Accounting MCQs

Question 1

When it is certain that a debt won't be recovered. Which of the following is correct?

Accepted Answer

Account receivable is credited

Answer

Provision for bad debt is created

Answer

Bad debts is credited

Answer

Sales is debited

Question 2

A recovery of bad debt

Accepted Answer

increases net income

Answer

decreases net income

Answer

increases gross profit

Answer

increases gross profit and net income

Question 3

What does 'aged debtors analysis' signify?

Accepted Answer

shows how long debts have been outstanding

Answer

How old the customers are

Answer

How long does a business take to repay the bank loans

Answer

Minimum number of old debtors

Question 4

Which of the following is the most common cause of bad debt?

Accepted Answer

Debtor declared to be a bankrupt

Answer

Debtor refusal to repayment

Answer

Debtor left the country

Answer

Debtor committed a crime

Question 5

Which accounting concept dictates the inclusion of 'provision for doubtful debts' in the financial statements?

Accepted Answer

Prudence concept

Answer

Accrual concept

Answer

Matching concept

Answer

Going concern concept

Question 6

Which of the following is a commonly used base to create the provision for doubtful debts?

Accepted Answer

Total credit sales

Answer

Total purchases

Answer

Total current assets

Answer

Total current liabilities

Question 7

Provision for doubtful debts account is a/an

Accepted Answer

Contra asset account

Answer

Asset account

Answer

Nominal account

Answer

Liability account

Question 8

Provision for cash discount on debtors is a percentage of

Accepted Answer

Net debtors less provision for doubtful debts

Answer

Debtors

Answer

Net debtors

Answer

Net sales

Question 9

The value of inventories or stock is figured out at the lower of cost and

Accepted Answer

Net realizable value

Answer

Purchase price

Answer

Opportunity cost

Answer

Realizable value