A) Operating expenses
B) Product cost
C) Deferred expenses
D) Direct cost
✅ ANSWER: A
Net Profit = Gross Profit minus Operating expenses.
Net Profit = Gross Profit minus Operating expenses.
Accounting mcqs
A company purchased a vehicle for Rs.6000. It will be used for 5 years and its residual value is expected to be Rs.1000. What is the annual amount of depreciation using straight line method of depreciation?
A) Rs. 1000
B) Rs. 2000
C) Rs. 3000
D) Rs. 5000
✅ ANSWER: A
Cost of the asset = Rs. 6,000
Salvage Value = Rs. 1,000
Total Depreciation Cost = Cost of asset – Salvage Value = 6000 – 1000 = Rs. 5000
Useful life of the asset = 5 years
Thus, annual depreciation cost = (Cost of asset – Salvage Cost)/Useful Life = 5000/5 = Rs. 1000.
Cost of the asset = Rs. 6,000
Salvage Value = Rs. 1,000
Total Depreciation Cost = Cost of asset – Salvage Value = 6000 – 1000 = Rs. 5000
Useful life of the asset = 5 years
Thus, annual depreciation cost = (Cost of asset – Salvage Cost)/Useful Life = 5000/5 = Rs. 1000.
Depreciable amount + Residual value of a fixed asset = ?
A) Depreciation expenses
B) Accumulated depreciation
C) Cost of the fixed asset
D) Future economic benefits of a fixed asset
✅ ANSWER: C
Depreciable amount + Residual value of a fixed asset = Cost of the fixed asset. Fixed assets are depreciated only to the extent of their depreciable amount, which equals cost minus the salvage value.
Depreciable amount + Residual value of a fixed asset = Cost of the fixed asset. Fixed assets are depreciated only to the extent of their depreciable amount, which equals cost minus the salvage value.
Cost incurred for the maintenance of shop is considered as
A) Deffered expense
B) Capital expenditure
C) Revenue expenditure
D) Preliminary expense
✅ ANSWER: C
Cost incurred for the maintenance of shop is considered as Revenue expenditure. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place.
Cost incurred for the maintenance of shop is considered as Revenue expenditure. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place.
Which of the following financial reports shows the profitability of a business?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of changes in equity
✅ ANSWER: A
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.
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.
Promissory note is prepared by
A) Drawer
B) Endorsee
C) Drawee
D) All of the above
✅ ANSWER: A
Promissory note is prepared by Drawer. Promissory note is prepared and signed by the a person / organisation ( borrower) while borrowing money from a lender.
Promissory note is prepared by Drawer. Promissory note is prepared and signed by the a person / organisation ( borrower) while borrowing money from a lender.
When capital is increased by an amount, it is recorded on the:
A) Left or credit side of the account
B) Right or debit side of the account
C) Right or credit side of the account
D) Left or debit side of the account
✅ ANSWER: C
When capital is increased by an amount, it is recorded on the Right or credit side of the account.
When capital is increased by an amount, it is recorded on the Right or credit side of the account.
Cash book is prepared by
A) Bank
B) Accountant of business
C) Manager of a company
D) Bank’s cashier
✅ ANSWER: B
Cash book is prepared by Accountant of business. A cash book is set up as a ledger in which all cash transactions are recorded according to date. It is a book of original entry and final entry.
Cash book is prepared by Accountant of business. A cash book is set up as a ledger in which all cash transactions are recorded according to date. It is a book of original entry and final entry.
The normal balance of asset account is
A) Credit balance
B) Debit balance
C) Cash balance
D) Neither debit nor credit balance
✅ ANSWER: B
The normal balance of asset account is Debit balance. Normal balance is the side where the balance of the account is normally found.
The normal balance of asset account is Debit balance. Normal balance is the side where the balance of the account is normally found.
Profit is a part of
A) Income
B) Owner’s capital
C) Assets
D) All of the above
✅ ANSWER: B
Profit is a part of Owner’s capital. When a company generates a profit and retains a portion of that profit after subtracting all of its costs, the owner’s equity generally rises.
Profit is a part of Owner’s capital. When a company generates a profit and retains a portion of that profit after subtracting all of its costs, the owner’s equity generally rises.