The final accounts are the accounts which are prepared at the end stage of an accounting year. This account highlights both the financial position and profits of a business, which can be used by any investors or internal bodies for various reasons.
This final trial balance comprises of all of the journal entries that are used to close the books, such as payroll tax accruals and wage. The final accounts give an insight into the financial status and profitability of a business to its owners, investors, and management.
Given below are essential MCQs on the Final Accounts to analyse your understanding of the topic. The answers are also given for your reference.
Final Accounts MCQs:
Question 1
Business is said to be in a profit when
A) Expenditure exceeds income
B) Income exceeds expenditure
C) Income exceeds liability
D) Assets exceed expenditure
Answer: B
Question 2
As per the accounting double-entry system, when expense increases, it is ___________.
A) No need to show as an accounting record.
B) Credited.
C) Debited.
D) Both (B) and (C).
Answer: C
Question 3
What does the term “credit” mean in business?
A) agreement between a lender and a borrower
B) revenue a business earns from selling its goods
C) cost of operations that a company incurs to generate revenue
D) own with the expectation to provide a future benefit
Answer: A
Question 4
When a Liability is decreased or reduced, it is registered on the
A) Debit side or left side of the account
B) Credit side or right side of the account
C) Debit side or right side of the account
D) Credit side or left side of the account
Answer: A
Question 5
When there is an increase in capital by an amount, it is registered on the
A) Credit or right side of the account
B) Debit or left side of the account
C) Credit or left side of the account
D) Debit or right side of the account
Answer: A
Question 6
What kind of expenses are paid from Gross Profit?
A) Selling Expenses
B) Financial Expenses
C) General Expenses
D) All of the above
Answer: D
Question 7
Which option gives a review report on the firm’s financial status at a specified date?
A) Income & Expenditure Account
B) Balance Sheet
C) Cash Flow Statement
D) Profit & Loss Account
Answer: B
Question 8
Which of the options is not an intangible asset?
A) Land
B) Patents
C) Goodwill
D) Franchise rights
Answer: A
Question 9
Which of the options is an example of business liability?
A) Creditors
B) Cash
C) Building
D) Land
Answer: A
Question 10
The unfavourable balance of Profit and Loss account should be
A) Subtracted from liabilities
B) Subtracted from capital
C) Subtracted from current assets
D) Added in liabilities
Answer: B
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