Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Financial AccountingTotal Number of Question: 40Time: 41 MinutesPlease check your email after completion of test for result.All the best... Name Phone No Email State 1. Which of the following is the primary objective of financial accounting? To prepare financial statements To determine the cost of production To calculate tax liabilities To provide information for decision-making None 2. According to the accrual basis of accounting, revenues are recognized when: Cash is received Goods are sold or services are rendered Payment is made Payment is due None 3. The fundamental accounting equation is: Assets = Liabilities + Shareholders’ Equity Assets = Liabilities - Shareholders’ Equity Revenues = Expenses + Profit Liabilities = Assets - Shareholders’ Equity None 4. Which of the following is NOT a feature of the double-entry system of accounting? Every transaction affects two accounts Every debit has a corresponding credit Only cash transactions are recorded The sum of debits equals the sum of credits None 5. The income statement reports: Assets and liabilities Revenue and expenses Cash inflows and outflows Capital expenditures None 6. Which of the following accounting standards is related to the treatment of fixed assets? AS 9 AS 10 AS 1 AS 15 None 7. Which of the following is considered a current liability? Bank loan due after 3 years Salaries payable within 3 months Building loan payable in 5 years Long-term bonds None 8. Which of the following is true about the historical cost concept in accounting? Assets should be recorded at their current market value Assets should be recorded at the price paid at the time of purchase Liabilities are recorded at market prices Depreciation is not considered in asset valuation None 9. Which of the following statements is true about an asset? It is a resource owned by the business to generate future economic benefits It is a claim against the business’s future revenue It is only a tangible property It is always non-current None 10. Which accounting standard covers the treatment of revenue recognition in financial accounting? AS 10 AS 9 AS 18 AS 12 None 11. The balance sheet presents: Income and expenditure Revenues and expenses The financial position of the business Cash inflows and outflows None 12. Which of the following is NOT an example of an intangible asset? Patent Goodwill Machinery Trademark None 13. The profit and loss account shows: Assets and liabilities Cash flow information Revenues and expenses Long-term liabilities None 14. A company reports a net profit of ₹50,000 for the year. The company’s retained earnings at the beginning of the year were ₹100,000. What is the retained earnings at the end of the year? ₹150,000 ₹50,000 ₹100,000 ₹200,000 None 15. Which of the following items is reported under shareholders' equity? Accounts payable Long-term debt Retained earnings Accounts receivable None 16. Which of the following is included in the Cash Flow Statement? Depreciation Share capital issuance Retained earnings Operating, investing, and financing activities None 17. Which of the following is an example of an operating activity in the Cash Flow Statement? Issuing shares Borrowing money Paying wages Purchasing equipment None 18. Which of the following items would NOT appear in the profit and loss account? Depreciation on assets Net profit Income tax expenses Bank overdraft None 19. Which of the following is true about "retained earnings"? It is a liability It represents profits that have been reinvested in the business It is paid out as dividends It is an asset of the business None 20. The term "gross profit" refers to: Total revenue Revenue minus cost of goods sold Revenue minus operating expenses Revenue minus interest expenses None 21. Which of the following transactions is an example of a financing activity? Purchase of machinery Payment of dividends Sale of inventory Payment of rent None 22. If an entity issues shares for cash, this transaction will be recorded in: Income statement Shareholders' equity section of the balance sheet Cash flow from investing activities Profit and loss account None 23. When inventory is sold, which of the following accounts is credited? Sales revenue Cash or Accounts receivable Cost of goods sold Retained earnings None 24. Which of the following is an example of a non-cash transaction? Issue of shares o B) o C) o D) Purchase of machinery on credit Payment of rent Sale of goods for cash None 25. The accounting treatment for a discount allowed is: Recorded as an expense Recorded as revenue Not recorded in the books Recorded as a liability None 26. Which of the following is an example of capital expenditure? Purchase of land Office rent Wages of employees Insurance premium None 27. The entry to record the depreciation of fixed assets will include a: Debit to Depreciation Expense Debit to Accumulated Depreciation Credit to Depreciation Expense Credit to Fixed Assets None 28. The provision for bad debts is classified as a: Current asset Non-current asset Current liability Non-current liability None 29. Which of the following is an example of a long-term liability? Bank overdraft Accounts payable Bonds payable Accrued expenses None 30. When goods are sold on credit, the accounting entry will be: Debit Accounts Receivable, Credit Sales Debit Sales, Credit Accounts Receivable Debit Cash, Credit Sales Debit Goods, Credit Accounts Payable None 31. In a partnership, the profit or loss is shared according to: The number of partners The agreement between the partners The capital contribution only The working hours of the partners None 32. Which of the following is NOT an advantage of forming a company? Limited liability Separate legal entity Unlimited life Easy transferability of shares None 33. Which of the following is true about a limited liability company? The liability of the shareholders is unlimited The company is a separate legal entity from its owners Shareholders are personally liable for the company’s debts o Only large companies can be incorporated None 34. In a partnership, the capital accounts are: Debited when profits are earned Credited when profits are distributed Increased by drawings Decreased by partners' investments None 35. Which of the following is the primary financial statement for a company? Balance sheet Cash flow statement Profit and loss account Statement of shareholders' equity None 36. In case of liquidation of a partnership firm, who gets paid first? Partners Creditors Shareholders Government taxes None 37. The amount of share capital in a company is determined by: The board of directors The shareholders The Articles of Association The Memorandum of Association None 38. The issue of shares at a premium means: Shares are sold at a price lower than the nominal value Shares are sold at a price equal to the nominal value Shares are sold at a price higher than the nominal value No money is received from shareholders None 39. In the case of a company, dividends are paid out of: Share capital Reserves and surplus Retained earnings Revenue from sales None 40. Which of the following is NOT a feature of a joint stock company? Limited liability Separate legal identity Transferability of shares Unlimited lifespan None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test.Look out for results and future opportunities.Stay Connected !! 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