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Accounting MCQ Questions & Answers

Accounting MCQs : This section focuses on the "Accounting". These Multiple Choice Questions (MCQs) should be practiced to improve the Accounting skills required for various interviews (campus interview, walk-in interview, company interview), placement, entrance exam and other competitive examinations.




Question 1

Which of the following is a real account?

A. Salary account
B. Cash account
C. Outstanding rent account
D. Sundry creditors account

View Answer

Question 2

The trade discount on purchases is recorded

A. When it is received
B. When the inventory is purchased
C. When the inventory is sold
D. Not at all recorded in the books

View Answer

Question 3

Purchase of office equipment for cash will be recorded on which side of a cash book?

A. Receipts
B. Payments
C. Incomes
D. Expenditures

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Question 4

Discount for quick repayment of debt is normally referred to as

A. Trade discount
B. Prompt payment discount
C. Cash discount
D. Bulk discount

View Answer

Question 5

Journals are also referred to as

A. Book of entries
B. Book of original entries
C. T account
D. Book of economic events

View Answer

Question 6

When one or both aspects of a transaction are recorded in the wrong class or category of account, it is called

A. Error of principle
B. Error of omission
C. Error of commission
D. Error of original entry

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Question 7

Based on which of the following concepts, is share capital account shown on the liability side of a balance sheet?

A. Business entity concept
B. Money measurement concept
C. Cost concept
D. Going concern concept

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Question 8

The real accounts are accounts of Assets, Liabilities and

A. Expenses
B. Revenues
C. Capital
D. Drawing

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Question 9

The process of recording in Journal is done

A. Two times in a year
B. Once in a year
C. Frequently during the accounting period
D. At the end of an accounting period

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Question 10

Provision for doubtful debts account is a/an

A. Asset account
B. Contra asset account
C. Nominal account
D. Liability account

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Question 11

Which of the following is known as the base for preparing trial balance?

A. Journal
B. Cash account
C. Ledger account
D. Balance Sheet

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Question 12

General Journal is a book of _____ entries

A. First
B. Original
C. Secondary
D. Generic

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Question 13

If we take goods for own use we should

A. Debit Drawings Account, Credit Purchases Account
B. Debit Drawings Account: Credit Stock Account
C. Debit Sales Account: Credit Stock Account
D. Debit Purchases Account: Credit Drawings Account

View Answer

Question 14

When capital is increased by an amount, it is recorded on the:

A. Left or credit side of the account
B. Right or debit side of the account
C. Right or credit side of the account
D. Left or debit side of the account

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Question 15

Cash book records

A. Cash payments
B. Cash Receipts
C. Cash payments and cash receipts
D. Neither cash payments nor cash receipts

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Question 16

Authorized share capital is also known as

A. Registered capital
B. Issued capital
C. Paid up capital
D. Called up capital

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Question 17

Which one of the following concepts states that the publication or presentation of financial statements should not be delayed?

A. Objectivity concept
B. Timing concept
C. Timeliness concept
D. Reliability concept

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Question 18

Transferring entries from journal to ledger account is commonly known as

A. Recording
B. Transferring
C. Posting
D. Entry making

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Question 19

Which of the following is non-profit organization?

A. Sole proprietorship
B. Partnership
C. Limited company
D. Trust

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Question 20

The accounting equation is based on

A. Dual aspect
B. Business entity
C. Going concern concept
D. All of the above

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Question 21

Balance sheets are prepared

A. Daily
B. Weekly
C. Monthly
D. Annually

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Question 22

Memorandum Joint Venture account is a

A. Personal account
B. Real account
C. Nominal account
D. None of the above

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Question 23

Which of the following account will be credited, if business bought goods on credit from Mr. Z?

A. Purchases account
B. Mr. Z account
C. Cash account
D. Sales account

View Answer

Question 24

Which of the following is the internal user of financial statements?

A. Creditor of the business
B. Government agency
C. Shareholder of the business
D. Manager of the business

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Question 25

Salaries paid in advance should be shown on

A. Asset side of the Balance sheet
B. Liability side of the Balance sheet
C. Credit side of the Trading account
D. All of the above

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Question 26

The three column cash book represents

A. Real accounts
B. Nominal accounts
C. Nominal and personal accounts
D. Real, personal and nominal accounts

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Question 27

Using 'lower of cost and net realisable value' for the purpose of inventory valuation is the implementation of which of the following concepts?

A. The going concern concept
B. The separate entity concept
C. The prudence concept
D. Matching concept

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Question 28

Discount allowed is

A. Expense of business
B. Income of business
C. Loss of business
D. Abnormal loss of business

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Question 29

Office equipment's account is classified as

A. Nominal accounts
B. Real account
C. Cash account
D. Capital account

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Question 30

Which of the following is/are fixed asset(s)?

A. Closing inventory
B. Fixed deposit in a bank
C. Patents
D. Prepaid expenses

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Question 31

Which of the following accounting equation is correct?

A. Cash + Other assets = Capital - Liabilities
B. Capital + Liabilities = Assets + Income
C. Assets - Liabilities = Capital
D. Assets + Capital = Liabilities

View Answer

Question 32

All of the following are the methods of inventory costing except

A. FIFO
B. LIFO
C. AVCO or average cost
D. Stock take

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Question 33

Opening inventory + Net purchases = ?

A. Ending inventory
B. Closing stock
C. Cost of goods manufactured
D. Cost of goods available for sale

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Question 34

Which of the following is the effect on net income if a business decreases its provision for bad debts?

A. It will increase net income
B. It will decrease net income
C. No effect
D. It will increase gross profit and net income

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Question 35

The most common imprest system is the ______ system

A. Petty cash
B. Cash book
C. Cash receipts journal
D. Discount

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Question 36

Transactions that a business does not record in any specialized journal are recorded in which of the following books?

A. Cash payment journal
B. Cash receipt journal
C. Purchases return journal
D. General journal

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Question 37

Those transactions for which there is no separate book, are recorded in the

A. Cash book
B. Bills receivable book
C. Bills payable book
D. Journal Proper

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Question 38

Auditing refers to

A. Reporting the financial information
B. Examination of financial information
C. Preparation of financial statements
D. Maintaining the ledger accounts

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Question 39

Debenture is also named as

A. Share
B. Bond
C. Reserve
D. Equity

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Question 40

Which is the most important characteristic that all assets of a business have?

A. Long life of assets
B. Value of assets
C. Intangible nature of assets
D. Future economic benefits

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Question 41

Which of the following is/are kind of depreciation expenses?

A. Amortization
B. Depletion
C. Both of them
D. None of the above

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Question 42

Goodwill is classified as which one of the following assets?

A. Fixed
B. Long term
C. Current
D. Intangible

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Question 43

Current assets are also known as

A. Gross working capital
B. Invested capital
C. Assets
D. Cash

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Question 44

Double entry accounting system includes

A. Accrual accounting only
B. Cash accounting only
C. Both cash and accrual accounting
D. None of the above

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Question 45

What does 'aged debtors analysis' signify?

A. shows how long debts have been outstanding
B. How old the customers are
C. How long does a business take to repay the bank loans
D. Minimum number of old debtors

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Question 46

The revenue recognition principle dictates that all types of incomes should be recorded or recognized when

A. Cash is received
B. At the end of accounting period
C. When they are earned
D. When interest is paid

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Question 47

A current asset that is convertible to cash within 3 months can be referred to as

A. Cash asset
B. Operating asset
C. Intangible assets
D. Cash equivalent

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Question 48

A document sent to customer when he returns the goods is called

A. Promissory note
B. Invoice
C. Credit note
D. Debit note

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Question 49

Interest on Capital is _____ for the business

A. Revenue
B. Expense
C. Gain
D. None of the above

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Question 50

The purchase price of a software that will be used for more than 12 months should be regarded as

A. a revenue expenditure
B. a capital expenditure
C. a long term expense
D. an accounting period expense

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Question 51

Which of the following is not a financial statement?

A. Profit and loss account
B. Profit and loss appropriation account
C. Balance sheet
D. Trial Balance

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Question 52

Financial statements mainly help in

A. Assumption of economic events
B. Anticipation of economic events
C. Recording of economic events
D. Communication of economic events

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Question 53

Information about an item is _______ if its ommission or misstatement might influence the financial decision of the users taken on the basis of that information

A. Concrete
B. Complete
C. Immaterial
D. Material

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Question 54

Cash book with cash and discount column is mostly referred to as

A. Simple cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book

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Question 55

The debts which are to be repaid within a short period (year or less) are known as

A. Current liabilities
B. Fixed liabilities
C. Contingent liabilities
D. All of the above

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Question 56

________ is the first phase of accounting cycle

A. Identifying an economic event or transaction
B. Preparing Journal
C. Posting entries to Ledger accounts
D. Making decisions about business

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Question 57

Stock of a Trading concern consists of

A. Raw material
B. Work in progress
C. Merchandise inventory
D. All of the above

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Question 58

Which one of the following is INCORRECT about closing stock?

A. It is added into current assets
B. It is deducted from Material available for use
C. It becomes opening stock of next year
D. It reduces the resources of business

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Question 59

A debit balance in the bank statement indicates

A. Cash at bank
B. Bank overdraft
C. Over payment to creditors
D. Cash in hand

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Question 60

Trial Balance is prepared to check accuracy of

A. Ledger account balances
B. Balance sheet balances
C. Income statement balances
D. Cash flow statement balances

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Question 61

The installation expenses for a new machinery will be debited to

A. Cash A/c
B. Profit & Loss A/c
C. Machinery A/c
D. Installation expenses A/c

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Question 62

Which of the following is a double entry for deprecation expenses?

A. Accumulated depreciation Debit and depreciation expenses Credit
B. Depreciation expenses Debit and accumulated depreciation Credit
C. Cash Debit and Depreciation expenses Credit
D. Depreciation expenses Debit and Cash Credit

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Question 63

Postage stamps on hand are considered as

A. Bank balance
B. Prepaid expenses
C. Accounts receivable
D. Creditors

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Question 64

Return on Investment Ratio (ROI) =

A. (Gross profit / Net sales) x 100
B. (Gross profit x Sales / Fixed assets) x 100
C. (Net profit / Sales) x 100
D. (Net profit / Total assets) x 100

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Question 65

Unpresented cheques are also referred to as

A. Uncollected cheques
B. Uncredited cheques
C. Outstanding cheques
D. Bounced cheques

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Question 66

Accounting provides information on

A. Cost and income for managers
B. Company's tax liability for a particular year
C. Financial conditions of an institutions
D. All of the above

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Question 67

When obligation is not probable or the amount expected to be paid to settle the liability cannot be measured with sufficient reliability, it is called

A. Contingent liability
B. Provision
C. Secured loan
D. None of the above

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Question 68

The ratios that refer to the ability of the firm to meet the short term obligations out of its short term resources

A. Liquidity ratio
B. Leverage ratio
C. Activity ratio
D. Profitability ratio

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Question 69

Which of the following item will be shown on debit side of debtors account?

A. Discount received
B. Return inwards
C. Discount allowed
D. Credit sales

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Question 70

A cash book with cash, bank and discount column is commonly referrred to as

A. Cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book

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Question 71

In Journal, the business transaction is recorded

A. Same day
B. Next day
C. Once in a week
D. Once in a month

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Question 72

Which of the following is a biological asset?

A. Land
B. Building
C. Environment
D. Living plants and animals

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Question 73

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

A. Total purchases
B. Total credit sales
C. Total current assets
D. Total current liabilities

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Question 74

Sales and purchase journal doesn't record

A. Credit sales
B. Credit purchases
C. Credit sales and purchases
D. Cash sales and purchases

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Question 75

The portion of the acquisition cost of an asset yet to be allocated is known as

A. Written down value
B. Accumulated value
C. Realizable value
D. Salvage value

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Question 76

Discounts received are

A. Deducted by us when we pay our accounts
B. Deducted when we receive cash
C. Given by us when we sell goods on credit
D. None of these

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Question 77

An 'account' records the ______ in the balance of an item

A. Increase
B. Decrease
C. Increase or decrease
D. Appreciation

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Question 78

Which of the following subsidiary books serves the purpose of ledger too, in addition to the recording of accounting transaction?

A. Purchases book
B. Sales book
C. Bills receivable book
D. Cash Book

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Question 79

Dividends are usually paid as a percentage of

A. Net profit
B. Authorized share capital
C. Called up capital
D. Paid up capital

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Question 80

Shares for which amount is paid by public are called ____ shares

A. Authorized
B. Paid up
C. Bonus shares
D. All of the above

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Question 81

_____ is not required in Promissory Note

A. Acceptance
B. Noting
C. Discounting
D. None of the above

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Question 82

Petty cash fund is supposed to be replenished

A. Every year
B. Every half year
C. Every year
D. At the end of every accounting period

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Question 83

Purchases + opening stock - closing stock = ?

A. Amount of sales
B. Gross profit
C. Cost of goods sold
D. Net income

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Question 84

Office equipment is a ______ asset for a computer manufacturer and the same office equipment is a ____ asset for a company that deals in these equipments

A. Current, fixed
B. Fixed, intangible
C. Tangible, intangible
D. Fixed, current

View Answer

Question 85

Which of the following is true about a trial balance?

A. It lists down the balances of accounts
B. It lists down the balances of a balance sheet
C. It is a kind of financial statement
D. It is not a part of accounting cycle

View Answer

Question 86

Which one of the following statement is CORRECT about long term liabilities?

A. These are due within one year
B. These consist of all debts, payabke after 12 months
C. In working capital, these are deducted from current assets
D. All of the above

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Question 87

Cash book is prepared by

A. Bank
B. Accountant of business
C. Manager of a company
D. Bank's cashier

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Question 88

Lower the Debt Equity ratio

A. Lower the protection to creditors
B. Higher the protection to creditors
C. It does not affect the creditors
D. None of the above

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Question 89

_______ is the gross inflow of economic benefits

A. Assets
B. Liabilities
C. Income
D. Expenses

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Question 90

Current ratio =

A. Quick assets/Current liabilities
B. Current assets/Current liabilities
C. Debt/Equity
D. Current assets/Equity

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Question 91

The normal balance of asset account is

A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance

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Question 92

Which of the following financial statements show the financial health of an organisation at a stated point of time?

A. Balance sheet
B. Trading and Profit & Loss account
C. Cash flow statement
D. Statement of retained earnings

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Question 93

Specialized journals are more adequate for which type of businesses?

A. Small businesses
B. Big businesses
C. Sole proprietorship
D. Partnership

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Question 94

A Master Budget consists of

A. Sales budget
B. Production budget
C. Material budget
D. All of the above

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Question 95

_______ are cheques that are issued by the business but not yet presented to bank for payment

A. Uncollected cheques
B. Uncredited cheques
C. Outstanding cheques
D. Bounced cheques

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Question 96

An informal accounting statement that lists the ledger account balances at a point of time and compares the total of debit balances with the total of credit balances is known as

A. Income statement
B. Balance sheet
C. Trial balance
D. Cash Book

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Question 97

One of the Fundamental accounting assumption is

A. Materiality
B. Going concern
C. Business entity
D. Dual aspect

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Question 98

Commercial accounting is based on

A. Single entry book keeping
B. Double entry book keeping
C. Both single and double entry book keeping
D. Cash basis of book keeping

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Question 99

Liabilities are which of the following?

A. Resources
B. Obligations
C. Future benefits
D. Expenses

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Question 100

Present liability of uncertain amount, which can be measured reliably by using a substantial degree of estimation is termed as

A. Contingent liability
B. Liability
C. Provision
D. Reserve

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Question 101

The long term assets that have no physical existence but are rights that have value is known as

A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments

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Question 102

The expenses that have fallen due for payment but not paid are

A. Outstanding expenses
B. Deffered expenses
C. Accrues expenses
D. Prepaid expenses

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Question 103

Every business transaction affects at least ____ accounts

A. One
B. Two
C. Three
D. Infinite

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Question 104

Which of the following accounts will be credited if a company purchases building for cash?

A. Capital account
B. Fixed assets account
C. Building account
D. Cash account

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Question 105

_______ is the common base for preparing a trial balance

A. Ledger accounts
B. General Journal
C. Specialized journals
D. Balance sheet

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Question 106

Patents accounts are

A. Secured loan account
B. Nominal account
C. Real account
D. Debtors account

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Question 107

Which of the following inventory valuation methods show higher profits during the period of rising prices?

A. FIFO
B. LIFO
C. Weighted average cost method
D. Simple average method

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Question 108

An entry which is made on both sides of a cash book is called

A. Cash entry
B. Contra entry
C. Payment entry
D. Compound entry

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Question 109

A recovery of bad debt

A. increases net income
B. decreases net income
C. increases gross profit
D. increases gross profit and net income

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Question 110

Which of the following is the external user of financial statements?

A. Manager of the business
B. CEO of the business
C. Creditor of the business
D. Controller of the business

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Question 111

Error which affect only one account can be

A. Error of complete omission
B. Error of posting
C. Compensatory errors
D. None of the above

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Question 112

Payment of expenses will ______ the assets

A. Increase
B. Reduce
C. Apportion
D. Overstate

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Question 113

Which of the following account with normal balance is shown at the credit side of a trial balance?

A. Cash account
B. Bank account
C. Equipment account
D. Accrued expenses account

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Question 114

Which one of the following can offer its share to public at large?

A. Private limited company
B. Listed company
C. Partnership firm
D. Trust

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Question 115

Which one of the following inventory costing methods is supposed to issue the most recently purchased goods?

A. FIFO
B. LIFO
C. AVCO or averrage cost
D. Moving average

View Answer

Question 116

The accounting process involves recording

A. Quantifiable economic event
B. Non Quantifiable economic event
C. All of them
D. None of them

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Question 117

Outsider's claim against the assets of the business is called

A. Liability
B. Expense
C. Income
D. Capital

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Question 118

Suspense account given in the trial balance will be entered in the

A. Manufacturing account
B. Balance sheet
C. Trading account
D. Profit and loss account

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Question 119

Net income equal to Revenues minus

A. Gains
B. Depreciation
C. Expenses
D. Capital expenditure

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Question 120

Bank Reconciliation statement is prepared by

A. Accountant of business
B. Manager of business
C. Controller of business
D. Accountant of the bank

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Question 121

The expenses related to the main operations of a business are referred to as

A. Administration expense
B. Non-administration expense
C. Selling expense
D. Operating expense

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Question 122

The charter of a company which defines the limitations and powers of the company is called

A. Memorandum of Association
B. Articles of Association
C. Statutory Report
D. Certificate of Commencement

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Question 123

When a liability is reduced or decreased, it is recorded on the:

A. Left or credit side of the account
B. Right or debit side of the account
C. Right or credit side of the account
D. Left or debit side of the account

View Answer

Question 124

Which of the following financial reports shows the profitability of a business?

A. Income statement
B. Balance sheet
C. Cash flow statement
D. Statement of changes in equity

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Question 125

Carriage inwards refers to the cost of transportation for

A. Purchase of materials
B. Sale of products
C. Returns outward
D. Return of unsold goods

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Question 126

Which of the following is quoted company?

A. Private limited company
B. Public limited company
C. Listed company
D. Non listed company

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Question 127

Which of the following is a selling expense?

A. Any tax/freight is paid on purchases
B. General salaries paid to laborers
C. Tax & freight paid on sale
D. Interest on deposits

View Answer

Question 128

Cash purchases is recorded in which of the following specialized journals?

A. Purchase Journal
B. Sales Journal
C. Purchase return journal
D. Cash payments journal

View Answer

Question 129

Under which depreciation method, the amount of depreciation expenses remains same throughtout the life of the asset?

A. Straight line method
B. Reducing balance method
C. Number of units produced method
D. Machine hours method

View Answer

Question 130

Exercising a degree of caution in the case of judgements needed under the condition of uncertainity is the assumption of which of the following accounting concepts?

A. Matching concept
B. Timeliness concept
C. Accrual concept
D. Prudence concept

View Answer

Question 131

An overstatement in the value of closing stock overstates all of the following except

A. Net income
B. Current assets
C. Capital of the business
D. Cost of goods sold

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Question 132

Real account records

A. Dealings with creditors or debtors
B. Dealings in commodities
C. Gains and losses
D. All of the above

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Question 133

Bills receivable endorsed are debited to

A. Bills Payable A/c
B. Debtor's A/c
C. Endorsee A/c
D. Bills Receivable A/c

View Answer

Question 134

The normal balance of liability account is

A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance

View Answer

Question 135

What is equity?

A. Cash from the business
B. Liability of a business
C. Owner's claim on total assets
D. Owner's claim on total liabilities

View Answer

Question 136

Which of the following account will be credited when the goods are purchased on credit from Mr. Ali?

A. Purchases account
B. Mr. Ali account
C. Cash account
D. Sales account

View Answer

Question 137

______ is a separate legal entity whose total capital can be divided into many shares

A. Partnership
B. Sole Proprietorship
C. Company
D. Non-profit organization

View Answer

Question 138

A Trial Balance contains the balances of

A. Only Real A/c
B. Real A/c and Nominal A/c
C. Personal A/c
D. Both 'b' and 'c'

View Answer

Question 139

Gross profit is

A. Cost of goods sold + Opening stock
B. Excess of sales over cost of goods sold
C. Sales fewer Purchases
D. Net profit fewer expenses of the period

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Question 140

A brief explanation recorded below every entry in General Journal is commonly known as

A. Narration
B. Explanation
C. Summary
D. Other Information

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Question 141

In case goods are manufactured and segregated for specified consumers, the best method for valuation of inventory would be

A. FIFO
B. Simple average
C. Base stock
D. Specific identification method

View Answer

Question 142

A higher inventory ratio indicates

A. Better inventory management
B. Quicker turnover
C. Both A and B
D. None of the above

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Question 143

Balance sheet is a statement of

A. Assets
B. Liabilities
C. Capital
D. All of the above

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Question 144

If it is required to maintain fixed capitals then the partners shares of profits must be

A. Credited to capital accounts
B. Debited to capital accounts
C. Debited to partners current accounts
D. Credited to partners current accounts

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Question 145

The charges of placing commodities into a saleable condition should be charged to

A. Trading account
B. P & L a/c
C. Balance Sheet
D. None of the above

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Question 146

Depreciation is charged on fixed assets to comply with which of the following accounting principle?

A. Matching concept
B. Prudence concept
C. Timeliness concept
D. Reliability concept

View Answer

Question 147

Different accounting policies can be adopted in the following area(s)

A. Valuation of inventories
B. Valuation of Investments
C. Calculation of depreciation
D. All of the above

View Answer

Question 148

Accounts payable has ____ balance

A. Credit
B. Debit
C. Unfavorable
D. Favorable

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Question 149

Which of the following is true when a debtor pays his dues?

A. The asset side of the balance sheet will decrease
B. The asset side of the balance sheet will increase
C. The liability side of the balance sheet will increase
D. There is no change in total assets or total liabilities

View Answer

Question 150

Which of the following is NOT an example of intangible assets?

A. Franchise rights
B. Goodwill
C. Patents
D. Land

View Answer

Question 151

Debit note is the basis for recording a transaction in which of the following journals?

A. General journal
B. Cash journal
C. Purchase journal
D. Purchase return journal

View Answer

Question 152

Which of the following is time spann into which the total life of a business is divided for the purpose of preparing financial statements?

A. Fiscal year
B. Calendar year
C. Accounting period
D. Accrual period

View Answer

Question 153

Which of the following specialized journal records "goods returned by customers"?

A. Purchase journal
B. Sales journal
C. Purchase return journal
D. Sales return journal

View Answer

Question 154

The sales income (Credit and Cash) of a business during a given period is called

A. Transactions
B. Sales Returns
C. Turnover
D. Purchase Returns

View Answer

Question 155

An asset possesses which of the following?

A. Future economic benefits for the business
B. All kinds of benefits for the business
C. Expenses for the business
D. Merits & Demerits for the business

View Answer

Question 156

Opening and closing inventories are recorded in

A. Journal proper
B. Purchase book
C. Sales book
D. Bill receivable book

View Answer

Question 157

The process of recording transactions in different journals is called

A. Posting
B. Entry making
C. Adjusting
D. Journalising

View Answer

Question 158

Which of the following accounts can be classified as a real account?

A. Rent expenses account
B. Rent income account
C. Insurance expenses account
D. Cash account

View Answer

Question 159

The accrual basis of accounting records revenues when they are

A. Collected
B. Earned
C. Contracted
D. Readily available for use

View Answer

Question 160

Under cash basis of accounting, revenue is recognized when

A. Sale is made
B. Cash is received
C. Goods are delivered
D. Services are rendered

View Answer

Question 161

In which of the following order, data is entered into the Journal?

A. Alphabetical order
B. Numeric order
C. Bullets order
D. Chronological order

View Answer

Question 162

Payment of rent expenses is recorded on which side of cash book?

A. Receipts
B. Payments
C. Income
D. Expense

View Answer

Question 163

Accounting furnishes data on

A. Income and cost for the managers
B. Financial conditions of the institutions
C. Company’s tax liability for a particular year
D. All the above

View Answer

Question 164

Which of the following is NOT a cash inflow?

A. Sale of fixed asset
B. Issue of debentures
C. Cash from business operation
D. Purchase of fixed asset

View Answer

Question 165

When the goods are returned to a supplier

A. A Debit note is sent to him
B. An Account sale is sent to him
C. A receipt is sent to him
D. Either 'b' or 'c'

View Answer

Question 166

An expenditure whose benefit is finished or enjoyed immediately is called

A. Expense
B. Liability
C. Cost
D. Income

View Answer

Question 167

A decrease in value of a fixed asset due to age, wear and tear is known as

A. Depreciation
B. Accumulated depreciation
C. Appreciation
D. Written Down Value (WDV)

View Answer

Question 168

If debit balances = credit balances, trial balance only shows or checks the _________ and it does not indicate that no errors were made during recording and posting.

A. Arithmetic accuracy
B. Errors of commission
C. Omissions of economic events
D. Understatements of balances

View Answer

Question 169

Del-credere Commission is allowed to cover

A. All types losses
B. Abnormal loss
C. Normal loss
D. None of the above

View Answer

Question 170

In income statement, gross profit is always equal to

A. Sales - expenses
B. Income - expenses
C. Sales - cost of goods sold
D. Sales - selling costs

View Answer

Question 171

Which of the following will be debited if a business purchases goods on credit?

A. Cash
B. Debtor
C. Creditor
D. Purchases

View Answer

Question 172

A company purchased a vehicle for Rs.6000. It will be used for 5 years and its residual value is expected to be Rs.1000. What is the annual amount of depreciation using straight line method of depreciation?

A. Rs. 1000
B. Rs. 2000
C. Rs. 3000
D. Rs. 5000

View Answer

Question 173

Which of the following appears in the profit and loss appropriation account?

A. Interest on debentures
B. Dividend
C. Provision for taxation
D. Provision for bad debts

View Answer

Question 174

Cost of a fixed asset - Accumulated depreciation expenses of the fixed asset = ?

A. Book value of a fixed asset
B. Market value of a fixed asset
C. Historical cost of a fixed asset
D. Recoverable amount if a fixed asset

View Answer

Question 175

Assets minus liabilities equal to

A. Goodwill
B. Working capital
C. Net income
D. Capital

View Answer

Question 176

Land on lease should be shown in Blance sheet contrary to the fact that the company does not own that piece of land is the implementation of which accounting concept?

A. Matchig concept
B. Accrual concept
C. Prudence concept
D. Substance over form concept

View Answer

Question 177

Which of the following assets are shown at written down value in Balance sheet?

A. Current assets
B. Liquid asset
C. Floating assets
D. Fixed asset

View Answer

Question 178

What is the basic accounting equation?

A. Capital + Liabilities = assets
B. Assets + Liabilities = Capital
C. Capital + Assets = Liabilities
D. Liabilities - Capital = Assets

View Answer

Question 179

An alternative term used for accumulated depreciation expenses?

A. Provision for depreciation
B. Cumulative depreciation
C. Targeted depreciation
D. Depletion

View Answer

Question 180

Commission to promote credit sale by consignee is known as

A. Del credere commission
B. Over riding commission
C. Ordinary commission
D. Special commission

View Answer

Question 181

The concept that "an accountant shouldn't anticipate profit, but must provide for all losses"

A. Conservation concept
B. Consistency concept
C. Materiality concept
D. Reduction concept

View Answer

Question 182

Which of the following does not appear in Balance sheet?

A. Building
B. Cash
C. Goodwill
D. Rent expenses

View Answer

Question 183

The term _______ is generally used for the depreciation of natural resources

A. Amortization
B. Depletion
C. Appreciation
D. Disposal value

View Answer

Question 184

The account that records expenses, gains and losses is

A. Personal account
B. Real account
C. Nominal account
D. None of the above

View Answer

Question 185

Which of the following event is subject matter of Accounting?

A. Death of key executive of the business
B. Strike of workers
C. Payment of Rs.1000 to bank in discharge of outstanding loan
D. Marriage of the daughter of the MD of the company

View Answer

Question 186

Suppliers personal a/c are seen in the

A. Sales Ledger
B. Nominal ledger
C. Purchases Ledger
D. General Ledger

View Answer

Question 187

Drawings by owner of business are generally recorded on which of the following side of a cash book?

A. Receipts
B. Payments
C. Incomes
D. Expenditures

View Answer

Question 188

Which of the following capital is taken up by the general public?

A. Issued capital
B. Subscribed capital
C. Authorized capital
D. Reserve capital

View Answer

Question 189

An asset must be ________ by the business to be shown as an asset in its balance sheet.

A. Possessed
B. Owned
C. Controlled
D. Used

View Answer

Question 190

Which of the following accounts will be debited if the business's owner withdraws cash from business for personal use?

A. Drawings
B. Cash
C. Business
D. Stock

View Answer

Question 191

The maximum amount beyond which a company is not allowed to raise funds by issue of shares is

A. Issued capital
B. Reserve capital
C. Nominal capital
D. Subscribed capital

View Answer

Question 192

Money spent to acquire or upgrade physical assets is known as

A. Revenue expense
B. Capital expense
C. Administrative expense
D. Operating expense

View Answer

Question 193

XYZ firm has imported a machine from abroad. Which of the following is NOT the element of the machine's cost?

A. Purchase price of machine
B. Import duty
C. Demmurage charges
D. Refundable tax

View Answer

Question 194

Which of the following statements is incorrect regarding capital account?

A. Debit increases the capital account balance
B. Credit increases the capital account balance
C. Fresh capital increases the capital account balance
D. Net income increases the capital account balance

View Answer

Question 195

Which of the following ratios indicate the short-term liquidity of a business?

A. Inventory turnover ratio
B. Debt equity ratio
C. Acid test ratio
D. Proprietary ratio

View Answer

Question 196

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

A. Debtor refusal to repayment
B. Debtor left the country
C. Debtor committed a crime
D. Debtor declared to be a bankrupt

View Answer

Question 197

Which of the following capital is required for the registration of the company?

A. Issued capital
B. Subscribed capital
C. Authorized capital
D. Reserve capital

View Answer

Question 198

The claims against the company not acknowledged as debts are shown as

A. Current liabilities
B. Loans and advances
C. Notes to balance sheet
D. Director's report

View Answer

Question 199

Which of the following is not considered as Research & Development costs?

A. Testing in search for product alternatives
B. Legal work on patent application
C. Modification of design of a process
D. Searching for application of new research findings

View Answer

Question 200

Sales on credit is recorded in which of the following journal?

A. Purchase journal
B. Sales journal
C. Purchase return journal
D. Sales return journal

View Answer

Question 201

American companies prepare their financial statement in Dollars whereas Japanese companies produce financial statement in Yen. This is an example of:

A. Stable monetary unit concept
B. Unit of measurement concept
C. Money value concept
D. Current swap concept

View Answer

Question 202

The matching concept matches which of the following?

A. Asset with liabilities
B. Capital with income
C. Revenues with expenses
D. Expenses with capital

View Answer

Question 203

Accounting is the process of matching

A. Benefits and costs
B. Revenues and costs
C. Cash inflows and outflows
D. Potential and real performance

View Answer

Question 204

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

A. Purchase price
B. Opportunity cost
C. Realizable value
D. Net realizable value

View Answer

Question 205

An increase in the value of fixed asset is referred to as:

A. Depreciation
B. Appreciation
C. Market capitalization
D. Reverse depreciation

View Answer

Question 206

Liquid or Quick assets =

A. Current assets - (Stock + Work in progress)
B. Current assets + Stock + Work in progress
C. (Current assets + Stock) + Work in progress
D. (Current assets + Work in progress) - Stock

View Answer

Question 207

Cost incurred for the maintenance of shop is considered as

A. Deffered expense
B. Capital expenditure
C. Revenue expenditure
D. Preliminary expense

View Answer

Question 208

Term 'Credit' means _____ by the business

A. Receiving of benefits
B. It has no effect on business
C. Providing benefits
D. It depends upon items

View Answer

Question 209

The following is a statement of revenues and expenses for a specific period of time

A. Trading account
B. Trial Balance
C. Profit & Loss statements
D. Balance Sheet

View Answer

Question 210

The document inviting offers from public to subscribe for the debentures or shares of a body corporate is a

A. Share certificate
B. Debenture
C. Fixed deposit receipt
D. Prospectus

View Answer

Question 211

Which of the following is TRUE about the treatment of insurance premium paid in advance

A. Current asset
B. Current liability
C. Short term liability
D. Fixed asset

View Answer

Question 212

A cash book that is used to record the small payments of cash is generally referred to as

A. Simple cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book

View Answer

Question 213

Discount allowed is a kind of deduction from

A. Account Payable
B. Account Receivable
C. Cash account
D. Discount account

View Answer

Question 214

The concept of 'separate entity' is applicable to which of the following types of businesses?

A. Sole proprietorship
B. Corporation
C. Partnership
D. All of the above

View Answer

Question 215

A credit balance in cash book indicates

A. Bank balance
B. Cash at bank
C. Bank overdraft
D. Bank underdraft

View Answer

Question 216

Bank Reconciliation statement is the comparision of a bank statement (sent by bank) with the

A. Cash receipt journal
B. Cash payment journal
C. Cash book
D. Financial statements

View Answer

Question 217

Net loss occurs when

A. Expenses are greater than income
B. Expenses are less than income
C. Expenses = Income
D. Liabilities are greater than income

View Answer

Question 218

Which of the following items of balance sheet are useful in evaluating a company's liquidity?

A. Current assets and other assets
B. Current liabilities and current assets
C. Current liabilities and plant and equipment
D. In current liabilities and other assets

View Answer

Question 219

Economic life of an enterprise Is split into periodic interval as per ____ concept

A. Materiality
B. Periodicity
C. Accrual
D. Conservation

View Answer

Question 220

A cheque returned by bank marked "NSF" means that

A. Bank can't verify your identity
B. There are not sufficient funds in your account
C. Cheque has been forged
D. Cheque can't be cashed being illegal

View Answer

Question 221

General office expenses are charged to which of the following head?

A. Administrative expenses
B. Marketing expenses
C. Selling expenses
D. Financial expenses

View Answer

Question 222

In balance sheet, fixed assets are shown at

A. Cost price
B. Market value
C. Fair value
D. Written Down Value (WDV)

View Answer

Question 223

Long term assets having no physical existence but, possessing a value are called

A. Intangible assets
B. Fixed assets
C. Current assets
D. Investments

View Answer

Question 224

An asset that is NOT physical in nature is called

A. Intangible asset
B. Liquid asset
C. Current asset
D. Fixed asset

View Answer

Question 225

Reserve capital means

A. Part of subscribed uncalled capital
B. Accumulated profit
C. Part of Capital Reserve
D. Part of Capital Redemption Reserve

View Answer

Question 226

Sales invoices are first entered in

A. The Cash Book
B. The Purchases Journal
C. The Sales Journal
D. The Sales Account

View Answer

Question 227

Bookkeeping mainly consists of which part of accounting process?

A. Analysing
B. Preparing financial statements
C. Recording financial information
D. Auditing the books of accounts

View Answer

Question 228

Net profit is computed in the

A. Profit and loss account
B. Balance sheet
C. Trial balance
D. Trading account

View Answer

Question 229

Copyrights, Patents and Trademarks are,

A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments

View Answer

Question 230

Which of the following is the closing balance of a ledger account?

A. Balance c/d
B. Balance b/d
C. Balance e/d
D. Balance f/c

View Answer

Question 231

Revenue from sale of product ordinarily is reported as part of earning in the period

A. The planning takes place
B. The sale is made
C. The product is manufactured
D. The cash is collected

View Answer

Question 232

If a trial balance totals do not agree, the difference must be entered in

A. The Profit and Loss Account
B. A Nominal Account
C. The Capital Account
D. A Suspense Account

View Answer

Question 233

A proforma invoice is sent by

A. Consignee to consignor
B. Consignee to debtors
C. Debtors to consignee
D. Consignor to consignee

View Answer

Question 234

The estimated value at which an asset is expected to be sold after the end of its useful life is called

A. Residual value
B. Salvage value
C. Scrap value
D. All of the above

View Answer

Question 235

Cash discount is allowed on ______ repayment of debt

A. Lump sum
B. Prompt
C. Actual
D. None of them

View Answer

Question 236

The measure of how efficiently the assets resources are employed by the firm is called

A. Liquidity ratio
B. Leverage ratio
C. Activity ratio
D. Profitability ratio

View Answer

Question 237

Which of the following are the owners of a company?

A. Proprietors
B. Partners
C. Shareholders
D. Managers

View Answer

Question 238

The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as

A. Appreciation
B. Depreciation
C. Fluctuation
D. None of the above

View Answer

Question 239

A low Return on Investment Ratio (ROI) indicates

A. Improper utilization of resources
B. Over investment in assets
C. Both A and B
D. None of the above

View Answer

Question 240

Which of the following specialized journal records "goods returned by the business"?

A. Purchase journal
B. Sales journal
C. Purchase return journal
D. Sales return journal

View Answer

Question 241

Prepaid expenses are considered as

A. Asset
B. Liability
C. Loss
D. Capital

View Answer

Question 242

Budgeting is difficult to apply in the following cases

A. Products subjected to rapid changes
B. Job order manufacturing
C. Uncertain market condition
D. All of the above

View Answer

Question 243

When will the bill mature if the date of maturity of a bill is a holiday

A. Holiday itself
B. Other agreed day
C. Preceding working day
D. Next working day

View Answer

Question 244

Which of the following sets of expense are the direct expense of business?

A. Wages, Carriage Inward, Octroi
B. Postage, Wages, Carriage Inward
C. Purchases, Wages, Coal Expenses
D. Both 'a' and 'c'

View Answer

Question 245

Under which method of inventory costing, a pre-determined cost is assigned to all items of inventory?

A. Replacement cost method
B. Standard cost method
C. AVCO or average cost
D. FIFO method

View Answer

Question 246

Normally the following accounts are balanced

A. Real account and Nominal account
B. Personal account and Real account
C. Only Nominal account
D. All accounts

View Answer

Question 247

The maximum amount with which a company is registered is called

A. Authorized capital
B. Issued capital
C. Paid up capital
D. Called up capital

View Answer

Question 248

Amortization of unidentified intangible assets is in terms of

A. Conservatism concept
B. Materiality concept
C. Matching concept
D. Cost concept

View Answer

Question 249

Identify the correct sequence of accounting process

A. Communicating -> Recording -> Identifying
B. Recording -> Communicating -> Identifying
C. Identifying -> Communicating -> Recording
D. Identifying -> Recording -> Communicating

View Answer

Question 250

Purchase book is maintained to record

A. All credit purchases
B. All cash purchases
C. Purchases of goods
D. None of the above

View Answer

Question 251

Identify the asset from the following

A. Cash and cash equivalent
B. Creditors
C. Notes payable
D. Bank loan

View Answer

Question 252

Which of the following is a type of cash receipt journal + cash payment journal?

A. Bank statement
B. Statement of cash flow
C. Cash book
D. Cash documents

View Answer

Question 253

Which of the following account will be credited when the goods are purchased on cash?

A. Stock account
B. Cash account
C. Supplier account
D. Work in progress account

View Answer

Question 254

Which of the following is not regarded as the fundamental concept that is identified by IAS-1?

A. The going concern concept
B. The separate entity concept
C. The prudence concept
D. Correction concept

View Answer

Question 255

Revenue earned but not yet received by the business is known as

A. Contra asset revenue
B. Accrued expenses
C. Accrued revenue
D. Unearned revenue

View Answer

Question 256

The main objective of providing depreciation is to

A. Calculate the true net profit
B. Compute the actual cash profit
C. Create funds for replacement of fixed assets
D. Reduce tax burden

View Answer

Question 257

Transaction between business and owner are recorded following ____ concept

A. Periodicity
B. Business entity
C. Prudence
D. Going concern

View Answer

Question 258

What is depreciation?

A. Cost of a fixed asset
B. Cost of a fixed asset's repair
C. The residual value of a fixed asset
D. Portion of a fixed asset's cost consumed during the current accounting period

View Answer

Question 259

Which of the following is the most important document of the company?

A. Memorandum of association
B. Articles of association
C. Annual report
D. Prospectus

View Answer

Question 260

The assets that can be easily converted into cash within a short period, i

A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments

View Answer

Question 261

A cash deposit made by business appears on the bank statement as ____ balance

A. Debit
B. Credit
C. Expenses
D. Liability

View Answer

Question 262

Discount received is recorded on which of the following side of a cash book?

A. Receipts
B. Payments
C. Income
D. Expenditure

View Answer

Question 263

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

A. Provision for bad debt is created
B. Account receivable is credited
C. Bad debts is credited
D. Sales is debited

View Answer

Question 264

Does prudence concept allow a business to build substantially higher reserves or provisions than that are actually required?

A. Yes
B. No
C. To some extent
D. It depends on the type of business

View Answer

Question 265

Fresh capital introduction will increase

A. Assets and Liabilities
B. Assets and Equity
C. Liabilities and equity and bank balance
D. Capital and Liabilities

View Answer

Question 266

The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as

A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments

View Answer

Question 267

Which of the following is (are) type(s) of Public Limited Companies?

A. Listed companies
B. Non listed companies
C. Private limited companies
D. Both listed and non listed companies

View Answer

Question 268

Which of the following account will be credited when a typewriter is sold that has been used in the office?

A. Office equipment account
B. Cash account
C. Sales account
D. Purchase account

View Answer

Question 269

Debit balance = Credit balance in a trial balance indicates that

A. No error in recording transactions
B. No error in posting entries to ledger accounts
C. Account balances are correct
D. Mathematically Capital + Liabilities = Assets

View Answer

Question 270

Accrued expenses are considered as

A. Asset
B. Liability
C. Gain
D. Income

View Answer

Question 271

Petty cash balance is

A. Liability
B. Income
C. Expense
D. Asset

View Answer

Question 272

Accounts receivable & inventory are the examples of

A. Current assets
B. Liquid asset
C. Fixed asset
D. Capital asset

View Answer

Question 273

The Journal entry in which two or more account is debited or credited is referred to as

A. Journal entry
B. Multi entry
C. Additional entry
D. Compound entry

View Answer

Question 274

Which of the following financial statements shows the financial position of a business at a specific date?

A. Balance sheet
B. Income statement
C. Cash flow statement
D. Statement of changes in equity

View Answer

Question 275

Which of the following are closed at the end of an accounting period?

A. Nominal accounts
B. Personal accounts
C. Real accounts
D. None of them

View Answer

Question 276

Goods returned by customer should be debited to which of the following accounts?

A. Sales income account
B. Sales account
C. Return inward account
D. Expenses account

View Answer

Question 277

Merchandise on hand at either the beginning or end of the accounting period is called

A. Raw material
B. Cost of goods sold
C. Work in progress
D. Inventory

View Answer

Question 278

The going concern concept assumes that

A. The entity continue running for forseeable future
B. The entity continue running until the end of accounting period
C. The entity will close its operation in 10 years
D. The entity can't be liquidated

View Answer

Question 279

Which of these best explains fixed assets?

A. Are bought to be used in the business
B. Are expensive items bought for the business
C. Are items which will not wear out quickly
D. Are of long life and are not purchased specifically for resale

View Answer

Question 280

Capital increases if ______ increases

A. Expenses are greater than income
B. Drawings
C. Interest on capital
D. Revenue

View Answer

Question 281

In order to find out the value of the closing stock during the end of the financial year we,

A. do this by stocktaking
B. deduct the cost of goods sold from sales
C. deduct opening stock from the cost of goods sold
D. look in the stock account

View Answer

Question 282

Depreciable amount + Residual value of a fixed asset = ?

A. Depreciation expenses
B. Accumulated depreciation
C. Cost of the fixed asset
D. Future economic benefits of a fixed asset

View Answer

Question 283

The unfavorable balance of Profit and Loss account should be

A. Added to liabilities
B. Subtracted from current assets
C. Subtracted from capital
D. Subtracted from liabilities

View Answer

Question 284

Which of the following is a liability?

A. Cash
B. Equipment
C. Debtors
D. Creditors

View Answer

Question 285

Which of the following foxed assets is not depreciated in the ordinary circumstances?

A. Plant & Machinery
B. Building account
C. Land
D. Equipment's

View Answer

Question 286

What type of expenses are paid out of Gross Profit?

A. General expenses
B. Financial expenses
C. Selling expenses
D. All of the above

View Answer

Question 287

Which of the following is not an item of revenue expenditure?

A. Interest on deposits accepted
B. Annual insurance premium on inventory
C. Customs duty paid in connection with the import of equipment
D. Repairs and maintenance on machinery

View Answer

Question 288

The persons who sign Articles and Memorandum of the company and contribute in the initial share capital of the company are called

A. Subscribers
B. Shareholders
C. Managers
D. Directors

View Answer

Question 289

Capital of a business decreases if there is an increase in

A. Drawings
B. Income
C. Gains
D. Fresh capital

View Answer

Question 290

In which of the following interim dividend is treated?

A. In profit and loss account
B. In profit and loss appropriation account
C. On the asset side of the Balance sheet
D. In trading account

View Answer

Question 291

Under which method of depreciation, the amount of depreciation expenses remains constant throughout the life of the asset?

A. Reducing balance method
B. Unit of activity method
C. Straight line method
D. None of these

View Answer

Question 292

Which one of the following accounting equations is correct?

A. Assets = Owner's equity
B. Assets = Liabilities + Owner's equity
C. Assets = Liabilities - Owner's equity
D. Assets + Liabilities = Owner's equity

View Answer

Question 293

______ is the withdrawal of cash and goods by the owner of the business for his/her personal use

A. Depreciation
B. Drawings
C. Outflow of cash
D. Appreciation

View Answer

Question 294

Which of the following will affect the agreement of a trial balance?

A. Complete omission of a transaction
B. Partial omission of a transaction
C. Error of principle
D. Compensating errors

View Answer

Question 295

A firm has not recorded the bad debts by mistake. Which of the following is the effect of bad debt ommission?

A. Net profit would decrease
B. Net profit would increase
C. Gross profit would overstate
D. Gross profit would understate

View Answer

Question 296

Cost of goods available for sale - closing inventory = ?

A. Opening inventiry
B. Cost of opening finished goods inventory
C. Work in progress ending inventory
D. Cost of goods sold

View Answer

Question 297

The following is (are) the current liability (ies)

A. Bills payable
B. Outstanding expenses
C. Bank Overdraft
D. All of the above

View Answer

Question 298

The assets which have a limited useful life are termed as

A. Limited assets
B. Depreciable assets
C. Unlimited assets
D. None of the above

View Answer

Question 299

Favourable balance of cash book implies

A. Credit balance of cash book
B. Debit balance of cash book
C. Bank overdraft
D. Adjusted balance of cash book

View Answer

Question 300

At the balance sheet date, the balance on the Accumulated Provision for Depreciation Account is

A. Transferred to Depreciation Account
B. Transferred to the Asset Account
C. Transferred to Profit and Loss Account
D. Simply deducted from the asset in the Balance Sheet

View Answer

Question 301

Expenditure incurred annually on renewal of patent is a

A. Revenue expenditure
B. Capital expenditure
C. Financial expenditure
D. Operating expenditure

View Answer

Question 302

Postdated cheques are considered as

A. Cash
B. Bank balance
C. Accounts receivable
D. Cash reserve

View Answer

Question 303

The following is a statement showing the financial status of the comapany at any given time

A. Trading account
B. Profit & Loss statement
C. Balance Sheet
D. Cash Book

View Answer

Question 304

Which of the following instruments is not a negotiable instrument?

A. Bearer cheque
B. Promissory note
C. Crossed cheque
D. Bills of exchange

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Question 305

_____ will be credited if goods are given as charity

A. Cash
B. Charity
C. Purchases
D. Sales

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Question 306

In an account, when credit side total < debit side total, then, the balance is known as

A. Negative balance
B. Debit balance
C. Positive balance
D. Credit balance

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Question 307

If the opening inventory of a business is undercast, it will

A. Increase gross profit and decrease net profit
B. Decrease gross profit as well as net profit
C. Increase value of assets
D. Increase gross profit as well as net profit

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Question 308

Loss leads to reduction in

A. Capital
B. Income
C. Liabilities
D. None of the above

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Question 309

Which of the following can be distributed among the shareholders?

A. Capital reserve
B. General reserve
C. Revaluation reserve
D. All of the above

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Question 310

Entered in the Purchases Journal are

A. Discounts received
B. Purchases invoices
C. Payments to suppliers
D. Trade discounts

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Question 311

Declared dividend should be classified in the balance sheet as a

A. Provision
B. Current liability
C. Reserve
D. Current asset

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Question 312

Net profit is computed in which of the following?

A. Balance sheet
B. Income statement
C. Cash flow statement
D. Statement of changes in equity

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Question 313

Which one of the following is NOT true about capital expenditure?

A. Creates future benefits
B. Incurred to acquire fixed assets
C. Incurred to increase the economic life of existing fixed assets
D. Reduce the profit of the concern

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Question 314

The following is (are) the type(s) of Journal

A. Purchase Journal
B. Sales Journal
C. Cash Journal
D. All of the above

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Question 315

Which of the following is a leverage ratio?

A. Debt equity ratio
B. Current ratio
C. Quick ratio
D. Earning power

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Question 316

If you want to ensure that your money will be secured if cheques sent are wasted in the post, you should

A. Always pay by cash
B. Cross your Cheques Account Payee only, Not Negotiable
C. Always get the money in person
D. Not use the postal service in future

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Question 317

Right shares are the shares

A. Issued by a newly formed company
B. Legally issued to the public at large
C. Offered to the existing equity shareholders
D. That have a right of redemption

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Question 318

Provision for bad debts is made as per the

A. Conservatism concept
B. Cost concept
C. Consistency concept
D. Going concern concept

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Question 319

Which of the following account with normal balance is shown at the debit side of a trial balance?

A. Rent income account
B. Creditors account
C. Unearned income account
D. Cash account

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Question 320

Which of the following is the normal balance of a rent expense account?

A. Credit balance
B. Cash balance
C. Overdraft
D. Debit balance

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Question 321

The allocation of owner's private expenses to his/her business violates which of the following?

A. Accrual concept
B. Matching concept
C. Separate business entity concept
D. Consistency concept

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Question 322

The process of entering all transactions from the Journal to Ledger is called

A. Posting
B. Entry
C. Accounting
D. None of the above

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Question 323

In the calculation of depreciation, all of the following items are actually estimates except:

A. Useful life
B. Residual value
C. Historical cost
D. Salvage value

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Question 324

Which of the following is used to record financial transactions in chronological (day-to-day) order?

A. Voucher
B. General Journal
C. General Ledger
D. Trial Balance

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Question 325

When a petty cash book is kept there will be

A. No entries made at all in the general ledger for items paid by petty cash
B. The same number of entries in the general ledger
C. Fewer entries made in the general ledger
D. More entries made in the general ledger

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Question 326

Current Assets - Current Liabilities = ?

A. Capital + Liabilities = assets
B. Absorbed capital
C. Net assets
D. Working capital

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Question 327

Double entry implies that

A. Recording entries in Journal
B. Recording entries in Ledger account
C. Recording two aspects of every transaction
D. Recording every transaction in books

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Question 328

Net Profit = Gross Profit minus

A. Operating expenses
B. Product cost
C. Deferred expenses
D. Direct cost

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Question 329

The person from whom the goods are purchased on credit are called

A. Debtors
B. Creditors
C. Accounts receivable
D. None of the above

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Question 330

Which of the following would NOT be considered as a component of 'cost' of stock?

A. Transportation inward costs
B. Import duties
C. Salaries of selling staff
D. Purchase price

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Question 331

The other name of Journal is

A. Ledger
B. T account
C. Day Book
D. Cash Book

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Question 332

Contra-entries are passed only when

A. Double column cash book is prepared
B. Three column cash book is prepared
C. Simple cash book is prepared
D. None of the above

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Question 333

Cash received from debtor is recorded in which of the following specialized journals?

A. Purchase Journal
B. Sales Journal
C. Cash receipts journal
D. Cash payments journal

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Question 334

Credit note is the basis for recording a transaction in which of the following journals?

A. Purchase Journal
B. Sales return journal
C. General journal
D. Cash receipt journal

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Question 335

A company's merchandise, raw materials, finished and unfinished products which have not yet been sold is known as

A. Sales
B. Purchases
C. Inventory
D. Work in progress

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Question 336

Overriding commission is generally calculated on

A. Cash sale only
B. Total sales exceeding invoice value/cost
C. Credit sales
D. None of the above

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Question 337

Identify the nominal account

A. Machinery account
B. Building account
C. Creditors account
D. Rent expenses account

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Question 338

Documentary evidence, in a specific format used to record the details of a transaction is known as

A. Account
B. Voucher
C. Journal
D. Ledger

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Question 339

The standard format of Journal does not include which of the following?

A. Assets column
B. Date column
C. Description column
D. Amount column

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Question 340

Provision for cash discount on debtors is a percentage of

A. Debtors
B. Net debtors
C. Net debtors less provision for doubtful debts
D. Net sales

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Question 341

Earned but not yet received income is treated as

A. Asset
B. Liability
C. Loss
D. Capital

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Question 342

Which one of the following methods of inventory costing yields highest taxable income?

A. FIFO
B. LIFO
C. AVCO or averrage cost
D. Standard cost method

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Question 343

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

A. Accrual concept
B. Matching concept
C. Going concern concept
D. Prudence concept

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Question 344

Sales expenditure budget is prepared by estimating the expense(s) of

A. Advertisement
B. Market analysis
C. Salesman's salary
D. All of the above

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Question 345

What is nature of Capital account?

A. Debit
B. Credit
C. Expenses
D. Loss

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Question 346

Which of the following financial statements shows the movement of cash and cash equivalents during an accounting period?

A. Income statement
B. Balance sheet
C. Cash flow statement
D. Statement of changes in equity

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Question 347

Which of the following is not an item of Balance Sheet?

A. Accounts receivable
B. Accounts payable
C. Sales revenue
D. Marketable securities

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Question 348

In accounting, an economic event is referred to as

A. Cash
B. Bank statement
C. Transaction
D. Exchange of money

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Question 349

Which of the following account will be credited in the books of XYZ Co. Ltd, if the business purchases a vehicle thriugh cheque?

A. Vehicle account
B. Business account
C. Bank account
D. Debtors account

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Question 350

NRV or net realizable value of inventory is the expected selling price or market value less

A. Carry value of the inventory
B. Expenses necessary to complete sale
C. Cost of the stock
D. Replacement cost

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Question 351

Introduction of capital by owner of business is recorded on which side of a cash book?

A. Receipts
B. Payments
C. Incomes
D. Expenditures

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Question 352

Revenue and expense accounts are referred to as

A. Nominal accounts
B. Real account
C. Cash account
D. Bank account

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Question 353

Interest on loan paid by business is an example of

A. Revenue expense
B. Income
C. Asset
D. Return outward

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Question 354

The normal balance of capital account is

A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance

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Question 355

Which of the following is an example of business liability?

A. Land
B. Building
C. Cash
D. Creditors

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Question 356

Which of the following documents contains rules and regulations for internal management of the business?

A. Memorandum of association
B. Articles of association
C. Prospectus
D. Statutory Declaration

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Question 357

Trial Balance is commonly prepared

A. Frequently during the year
B. At the end of an accounting period
C. At the end of a month
D. At the end of a year

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Question 358

Which one of the following is NOT true about revenue expenditure?

A. These are the running expenses of the business
B. They improve the financial position of the business
C. They reduce the profit of the concern
D. They do not appear in the balance sheet

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Question 359

The debts which are to be repaid within a short period (a year or less) are referred to as,

A. Current Liabilities
B. Fixed liabilities
C. Contingent liabilities
D. All the above

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