MGT101 MCQs by Asad Ali Shah

Q1. An accounting system is used by a business to:

1. Analyze transactions
2. Handle routine book-keeping tasks
3. Classify and summarize financial information
4. All of the given options

Correct answer: Analyze transactions

Q2. The assets which have a limited useful life are termed as:

1. Limited assets
2. Depreciate able assets
3. Unlimited assets
4. None of the given options

Correct answer: Depreciate able assets

Q3. Accountancy covers which of the following area(s):

1. Book-keeping
2. Accounting
3. Auditing
4. All of the given options

Correct answer: All of the given options

Q4. If a business pays rent in advance for 12 months, it will be treated as:

1. Prepaid expenses of business
2. Long term liability of business
3. Fixed assets of business
4. Current liability of business

Correct answer: Prepaid expenses of business

Q5. Which of the following transaction have NO affect on stockholders' equity?

1. Purchase of land on credit
2. Dividends to stockholders
3. Net loss
4. Investment in cash by stockholders

Correct answer: Dividends to stockholders

6. Which of the following account balance is shown on credit side of Trial

balance)

1. Cash account
2. Furniture account
3. Vehicle account
4. Capital account

Correct answer: Capital account

Q7. If you start with cash book balance (Dr.), which of the following item will be deducted in Bank Reconciliation Statement?

1. Any cheque drawn to creditor but not paid by bank
2. Interest credited by the bank in pass book
3. Cheque deposited but not credited by the bank
4. Dividend collected by bank on behalf of the customer

Correct answer: Any cheque drawn to creditor but not paid by bank

Q8. The cost of moving plant and machinery to a new site will be treated as:

1. Revenue expense
2. Capital expense
3. Administrative expense
4. Operating expense

Correct answer: Revenue expense

Q9. Which one of the following is NOT true about Capital Expenditure?

1. Creates future benefits
2. Incurred to acquire fixed assets
3. Incurred to increase the economic life of existing fixed assets
4. Reduce the profit of the concern

Correct answer: Reduce the profit of the concern

10. Consider the following: · If, Cost of machine = Rs.400, 000 · Useful life = 5 years · Residual value = Rs.25, 000

The depreciation of machine per year using straight line method is?

1. Rs. 160,000
2. Rs. 96,000
3. Rs. 75,000
4. Rs. 57,600

Correct answer: Rs. 75,000

Q11. .A decrease in value of a fixed asset due to age, wear and tear is known as:

1. Depreciation
2. Accumulated Depreciation
3. Appreciation
4. Written Down Value

Correct answer: Depreciation

Q12. In balance sheet fixed assets are shown at:

1. Cost price
2. Market value
3. Fair value
4. Written down value (WDV)

Correct answer: Written down value (WDV)

Q13. In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

1. Opening raw material inventory + Purchases – Ending raw material inventory
2. Opening raw material inventory - Purchases + Ending raw material inventory
3. Ending raw material inventory + Opening raw material inventory - Purchases
4. Ending raw material inventory + Opening raw material inventory + Purchases

Correct answer: Opening raw material inventory + Purchases – Ending raw material inventory