ExamVeda
Login
Home

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-1 section-3

Each section contains 100 MCQs on Accounting .
1
Which one of the following methods of inventory costing yields highest taxable income?
Discuss
Answer & Solution
Answer: Option A
Solution:
FIFO methods of inventory costing yields highest taxable income. First-in, first-out, or FIFO, applies the earliest costs first. In rising markets, FIFO yields the lowest cost of goods sold and the highest taxable income.
2
Which one of the following methods of inventory costing produces ending stock cost close to the market value of the inventory?
Discuss
Answer & Solution
Answer: Option A
Solution:
FIFO methods of inventory costing produces ending stock cost close to the market value of the inventory. FIFO (First-in, first-out) method is based on the perception that the first inventories purchased are the first ones to be sold. It is a cost flow assumption for most companies. Since the theory perfectly matches to the actual flow of goods, therefore it is considered as the right way to value inventory.
3
Which one of the following inventory costing methods is supposed to issue the most recently purchased goods?
Discuss
Answer & Solution
Answer: Option B
Solution:
LIFO inventory costing methods is supposed to issue the most recently purchased goods. LIFO, which stands for last-in-first-out, is an inventory valuation method which assumes that the last items placed in inventory are the first sold during an accounting year.
4
Opening inventory + Net purchases = ?
Discuss
Answer & Solution
Answer: Option D
Solution:
Opening inventory + Net purchases = Cost of goods available for sale.
The cost of goods available for sale equals the beginning value of inventory plus the cost of goods purchased.
5
Cost of goods available for sale - closing inventory = ?
Discuss
Answer & Solution
Answer: Option D
Solution:
Cost of goods available for sale - closing inventory = Cost of goods sold.
6
NRV or net realizable value of inventory is the expected selling price or market value less
Discuss
Answer & Solution
Answer: Option B
Solution:
NRV or net realizable value of inventory is the expected selling price or market value less Expenses necessary to complete sale. Net realizable value is generally equal to the selling price of the inventory goods less the selling costs (completion and disposal).
7
Under which method of inventory costing, a pre-determined cost is assigned to all items of inventory?
Discuss
Answer & Solution
Answer: Option B
Solution:
Under Standard cost method of inventory costing, a pre-determined cost is assigned to all items of inventory. A standard cost is described as a predetermined cost, an estimated future cost, an expected cost, a budgeted unit cost, a forecast cost, or as the "should be" cost. Standard costs are often an integral part of a manufacturer's annual profit plan and operating budgets.
8
Term 'Credit' means _____ by the business
Discuss
Answer & Solution
Answer: Option A
Solution:
Term 'Credit' means Receiving of benefits by the business. The terms which indicate when payment is due for sales made on account (or credit).
9
When a liability is reduced or decreased, it is recorded on the:
Discuss
Answer & Solution
Answer: Option D
Solution:
When a liability is reduced or decreased, it is recorded on the Left or debit side of the account.
10
When capital is increased by an amount, it is recorded on the:
Discuss
Answer & Solution
Answer: Option C
Solution:
When capital is increased by an amount, it is recorded on the Right or credit side of the account.