Company Final Accounts(Advance Accountancy ) Questions and Answers

Question 1.

Business is said to be in a profit when

  1.    Expenditure exceeds income
  2.    Income exceeds expenditure
  3.    Income exceeds liability
  4.    Assets exceed expenditure
Explanation:-
Answer: Option B. -> Income exceeds expenditure


Question 2. As per the accounting double-entry system, when expense increases, it is ___________.
  1.    No need to show as an accounting record.
  2.    Credited
  3.    Debited
  4.    Both (B) and (C).
Explanation:-
Answer: Option C. -> Debited


Question 3. What does the term “credit” mean in business?
  1.    agreement between a lender and a borrower
  2.    revenue a business earns from selling its goods
  3.    cost of operations that a company incurs to generate revenue
  4.    own with the expectation to provide a future benefit
Explanation:-
Answer: Option A. -> agreement between a lender and a borrower


Question 4. When a Liability is decreased or reduced, it is registered on the
  1.    Debit side or left side of the account
  2.    Credit side or right side of the account
  3.    Debit side or right side of the account
  4.    Credit side or left side of the account
Explanation:-
Answer: Option A. -> Debit side or left side of the account


Question 5. When there is an increase in capital by an amount, it is registered on the
  1.    Credit or right side of the account
  2.    Debit or left side of the account
  3.    Credit or left side of the account
  4.    Debit or right side of the account
Explanation:-
Answer: Option A. -> Credit or right side of the account


Question 6. What kind of expenses are paid from Gross Profit?
  1.    Selling Expenses
  2.    Financial Expenses
  3.    General Expenses
  4.    All of the above
Explanation:-
Answer: Option D. -> All of the above


Question 7. Which option gives a review report on the firm’s financial status at a specified date?
  1.    Income & Expenditure Account
  2.    Balance Sheet
  3.    Cash Flow Statement
  4.    Profit & Loss Account
Explanation:-
Answer: Option B. -> Balance Sheet


Question 8. Which of the options is not an intangible asset?
  1.    Land
  2.    Patents
  3.    Goodwill
  4.    Franchise rights
Explanation:-
Answer: Option A. -> Land


Question 9. Which of the options is an example of business liability?
  1.    Creditors
  2.    Cash
  3.    Building
  4.    Land
Explanation:-
Answer: Option A. -> Creditors


Question 10. The unfavourable balance of Profit and Loss account should be
  1.    Subtracted from liabilities
  2.    Subtracted from capital
  3.    Subtracted from current assets
  4.    Added in liabilities
Explanation:-
Answer: Option B. -> Subtracted from capital


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