settlement discounts received from suppliers on purchases.
- Transaction 1 relates to discounts on sales so does not impact the discounts received account.
- Therefore, in transaction 2, purchase net of trade discount = $600 x 90% = $540 (trade discounts are not accounted for separately). Early settlement discount = 2% × $540 = $10.80.
Financial Accounting Question 7:
Merik's trial balance did not balance so he opened a suspense account with a debit balance of $346. Control accounts are maintained for receivables and payables.
Merik discovered the following:
(1) The sales day book was undercast by $400.
(2) Purchases of $520 from the purchases day book have only been recorded in the payables ledger control account.
(3) Profit on sale of non-current assets of $670 had been recorded in the sundry income account as $760.
What is the remaining balance on Merik's suspense account after these errors have been corrected?
Answer (Detailed Solution Below)
Financial Accounting Question 7 Detailed Solution
The correct option is option 1
Additional Information:
SUSPENSE ACCOUNT
| $ | $ | ||
| Bal b/f | 346 | Purchases (2) | 520 |
| Bal c/f | 264 | Sundry income (3) | 90 |
| 610 | 610 |
Financial Accounting Question 8:
Prince Co values inventories on the first in first out (FIFO) basis. Prince Co has 120 items of product A valued at $8 each in inventory at1 October 20X9. During October 20X9, the following transactions in product A took place.
| 3 October | Purchases | 180 items at $9 each |
| 4 October | Sales | 150 items at $12 each |
| 8 October | Sales | 80 items at $15 each |
| 18 October | Purchases | 300 items at $10 each |
| 22 October | Sales | 100 items at $15 each |
What is the closing balance on the inventory account at 31 October 20X9?
Answer (Detailed Solution Below)
Financial Accounting Question 8 Detailed Solution
The correct option is option 1
Additional Information:
| No. of items | Unit price | Value | ||
| Date | $ | $ | ||
| 1.10.X9 | Balance | 120 | 8 | 960 |
| 3.10.X9 | Purchases | 180 | 9 | 1,620 |
| Balance | 300 | 2 | 580 | |
| 4.10.X9 | Sales | (120) | 8 | (960) |
| Sales | (30) | 9 | (270) | |
| Balance | 150 | 1,350 | ||
| 8.10.X9 | Sales | (80) | 9 | (720) |
| Balance | 70 | 630 | ||
| 18.10.X9 | Purchases | 300 | 10 | 3,000 |
| Balance | 370 | 3,630 | ||
| 22.10.X9 | Sales | (70) | 9 | (630) |
| Sales | (30) | 10 | (300) | |
| Balance | 270 | 2,700 |
Financial Accounting Question 9:
Which of the following items, if material, would NOT typically appear in the 'Cash flows from investing activities' section of a Statement of Cash Flows prepared under IAS 7 Statement of Cash Flows?
Answer (Detailed Solution Below)
Financial Accounting Question 9 Detailed Solution
The correct option is option 4
Additional Information:
-
Repayment of a long-term bank loan is a financing activity. It relates to changes in the size and composition of the equity and borrowings of the entity.
Short Explanation of Incorrect Options:
-
Option 1. Proceeds from the sale of a non-current asset. This is a typical investing activity, reflecting the disposal of long-term assets.
-
Option 2. Cash paid for the acquisition of property, plant and equipment. This is a typical investing activity, reflecting the acquisition of long-term assets.
-
Option 3. Dividends received from an investment in an associate. Dividends received from investments (unless from operating activities for financial institutions) are generally classified as investing activities cash inflows..
Financial Accounting Question 10:
Phoenix Co. incurred the following costs related to a new product development project during the year ended 31 December 20X6:
- Initial research costs (January - March): $80,000 (no certainty of success).
-
Development costs - Phase A (April - June): $120,000. This phase achieved technical feasibility and commercial viability was considered probable.
-
Development costs - Phase B (July - September): $90,000. Further refinement and testing of the product.
-
Marketing and advertising costs for product launch (October - December): $50,000.
-
Training staff to operate the new production machinery (November): $10,000.
The new product is expected to be launched and commence commercial production on 1 February 20X7. Phoenix Co. uses the straight-line method for amortisation.
What is the total amount that should be expensed to the statement of profit or loss for the year ended 31 December 20X6, in accordance with IAS 38 Intangible Assets?
Answer (Detailed Solution Below)
Financial Accounting Question 10 Detailed Solution
The correct option is option 1
Additional Information:
-
Initial research costs ($80,000): These are research costs as there was "no certainty of success" and are expensed as incurred.
-
Development costs - Phase A ($120,000): These costs are capitalised from the point at which the criteria for capitalisation were met (i.e., technical feasibility and commercial viability became probable). So, this amount is capitalised.
-
Development costs - Phase B ($90,000): These are further development costs incurred after the capitalisation criteria were met, and they contribute to bringing the asset to its intended use. So, this amount is capitalised.
-
Marketing and advertising costs for product launch ($50,000): These are selling costs and cannot be capitalised as part of the intangible asset. They are expensed as incurred.
-
Training staff to operate the new production machinery ($10,000): These are training costs and cannot be capitalised as part of the intangible asset. They are expensed as incurred.
Total expenses for 20X6 = Research costs + Marketing and advertising costs + Training costs = $80,000 + $50,000 + $10,000 = $140,000.
No amortisation is charged for 20X6 because commercial production has not yet commenced (it begins on 1 February 20X7).
Short Explanation of Incorrect Options:
-
Option 2. $200,000: Incorrect. This option likely includes all development costs as expensed, which is incorrect as they meet capitalisation criteria from Phase A onwards.
-
Option 3. $180,000: Incorrect. This might include research costs and part of the development costs, or misclassify marketing/training costs.
-
Option 4. $80,000: Incorrect. This only includes the initial research costs, omitting other costs that should also be expensed (marketing and training).