Free Financial Statements MCQs with Answers
128 Financial Statements MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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128 questions · page 4 of 7
61. If the gross margin is $9000 and the cost of goods sold is $8000 then the revenue will be _________?
- A. $1,000
- B. −$1000
- C. $17,000
- D. −$17000
Explanation: Gross margin equals revenue minus cost of goods sold, so revenue is $9,000 + $8,000 = $17,000.
Correct answer: $17,000- A. $23,000
- B. −$23000
- C. −$9000
- D. $9,000
Explanation: Cost of goods sold equals revenue minus gross margin: $16,000 − $7,000 = $9,000.
Correct answer: $9,000- A. −$8000
- B. $3,000
- C. −$3000
- D. $8,000Access Government Careers
Explanation: Gross margin equals revenue minus cost of goods sold, so cost of goods sold is $5,000 − $2,000 = $3,000.
Correct answer: $3,000- A. revenues
- B. selling price
- C. unit price
- D. bundle price
Explanation: Gross margin is revenue minus cost of goods sold; therefore, adding gross margin back to cost of goods sold gives revenue.
Correct answer: revenues- A. Gross margin
- B. income margin
- C. sales margin
- D. cost marginHire An Accountant
Explanation: Gross margin compares sales revenue with the cost of goods sold, so it helps indicate how competitively a business can price its products…
Correct answer: Gross margin66. If the cost of goods sold is $8000, the gross margin is $5000 then the revenue will be ___________?
- A. $13,000
- B. −$13000
- C. $3,000
- D. −$3000
Explanation: Revenue equals cost of goods sold plus gross margin: $8,000 + $5,000 = $13,000.
Correct answer: $13,000- A. income margin percentage
- B. Gross margin percentage
- C. cost margin percentage
- D. sales margin percentage
Explanation: Gross margin divided by revenue measures the portion of sales remaining after cost of goods sold, so it is the gross margin percentage.
Correct answer: Gross margin percentage- A. revenues
- B. operating leverage
- C. contribution margin
- D. operating marginCompany Earnings
Explanation: Revenue is derived by adding gross margin to cost of goods sold: Revenue = Cost of goods sold + Gross margin.
Correct answer: revenues- A. $3,000
- B. $300
- C. $4,700
- D. $4,500
Explanation: Static budget variance equals actual results minus the original static budget: $2,500 minus $2,200 equals $300.
Correct answer: $300- A. factory overhead costs
- B. manufacturing overhead costs
- C. Inventoriable Costs
- D. finished costs
Explanation: Inventoriable costs are product costs initially recorded as inventory assets on the balance sheet and expensed as cost of goods sold when…
Correct answer: Inventoriable Costs- A. direct materials inventory
- B. work in process inventory
- C. finished goods inventory
- D. indirect material inventory
Explanation: Goods that have entered production but are not yet complete are held in work in process inventory.
Correct answer: work in process inventory- A. profit and loss account
- B. Manufacturing account
- C. Income and Expenditure Account
- D. Cost of good sold
Explanation: A non-trading institution does not primarily calculate profit from buying and selling goods, so it prepares an Income and Expenditure…
Correct answer: Income and Expenditure Account- A. 0.65
- B. 0.35
- C. 1.50
- D. 5.29
Explanation: Return on investment is calculated as asset turnover multiplied by profit margin: 1.85 × 0.35 = 0.6475, or approximately 0.65.
Correct answer: 0.65- A. 50,000
- B. 55,000
- C. 60,000
- D. 65,000
Explanation: Cost of goods sold is sales less gross profit, or 220,000 minus 40,000 = 180,000.
Correct answer: 60,000- A. Dressing Balance Sheet
- B. Marshalling Balance Sheet
- C. Formatting Balance Sheet
- D. Make up of Balance Sheet
Explanation: Marshalling means arranging balance-sheet items in a logical order, usually according to liquidity or permanence.
Correct answer: Marshalling Balance Sheet- A. Income from sale of trading goods
- B. Bad debts recovered
- C. Interest on FDs
- D. None
Explanation: Interest on fixed deposits is normally non-operating income because it arises from an investment rather than the main trading activity.
Correct answer: Interest on FDs- A. In Trading A/c
- B. In Profit and Loss Appropriation A/c
- C. Profit and Loss A/c
- D. Being a non operating item ignored
Explanation: The profit is a capital profit arising from disposal of a fixed asset, but it is transferred to the Profit and Loss Account for reporting.
Correct answer: Profit and Loss A/c- A. Profit and Loss A/c
- B. Trading A/c
- C. Deducted from the concerned assets A/c
- D. Shown on the liability side
Explanation: A depreciation account with a debit balance represents an expense for the accounting period, so it is charged to the Profit and Loss…
Correct answer: Profit and Loss A/c- A. Trading A/c and Balance Sheet
- B. Profit and Loss A/c
- C. Balance Sheet only
- D. Trading A/c only
Explanation: When closing stock appears inside the Trial Balance, its adjustment has already been recorded, so it is shown only as a current asset in…
Correct answer: Balance Sheet only- A. Results of operations for a particular period
- B. Financial position during a particular period
- C. Profit earning capacity for a particular period
- D. Financial position as on a particular date
Explanation: A balance sheet is a point-in-time statement, so it reports assets, liabilities and capital as on a specific date.
Correct answer: Financial position as on a particular date