Financial Statements of a Company MCQ

Question 1

Cash Balance will be classified under –

A.Current Asset

B.Non-Current Asset

C.Current Liabilities

D.Non- Current Liabilities

SOLUTION

Solution : A

Cash Balance will be classified under Current Asset

Question 2

Under the accrual basis of accounting, revenues are recognised in the accounting period in which –

A.Revenues are earned

B.Cash is received

C.Either revenues are earned or cash is received

D.None of these

SOLUTION

Solution : A

Under the accrual basis of accounting, revenues are recognized in the accounting period in which revenues are earned.

Question 3

Goodwill is –

A.a current asset

B.an intangible fixed asset

C.a tangible fixed asset

D.an investment

SOLUTION

Solution : B

Goodwill is an intangible fixed asset.

Question 4

Stock is-

A.included in the category of fixed assts

B.an investment

C.a part of current assets

D.an intangible fixed asset

SOLUTION

Solution : C

Stock is a part of current assets.

Question 5

Loan taken from bank will be classified as –

A.Assets

B.Liabilities

C.Shareholders’ funds

D.None of these

SOLUTION

Solution : B

Loan taken from bank will be classified as liabilities

Question 6

Information about accounting policies assists financial readers in better interpreting a company’s financial statements. It is given in ___

A.Balance sheet

B.Statement of profit & loss

C.Notes to accounts

D.None of these

SOLUTION

Solution : C

It is given in notes to accounts.

Question 7

Patent is a/an:

A.Currrent Asset

B.Fictitous Asset

C.Tangible Asset

D.Intangible Asset

SOLUTION

Solution : D

Patent is an intangible asset

Question 8

Furniture is a/an:

A.Current Asset

B.Fictitous Asset

C.Tangible Fixed Asset

D.Intangible Asset

SOLUTION

Solution : C

Furniture is a tangible fixed asset

Question 9

Which of the following would not be a current asset?

A.Accounts Receivable

B.Land

C.Prepaid Insurance

D.Supplies

SOLUTION

Solution : B

Land is not a current asset, because land will NOT turn to cash within one year of the balance sheet date, or within the operating cycle if the operating cycle is longer than one year.

Question 10

Bills Receivable is a:

A.Current Asset

B.Fictitous Asset

C.Intangible Asset

D.Tangible Fixed Asset

SOLUTION

Solution : A

Bills Receivable is a current asset.