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Accounting MCQ Questions and Solutions with Explanations | Commerce

Accounting MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Accounting MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-7 section-2

Each section contains 100 MCQs on Accounting .
61
Which of the following financial reports shows the profitability of a business?
Discuss
Answer & Solution
Answer: Option A
Solution:
Income statement shows the profitability of a business. The income statement is the most important report for many analysts. It shows the company's operating results for an entire year.
62
Assets minus liabilities equal to
Discuss
Answer & Solution
Answer: Option D
Solution:
Assets minus liabilities equal to Capital, it shows that a company's total amount of assets equals the total amount of liabilities plus owner's (or stockholders') equity.
63
Which of the following financial statements shows the movement of cash and cash equivalents during an accounting period?
Discuss
Answer & Solution
Answer: Option C
Solution:
Cash flow statement shows the movement of cash and cash equivalents during an accounting period. A cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.
64
Goodwill is classified as which one of the following assets?
Discuss
Answer & Solution
Answer: Option D
Solution:
Goodwill is classified as Intangible assets. The goodwill amounts to the excess of the "purchase consideration" (the money paid to purchase the asset or business) over the total value of the assets and liabilities. It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched.
65
Which of the following does not appear in Balance sheet?
Discuss
Answer & Solution
Answer: Option D
Solution:
Rent expenses does not appear in Balance sheet.
66
Current assets are also known as
Discuss
Answer & Solution
Answer: Option A
Solution:
Current assets are also known as Gross working capital. Gross working capital is the sum of all of a company's current assets (assets that are convertible to cash within a year or less).
67
The expenses related to the main operations of a business are referred to as
Discuss
Answer & Solution
Answer: Option D
Solution:
The expenses related to the main operations of a business are referred to as Operating expense. The operating expenses refer to the specific costs after gross revenue is defined in the income statement.
68
A current asset that is convertible to cash within 3 months can be referred to as
Discuss
Answer & Solution
Answer: Option D
Solution:
A current asset that is convertible to cash within 3 months can be referred to as Cash equivalent. Cash and cash equivalents refer to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately.
69
What is depreciation?
Discuss
Answer & Solution
Answer: Option D
Solution:
Portion of a fixed asset's cost consumed during the current accounting period is known as depreciation. Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. Businesses depreciate long-term assets for both tax and accounting purposes.
70
Under which depreciation method, the amount of depreciation expenses remains same throughtout the life of the asset?
Discuss
Answer & Solution
Answer: Option A
Solution:
Under Straight line method, the amount of depreciation expenses remains same throughtout the life of the asset. In a straight line depreciation method, it is assumed that the asset uniformly depreciates over its useful life.