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 accounting concepts ensures that transactions are recorded in the period in which they occur, regardless of when cash is received or paid? Accrual concept Matching concept Conservatism concept Consistency concept None 2. The primary objective of financial accounting is to: Assist in decision-making Provide information to stakeholders Assess financial performance and position Record daily transactions None 3. The principle of "prudence" in accounting means: Recognition of income when earned Recognizing potential losses, but not potential gains The need to balance assets and liabilities Avoiding overstatement of profits None 4. Which of the following is an example of a non-current asset? Accounts receivable Inventory Property, plant, and equipment Bank overdraft None 5. Which of the following is NOT an example of a liability? Accounts payable Bank loan Retained earnings Accrued expenses None 6. Which of the following financial statements is prepared to determine the profit or loss of a business? Balance Sheet Profit and Loss Account Cash Flow Statement Statement of Changes in Equity None 7. The accounting equation is represented as: Assets = Liabilities + Equity Assets = Revenues - Expenses Liabilities = Assets + Equity Equity = Assets + Liabilities None 8. A partnership firm has a capital balance of ₹100,000 and has earned a profit of ₹30,000. The profit-sharing ratio between two partners is 3:2. What is the share of profit for the first partner? ₹12,000 ₹18,000 ₹15,000 ₹30,000 None 9. In a balance sheet, "retained earnings" are classified as: Current liabilities Non-current liabilities Current assets Shareholders' equity None 10. Which of the following accounts is increased by a credit entry? Asset account Liability account Expense account Drawing account None 11. The balance sheet of a company shows: Profit and loss Assets, liabilities, and shareholder's equity Cash inflows and outflows Revenue and expenses None 12. In a profit and loss account, which of the following represents the first step in determining the profit or loss of a business? Subtracting cost of goods sold from revenue Subtracting expenses from income Subtracting interest expense from net income Subtracting taxes from gross profit None 13. Which of the following is classified as a current asset? Building Patents Cash Long-term investments None 14. In the statement of cash flows, "cash from operating activities" includes: Cash received from the sale of fixed assets Cash paid to employees and suppliers Cash received from issuing shares Cash received from long-term borrowing None 15. Which of the following items would NOT be included in the balance sheet of a company? Cash Accounts payable Dividend paid Retained earnings None 16. 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 ₹100,000 ₹200,000 None 17. The "matching concept" in accounting refers to: Matching assets with liabilities Matching revenue with expenses in the same period Matching cash receipts with cash payments Matching income tax with the revenue earned None 18. Which of the following is NOT included in a company’s equity? Share capital Retained earnings Revenue Reserves None 19. The income statement measures the: Financial position of the business at a specific point in time Changes in equity during a period Profitability of the business during a period Cash flow during a period None 20. What is the accounting treatment for a dividend declared but not paid by a company? Debit Dividend Payable, Credit Retained Earnings Debit Retained Earnings, Credit Dividend Payable Debit Cash, Credit Dividend Payabl No entry until paid None 21. Which of the following is considered a capital expenditure? Purchase of machinery Payment of wages Payment of interest on loans Rent expense None 22. The treatment for "bad debts" in the accounting records is: Debit to Cash, Credit to Accounts Receivable Debit to Bad Debts Expense, Credit to Accounts Receivable Debit to Accounts Receivable, Credit to Cash Debit to Accounts Receivable, Credit to Bad Debts Expense None 23. Which of the following is the correct treatment for "prepaid expenses" in the financial statements? They are initially recorded as liabilities and then transferred to expenses They are recorded directly as expenses They are recorded directly as expenses They are recorded as long-term liabilities None 24. The journal entry to record the purchase of goods on credit would be: Debit Inventory, Credit Accounts Payable Debit Accounts Payable, Credit Inventory Debit Cash, Credit Accounts Payable Debit Goods, Credit Cash None 25. When an asset is sold for a profit, the accounting entry would include: Debit Cash, Credit Revenue Debit Cash, Credit Profit on Sale of Asset Debit Revenue, Credit Asset Debit Asset, Credit Cash None 26. Which of the following is the accounting treatment for “depreciation”? Debit Depreciation Expense, Credit Accumulated Depreciation Debit Accumulated Depreciation, Credit Depreciation Expense Debit Asset Account, Credit Depreciation Expense Debit Depreciation Expense, Credit Asset Account None 27. A business receives a bank loan of ₹100,000. The journal entry to record this would be: Debit Cash ₹100,000, Credit Bank Loan ₹100,00 Debit Bank Loan ₹100,000, Credit Cash ₹100,000 Debit Cash ₹100,000, Credit Income ₹100,000 Debit Bank Loan ₹100,000, Credit Revenue ₹100,000 None 28. The profit-sharing ratio in a partnership is based on: The capital ratio The agreement between the partners The work contribution of the partners The duration of the partnership None 29. Which of the following is an example of a non-cash transaction? Issue of shares Purchase of machinery Repayment of loan Payment of wages None 30. Which of the following statements about “deferred revenue” is correct? It is a liability It is an asset It represents a future income It is recorded as revenue None 31. Which of the following is NOT a feature of a partnership? Mutual agency Unlimited liability Limited life Separate legal entit None 32. In a partnership, the capital accounts of partners: Are not affected by profits or losses Are affected by profits, losses, and withdrawals Are adjusted only for withdrawals Are only affected by contributions None 33. Which of the following is a feature of a joint stock company? No separate legal entity Unlimited liability Shares are transferable The company dissolves automatically after a set period None 34. A company issues 10,000 shares of ₹10 each at a premium of ₹5 per share. The total capital raised will be: ₹100,000 ₹150,000 ₹200,000 ₹250,000 None 35. Which of the following is included in the equity of a company? Bank loan Debentures Share capital Accounts payable None 36. In the case of liquidation of a partnership, creditors are paid from: Capital accounts of partners Assets of the partnership Income generated during liquidation Profits from future activities None 37. In a partnership, the "goodwill" of the firm is calculated based on: Net asset value Profit-sharing ratio Average annual profits Partnership agreement None 38. Which of the following is NOT a financial statement required for a company? Profit and Loss Account Balance Sheet Statement of Cash Flows Management Report None 39. In the case of a public limited company, the share capital is: Divided equally among all members Issued to the public for subscription Not transferable Paid only by the director None 40. A company reports a loss of ₹50,000 for the year. The treatment of the loss will be: Deducted from the retained earnings Added to the retained earnings Recorded as an asset Distributed among shareholders as dividend 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 !! Your quiz time is about to finish. 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