Cash Book MCQs

By: Prof. Dr. Fazal Rehman | Last updated: May 21, 2025

1. : Which of the following is a profitability ratio?
(A) Return on Capital employed
(B) Current ratio
(C) Gross markup
(D) Net profit margin

2. : Which of the following is not correct for calculating stock turnover?
(A) Cost of goods sold/average stock
(B) Gross profit/cost of goods sold
(C) Current assets/current liabilities
(D) Gross profit/net sales

3. : The ratios used to measure liquidity are:
I. Return on Capital employed
II. Acid test ratio
III. Gross margin
IV. Debtors turnover

4. : In which journal are debit notes entered?
(A) Returns outwards
(B) Returns inwards
(C) Sales
(D) Purchases

5. : Which of the following contracts should be entered in the Petty Cash Book?
(A) Salary payments
(B) Stock issued
(C) Subscriptions
(D) Travelling expenses

6. : The statement that gives the financial performance of a business at a specified date is called a
(A) Cash flow
(B) Balance sheet
(C) Income statement
(D) Trial balance

7. : Which of the following cannot be classified as a capital expenditure?
(A) Maintenance of a truck
(B) Purchase of a motor vehicle
(C) Installation of new computers
(D) Purchase of land

8. : What is Karlene’s working capital?
(A) $20,000
(B) $23,000
(C) $27,000
(D) $30,000

9. : What is Karlene’s capital at close?
(A) $620,000
(B) $621,000
(C) $637,000
(D) $647,090

10. : Which of the following is the presentation of Karlene’s balance sheet?
(A) Vertical
(B) Horizontal
(C) Liquidity
(D) Periodic

11. : Which of the financial statements will the $6000 be transferred to?
(A) Profit and Loss account
(B) Trading account
(C) Balance sheet
(D) Cash flow

12. : A motor van valued at $200,000 is depreciated at 15% using the straight-line method. What is the total depreciation after 3 years?
(A) $30,000
(B) $60,000
(C) $90,000
(D) $110,000

13. : Which of the following expenses is a non-monetary considered expense?
(A) Depreciation
(B) Bad debts
(C) Salary
(D) Postage and stationery

14. : The balance of an expense account is transferred to the:
(A) Balance Sheet
(B) Cash Flow
(C) Profit and Loss account
(D) Trial balance

15. : Which of the following factors will be used to calculate profit?
I. Cost of goods sold
II. Wages and salaries
III. Machinery
IV. Closing stock

16. : In inventory, the first to leave the warehouse is called:
(A) First in first out
(B) Last in first out
(C) Average cost
(D) Next in-first out

17. : Goods are purchased, a new average cost of inventory is calculated in a method called:
(A) First in first out
(B) Last in first out
(C) Average cost
(D) Next in first out

18. : Which of the following methods will value ending inventory at older rates?
(A) Average cost
(B) First in first out
(C) Last in first out
(D) Next in first out

19. : Which of the following stock valuation methods will produce the highest profit?
(A) Average cost
(B) Last in first out
(C) Next in first out
(D) First in first out

20. : What is the working capital of Carla’s Company Limited?
(A) $5,000
(B) $8,000
(C) $9,000
(D) $13,000

21. : What is the acid test ratio of Carla’s Company Limited?
(A) 1.83:1
(B) 2.09:1
(C) 2.16:1
(D) 2.45:1

22. : Each ‘T’ account contains the exact amount owing to a supplier:
(A) Sales ledger
(B) Purchases ledger
(C) General ledger
(D) Cash book

23. : The Trial balance:
(A) Is a listing of all the general ledger account balances at a particular date
(B) Is a listing of all the assets and expenses at a particular date
(C) Is a summary of all revenues and expenses at a particular date
(D) Is a summary of cash inflows and cash outflows at a particular date