Accounting MCQs with Answers

Rose Company reported net income of $24,000, net sales of $400,000, and average assets of $600,000. Calculate the profit margin ratio.

1. 12%
2. 6%
3. 40%
4. 200%

A company makes a credit sale of $750 on June 13, terms 2/10, n/30, on which it grants a return of$50 on June 16. The amount received as payment in full on June 23 is:

1. $650
2. $685
3. $686
4. $700

The closing process involves separate entries to close: (1) expenses, (2) dividends, (3) revenues, and (4) income summary. The correct sequencing of the entries is:

1. (4), (3), (2), (1)
2. (1), (2), (3), (4)
3. (3), (1), (4), (2)
4. (3), (2), (1), (4)

An adjusting entry for prepaid expenses affects

1. Liabilities and assets
2. Liabilities and expenses
3. Assets and expenses
4. Assets and income

Which report gives a review on the profitability of a business?

1. Statement of changes in equit
2. Cash flow statement
3. Balance sheet
4. Income statement

An examination of the sources and uses of funds statement is part of:

1. A forecasting technique
2. A funds flow analysis.
3. A ratio analysis.
4. Calculations for the balance sheet

In Inventory Turnover calculation, what is taken in the numerator?

1. Closing Stock.
2. Opening Stock
3. Cost of Goods Sold,
4. Sales

Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be:

1. Decrease in Sales.
2. Increase in Dividend
3. If Increase in Expense
4. Increase in Costs of Goods Sold

A Current Ratio of Less than One means:

1. Share Capital > Current Assets
2. Current Liabilities < Current Assets
3. Current Assets < Current Liabilities
4. None of these

ABC Ltd. has a Current Ratio of 1.5: 1 and Net Current Assets of Rs. 5,00,000. What are the Current Assets?

1. Rs. 25,00
2. Rs. 15,00,000
3. Rs. 10,00,000,
4. Rs. 5,00,000