Questions for Chapter-Financial statement of the company 

MCQ-Based Questions for CUET Accountancy chapter-Financial statement of the company 

This page is prepared by HT experts and consists of MCQ-Based Questions for CUET Accountancy chapter-Financial statement of the company with a detailed explanation of all the questions asked from the Financial statement of the company. To find the solution to the MCQ asked just click on the answer tab. Check out all chapters of CUET Accountancy. 

Practice Questions for CUET Accountancy chapter-Financial statement of the company SET-1

Financial statement of company

Chapter-3

Tough

Q.1. The basis for the preparation of periodical financial statements are:

a) cost of product

b) Trial balance

c) Balance sheet

d) Chronologically recorded facts

Answer:

(d) Chronologically recorded facts

Explanation: - every process of accounting is based on chronologically recorded facts about events expressed in monetary terms.

Q.2. The basis of recording transaction is:-

a) Market cost

b) Original cost

c) Scrap cost

d) None

Answer:

B) Original cost

Explanation:- all monetary transactions are recorded on the basis of historical or original cost at the time of there occurrence.

Q.3. The nature of financial statements is/are:-

a) recorded facts

b) accounting convention

c) postulates

d) all of the above

Answer:

D) All of the above

Explanation: - all are the nature of financial statement.

Q.4. According to accounting convention inventory is valued at

a) Cost price

b) Market price

c) Both A and B

d) Whichever is lower

Answer:

D) Whichever is lower

Explanation: - the convention of valuing inventory at cost or market price, is followed.

Q.5. According to accounting convention assets purchased in the current year are treated as:-

A) liabilities

B) Income

C) Expenditure

D) None

Answer:

C) Expenditure

Explanation: - these items are treated as expenditure in the year in which they are purchased even though they are assets in nature.

Q.6. The use of accounting convention makes statements:-

a) comparable

b) simple

c) realistic

d) all of the above

Answer:

All of the above

Explanation: - all are the advantages of accounting convention

Q.7. Certain basic assumptions of financial statements are:-

a) going concern postulate

b) Money measurement postulate

c) Realization postulate

d) All of the above

Answer:

d) All of the above

Explanation: - all are the basic assumption of accounting.

Q.8. The firm will exist for long period is assumed by

a) going concern postulate

b) Money measurement postulate

c) Realization postulate

d) All of the above

Answer:

a) Going concern postulate

Explanation: - the firm will survive for long period of time in the market is assumed in assumption of going concern

Q.9. _____ assumes that the value of money will remain the same in different periods.

a) going concern postulate

b) realization postulate

c) both A and B

d) None.

Answer:

d) None

Explanation: - money measurement assumes that the value of money will remain the same in different periods

Q.10. Primary objective of financial statements is:

a) to show expenditure and income

b) to show profit and loss

c) to expand business

d) to assist the users in decision making

Answer:

d) To assist the users in decision making.

Explanation: - the main and primary aim of financial statement is to assist the user in decision making.

Q.11. P&L refers to statement which is prepared to determine ______ position of the enterprise

a) operational

b) managerial

c) factual

d) none

Answer:

A) Operational

Explanation: - Operational position of the enterprise.

Q.12.Which one is true regarding the objectives of financial statements:-

a) to provide information about economic resources and obligations of a firm

b) to provide information about the earning capacity of the firm

c) to provide information about cash flow

d) All of the above

Answer:

D) all of the above

Explanation: - all are true regarding the objectives of financial statements.

Q.13.Income statement gives:-

a) factual interpretation

b) managerial interpretation

c) Quantitative interpretative

d) All

Answer:

Quantitative interpretation

Explanation:- Income statement means P&L statement that shows onle nomerica or monetary facts or events

Q.14. According to the accounting concept of income ‘Income’ is :-

a) excess of realized revenues over related expired cost

b) Excess of expired cost over related realized revenue

c) Both A and B

d) Only A

Answer:

D) Only A

Explanation:- According to the accounting concept of income ‘Income’ is excess of realized revenues over related expired cost

Easy

Q.15 P&L is the difference between:-

a) realized revenue

b) related expired cost

c) Between A and B of the period

d) All

Answer:

C) between A and B of the period

Explanation:- P&L is the difference between realized revenue and related expired cost

Q.16.Transfer to reserve is the process of

a) P&L account

b) P&L appropriation a/c

c) Balance sheet

d) None

Answer:

P&L appropriation A/c

Explanation:- P&L app a/c is prepared to record various appropriations of profit like transfer to reserve etc.

Q.17.income statement can be divided into;-

a) trading

b) P&L a/c

c) P&L App A/c

d) All

Answer:

All

Explanation: - Income statement can be divided into three components.

Q.18.Gross profit is derived by:-

a) Trading

b) P&L a/c

c) P&L App A/c

d) All

Answer:

a) Trading

Explanation: - Trading account shows the gross profit from the sales of firm

Q.19. Net profit and net loss is derived by:-

a) trading

b) P&L a/c

c) P&L App A/c

d) All

Answer:

B) P&L A/c

Explanation: - P&L shows net profit or loss of the firm by deducting all expenses from incomes

Q.20. Loss of last year and surplus or deficit at the end of the period is adjusted by:-

a) trading

b) P&L a/c

c) P&L App A/c

d) All

Answer:

C) P&L App A/c

Explanation: - P&L app A/c shows all appropriation from the current year and balance of profit or loss of lat years adjustment.

Practice Questions for CUET Accountancy chapter-Financial statement of the company SET-2

Q.21.Which one is not the item recorded in the process of preparation of income statement:-

a) record all the revenue receipts

b) Recording all the revenue expenditure

c) Recording non-operating

d) All of the above

Answer:

All of the above

Explanation: - All are the items includes in the process of preparation of income statement

Q.22. According to _________ all permanent long term assets are shown at beginning

a) permanency

b) occurrence

c) Neither A nor B

d) Only A

Answer:

A) Only A

Explanation: - acc to permanency

Q.23 Items of liabilities side are:-

a) Share capital

b) Unsecured loans

c) Reserve and surplus

d) All

Answer:

d) All

Explanation: - all are the items comes under liability side of balance sheet

Q.24 Items of assets side is/are

a) fixed liabilities

b) Current liabilities

c) Fixed assets

d) Unsecured loan

Answer:

C) Fixed assets

Explanation: - Only fixed assets is the item comes under assets side of balance sheet

Q.25. Preliminary expenses come under:-

a) investments

b) Current assets

c) Miscellaneous exp

d) None

Answer:

C) Miscellaneous exp

Explanation: - it comes under miscellaneous exp

Q.26. Sales – cost of goods sold is the item of:-

a) P&L A/c

b) Trading a/c

c) Operating profit

d) All

Answer:

B) Trading a/c

Explanation: - it comes under trading A/c

Q.27. Net profit derived after

a) trading A/c

b) P&L a/c

c) Gross profit.

d) All

Answer:

C) Gross profit

Explanation: - net profit is derived after gross profit

Q.28. Part of profit which is distributed among its shareholders.

a) dividends

b) Interest

c) Either A or B

d) Only a

Answer:

Only a

Explanation: - dividend is the part of profit which is distributed among its shareholders