Friday, July 23, 2021

Class 12 Consumer Awareness Project Report on Advertisement Appeals of Liberty Shoes - Class 12 Business Studies Advertisement Project Report - Class 11 and 12 Advertisement project Report

 

Class 12 Business Studies Advertisement Project Report  - Class 11 and 12 Advertisement project Report on Advertisement Appeals of Liberty Shoes, AIDA Model, advantages and disadvantages of Advertisement, Various advertisement appeals

 

Table of Contents

Page number

Introduction to Promotion Mix

 

Elements of Promotion Mix

 

Advertising

 

Characteristics of Advertising

 

Advantages of Advertising

 

Disadvantages of Advertising

 

AIDA Model for Advertisement

 

Introduction to Advertisement Appeals

 

Types of Advertisement Appeals

 

Introduction of Liberty Shoes

 

Various types of appeals shown by different Print, TV & Radio advertisements of Liberty Shoes

 

Promotion Mix refers to the blend of several promotional tools used by the business to create, maintain and increase the demand for goods and services.

The fourth element of the 4 P’s of Marketing Mix is the promotion; that focuses on creating the awareness and persuading the customers to initiate the purchase. The several tools that facilitate the promotion objective of a firm are collectively known as the Promotion Mix.

The Promotion Mix is the integration of Advertising, Personal Selling, Sales Promotion, Public Relations and Direct Marketing. The marketers need to view the following questions in order to have a balanced blend of these promotional tools.

  • What is the most effective way to inform the customers?
  • Which marketing methods to be used?
  • To whom the promotion efforts be directed?
  • What is the marketing budget? How is it to be allocated to the promotional tools?

 Elements of Promotion Mix

1.	Advertising: The advertising is any paid form of non-personal presentation and promotion of goods and services by the identified sponsor in the exchange of a fee. Through advertising, the marketer tries to build a pull strategy; wherein the customer is instigated to try the product at least once. The complete information along with the attractive graphics of the product or service can be shown to the customers that grab their attention and influences the purchase decision. 2.	Personal Selling: This is one of the traditional forms of promotional tool wherein the salesman interacts with the customer directly by visiting them. It is a face to face interaction between the company representative and the customer with the objective to influence the customer to purchase the product or services. 3.	Sales Promotion: The sales promotion is the short term incentives given to the customers to have an increased sale for a given period. Generally, the sales promotion schemes are floated in the market at the time of festivals or the end of the season. Discounts, Coupons, Payback offers, Freebies, etc. are some of the sales promotion schemes. With the sales promotion, the company focuses on the increased short term profits, by attracting both the existing and the new customers. 4.	Public Relations: The marketers try to build a favorable image in the market by creating relations with the general public. The companies carry out several public relations campaigns with the objective to have a support of all the people associated with it either directly or indirectly. The public comprises of the customers, employees, suppliers, distributors, shareholders, government and the society as a whole. The publicity is one of the form of public relations that company may use with the intention to bring newsworthy information to the public. For example, Large Corporate such as Dabur, L&T, Tata Consultancy, Bharti Enterprises, Services, Unitech and PSU’s such as Indian Oil, GAIL, and NTPC have joined hands with Government to clean up their surroundings, build toilets and support the swachh Bharat Mission. 5.	Direct Marketing: With the intent of technology, companies reach customers directly without any intermediaries or any paid medium. The e-mails, text messages, Fax, are some of the tools of direct marketing. The companies can send the emails and messages to the customers if they need to be informed about the new offerings or the sales promotion schemes. E.g. The Shopperstop sends SMS to its members informing about the season end sales and extra benefits to the golden card holders.


1.   Advertising: The advertising is any paid form of non-personal presentation and promotion of goods and services by the identified sponsor in the exchange of a fee. Through advertising, the marketer tries to build a pull strategy; wherein the customer is instigated to try the product at least once. The complete information along with the attractive graphics of the product or service can be shown to the customers that grab their attention and influences the purchase decision.

2.   Personal Selling: This is one of the traditional forms of promotional tool wherein the salesman interacts with the customer directly by visiting them. It is a face to face interaction between the company representative and the customer with the objective to influence the customer to purchase the product or services.

3.   Sales Promotion: The sales promotion is the short term incentives given to the customers to have an increased sale for a given period. Generally, the sales promotion schemes are floated in the market at the time of festivals or the end of the season. Discounts, Coupons, Payback offers, Freebies, etc. are some of the sales promotion schemes. With the sales promotion, the company focuses on the increased short term profits, by attracting both the existing and the new customers.

4.   Public Relations: The marketers try to build a favorable image in the market by creating relations with the general public. The companies carry out several public relations campaigns with the objective to have a support of all the people associated with it either directly or indirectly. The public comprises of the customers, employees, suppliers, distributors, shareholders, government and the society as a whole. The publicity is one of the form of public relations that company may use with the intention to bring newsworthy information to the public. For example, Large Corporate such as Dabur, L&T, Tata Consultancy, Bharti Enterprises, Services, Unitech and PSU’s such as Indian Oil, GAIL, and NTPC have joined hands with Government to clean up their surroundings, build toilets and support the swachh Bharat Mission.

5.   Direct Marketing: With the intent of technology, companies reach customers directly without any intermediaries or any paid medium. The e-mails, text messages, Fax, are some of the tools of direct marketing. The companies can send the emails and messages to the customers if they need to be informed about the new offerings or the sales promotion schemes. E.g. The Shopperstop sends SMS to its members informing about the season end sales and extra benefits to the golden card holders.

Introduction to Advertising

Advertising is defined as any paid form of non-personal presentation and promotion of ideas, goods, and services by an identified sponsor. It is a way of mass communication. It is the most popular and widely practiced tool of market promotion. Major part of promotional budget is consumed for advertising alone. Various advertising media – television, radio, newspapers, magazines, outdoor means and so forth – are used for advertising the product.

Characteristics of advertising

i. Adverting is non-personal or mass communication. Personal contact is not possible.

ii. It is a paid form of communication.

iii. It is a one-way communication.

iv. Identifiable entity/sponsor-company or person gives advertising.

v. It is costly option to promote the sales.

vi. It can be reproduced frequently as per need.

vii. Per contact cost is the lowest.

Viii. Various audio-visual, print, and outdoor media can be used for advertising purpose.

ix. It is a widely used and highly popular tool of market promotion.

Advantages of Advertising

Following are the advantages of advertising:-

(1) Introduces a New Product in the Market:

Advertising plays significant role in the introduction of a new product in the market. It stimulates the people to purchase the product.

(2) Expansion of the Market:

It enables the manufacturer to expand his market. It helps in exploring new markets for the product and retaining the existing markets. It plays a sheet anchor role in widening the marketing for the manufacturer’s products even by conveying the customers living at the far flung and remote areas.

(3) Increased Sales:

Advertisement facilitates mass production to goods and increases the volume of sales. In other words, sales can be increased with additional expenditure on advertising with every increase in sale, selling expenses will decrease.

(4) Fights Competition:

Advertising is greatly helpful in meeting the forces of competition prevalent in the market. Continuous advertising is very essential in order to save the product from the clutches of the competitors.

(5) Enhances Goodwill:

Advertising is instrumental in increasing goodwill of the concern. It introduces the manufacturer and his product to the people. Repeated advertising and better quality of products brings more reputation for the manufacturer and enhances goodwill for the concern.

(6) Educates The Consumers:

Advertising is educational and dynamic in nature. It familiarises the customers with the new products and their diverse uses and also educates them about the new uses of existing products.

(7) Elimination of Middlemen:

It aims at establishing a direct link between the manufacturer and the consumer, thereby eliminating the marketing intermediaries. This increases the profits of the manufacturer and the consumer gets the products at lower prices.

(8) Better Quality Products:

Different goods are advertised under different brand names. A branded product assures a standard quality to the consumers. The manufacturer provides quality goods to the consumers and tries to win their confidence in his product.

(9) Supports The Salesmanship:

Advertising greatly facilitates the work of a salesman. The customers are already familiar with the product which the salesman sells. The selling efforts of a salesman are greatly supplemented by advertising. It has been rightly pointed out that “selling and advertising are cup and saucer, hook and eye, or key and lock wards.”

(10) More Employment Opportunities:

Advertising provides and creates more employment opportunities for many talented people like painters, photographers, singers, cartoonists, musicians, models and people working in different advertising agencies.

(11) Reduction in the Prices of Newspapers and Magazines Etc:

Advertising is immensely helpful in reducing the cost of the newspapers and magazines etc. The cost of bringing out a newspaper is largely met by the advertisements published therein.

(12) Higher Standard of Living:

The experience of the advanced nations shows that advertising is greatly responsible for raising the living standards of the people. In the words of Winston Churchil “advertising nourishes the consuming power of men and creates wants for better standard of living.” By bringing to the knowledge of the consumers different variety and better quality products, it has helped a lot in increasing the standard of living in a developing economy like India.

Disadvantages of Advertising

Advertising has the following disadvantages:

(1) Adds to Costs:

An organisation has to spend large amount on advertising. It increases the cost of the products. To meet this expenditure, price of the product is raised. No manufacturer pays for the advertising expenses out of his pocket. Advertising, therefore, leads to unnecessary rise in prices. In this reference it is said that advertising costs are passed on to the consumers in the form of high prices.

(2) Undermines Social Values:

Advertisement is a sort of day-dreaming for the people. These days it is taking the people away from reality and into the realm of artificiality. Through its medium people get information about new products. Only very few products are of any use for them. The brilliance of new products really gets on their nerves. They want to buy them but have no resources at their command. Consequently, they start feeling upset with their present status. Taking it as a social evil, it can be said that advertisement undermines social values.

(3) Confuses the Buyers:

Many a time distorted version of reality is shown in the advertising. Believing in advertising, consumers buy the product. On its use, they feel cheated.They come to realize later that the information given in the advertisement was something else whereas the actual product was quite different from it. Thus, people lose confidence in advertising because of wrong presentation. In this reference it is said that advertising confuses rather than helps.

(4) Encourages Sale of Inferior Products:

Every manufacturer projects his product as superior one in the advertisement. Therefore, the buyer is unable to decide as to which product is really good. Consequently, it is difficult to get good quality product even after paying a handsome price for it. If a seller gets good price for some inferior product, it becomes a habit with him. It affects other sellers also. Therefore, it is said that advertisement encourages the sale of inferior products.

 (5) Some Advertisement is in Bad Taste:

Many times, foul language and objectionable pictures are used in advertising in order to attract a particular class. They may be insulting to a particular class. It causes decay of social values.

Such kinds of advertising are generally opposed by the people as it hurts their feelings. In this reference it is said that some advertisements are in bad tastes.

AIDA Model for Advertisement

The AIDA model is just one of a class of models known as hierarchy of effects models or hierarchical models, all of which imply that consumers move through a series of steps or stages when they make purchase decisions. These models are linear, sequential models built on an assumption that consumers move through a series of cognitive (thinking) and affective (feeling) stages culminating in a behavioural stage (doing e.g. purchase or trial) stage.

The steps proposed by the AIDA model are as follows:

Attention –

The consumer becomes aware of a category, product or brand (usually through advertising)

Interest –

The consumer becomes interested by learning about brand benefits & how the brand fits with lifestyle

Desire –

The consumer develops a favorable disposition towards the brand

Action –

The consumer forms a purchase intention, shops around, engages in trial or makes a purchase

The AIDA model is just one of a class of models known as hierarchy of effects models or hierarchical models, all of which imply that consumers move through a series of steps or stages when they make purchase decisions. These models are linear, sequential models built on an assumption that consumers move through a series of cognitive (thinking) and affective (feeling) stages culminating in a behavioural stage (doing e.g. purchase or trial) stage. The steps proposed by the AIDA model are as follows:  Attention –  The consumer becomes aware of a category, product or brand (usually through advertising) Interest –  The consumer becomes interested by learning about brand benefits & how the brand fits with lifestyle Desire – The consumer develops a favorable disposition towards the brand Action –  The consumer forms a purchase intention, shops around, engages in trial or makes a purchase


Advertisement Appeal

Advertising Appeal is an igniting force which stimulates the customer mindset towards the product or services. It not the only factor in the marketing mix which initiates a consumer for buying the product but it is certainly one of the advertisers' most important creative strategy decisions involves the choice of an appropriate appeal.

Advertising appeals are designed in a way so as to create a positive image of the individuals who use certain products. Advertising agencies and companies use different types of advertising appeals to influence the purchasing decisions of people.

Types of Advertisement Appeals

1.   Rational or Informational Appeal

2.   Emotional Appeal

3.   Moral Appeal

4.   Other Advertisement Appeals

I. Rational or Informational Appeals

This is generally product oriented appeal, highlights the functional benefits like- quality, economy, value, or performance of a product. Following are different types of rational appeals:

Feature Appeal –

Advertisements based on such appeal are highly informative, provides information of product attributes or features that can be used as the basis for rational purchase decision. Technical and high involvement product often uses this appeal.

Competitive Advantage Appeal –

Such appeal is used to compare the product with the competitor's product directly or indirectly and advertiser try to present his product superior then competitor's product on one or more attributes.

Favorable Price Appeal –

Here price offer is considered as the dominant point of the message.

News Appeal –

Some type of news or announcements about product or company dominates the advertisement.

Product Popularity Appeal –

Product popularity is considered as the dominant point of advertisement by highlighting the increasing number of users of brand or the number who have switched to it.

High Quality –

Some products are preferred for their quality not merely because of their taste or style, such products are advertised by highlighting the quality attribute in advertisement.

Low price –

Many people prefer low priced goods. To target such audience products are advertised by highlighting the low price tag of the product.

Long Life –

Many consumers want product of durable nature that can be used for a long period, in advertisement of such product durability is the dominant point of the message.

Performance –

Many advertisements exhibit good performance of product.

Economy –

Many customers consider savings in operation and use of product, for example in case of automobile the mileage is considered while selecting the brand or model.

Scarcity –

Another appeal that is occasionally used is scarcity. When there is a limited supply of a product, the value of that product increases. Scarcity appeals urge consumers to buy a particular product because of a limitation.

Other Rational Appeals –

Other rational appeals include purity, more profits, time saving, multifunction, more production, regular supply and availability of parts, limited space required, artistic form, etc. that can make advertising effective.

II. Emotional Appeals

An emotional appeal is related to an individual’s psychological and social needs for purchasing certain products and services. Emotions affect all type of purchase decisions.

Types of emotional appeals are as follows:

Positive Emotional Appeal –

Positive emotions like- humour, love, care, pride, or joy are shown in advertisements to appeal audience to buy that product. For example- Jonson and Jonson baby products.

Negative Emotional Appeal –

This includes fear, guilt, and shame to get people to do things they should or stop.

Fear –

Fear is an emotional response to a threat that expresses some sort of danger. Ads sometimes use fear appeals to evoke this emotional response and arouse consumers to take steps to remove the threat. For example- Life Insurance

Anxiety –

Most people try to avoid feeling anxious. To relieve anxiety, consumers might buy mouthwash, deodorant, a safer car, get retirement pension plan.

Humour –

Humour causes consumer to watch advertisement, laugh on it, and most important is to remember advertisement and also the product connected with humour. For example- Happydent, and Mentos.

III. Moral Appeals

Moral appeals are directed to the consumers’ sense of what is right and proper. These are often used to exhort people to support social and ethical causes. Types of Moral Appeal are as follows:

  • Social awakening and justice
  • Cleaner and safe environment
  • Equal rights for women
  • Prohibition of drugs and intoxication
  • Adult literacy
  • Anti-smuggling and hoarding
  • Protection of consumer rights and awakening

Other Type of Appeals

Reminder Appeal –

Advertising using reminder appeal has the objective of building brand awareness. For example- IPO

Teaser Advertising –

Advertisers introducing a new product often use this appeal. It is designed to build curiosity, interest and excitement about a product or brand. For example- Ponds ad of Saif & Priyanka

Musical Appeals –

Music is an extremely important component in advertising. It captures the attention of listeners. For example- Docomo, Airtel

Comparison Appeal –

In this appeal a brand’s ability to satisfy consumers is demonstrated by comparing its features to those of competitive brands. For example-Tide & Surf

Direct Appeals –

Direct appeals clearly communicate with the consumers about a given need. These extol the advertised brand as a product which satisfies that need.

Indirect Appeals –

Indirect appeals do not emphasize a human need, but allude to a need.

Sex Appeal

Sex and nudity have always sold well. Sexuality, sexual suggestiveness, over sexuality or sensuality raises curiosity of the audience and can result in strong feelings about the advertisement. It can also result in the product appearing interesting. However use of sex in types of advertising appeals can have a boomerang effect if it is not used carefully. It can interfere with the actual message of the advertisement and purpose of the product and can also cause low brand recall. If this is used then it should be an integral part of the product and should not seem vulgar. The shift should be towards sensuality.

Scarcity Appeal

Scarcity appeals are based on limited supplies or limited time period for purchase of products and are often used while employing promotional tools including sweepstakes, contests etc.

Masculine Feminine Appeal

It is used in cosmetic or beauty products and also clothing. This type of appeal aims at creating the impression of the perfect person. The message is that the product will infuse the perfection or the stated qualities in you.

Brand Appeal

This appeal is directed towards people who are brand conscious and wish to choose particular products to make a brand statement.

Snob Appeal

This appeal is directed towards creating feeling of desire or envy for products that are termed top of the line or that have considerable qualities of luxury, elegance associated with them.

Adventure Appeal

This appeal is directed towards giving the impression that purchasing a product will change the individual’s life radically and fill it with fun, adventure and action.

Romance Appeal

These advertisements display the attraction between the sexes. The appeal is used to signify that buying certain products will have a positive impact on the opposite sex and improve your romantic or love life. Fragrances, automobiles and other products use these types of advertising appeals.

Youth Appeal

Advertisements that reflect youth giving aspects or ingredients of products use these types of appeals. Cosmetic products in particular make use of these appeals.

Endorsement

Celebrities and well known personalities often endorse certain products and their pitching can help drive the sales.

Play on Words

Advertisements also make effective use of catch phrases to convey the message. Such appeals help in brand recognition and recall and can be quite popular with the youth in particular.

Statistics

Advertisements also use statistics and figures to display aspects of the product and its popularity in particular.

Plain Appeal

These advertisements use every day aspects of life and appeal to ordinary people regarding the use of a product or service.

Bandwagon Appeal

This type of advertising appeal is meant to signify that since everybody is doing something you should be a part of the crowd as well. It appeals towards the popularity aspect or coolness aspect of a person using a particular product or service.

Introduction of Liberty Shoes

Liberty Shoes Limited (LSL) is an Indian shoe company, based in Karnal, Haryana. Established in 1954, the company presently produces 50,000 pairs of footwear a day through its six manufacturing units, sold through 6,000 multi-brand outlets and 350 exclusive showrooms, and has a presence in 25 countries, with 50 showrooms outside India. Adesh Gupta became the CEO of LSL on 16 July 2001.

With over 60 years of experience, Liberty shoes Ltd has established itself as a brand that people can trust. The brand with a well known and exalted positioning in metropolitan cities is persistently expanding in tier 2 and tier towns and cities. It has won hearts of millions with its trust, quality and loyalty. Throughout its journey, it has proved that it is all about the people and their needs. The brand loyalists know that owning Liberty Footwear is not a seasonal affair but it is a bond that stands through the tests of time. We are about people and we stand by it.

 

LIBERTY SHOES OWNER AADESH GUPTA            

Various types of appeals shown by different Print, TV & Radio advertisements of Liberty

Advertisement I.



This advertisement focuses to lure youth to buy liberty products. The various appeals involved in this advertisement includes –

1.   Romance appeal

This advertisement signifies that buying Liberty shoes will have a positive impact on the opposite sex and improve your romantic or love life.

2.   Youth appeal

Since this advertisement is endorsed by two youths. So it is appealing to youth to buy their products.

3.   Adventure Appeal

This advertisement signifies that purchasing Liberty shoes will change the individual’s life radically and fill it with fun, adventure and action

4.   Masculine Feminine Appeal

This advertisement aims at creating the impression of the perfect person. The message is that the product will infuse the perfection or the stated qualities in you.

5.   Positive Emotional Appeal 

This advertisement also demonstrates emotions like love, pride and joy a appeal audience to buy that product.

Advertisement II



This advertisement includes following appeals:-

1.   Teaser Advertising 

This advertisement is designed to build curiosity, interest and excitement about its new range of product named as Avengers.

2.   Brand Appeal

This advertisement has a brand appeal as it is directing people who are Liberty brand conscious and wish to choose particular products to make a brand statement.

3.   Snob Appeal

Since this advertisement is reflecting new product range of Liberty thus creating feeling of desire to opt it as it is termed as top of the line and has considerable qualities of luxury, elegance associated with it.

4.   Adventure Appeal

This advertisement is also giving the impression that purchasing a product will change the individual’s life radically and fill it with fun, adventure and action.

5.   Performance Appeal

This advertisement exhibits good performance of product.

Advertisement III



The various types of appeals included in this advertisement includes –

Favorable Price Appeal –

This advertisement clearly demonstrates the price of the product which is favorable for the customers and also dominant point of this advertisement.

Low price 

Many people prefer low priced goods. To target such audience this advertisement has been made to highlight the low price tag of the product.

Economy –

This advertisement also shows that people can own a branded product at an economical rate which is durable in nature too.

Direct Appeals –

Many people want to buy branded product but due to its high price they are not able to do so. This advertisement has a direct appeal to such people to own liberty low range shoes.

Advertisement IV


Source: https://youtu.be/ZxTD_iG0zkM

The various appeals included in this TV advertisement of Liberty shoes Includes:-

Masculine Feminine Appeal

This advertisement aims at creating the impression of the perfect person. The message is that the product will infuse the perfection or the stated qualities in you. It also demonstrates that Liberty has product range for both males and females.

Snob Appeal

This advertisement reflects considerable qualities of luxury and elegance associated with the products.

Adventure Appeal

This advertisement is directed towards giving the impression that purchasing a product will change the individual’s life radically and fill it with fun, adventure and action.

Youth Appeal

The advertisement is focused on youths and teenagers. All the actors in the advertisement are youths.

Endorsement Appeal

Hrithik Roshan is endorsing liberty shoes in this advertisement.

Musical Appeals –

The video comprise of musical song completing focusing on modern, young & dynamics people creating a sense of curiosity for music lovers

Positive Emotional Appeal –

Positive emotions like- humour, love, care, pride, or joy is shown in advertisements to appeal audience to buy Liberty shoes.

Feature Appeal –

This advertisement shows various ranges of Liberty shoes having different features and purpose that can be used as the basis for rational purchase decision.

Bibliography

  www.libertyshoes.com

  www.google.com

  https://youtu.be/ZxTD_iG0zkM

Accountancy Mcqs - Financial Accounting and accounts mcqs multiple choice Questions for Class 11, 12, BBA, B.Com, MBA, CA, UGC NET, ACCA & UPSC

 

Accountancy / Financial Accounting MCQs Multiple choice Questions - Class 11, 12, BBA, MBA, B.Com, CA CPT, ACCA, UGC NET Accountancy / Financial Accounting Multiple choice Questions 10 sets

Accountancy / Financial Accounting MCQ Set 1

 1) The Basic accounting equation is

A)  Asset=Expense +Income

B)  Assets=Cash+Capital

C)  Assets=Capital+Liabilities

D)  Assets=Expenses+Capital

2) Find out the value of assets if: Liabilities=$5000 and Capital=$1000

A)  $4000

B)  $6000

C)  $7000

D)  $3000

3) Calculate the amount of cash if: Total assets=$10,000 Total liabilities=$10,000 Total Capital=$5000

A)  $6000

B)  $10,000

C)  $5000

D)  $1000

4) Capital increases if ______ increases

A)  Expenses

B)  Drawings

C)  Interest on capital

D)  Revenue

5) Capital of a business decreases if there is an increase in

A)  Drawings

B)  Income

C)  Gains

D)  Fresh capital

6) If the total liabilities of a business decrease by $5000 what will be the effect on total asset? (assuming the amount of capital remain same)

A)  Remain constant

B)  Decrease by $5000

C)  Increase by $5000

D)  Increase by $10,000

7) If the business's owner withdraws cash for his/her personal use what will be the effect on capital?

A)  Increase in capital

B)  Remain the same

C)  Decrease in capital

D)  No effect on capital

8) Net income equal to Revenues minus

A)  Gains

B)  Depreciation

C)  Expenses

D)  Capital expenditures

9) Collection of account receivable will

A)  Increase assets and decrease assets

B)  Increase assets and decrease liabilities

C)  Increase assets and increase capital

D)  Increase assets and increase cash

10) Payment of expenses will ______ the assets

A)  Increase

B)  Reduce

C)  apportion

D)  Overstate

11) Which of the following is the practical implementation of the accounting equation?

A)  Cash flow statement

B)  Income statement

C)  Statement of changes in equity

D)  Statement of financial position

12) Which of the following accounting equation is correct?

A)  Cash+Other assets=Capital-Liabilities

B)  Capital+ Liabilities=Assets+Income

C)  Assets-Liabilities=Capital

D)  Assets+Capital=Liabilities

13) Fresh capital introduction will increase

A)  Assets and liabilities

B)  Assets and equity

C)  Liabilities and equity and bank balance

D)  Capital and liabilities

14) Cash received for services rendered will

A)  Increase cash and liability

B)  Increase equity and liability

C)  Increase fixed assets and cash

D)  Increase cash and equity

15) Which of following best describes the increase in equity expands_______

A)  Business operations

B)  cash outflows

C)  Inflows of cash

D)  Appropriation expenses

16) If Cash=$1000 inventories=$4000 Debtors=$5000 fixed assets=? Capital+Liabilities=$15000 What is the Amount of total assets?

A)  $5000

B)  $10,000

C)  $15,000

D)  $20,000

17) Depreciation decreases

A)  Liabilities

B)  Cash

C)  Bank

D)  Capital

18) An increase in provision for bad debt will

A)  Decrease net income

B)  Decrease liabilities

C)  Increase net income

D)  Increase liabilities

19) Current assets - Current liabilities=?

A)  Capital

B)  Absorbed capital

C)  Net assets

D)  Net working capital

20) Assets-Liabilities=?

A)  Cash

B)  Equity

C)  Net income

D)  Net expenses

1.               c

2.               b

3.               c

4.               d

5.               a

6.               b

7.               c

8.               c

9.               a

10.         b

11.         d

12.         c

13.         b

14.         d

15.         a

16.         a

17.         d

18.         a

19.         d

20.         b

Accountancy / Financial Accounting MCQ Set 2

1) The process of recording is done

A)  Two times a year

B)  once a year

C)  Frequently during the accounting period

D)  At the end of a accounting period

2) General journal is a book of _______ entries

A)  First

B)  Original

C)  Secondary

D)  Generic

3) The process of recording transactions in different journals is called

A)  Posting

B)  Entry making

C)  Adjusting

D)  Journalizing

4) Every business transaction affects at least ________ accounts

A)  One

B)  Two

C)  Three

D)  Infinite

5) Discount allowed is a kind of deduction from

A)  Account payable

B)  Account receivable

C)  Cash account

D)  Discount account

6) The other name of journal is

A)  Ledger

B)  T account

C)  Day book

D)  Cash book

7) A journal entry in which two or more account is debited or credited is referred as

A)  Journal entry

B)  Multi entry

C)  Additional entry

D)  Compound entry

8) The term 2/10-n/30 implies that ______ % discount will be given if the payment is made within _____ days or full amount is receivable within 30 days

A)  2,10

B)  10,2

C)  10,30

D)  3,15

9) Goods returned by customer should be debited to which of the following accounts?

A)  Sales income account

B)  Sales account

C)  Return inward account

D)  Expenses account

10) Discount allowed is

A)  Expense of business

B)  Income of business

C)  Loss of business

D)  Abnormal loss of business

11) _________ is the evidence that a transaction took place

A)  Source documents

B)  Ledger

C)  Bonds

D)  Journals

12) Which of the following will be debited if a business purchases goods on credit?

A)  Cash

B)  Debtor

C)  Creditor

D)  Purchases

13) Which of the following accounts will be debited if the business's owner withdraws cash from business for his personal use?

A)  Drawings

B)  Cash

C)  Business

D)  Stock

14) Journals are also referred as

A)  Book of entries

B)  Book of original entries

C)  T account

D)  Books of economic event

15) The standard format of journal does not include which of the following?

A)  Assets column

B)  Date column

C)  Description column

D)  Amount column

16) In which of the following orders data is entered in journal?

A)  Alphabetical order

B)  Numeric order

C)  Bullets order

D)  Chronological order

17) Which of the following accounts will be credited if a company purchases building for cash?

A)  Capital account

B)  Fixed assets account

C)  Building account

D)  Cash account

18) Discount for quick repayment of debt is normally referred as

A)  Trade discount

B)  Prompt payment discount

C)  Cash discount

D)  Bulk discount

19) The first step in accounting process is

A)  Recording the transaction

B)  Identifying the transaction

C)  Posting the transaction

D)  Preparing the source documents

20) A chart of accounts generally start with which of the following types of accounts?

A)  Assets accounts

B)  liability accounts

C)  Cash accounts

D)  Revenue accounts

1.               C

2.               B

3.               D

4.               B

5.               B

6.               C

7.               D

8.               A

9.               C

10.         A

11.         A

12.         D

13.         A

14.         B

15.         A

16.         D

17.         D

18.         C

19.         B

20.         A

Accountancy / Financial Accounting MCQ Set 3

1) Which of the following specialised journals records "goods returned by customers"?

A)  Purchase journal

B)  Sales journal

C)  Purchases return journal

D)  Sales return journal

2) Sales on credit is recorded in which of the following journal?

A)  Purchase journal

B)  Sales journal

C)  Purchases return journal

D)  Sales return journal

3) Transactions that a business doesn't record in any specialised journal are recorded in which of the following journals or day books?

A)  Cash payments journal

B)  Cash receipts journal

C)  Purchases return journal

D)  General journal

4) Another name of journal is

A)  Specialized journal

B)  Day book

C)  Cash book

D)  Record book

5) Which of the following specialised journals will record "goods returned by the business"?

A)  Purchase journal

B)  Sales journal

C)  Purchases return journal

D)  Sales return journal

6 Sales and purchase journal don't record

A)  Credit sales

B)  Credit purchases

C)  Credit sales and purchases

D)  Cash sales and purchases

7) Cash received from debtor is recorded in which of the following specialized journals?

A)  Purchase journal

B)  Sales journal

C)  Cash receipts

D)  Cash payments journal

8) Which of the following is a type of cash receipt journal + cash payment journal?

A)  Bank statement

B)  Statement of cash flow

C)  Cash book

D)  Cash documents

9) Cash purchases is recorded in which of the following specialized journals?

A)  Purchase journal

B)  Sales journal

C)  Purchases return journal

D)  Cash payments journal

10) A brief explanation recorded below every entry in general journal is commonly known as

A)  Narration

B)  Explanation

C)  Summary

D)  Other information

11) Credit purchase of plant and machinery is recorded in which of the following specialized journals?

A)  General journal

B)  Cash journal

C)  Purchase journal

D)  Purchase return journal

12) Debit note is the basis for recoding a transaction in which of the following journals?

A)  General journal

B)  Cash journal

C)  Purchase journal

D)  Purchase return journal

13) "Sale of old furniture" will be recorded in which of the following specialised journals?

A)  Purchase journal

B)  Sales journal

C)  General journal

D)  Cash receipt journal

14) Credit note is the basis for recording a transaction in which of the following specialized journals?

A)  Purchase journal

B)  Sales return journal

C)  General journal

D)  Cash receipt journal

15) Specialized journals are more adequate for which type of businesses?

A)  Small businesses

B)  Big businesses

C)  Sole proprietorship

D)  Partnership

16) Which of the following is known as an evidence that a transaction took place?

A)  Cash receipts journal

B)  General journal

C)  Source document

D)  Cash book

17) "Business paid rent amounting to $100" which of the following specialized journals records this transaction?

A)  Cash receipts journal

B)  Cash payments journal

C)  Sales journal

D)  Purchase journal

18) Credit memo or credit note No. is entered in which of the following journal?

A)  General journal

B)  Cash journal

C)  Purchase journal

D)  Sales return day book

1.   D

2.   B

3.   D

4.   B

5.   C

6.   D

7.   C

8.   C

9.   D

10.         A

11.         A

12.         A

13.         C

14.         B

15.         B

16.         C

17.         B

18.         A

Accountancy / Financial Accounting MCQ Set 4

1) Trial balance is prepared to check accuracy of

A)  Ledger accounts balances

B)  Balance sheet balances

C)  Income statement balances

D)  Cash flow statement balances

2) If a transaction is completely omitted from the books of accounts, will it affect the agreement of a trial balance?

A)  Yes

B)  No

C)  Transactions can't be omitted

3) ________ is the common base for preparing a trial balance

A)  Ledger accounts

B)  General Journal

C)  Specialized journals

D)  Balance sheet

4) Which of the following is true about a trial balance?

A)  It lists down the balances of accounts

B)  It lists down the balances of a balance sheet

C)  It is a kind of financial statement

D)  It is not a part of accounting cycle

5) Debit balance = Credit balance in a trial balance indicates that

A)  No error in recording transactions

B)  No error in posting entries to ledger accounts

C)  Account balances are correct

D)  Mathematically Capital+Liabilities=Assets

6) Trial balance is commonly prepared

A)  Frequently during the year

B)  At the end of an accounting period

C)  At the end of a month

D)  At the end of a year

7) Which of the following will affect the agreement of a trial balance?

A)  Complete omission of a transaction

B)  Partial omission of a transaction

C)  Error of principle

D)  Compensating errors

8) If debit balances = credit balances, trial balance only shows or check the ____________ and it does not indicate that no errors were made during recording and posting

A)  Arithmetic accuracy

B)  Errors of commission

C)  Omissions of economic events

D)  Understatements of balances

9) Which of the following account with normal balance is shown at the debit side of a trial balance?

A)  Rent income account

B)  Creditors account

C)  Unearned income account

D)  Cash account

10) Which of the following account with normal balance is shown at the credit side of a trial balance?

A)  Cash account

B)  Bank account

C)  Equipment account

D)  Accrued expenses account

11) The closing balance of petty cash book is considered as

A)  Liability

B)  Asset

C)  Expenses

D)  Income

12) Payment of rent expenses is recorded on which side of cash book?

A)  Receipts

B)  Payments

C)  Income

D)  Expense

13) An entry which is made on both sides of a cash book is called

A)  Cash entry

B)  Contra entry

C)  Payment entry

D)  Compound entry

14) A cash book with cash, bank and discount column is commonly referred as

A)  Cash book

B)  Two columns cash book

C)  Three columns cash book

D)  Petty cash book

15) Cash book records

A)  Cash payments

B)  Cash receipts

C)  Cash payments and cash receipts

D)  Neither cash payments nor cash receipts

16) Cash discount is allowed on _______ repayment of debt

A)  Lump sum

B)  Prompt

C)  Actual

D)  None of them

17) Cash book is prepared by

A)  Bank

B)  Accountant of business

C)  Manager of a company

D)  Bank's cashier

18) The most common imprest system is the ________ system

A)  petty cash

B)  Cash book

C)  Cash receipt

D)  Discount

19) Discount received is recorded on which of the following side of a cash book?

A)  Receipts

B)  Payments

C)  Incomes

D)  Expenditures

20) Drawings by owner of business are generally recorded on which of the following side of a cash book?

A)  Receipts

B)  Payments

C)  Incomes

D)  Expenditures

21) Introduction capital by owner of business is recorded on which side of a cash book?

A)  Receipts

B)  Payments

C)  Incomes

D)  Expenditures

22) Cash book with cash and discount column is mostly referred as

A)  Simple cash book

B)  Two column cash book

C)  Three column cash book

D)  Petty cash book

23) A cash book that is used to record the small payments of cash is generally referred as

A)  Simple cash book

B)  Two column cash book

C)  Three column cash book

D)  Petty cash book

24) A simple or one column cash book usually has which of the following main columns?

A)  Bank

B)  Payments

C)  Discount

D)  Cash

25) Purchase of office equipment for cash will be recorded on which of the following sides of a cash book?

A)  Receipts

B)  Payments

C)  Incomes

D)  Expenditures

26) Postdated checks are considered as

A)  Cash

B)  Bank balance

C)  Accounts receivable

D)  Cash reserve

27) Postage stamps on hand are considered as

A)  Bank

B)  Prepaid expenses

C)  Accounts receivable

D)  Creditor

28) Petty cash fund is supposed to be replenished

A)  Every day

B)  Every half year

C)  Every year

D)  At the end of every accounting period

29) Which of the following is generally not the party to a check?

A)  Payee

B)  Payer

C)  Bank

D)  Seller

30) A credit balance in cash book indicates

A)  Bank balance

B)  Cash at bank

C)  Bank overdraft

D)  Bank underdraft

1.   A

2.   B

3.   A

4.   A

5.   D

6.   B

7.   B

8.   A

9.   D

10.         D

11.         B

12.         B

13.         B

14.         C

15.         C

16.         B

17.         B

18.         A

19.         B

20.         B

21.         A

22.         B

23.         D

24.         D

25.         B

26.         C

27.         B

28.         D

29.         D

30.         C

 Accountancy / Financial Accounting MCQ Set 5

1) Transferring entries from journal to ledger account is commonly known as

A)  Recording

B)  Transferring

C)  Posting

D)  Entry making

2) An account records the ___________ in the balance of an item

A)  Increase

B)  Decrease

C)  Increase or decrease

D)  Appreciation

3) If credit side of a bank account is greater than the debit side, it indicates which of the following?

A)  Bank overdraft

B)  Cash at bank

C)  Bank balance

D)  Current Asset

4) If debit side of a bank account is greater than credit side it indicates which of the following?

A)  Cash at bank

B)  Bank understatement

C)  Bank overdraft

D)  Balance overstatement

5) _________ will be credited if goods are given as charity

A)  Cash

B)  Charity

C)  Purchases

D)  Sales

6) Which of the following is known as the base for preparing trial balance?

A)  Journal

B)  Cash account

C)  Ledger account

D)  Balance sheet

7) If debit balance is greater than creadit balance then the account blance will be:

A)  Credit balance

B)  Debit and credit balance

C)  Cash balance

D)  Debit balance

8) The normal balance of capital account is

A)  Credit balance

B)  Debit balance

C)  Cash balance

D)  Neither debit nor credit balance

9) The normal balance of asset account is

A)  Credit balance

B)  Debit balance

C)  Cash balance

D)  Neither debit nor credit balance

10) The normal balance of liability account is

A)  Debit balance

B)  Credit balance C)  Cash balance

D)  Neither debit nor credit balance

11) Which of the following statements is incorrect regarding capital account?

A)  Debit increases the capital account balance

B)  Credit increases the capital account balance

C)  Fresh capital increases the capital account balance

D)  Net income increases the capital account balance

12) Which of the following is the normal balance of a rent expense account?

A)  Credit balance

B)  Cash balance

C)  Overdraft

D)  Debit balance

13) Revenue and expense accounts are referred as

A)  Nominal accounts

B)  Real account

C)  Cash accounts

D)  Banks account

14) The real accounts are accounts of Assets, liabilities and ________

A)  Expenses

B)  Revenues

C)  Capital

D)  Drawing

15) Building account is classified as _________ account

A)  Nominal

B)  Real

C)  Cash

D)  Capital

16) Office equipments account is classifed as _________ account

A)  Nominal

B)  Real

C)  Cash

D)  Capital

17) ___________ helps business to classify transactions according to their nature

A)  General journal

B)  Real accounts

C)  Ledger accounts

D)  Cash accounts

18) Which of the following is a real account?

A)  Office equipment

B)  Rent expenses

C)  Rent income

D)  Insurance expense

19) Which of the following accounts are closed at the end of an accounting period?

A)  Nominal accounts

B)  Balance sheet accounts

C)  Real accounts

D)  None of them

20) Which of the following is the closing balance of a ledger account?

A)  Blance c/d

B)  Balance b/d

C)  Balance e/d

D)  Balance f/c

1.   C

2.   C

3.   A

4.   A

5.   C

6.   C

7.   D

8.   A

9.   B

10.         B

11.         A

12.         D

13.         A

14.         C

15.         B

16.         B

17.         C

18.         A

19.         A

20.         A

 Accountancy / Financial Accounting MCQ Set 6

1) Favourable balance of cash book implies that

A)  Credit balance of cash book

B)  Debit balance of cash book

C)  Bank overdraft

D)  Adjusted balance of cash book

2) A cash deposit made by business appears on the bank statement as _______ balance

A)  Debit

B)  Credit

C)  Expenses

D)  Liability

3) Bank reconciliation statement is the comparison of a bank statement (sent by bank) with the _________ (prepared by business)

A)  Cash receipt journal

B)  Cash payment journal

C)  Cash book

D)  Financial statements

4) A check returned by bank marked "NSF" means that

A)  Bank can't verify your identity

B)  There are not sufficient funds in your account

C)  Check has been forged

D)  Check can't be cashed being illegal

5) In the Bank reconciliation statement "Deposit in transit" is usually

A)  Subtracted from bank balance

B)  Added to bank balance

C)  Added to Cash book balance

D)  Subtracted from cash book balance

6) Bank reconciliation statement is prepared by

A)  Accountant of the business

B)  Manager of the business

C)  Controller of the bank

D)  Accountant of the bank

7) Which of the following error results in unadjusted cash book balance?

A)  Outstanding checks

B)  Unpresented checks

C)  Deposit in transit

D)  Omission of Bank charges

8) Bank charges amounting to $5000 was not entered in the cash book. Identify the correct adjustment in cash book

A)  Bank charges will be debited in cash book

B)  Bank charges will be added to cash book balance

C)  Bank charges will be credited in cash book

D)  Bank charges need no adjustment in cash book

9) Unpresented checks also referred as

A)  Uncollected checks

B)  Uncredited checks

C)  Outstanding checks

D)  Bounced checks

10) ________ are checks that are issued by the business but not yet presented to bank

A)  Uncollected checks

B)  Uncredited checks

C)  Outstanding checks

D)  Bounced checks

Bank reconciliation statement MCQs

11) _________ Checks that are presented to bank but not yet credited by the bank

A)  Unpresented checks

B)  Uncredited checks

C)  Outstanding checks

D)  Bounced checks

12) Uncollected checks also referred as

A)  Unpresented checks

B)  Uncredited checks

C)  Outstanding checks

D)  Bounced checks

13) Favourable balance of bank statement implies that

A)  Credit balance

B)  Debit balance

C)  Bank overdraft

D)  Adjusted balance

14) Standing orders are ________

A)  Credited in the cash book

B)  Debited in the cash book

C)  Entered in the bank statement

D)  Entered in the petty cash balance

15) A company was entered in hire purchase agreement and had to pay $1000 per month.Three payments were made via bank account but no entry was found in cash book. Identify the correct adjustment in cash book

A)  $1000 will be added to cash book balance

B)  $2000 will be deducted from cash book balance

C)  $3000 will be added to cash book balance

D)  $3000 will be subtracted from cash book balance

16) $5000 deposited in bank account was entered twice in the cash book. Identify the correct adjustment in cash book

A)  $5000 will be credited

B)  $5000 will be debited

C)  $10,000 will be credited

D)  $10,000 will be debited

17) Bank sent debit advice of $500 to company being interest on overdraft. It wasn't entered in cash book. Identify the correct adjustment in cash book

A)  $500 will be debited

B)  $500 will be credited

C)  Non-adjustable

D)  $1000 will be subtracted

18) In bank reconciliation statement the amount of outstanding checks is added to ________ balance of cash book

A)  Adjusted

B)  Unadjusted

C)  Understated

D)  Overstated

19) Balance as per cash book(adjusted)=$1000, Unpresented checks=$2000, Uncredited checks=$500, Deposit in transit=$500. Compute the balance as per bank statement

A)  $2000

B)  Zero

C)  $3000

D)  $2500

20) A discount of $2000 was given to a supplier on his prompt repayment of debt but the cashier entered the gross amount in cash book. What should be the adjustment in cash to work out the correct balance of cash book?

A)  $2000 will be debited in cash book

B)  $2000 will be credited in cash book

C)  $4000 will be debited in cash book

D)  $4000 will be credited in the cash book

1.   B

2.   B

3.   C

4.   B

5.   B

6.   A

7.   D

8.   C

9.   C

10.         C

11.         B

12.         B

13.         A

14.         A

15.         D

16.         A

17.         B

18.         A

19.         A

20.         B

Accountancy / Financial Accounting MCQ Set 7 

1)  Accrued expenses are considered as

A)  Asset

B)  Liability

C)  Gain

D)  Income

2) Prepaid expenses are regarded as

A)  Asset

B)  Liability

C)  Loss

D)  Capital

3) Which of the following adjusting double entries is correct for Unearned income?

A)  DEBIT= Income, CREDIT= Unearned income

B)  DEBIT= Unearned income, CREDIT= Income

C)  DEBIT= Cash, CREDIT= Unearned income

D)  DEBIT= Income, CREDIT= Cash

4) Earned but not yet received income is treated as

A)  Asset

B)  Liability

C)  Loss

D)  Capital

5) Which of the following adjusting double entries is correct for accrued expenses?

A)  DEBIT= Expenses, CREDIT= Accrued expenses

B)  DEBIT= Accrued expenses, CREDIT= Expenses

C)  DEBIT= Cash, CREDIT= Accrued expenses

D)  DEBIT= Expenses, CREDIT= Cash

6) Which of the following adjusting double entries is correct for Prepaid expenses?

A)  DEBIT= Expenses, CREDIT= Prepaid expenses

B)  DEBIT= Prepaid expenses, CREDIT= Expenses

C)  DEBIT= Cash, CREDIT= Prepaid expenses

D)  DEBIT= Expenses, CREDIT= Cash

7) Unearned income is classified as

A)  Asset

B)  Liability

C)  Loss

D)  Capital

8) Which of the following adjusting double entries is correct for earned income?

A)  DEBIT= Income, CREDIT= Earned income

B)  DEBIT= Earned income, CREDIT= Income

C)  DEBIT= Cash, CREDIT= Earned income

D)  DEBIT= Income, CREDIT= Cash

9) Failure to make adjusting entries for accrued income results in

A)  Overstatement of expenses

B)  Understatement of expenses

C)  Understatement of capital

D)  Overstatement of income

10) Identify the consequences of not making adjustment entry for accrued expense

A)  Overstatement of liabilities

B)  Understatement of liabilities

C)  Overstatement of expenses

D)  Understatement of capital

11) An adjusting entry for prepaid expenses affects

A)  Assets and expenses

B)  Assets and income

C)  Liabilities and expenses

D)  Liabilities and assets

12) Adjusting entries convert cash based account into _________ based accounting

A)  Capital

B)  Asset

C)  Accrual

D)  Prepaid

13) An unearned income adjusting entry affects

A)  Asset and liabilities

B)  Cash and income

C)  Income and liabilities

D)  Cash and liabilities

14) A business paid 3 month rent amounting to $3000 out of this amount one month rent pertains to the next accounting period. Identify the correct amount prepaid expense

A)  $3000

B)  $1000

C)  $2000

D)  $4000

15) Adjusting entries help allocating incomes and expenses to their ________

A)  Cash balances

B)  Appropriate accounting periods

C)  Credit balances

D)  Received or paid cash balances

16) A customer paid you $100,000 for some construction work. However, at the end of your accounting period only 1/4 of work was completed. What amount of income should be shown in income statement?

A)  100,000

B)  50,000

C)  10,000

D)  25,000

17) A business paid $5000 for technical services but used up the services for only $2000 until the end of its accounting period. The remaining $3000 would be referred as

A)  Accrued expenses

B)  Accrued income

C)  Prepaid income

D)  Prepaid expenses

18) Revenue earned but not yet received by the business is known as

A)  Contra asset revenue

B)  Accrued expenses

C)  Accrued revenue

D)  Unearned revenue

19) Another name of accrued revenue is

A)  Outstanding asset

B)  Earned asset

C)  Unearned revenue

D)  Earned revenue

20) If Rent expenses=$5000, Insurance expenses=$4000, Prepaid rent expenses=$3000. What amount of total expenses will be shown in income statement?

A)  $9000

B)  $12000

C)  $8000

D)  $6000

1.   B

2.   A

3.   A

4.   A

5.   A

6.   B

7.   B

8.   B

9.   C

10.         B

11.         A

12.         C

13.         C

14.         B

15.         B

16.         D

17.         D

18.         C

19.         D

20.         D

 Accountancy / Financial Accounting MCQ Set 8

1) Which of the following is not regarded as the fundamental concept that is identified by IAS-1

A)  The going concern concept

B)  The separate entity concept

C)  The prudence concept

D)  Correction concept

2) Using "lower of cost and net realisable value" for the purpose of inventory valuation is the implementation of which of the following concepts?

A)  The going concern concept

B)  The separate entity concept

C)  The prudence concept

D)  Matching concept

3) The concept of separate entity is applicable to which of following types of businesses?

A)  Sole proprietorship

B)  Corporation

C)  Partnership

D)  All of them

4) Does Prudence concept allow a business to build substantially higher reserves or provisions than that are actually required?

A)  Yes

B)  No

C)  To some extent

D)  It depends on the type of business

5) The revenue recognition principal dictates that all types of incomes should be recorded or recognized when

A)  Cash is received

B)  At the end of accounting period

C)  When they are earned

D)  When interest is paid

6) The matching concept matches which of the following?

A)  Asset with liabilities

B)  Capital with income

C)  Revenues with expenses

D)  Expenses with capital

7) The allocation of owner's private expenses to his/her business violates which of the following?

A)  Accrual concept

B)  Matching concept

C)  Separate business entity concept

D)  Consistency concept

8) The going concern concept assumes that

A)  The entity continue running for foreseeable future

B)  The entity continue running until the end of accounting period

C)  The entity will close its operating in 10 years

D)  The entity can't be liquidated

9) American companies prepare their their financial statement in dollars whereas Japanese companies produce financial statements in yens. Ths is an example of:

A)  Stable monetary unit Concept

B)  Unit of measurement Concept

C)  Money value concept

D)  Current swap concept

10) Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?

A)  Fiscal year

B)  Calendar year

C)  Accounting period

D)  Accrual period

11) Showing purchased office equipments in financial statements is the application of which accounting concept?

A)  Historical cost convention

B)  Materiality

C)  Prudence

D)  Matching concept

12) Assets can't be offset against liabilities. This the dictation of which of the following accounting concepts?

A)  Matching concept

B)  Accrual concept

C)  Prudence concept

D)  Offsetting concept

13) Information about an item is ________ if its omission or misstatement might influence the financial decision of the users taken on the basis of that information

A)  Concrete

B)  Complete

C)  Immaterial

D)  Material

14) Exercising a degree of caution in the case of judgments needed under the condition of uncertainty is assumption of which of the following accounting concepts?

A)  Matching concept

B)  Timeliness concept

C)  Accrual concept

D)  Prudence concept

15) Which one of the following concepts states that the publication or presentation financial statements should not be delayed?

A)  Objectivity Concept

B)  Timing concept

C)  Timeliness Concept

D)  Reliability Concept

16) land on lease should be shown in balance sheet contrary to fact that company doesn't own this piece of land. This is the statement of what accounting concepts?

A)  Matching concept

B)  Accrual concept

C)  Prudence concept

D)  Substance over form Concept

17) "Financial information should be neutral and bias free" is the dictation of which one of the following?

A)  Completeness concept

B)  Faithful representation Concept

C)  Objectivity Concept

D)  Duality Concept

18) A business was commenced on 1st January and it purchased 5 vehicles, each costing $5000. During the year the business managed to sell 2 vehicles at the price of $12000. How should the remaining 3 vehicles be valued if the business is going to continue its operations in the next year?

A)  At the breakup value

B)  On the basis of going concern

C)  Liquidation value

D)  More than market value

19) A company received cash $1000 in advance for auditing service. However, the company neither earned this revenue nor made any adjusting entry in its books. Identify the effect of this omission?

A)  Total liabilities to be understated

B)  Total expenses to be overstated

C)  Total income to be overstated

D)  Total assets to be understated

20) Depreciation is charged on fixed asse to comply with which of the following accounting principles or concepts?

A)  Matching concept

B)  Prudence concept

C)  Timeliness concept

D)  Reliability concept

1.   D

2.   C

3.   D

4.   B

5.   C

6.   C

7.   C

8.   A

9.   B

10.      C

11.      B

12.      D

13.      D

14.      D

15.      B

16.      D

17.      C

18.      B

19.      A

20.      A

 Accountancy / Financial Accounting MCQ Set 9

1) Financial statements are prepared mainly for

A)  Internal users of financial information

B)  External users of financial informaiton

C)  Creditors of the business

D)  Managers of the business

2) Net profit is computed in which of the following?

A)  Balance sheet

B)  Income statement

C)  Cash flow statement

D)  Statement of changes in equity

3) Which of the following should be the most appropiate order of current asset in a balance sheet?

A)  cash, debtor, bank, stock

B)  Bank, cash, stock, debtor

C)  Stock, bank, cash, debtor

D)  Cash, bank, debtor, stock

4) In income statement, gross profit is always equal to

A)  Sales-expenses

B)  Incomes-expenses

C)  Sales-cost of goods sold

D)  Sales-selling costs

5) Office equipment is a ________ asset for a computer manufacturer and the same office equipment is a _________ asset for a company that deals in these equipments

A)  Current, Fixed

B)  Fixed, intangible

C)  Tangible, intangible

D)  Fixed, current

6) Identify the external user of financial information or financial statements

A)  Management of the business

B)  CFO of the business

C)  Employees of the business

D)  Investors of the business

7) A statement or report that records the fluctuation in business's capital is referred as

A)  Balance sheet

B)  Income statement

C)  Cash flow statement

D)  Statement of changes in equity

8) Financial statements mainly help in

A)  Assumption of economic events

B)  Anticipation of economic events

C)  Recording of economic events

D)  Communication of economic events

9) Purchases +opening stock-closing stock=?

A)  Amount of sales

B)  Gross profit

C)  Cost of goods sold

D)  Net income

10) Which of the following financial statements shows the financial position of a business at a specific date?

A)  Balance sheet

B)  Income statement

C)  Cash flow statement

D)  Statement of changes in equity

11) Which of the following financial reports shows the profitable of a business?

A)  Income statement

B)  Balance sheet

C)  Cash flow statement

D)  Statement of changes in equity

12) Assets minus liabilities equal to

A)  Goodwill

B)  Working capital

C)  Net income

D)  Capital

13) Which of the following financial statements shows the movement of cash and cash equivalents in during an accounting period?

A)  Income statement

B)  Balance sheet

C)  Cash flow statement

D)  Statement of changes in equity

14) Goodwill is classified as which one of the following assets?

A)  Fixed

B)  Long term

C)  Current

D)  Intangible

15) Which of the following does not appear in Balance sheet?

A)  Building

B)  Cash

C)  Goodwill

D)  Rent expenses

16) Which of the following lists down the balances to asset accounts, liability accounts and capital account balances?

A)  Income statement

B)  Balance sheet

C)  Cash flow statement

D)  Statement of changes in equity

17) Current assets are also known as

A)  Working capital

B)  Invested capital

C)  Assets

D)  Cash

18) The expenses related to the main operations of business are referred as

A)  Administration expense

B)  Non-administration expense

C)  Selling expenses

D)  Operating expenses

19) Cash receipt from the sales fixed assets is recorded under the heading of

A)  Operating activities

B)  Financing activities

C)  Investing activities

D)  Other activities

20) A current asset that is convertible to cash within 3 months can be referred to as

A)  Cash asset

B)  Operating asset

C)  Intangible asset

D)  Cash equivalent

1.   B

2.   B

3.   D

4.   C

5.   D

6.   D

7.   D

8.   D

9.   C

10.      A

11.      A

12.      D

13.      C

14.      D

15.      D

16.      A

17.      A

18.      D

19.      C

20.      D

 

Accountancy / Financial Accounting MCQ Set 10

1) What is the minimum number of partners required to commence a partnership business?

A)  20

B)  10

C)  2

D)  4

2) Partnership type of business is formed by the mutual agreement of partners. What kind of agreement is it?

A)  Oral agreement

B)  Written agreement

C)  Oral or written agreement

D)  None of them

3) In the general form of partnership, liabilities of partners are:

A)  Limited

B)  Unlimited

C)  Limited to the business capital

4) Is partnership type of business considered as a separate legal entity?

A)  No

B)  Yes

5) can a partner transfer his/her share of business to a third party without other partners consent?

A)  No

B)  Yes

6) Is it compulsory for all partners to contribute equal amount of capital in the business?

A)  No

B)  Yes

7) Interest on drawings is:

A)  Debited to partner’s current a/c

B)  Credited to partner’s current a/c

C)  Not shown in current account

8) The written agreement of partnership is most commonly referred to as:

A)  Agreement

B)  Partnership deed

C)  Partnership contract

D)  Partnership Act

9) Where there is no partnership agreement exists between partners, what will be the profit sharing ratio between the partners?

A)  Equal

B)  Unequal

C)  It will depend on a partner’s capital

D)  It will depend on the experience of a partner

10) Salary of a partner is _________ to current account

A)  Debited

B)  Credited

11) New investment by any partner in the partnership type of business is _______ to the partner’s capital account

A)  Debited

B)  Credited

12) Under fluctuation method of capital, what is the treatment of “interest on capital”?

A)  Credited to capital account

B)  Debited to capital account

C)  No treatment or adjustment needed

D)  Credited to current account

13) Which of the following is NOT generally the characteristic of a partnership business?

A)  Limited life

B)  Ease of formation

C)  Mutual agency

D)  Limited liability

14) In which of the following types of partnership the liability of at least one partner is unlimited whereas the liability of other partners is limited?

A)  General partnership

B)  Particular partnership

C)  Partnership-at-will

D)  Limited partnership

15) In which of the following types of partnership there is no agreement regarding the duration of partnership?

A)  General partnership

B)  Partnership-at-will

C)  Limited partnership

D)  Registered partnership

16) A&B are partners sharing profit or loss equally. A new partner enters in the partnership and invests a piece of land that had historical cost of $50,000, book value = $25000 and current market value = $30,000. By what amount the new partner’s account should be increased?

A)  $25000

B)  $50,000

C)  $30,000

D)  $75000

17) X and Y are partners sharing profit and loss at the ratio of 1/3 and 2/3 respectively. The net income for this accounting period is $10 while salary of X = $2, interest on Y’s drawings = $3 and interest on X’s capital = $2. What is the X’s share of profit or loss after the adjustment for partner’s salary, interest on capital and interest on drawings?

A)  $3

B)  $6

C)  $9

D)  $11

18) Which of the following is known as the value addition to a business because of business reputation, customers’ loyalty, brand name etc.

A)  Assets

B)  Market capitalization

C)  Goodwill

D)  Market penetration

19) Which of following is the correct double entry for revaluation surplus?

A)  Revaluation = Debit and Partners capital accounts = Credit

B)  Partners capital accounts = Debit and Revaluation surplus = Credit

20) A and B share profit and loss in the ratio of 3/5 and 2/5 respectively and having capital account balances of $100,000 each. At the time of revaluation, the firm’s total asset book value was $60,000 while they can only be sold for $40,000. Which of the following is the balance of A’s capital account after revaluation of firm’s assets?

A)  $100,000

B)  $112,000

C)  $88,000

D)  $72,000

21) Which one of the following double entries is correct regarding the cost of firm or partnership dissolution?

A)  Credit realization a/c and Debit partners’ capital a/c

B)  Credit realization a/c and Debit bank a/c

C)  Debit realization a/c and Credit bank/cash

22) Identify the correct double entry for realization profit at time dissolution of partnership

A)  Debit realization a/c and Credit bank a/c

B)  Debit bank a/c and Credit realization account

C)  Debit realization account and Credit partners’ capital accounts

23) Partner ‘A’ took firm’s vehicle worth $5000 without payment at the time of firm’s disbanding. Identify the correct adjustment in the capital account of partner ‘A’

A)  $5000 will be debited

B)  $5000 will be credited

C)  No adjusted needed in capital a/c

24) During the process of dissolution of partnership, the carrying value of machinery=$5000 and building = $20,000 while both fixed assets were disposed at the cumulative price of $10,000 and realization cost was up to $2000. Identify what total amount needed to credit or debit in the partners capital accounts

A)  $12000 Debit

B)  $13000 Credit

C)  $13000 Debit

C)  $10,000 Debit

25) A and B are the partners in a small firm, their profit or loss sharing ratio is 6:4. A new partner C admitted in the firm that will share profit or loss at the ratio of 1/4. Which of the following is the new profit or loss sharing ratio among the partners A, B and C?

A)  6:4:1

B)  18:12:10

C)  10:12:18

D)  6:4:4

26) Which one of the following is the method of goodwill valuation?

A)  Average capital method

B)  Super capital method

C)  Capital intensity method

D)  Super profit method

27) Under capitalization method of goodwill valuation, which of the following formulas is used to calculate the “value of whole business”?

A)  Value of whole business=Profit / Reasonable rate of return X 100

B)  Value of whole business= Total assets / Reasonable rate of return X 100

C)  Value of whole business= Equity-Net assets

28) Which of the following is not recorded in the partners current accounts?

A)  Drawings

B)  Interest on Drawings

C)  Partners salaries

D)  Administrative expenses

29) A partner that doesn’t take part in the management of business, but he/she has made investment in business and liable to creditors of the business is known as:

A)  Active partner

B)  Nominal partner

C)  Junior partner

D)  Dormant partner

1.   C

2.   C

3.   B

4.   A

5.   A

6.   A

7.   A

8.   B

9.   A

10.         B

11.         B

12.         A

13.         D

14.         D

15.         B

16.         C

17.         A

18.         C

19.         A

20.         C

21.         C

22.         C

23.         A

24.         C

25.         B

26.         D

27.         A

28.         A

29.         D

Accountancy Mcqs - Financial Accounting and accounts mcqs multiple choice Questions for Class 11, 12, BBA, B.Com, MBA, CA, UGC NET, ACCA & UPSC