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Financial Accounting MCQs for CMA Inter
Chapter-wise Financial Accounting MCQs with answers and explanations. Try the sample questions below, then practise a set of 10 with instant right/wrong.
Practise 10 FA MCQsSample Financial Accounting MCQs with answers
Q1 · Accounting Fundamentals
Under the accrual basis of accounting, which of the following is the correct treatment of an expense that has been incurred but not yet paid?
- (a) It is recorded as an expense in the period in which it is incurred
- (b) It is ignored until the payment is made
- (c) It is recorded only when the invoice is received in the next year
- (d) It is recorded as an asset in the balance sheet
Show answer ↓
Answer: (a) It is recorded as an expense in the period in which it is incurred
(a) is correct: under the accrual basis, expenses are recognised when incurred, not when paid, so outstanding expenses are charged to the period. (b) and (c) follow cash or invoice timing, which is not the accrual principle, and (d) wrongly treats an expense as an asset.
Q2 · Bills of Exchange
A bill of exchange is drawn by the creditor on the debtor and accepted by the debtor. Who is the drawer in this transaction?
- (a) The debtor
- (b) The bank
- (c) The creditor
- (d) The acceptor's guarantor
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Answer: (c) The creditor
(c) is correct: the drawer is the person who draws (creates) the bill, here the creditor who is owed money. The debtor is the drawee/acceptor, so (a) is wrong, and no bank or guarantor is involved in the basic definition.
Q3 · Consignment
In a consignment, the consignor sends goods to the consignee. Who bears the risk of loss of goods while they are lying with the consignee, in the absence of any agreement to the contrary?
- (a) The consignee
- (b) The consignor
- (c) The carrier
- (d) The insurance company only
Show answer ↓
Answer: (b) The consignor
(b) is correct: the consignor remains the owner of the goods, so loss of goods held by the consignee is borne by the consignor. The consignee acts only as an agent, so (a) is wrong, and the carrier's liability arises only in transit, making (c) and (d) incorrect in general.
Q4 · Accounting. Fundamentals
Under the accrual basis of accounting, which principle requires that expenses be recognised in the period in which the related revenue is earned, irrespective of when cash is paid?
- (a) Going concern concept
- (b) Matching concept
- (c) Consistency concept
- (d) Prudence concept
Show answer ↓
Answer: (b) Matching concept
(b) is correct: the matching concept requires expenses to be matched with the revenues they help earn in the same period. Prudence concerns recognising losses early, not matching, so it is the closest wrong option.
Q5 · Accounting Standards
Which Accounting Standard deals with the presentation of the cash flow statement?
- (a) AS 3 (Ind AS 7)
- (b) AS 10 (Ind AS 16)
- (c) AS 2 (Ind AS 2)
- (d) AS 6 (Ind AS 8)
Show answer ↓
Answer: (a) AS 3 (Ind AS 7)
(a) is correct: AS 3 (corresponding to Ind AS 7) covers Cash Flow Statements. The other options deal with Property, Plant and Equipment, Inventories and Accounting Policies respectively.
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