Basic Accounting 17

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Objective Questions and Answers of MBA: Basic Accounting 17

Subject: Objective Questions and Answers of MBA: Basic Accounting 17

Part 17: Objective questions and answers of Basic Accounting


Q1. Interest paid (earned) on both the original principal borrowed (lent) and previous interest allowed (earned) is often referred to as ______________.

a) Compound interest

b) Double interest

c) Simple interest

d) Present value


Q2. The Bailey Brothers want to issue 20-year, zero coupon bonds that yield 9 percent.

What price should it charge for these bonds if the face value is $1,000?

a) $ 157.25

b) $ 163.70

c) $ 178.43

d) $ 194.49


Q3. What type of long-term financing most likely has the following features?

(1) It has an infinite and finite life

(2) It pays dividends, and

(3) Its cash flows are expected to be a constant annuity stream.

a) Long-term debt

b) Preferred stock

c) Common stock

d) None of the given option


Q4. ______________ Ratios are used to measure a firm’s ability to meet short-term obligations mpor

a) Asset management ratios

b) Debt management ratios

c) Liquidity ratios

d) Equity ratios


Q5. Dividend is approved by the shareholder in the ______________ at the recommendation of the directors.

a) Annual general meeting

b) Director meeting

c) Statutory meeting

d) Special meeting


Q6. Market value determines

a) On running business

b) When company closedown

c) Before establishment of business

d) When asset sold individually


Q7. Muhammad Ali just received an interest payment that is equal to 7 percent of his Rs. 20,000 in Bond investment. This 7 percent is best described as a

a) Real Return

b) Deflated Return

c) Coupon Return

d) None


Q8. Marketable Securities, Account Receivables and Inventory are listed as

a) Current Asset

b) Current Liabilities

c) Long Term Asset

d) Long term liabilities


Q9. Which of the following is considered a Profitability measure?

a) Days Sales in Inventory

b) Fixed Asset Turnover

c) Cash Coverage Ratio

d) Return on Assets


Q10. Bond secured by lien on real property is

a) Debenture

b) Euro bond

c) Mortgage bond

d) Convertible bond


Q11. Profit maximization is a

a) Short term concept

b) Long term concept

c) Both a & b

d) None


Q12. When the bond approaches its maturity, the market value of the bond approaches to which of the following?

a) Intrinsic value

b) Book value

c) Par value

d) Historic cost


Q13. Which one of the following can issue the corporate bond?

a) Individuals

b) Government

c) Public limited companies

d) All of before


Q14. Which of the following statements is incorrect?

a) Assets – Capital = Liabilities

b) Liabilities + Assets = Capital

c) Liabilities + Capital = Assets

d) Assets – Liabilities = Capital


Q15. To find the value of closing stock at the end of a period we

a) do this by stocktaking

b) deduct cost of goods sold from sales

c) deduct opening stock from cost of goods sold

d) look in the stock account


Q16. When Lee makes out a cheque for £50 and sends it to Young, then Lee is known as:

a) The payee

b) The banker

c) The drawer

d) The creditor


Q17. Given a purchases invoice showing 5 items of £80 each, less trade discount of 25 percent and cash discount of 5 per cent, if paid within the credit period, your cheque would be made out for:

a) £260

b) £280

c) £285

d) None of these


Q18. At the balance sheet date the balance on the Accumulated Provision for Depreciation Account is:

a) Transferred to Depreciation Account

b) Transferred to the Asset Account

c) Transferred to Profit and Loss Account

d) Simply deducted from the asset in the Balance Sheet


Q19. Which of the following are not true? A Bank Reconciliation Statement is

(i) Part of the double entry system

(ii) Not part of the double entry system

(iii) Sent by the firm to the bank

(iv) Posted to the ledger accounts.

a) (i), (ii) and (iv)

b) (i), (iii) and (iv)

c) (iii) and (ii)

d) (ii), (iii) and (iv)


Q20. What should happen if the balance on a Suspense Account is of a material amount?

a) Write it off to Profit and Loss Account

b) Should be written off to the balance sheet

c) Carry forward the balance to the next period

d) Find the error(s) before publishing the final accounts


Part 17: Objective questions and answers of Basic Accounting


Q1. Answer a


Q2. Answer c


Q3. Answer b


Q4. Answer c


Q5. Answer a


Q6. Answer a


Q7. Answer c


Q8. Answer a


Q9. Answer d


Q10. Answer c


Q11. Answer a


Q12. Answer a


Q13. Answer c


Q14. Answer b


Q15. Answer a


Q16. Answer c


Q17. Answer c


Q18. Answer d


Q19. Answer b


Q20. Answer d

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