Accounting mcqs

✅ The correct answer is C.
Accounting period is time spann into which the total life of a business is divided for the purpose of preparing financial statements. This period defines the time range over which business transactions are accumulated into financial statements, and is needed by investors so that they can compare the results of successive time periods.

✅ The correct answer is A.
Liability for bill discounted is a Contingent liability. Contingent liability is a potential liability that may occur, depending on the outcome of an uncertain future event.

✅ The correct answer is A.

✅ The correct answer is A.
The memorandum of association of a company is the charter and defines the limitation of the power of the company established under Companies Act. Memorandum of Association is the most important document of a company. It states the objects for which the company is formed. It contains the rights, privileges and powers of the company. Hence it is called a charter of the company. It is treated as the constitution of the company. It determines the relationship between the company and the outsiders.

✅ ANSWER: D
Materiality is a concept in financial accounting and reporting that firms may disregard trivial matters, but they must disclose everything that is important to the report audience. Items that are important enough to matter are material items.

✅ ANSWER: D
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.

✅ ANSWER: A
Revenue and expense accounts are referred to as Nominal accounts because each period they are closed out to Income Summary in the closing process.

✅ ANSWER: D
Preliminary expenses are treated as Miscellaneous expenditure. Preliminary expenses are those that are incurred before incorporation of a company or commencement of business.

✅ ANSWER: D
Cash account with normal balance is shown at the debit side of a trial balance.

✅ ANSWER: B
A promissory note is drawn by Maker in favor of Payee. Maker or Drawer is the person who makes or draws the promissory note. He is also called the promisor. Drawee or Payee is the person in whose favour the promissory note is drawn.