Refer to MCQs for Accountancy Class 11 with Answers Chapter 9 Financial Statements – I as per the latest syllabus issued by CBSE. All Multiple choice questions have been provided with solutions and have been prepared based on the expected pattern in upcoming board exams. MCQs Chapter 9 Financial Statements – I have been prepared by our team of best accountancy teachers.

Question .The goal of final accounts is to determine:
(a) Capital
(b) The value of assets
(c) Profit or loss
(d) Profit and loss and financial position

Question Computers purchased for re-sale is:   
(a) Capital expenditure.
(b) Revenue Expenditure.
(c) Deferred Revenue Expenditure.
(d) None of these.

Question . Arrange cash, building goodwill, debtors, and machine in the Balance Sheet in order of liquidity.
(a) Debtors, Cash, Building Goodwill, Machine
(b) Cash, Debtors, Machine. Building, Goodwill
(c) Cash, Building Goodwill, Debtors, Cash Machine
(d) Cash, Goodwill, Debtors, Machine. Building

Question . Profit earn through normal activities of business
(a) operating profit
(b) net profit
(c) gross profit
(d) manufacturing profit

Question . We get Profit & Loss account for_________.
(a) net profit
(b) capital
(c) gross profit
(d) gross loss.

Question . Which is an example of fictitious assets?
(a) Building
(b) Bill receivable
(c) Adverting suspense
(d) Cash

Question . The customs duty will show in _.
(a) Profit & Loss Dr.
(b) Trading Cr.
(c) Trading Dr.
(d) Profit &Loss Cr.

Question . Trade Mark is _.
(a) Tangible assets
(b) Current assets
(c) Fixed assets
(d) Liability

Question. Balance Sheet shows :   
(A) Profit or Loss
(B) Financial Position
(C) Errors of Accounts
(D) Total Debtors

Question . Which of the below is position statement
(a) Trial balance
(b) Profit & Loss
(c) Balance sheet
(d) Bank Reconciliation Statement

Question . Gross loss is identifying from __ account.
(a) Trading account
(b) Profit & Loss account
(c) Balance sheet
(d) None of these

Question Outstanding Salaries is shown as   
(a) an asset in the Balance Sheet.
(b) a liability in the Balance Sheet.
(c) adjusted in Profit and Loss Account.
(d) both (b) and (c).

Question . Expenditure of recurring nature are
(a) Preliminary
(b) Revenue
(c) Capital
(d) Deferred revenue

Question. Final Accounts are prepared :   
(A) At the end of calendar year
(B) At the end of Assessment year
(C) On every Diwali
(D) At the end of Accounting year

Question . The closing stock is entered into _.
(a) Trading account
(b) Balance sheet
(c) Profit and Loss
(d) Both A and B

Question Balance Sheet is a   
(a) a list of all the accounts in the books of a business.
(b) an account showing trading activities of a business.
(c) an account showing the financial position of a business as on a certain date.
(d) a list of assets, liabilities and capital of a business at a certain date.

Question . Revenue Expenditure is redirected to the following accounts:
(a) Profit and Loss Account
(b) Balance Sheet
(c) Partly to Balance Sheet and Partly to Profit and Loss Account.
(d) Trading Account

Question . Capital Expenses and Capital Receipts are moved to __.
(a) Trading Account
(b) Balance Sheet
(c) Profit and Loss Account
(d) Trial Balance

Question Purchase of machinery for production is   
(a) Revenue Expenditure.
(b) Capital Expenditure.
(c) Deferred Revenue Expenditure.
(d) None of these.

Question . Opening Stock Rs. 1,00,000; Closing Stock Rs. 60,000; Purchases Rs. 50,000 and Gross Profit is 10% of sales. The gross profit is:
(a) Rs. 20,000
(b) Rs. 15,000
(c) Rs. 10,000
(d) Rs. 12,000

Question. Balance of Petty Cash is :   
(A) Expenses
(B) Income
(C) Liability
(D) Asset

Question Insurance premium paid to insure the machinery at the time of its purchase is   
(a) Revenue Expenditure.
(b) Capital Expenditure.
(c) Deferred Revenue Expenditure.
(d) None of these.

Question . Advance Commission received existing in the Trial Balance is _.
(a) Assets side of the Balance Sheet
(b) Liability side of the Balance Sheet
(c) Debit side of the Profit and Loss A/c
(d) Credit Side of the Profit and Loss A/c

Question Large advertisement expenditure to introduce a new product is   
(a) Capital Expenditure.
(b) Revenue Expenditure.
(c) Deferred Revenue Expenditure.
(d) None of these.

Question . Balance Sheet gives information _.
(a) financial position during a particular period
(b) profit earning capacity for a particular period
(c) financial position as on a particular date
(d) operating efficiency of the firm

Question. The purpose of preparing final accounts is to ascertain :   
(A) Profit or loss
(B) Capital
(C) The value of assets
(D) Profit or loss and financial position

Question  Income tax paid by a sole trader is shown 
(a) on the debit side of the Trading Account.
(b) on the debit side of the Profit and Loss Account.
(c) as deduction from capital in the Balance Sheet.
(d) as addition to capital in the Balance Sheet.

Question . In the Trial Balance, the Returns Outward are subtracted from _.
(a) Purchases
(b) Sales
(c) Drawings
(d) Capital

Question . An example of a preliminary expense is:
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Deferred Revenue Expenditure
(d) they are Capital in Nature

Question Loss on sale of an old car is debited to 
(a) Profit and Loss A/c.
(b) Car A/c.
(c) Depreciation A/c.
(d) Trading Account.

Question Which of the following is not shown in Balance Sheet?   
(a) Opening Stock
(b) Closing Stock
(c) Patents
(d) Debtors

Question . An enterprise’s capital expenses are diverted to:
(a) Profit and Loss Account
(b) Partly to Balance Sheet and Partly to Profit and Loss Account
(c) Balance Sheet
(d) Trading Account

Question Goodwill is a 
(a) Fictitious Asset.
(b) Tangible Asset.
(c) Intangible Asset.
(d) Current Asset.

Question Expenses on overhauling a second-hand machine purchased is   
(a) Revenue Expenditure.
(b) Capital Expenditure.
(e) Deferred Revenue Expenditure.
(d) None of these.

Question. Balance Sheet is prepared with the balances of which of the following : 
(A) All balances in the Ledger
(B) Balances of Personal Accounts
(C) Balances of Real Accounts
(D) Balances of Personal and Real Accounts

Q20. Overhauling expense of second hand machinery purchased are:
(a) Prepaid Expenses
(b) Deferred Revenue Expenses
(c) Capital Expenses
(d) Revenue Expenses

Question . A petition of Rs. 200,000 was lodged against a machinery with a book value of Rs. 2,50,000 that was destroyed in the company. The following is an example of an insurance claim that has been received:
(a) Capital Expenditure
(b) Revenue Receipt
(c) Capital Receipt
(d) Revenue Expenditure

Question. Closing Stock appearing in the Trial Balance is shown :   
(A) On the Dr. side of Trading A/c
(B) On the Cr. side of Trading A/c
(C) On the Assets side of Balance Sheet
(D) On the Cr. side of Trading A/c and on the Assets side of Balance Sheet

Question  Carriage Outwards is shown in   
(a) Trading Account.
(b) Profit and Loss Account.
(c) Balance Sheet.
(d) Either Trading Account or Profit and Loss Account.

Question Sales are equal to 
(a) Cost of Goods Sold + Gross Profit.
(b) Cost of Goods Sold — Gross Profit,
(c) Gross Profit — Cost of Goods Sold.
(d) Purchases + Gross Profit.

Question  Which type of expenses are shown in Trading Account?   
(a) Direct Expenses.
(b) Indirect Expenses.
(c) Opening Expenses.
(d) Direct and Indirect Expenses.

Question Capital Expenditure is included in   
(a) Trading Account.
(b) Profit and Loss Account.
(c) Balance Sheet.
(d) Profit and Loss Appropriation Account.

Question . Prepaid Rent is shown as
(a) An asset
(b) An expense
(c) An Income
(d) A liability

Question. “Salaries and Wages” appearing in Trial Balance is shown :   
(A) On the Debit Side of Trading A/c
(B) On the Debit Side of P & L A/c
(C) On the Asset Side of Balance Sheet
(D) On the Liabilities Side of Balance Sheet

Question. Fixed assets are kept: 
(A) For earning revenue
(B) For conversion into cash as quickly as possible
(C) For resale
(D) For getting loan by mortgage

Question. The Profit and Loss Account shows :   
(A) Financial Position of the Concern
(B) Gross Profit
(C) Net Profit
(D) Net Profit and Financial Position

Question. Schedule of balances prepared from ledger accounts is known as :   
(A) Balance Sheet
(B) Trial Balance
(C) Statement of Accounts
(D) Statement of Affairs

Question Revenue Expenditure is transferred to   
(a) Profit and Loss Account.
(b) Trading and Profit and Loss Account.
(c) Balance Sheet.
(d) Purchases Account.

Question . Outstanding Income is
(a) An income
(b) An expense
(c) A liability
(d) An asset

Question Capital Receipts are shown in   
(a) Balance Sheet.
(b) Trading Account.
(c) Trading Account.
(d) Capital Account.

Question Current liabilities are such obligations which are to be satisfied   
(a) within one year.
(b) within two years.
(c) within three years.
(d) within four years.

Question . Until charging the commission, the manager is entitled to a 5% benefit commission. Since the benefit is Rs. 2,10,000, the fee would be__________.
(a) Rs. 10,000
(b) Rs. 10,500
(c) Rs. 11,100
(d) Rs. 11,500

Question  Revenue Income is transferred to   
(a) Profit and Loss Account.
(b) Trading and Profit and Loss Account.
(c) Balance Sheet.
(d) Miscellaneous Income.

Question . The arrangement of various assets and liabilities in a proper order is termed as
(a) Marshalling
(b) Arrangement
(c) Balancing
(d) Grouping

Question. Trading and Profit and Loss Account is prepared : 
(A) For a particular period
(B) On a particular date
(C) For the whole year
(D) None of above

Question . Expenses incurred to get the Manager’s Office air-conditioned is
(a) Capital Expenditure.
(b) Revenue Expenditure.
(c) Deferred Revenue Expenditure.
(d) Capital Income.

Question  Returns Inward in the Trial Balance is deducted from 
(a) Purchases.
(b) Sales.
(c) Returns outward.
(d) Gross profit.

Question . The following is the entry for making a provision for bad debts:
a) Debit Provision for Bad Debts A/c and Credit Creditor A/c.
b) Debit Provision for Bad Debts A/c and Credit Profit and Loss A/c.
c) Debit Provision for Bad Debts A/c and Credit Bad Debts A/c
d) Debit Profit and Loss A/c and Credit Provision for Bad Debts A/c

Question Which statement shows financial position of the business?   
(a) Trading Account.
(b) Profit and Loss Account.
(c) Balance Sheet.
(d) Trial Balance.

Question. If sales are Rs.2,000 and the rate of gross profit on cost of goods sold is 25%, then the cost of goods sold will be :   
(A) Rs. 1,600
(B) Rs. 1,500
(C) Rs. 1,700
(D) Rs. 1,800

Question Financial Statements includes   
(а) Trial Balance. 
(b) Trading and Profit and Loss Account.
(c) Balance Sheet.
(d) Trading and Profit and Loss Account and Balance Sheet.

Question Capital Receipts and Revenue Receipts   
(a) are distinguished.
(b) are not distinguished.
(c) may or may not be distinguished.
(d) must not be distinguished.

Question Which of the following is not the part of Financial Statements?   
(a) Trial Balance
(b) Trading Account
(c) Profit and Loss Account
(d) Balance Sheet

Question. Balance Sheet is prepared : 
(A) For a particular period
(B) On a particular date
(C) For the whole year
(D) None of the above

Question Which of the following is correct? 
(a) Operating Profit = Net Profit + Non-operating Expenses – Non-operating Income
(b) Operating Profit = Net Profit + Non-operating Expenses + Non-operating Income
(c) Operating Profit = Net Profit + Non-operating Expenses – Non-operating Income
(d) Operating Profit = Net Profit — Non-operating Expenses + Non-operating Income

Question Capital Expenditure and Revenue Expenditure   
(a) are distinguished.
(b) are not distinguished.
(c) may or may not be distinguished.
(d) must not be distinguished.

Question . The Profit and Loss Account reveals_______________.
a) Financial results of the business for a period.
b) Financial position of the business for a period.
c) Financial results of the business on a particular date.
d) Cost of goods sold during the business.

Question. Calculate the gross profit if rate of gross profit is 25% on sales and cost of goods sold are Rs. 1,80,000   
(A) Rs.60,000
(B) Rs.36,000
(C) Rs.45,000
(D) Rs.30,000

Question. Cost of Goods Sold Rs. 1,50,000; Closing Stock Rs.40,000; Opening Stock Rs.60,000; Amount of purchase will be   
(A) Rs. 1,30,000
(B) Rs. 1,70,000
(C) Rs.50,000
(D) None of these

Question . If net sales is Rs. 36,000, his gross profit is 60% of sales and net profit is 40% of sales, his expenses are
a) Rs. 14,200
b) Rs. 8,800
c) Rs. 14,600
d) Rs. 7,200.

Question. Choose the Current Assets from the following :   
(A) Cash
(B) Stock
(C) Debtors
(D) All of these 

Question.Opening Stock Rs.8,500   
Purchases Rs.30,700
Direct Wages Rs.4,800
Interest on Loan Rs.2,800
Closing Stock Rs.9,000
Cost of goods sold will be ……………..
(A) Rs.30,000
(B) Rs.32,000
(C) Rs.35,000
(D) Rs.40,000

Question . If Closing Capital is Rs. 70,000, Additional Capital introduced is Rs. 50,000, Drawings Rs. 80,000, Loss is Rs. 1,00,000 then Capital in the beginning is equal to
a) Rs. 2,00,000
b) Rs. 1,80,000
c) Rs. 1,20,000
d) Rs. 3,00,000

Question . Trading Account Shows __ Profit/Loss.
(a) Gross
(b) Net
(c) Both A and B
(d) None of above

Question . All Direct Expenses are shows in:
(a) Trading Account
(b) Profit & Loss Account
(c) Balance sheet
(d) None of these

Question . The Profit and loss Account always shows _:
(a) Gross profit
(b) Net Profit
(c) Gross loss
(d) None of these

Question . Goodwill is:
(a) Asset
(b) Liability
(c) Expense
(d) None of these

Question. Goodwill is :   
(A) Current Asset
(B) Tangible Asset
(C) Intangible Asset
(D) Fictitious Asset

Question . Withdraws of goods are deducted from:
(a) Purchase
(b) Sales
(c) Returns outward
(d) Capital

Question . We can know about profitability and financial position of a business by_________.
(a) Balance sheet
(b) Profit and loss account
(c) Financial statement
(d) None

Question . Income statement is prepared to ascertain of:
(a) Gross profit/loss
(b) Net profit/loss
(c) Both A and B
(d) None of these

Question . Following are the Financial statement except
(a) Audit report
(b) Balance sheet
(d) Income statement
(d) Cash Flow statement

Question. Excess of debit in Profit and Loss Account is called : 
(A) Net Profit
(B) Net Loss
(C) Gross Profit
(D) Gross LOSS

Question Expenditure incurred on a fixed asset which increases the earning capacity is accounted as   
(a) Capital Expenditure.
(b) Revenue Expenditure.
(c) Deferred Revenue Expenditure.
(d) General Expenditure.

Question . Discount received appears in
(a) Credit side of Balance sheet
(b) Debit side of Balance sheet
(c) Debit side of Profit and loss account
(d) Credit side of Profit and loss account

Question . Petty Cash Balance
(a) Income
(b) Expenses
(c) Asset
(d) Liability

Question  Closing stock shown inside the Trial Balance is shown in   
(a) Trading Account.
(b) Profit and Loss Account.
(c) Balance Sheet.
(d) None of these.

Question  Computers owned by a firm are classified as 
(a) Tangible Assets.
(b) Current Assets.
(c) Liquid Assets.
(d) Intangible Assets.