School of distance education

CALICUT UNIVERSITY
SCHOOL OF DISTANCE EDUCATION

BASIC ACCOUNTING
OPEN COURSE
(For the UG Candidates with core course other than BCom)
CUCBCSS-2014 Admission Onwards
Question Bank
Prepared By:
Sreekumar P G
Assistant professor in Commerce
N S S College Nemmara

Objective type questions:

1. Accounting principles are generally based on:
(a) Objectivity (c) Subjectivity
(b) Convenience (d) Convenience in Recording
2. The policy ‘Anticipate the profit and provide for all possible losses’ arises due to:
(a) Convention of consistency (c) Convention of conservatism
(b) Convention of full disclosure (d) Convention of Materiality
3. According to which of the following accounting concept even the proprietor of
business treated as the creditor of the business to the extent of his capital:
(a) Money measurement concept (c) Accounting period concept
(b) Going concern concept (d) Business entity concept
4. Outstanding expenditure is a ___________ account
(a) Real Account (c) Personal Account
(b) Nominal Account (d) Impersonal Account
5. The basic concept relating to balance sheet are:
(a) Cost Concept (c) Business entity Concept
(b) Accounting period Concept (d) All of the above.
6. Income received in advance is a:
(a) An asset (c) an income
(b) A liability (d) a loss
7. The balance sheet gives information regarding:
(a) Financial position during a particular firm
(b) Result of operation for a particular period
(c) The operating efficiency of the firm
(d) Financial position on a particular date.
8. Outstanding salaries are shown as

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(a) An asset (c) an income

(b) A liability (d) an expense
9. Which of the following is not a fixed asset?
(a) Motor Vehicle (c) Furniture
(b) Inventory (d) Freehold Property
10. From income statement we can find out:
(a) Gross profit (c) Financial position
(b) Net profit (d) All of the above
11. Which of the following is not an intangible asset:
(a) Stock (c) Goodwill
(b) Patent (d) Trademark
12. Which of the following is a fictitious asset?
(a) Goodwill (c) Discount on issue of securities
(b) Copyright (d) Patent
13. Returns outward appearing in trial balance is to be deducted from:
(a) Sales (c) Purchases
(b) Returns inward (d) Closing stock
14. Returns inwards appearing in trial balance is to be deducted from:
(a) Sales (c) Purchases
(b) Returns Outward (d) Closing stock
15. Carriage outward is shown on the:
(a) Debit side of Trading A/c (c) Debit side of P & L A/c
(b) Credit side of P & L A/c (d) Liability Side of Balance Sheet
16. Contingent Liability is shown:
(a) Liability Side of Balance Sheet (c) Asset Side of Balance Sheet
(b) In Profit and Loss A/c (d) Below the Balance Sheet as a foot note
17. Receipt and Payment account is
(a) Real Account (c) Personal Account
(b) Nominal Account (d) Special Journal
18. Income and Expenditure account is:
(a) Real Account (c) Personal Account
(b) Nominal Account (d) Special Journal
19. Non-profit organizations prepare:
(a) Profit and Loss A/c (c) Income and Expenditure A/c
(b) Trading A/c (d) None of these.
20. Which item enters in the Income and Expenditure account?
(a) Sale of old newspaper (c) Closing balance of Cash
(b) Tournament Fund (d) None of these.
21. Donation received for a special purpose will be taken to:
(a) Income and Expenditure A/c (c) Asset Side of Balance Sheet
(b) Liability Side of Balance Sheet (d) None of these.
22. In case a sports fund is kept, expenses in connection with sports events should be:
(a) Charged to sports fund (c) Charged to Income and Expenditure A/c
(b) Liability Side of Balance Sheet (d) Asset Side of Balance Sheet

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23. Subscription received in advance is:

(a) An asset (c) an income
(b) A liability (d) an expense
24. Admission fee should be:
(a) Capitalized (c) Treated as revenue
(b) Treated as Liability (d) treated as revenue unless the amount is pretty large.
25. Receipts and payment account is prepared for:
(a) Non Profit organization (c) trading organizations
(b) Joint Stock Company (d) None of these.
26. Excess of income over expenditure is called:
(a) Revenue (c) Surplus
(b) Commission (d) Discount
27. Income and expenditure account is a type of:
(a) Balance sheet (c) Trading A/c
(b) P& L A/c (d) Manufacturing A/c
28. Subscription outstanding of previous year should be ___________ in income and
expenditure Account.
a) Added (c) Cancelled
b) Deducted (d) None of these.
29. _____________ is a gift or donation received by a non-trading concern as per the will
of a deceased person.
(a) Legacy (c) Honorarium
(b) Endowment Fund (d) Entrance fee
30. Generally entrance fees are treated as:
(a) Revenue Receipt (c) Capital Receipt
(b) Revenue expenditure (d) None of these.
31. Sale of old newspaper is _______________-
(a) Revenue Receipt (c) Capital Receipt
(b) Revenue expenditure (d) None of these.
32. Which Statement gives a concise idea about the profitability and financial position of
the business?
(a) Final Accounts (c) Journal
(b) Subsidiary Books (d) Ledger
33. The amount of money owned by a business to outsider is called:
(a) Assets (c) Liability
(b) Expense (d) Income
34. The expenses and incomes in the business can be classified into:
(a) Assets and Liabilities (c) Capital and revenue
(b) Debit and Credit (d) None of the above
35. Expenses paid in advance is:
(a) Liability (c) Assets
(b) Expense (d) Income
36. Excess of Debit over Credit means:
(a) Gross Profit (c) Gross Loss

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(c) Net Profit (d) Net Loss

37. Outstanding expenses is
(a) Assets (c) Liability
(b) Expense (d) Income
38. __________ is an expenditure which is incurred to meet the day- to-day expenses of
the business.
(a) Revenue Receipt (c) Capital Receipt
(b) Capital expenditure (d) Revenue expenditure
39. __________ Wages incurred for the current period are shown as a liability in the
balance sheet unless it is paid.
(a) Prepaid (c) Outstanding
(b) Deferred (d) None of these.
40. Accrued income is :
(a) Assets (c) Liability
(b) Expense (d) Income
41. Debit balances of all personal accounts are collectively called as:
(a) Sundry Creditors (c) Sundry Debtors
(b) Personal account Balance (d) Total of personal accounts
42. In accounting only _______ discount is recorded
(a) Trade (b) Cash (c) Real (d) None of these
43. An expenditure incurred to derive long term advantage is:
(a) Revenue Expenditure (c) Capital Expenditure
(b) Deferred revenue expenditure (d) Expense
44. Accounting records transactions in term of:
(a) Commodity units (c) Production units
(b) Monetary units (d) Expense units
45. The process of recording transactions in a journal is known as:
(a) Journalizing (b) Balancing
(b) Posting (d) Tallying.
46. Trial balance is a:
(a) Statement (c) Account
(b) Journal (d) None of these
47. Which of the following is a direct expense?
(a) Rent (c) Salary
(b) Wages (d) Interest
48. The process of recording transactions in a ledger is known as:
(a) Journalizing (c) Tallying
(b) Posting (d) Balancing
49. In sole traders balance sheet assets are arranged in the order of:
(a) Permanency (c) Liquidity
(b) Single entry (d) Double account
50. Excess of closing capital over opening capital denotes:
(a) Profit (c) Loss
(b) Additional capital (d) Lesser capital

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51. The properties owned by a business enterprise are called:

(a) Assets (c) Liabilities
(b) Capital (d) Owner’s equity
52. Debit may signify:
(a) An increase in assets account (c) A decrease in asset account
(b) An increase in liability account (d) An increase in capital stock account
53. The determination of the expenses for an accounting period is based largely on the
application of :
(a) Cost Concept (c) Consistency Principle
(b) Matching concept (d) Principle of time perspective
54. Capital is shown under liability because of:
(a) Cost Concept (c) Business entity Concept
(b) Accounting period Concept (d) Going concern.
55. According to going concern concept a business is viewed as having
(a) Limited life (c) Going to liquidated after 100 years
(b) An indefinite life (d) None of these.
56. According to concept of conservatism stock in trade is valued at:
(a) Cost price or Market price whichever is high (c) Market price
(b) Cost price or Market price whichever is less (d) Cost price
57. Fixed assets and current assets are categorized as per the concept of:
(a) Going concern (c) Business entity Concept
(b) Time period Concept (d). Cost Concept
58. Accounting does not record non-financial transactions because of the concept of:
(a) Money measurement concept (c) Business entity Concept
(b) Time period Concept (d) Cost Concept
59. Accounting is the process of matching:
(a) Benefits and cost (c) Revenues and cost
(b) Cash inflows and outflows (d) potential and real performance
60. Which of the following event is the subject matter of accounting?
(a) Death of key executive of the business
(b) Strike of the workers
(c) Payment of Rs. 10,000 to bank in discharge of outstanding loan
(d) Marriage of the daughter of the MD.
61. Which of the following is not available in the fianancial statement?
(a) Total Sales (c) Total Profit & Loss A/c
(b) Loss from fire (d) None of these.
62. Financial accounting looks for the interest of:
(a) Investors (c) Employees
(b) Suppliers (d) Both investors and suppliers
63. Financial statement prepared by the organization comprises of:
(a) Profitability Statement (c) balance sheet
(b) Both Profitability Statement & balance sheet (d) None of these
64. Financial statement of business at any target time in terms of assets and liabilities:
(a) Book Keeping (c) Profitability statement

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(b) Audit (d) Balance sheet

65. Financial accounting considers the transaction:
(a) In terms of money (c) Important from business point of view
(b) Not in terms of money (d) All of the above
66. Which type of expenditure in an organization receives return during the same period
they are paid for?
(a) Revenue (c) Capital
(b) Deferred Revenue (d) All of the above
67. Which of the following is a personal account?
(a) Account of the customer (c) Salary account
(b) Telephone expenses Account (d) Trade mark Account
68. Accounting system used for the organization not earning any profit is:
(a) Accrual system (c) Cash System
(b) Mercantile system (d) Non- profit system
69. The reduction in the value of fixed assets which can arise due to time factor is:
(a) Discount (c) Depreciation
(b) Reduction (d) None of these
70. Which type of expenditure of an organization affects the profitability statement?
(a) Revenue (c) Capital
(c) Deferred Revenue (d) All of the above
71. Which type of expenditure is done for making assets:
(a) Revenue (c) Capital
(b) Deferred Revenue (d) All of the above
72. Accounting policies and procedures once decided should not be changed till any sound
reason is there. This is known as:
(a) Accrual Concept (c) conservatism
(b) Business Entity (d) Consistency
73. Comparing the cost of the entities and then deciding expenditures for which entity
should be written in financial record is a concept of:
(a) Money measurement concept (c) Materiality
(b) Matching concept (d) Cost concept
74. The financial record should always be published in a definite time period. This
concept is:
(a) Accounting period concept (c) Money measurement concept
(b) Cost concept (d) Consistency
75. In financial accounting records the entities whose monitory value is not known are not
entered. This concept is
(a) Double entry concept (c) Objectivity
(b) Cost concept (d) Money measurement concept
76. Financial accounting looks for the interest of:
(a) Investors (c) Employees
(b) Suppliers (d) Both Suppliers and investors
77. Financial Statement prepared by the organisation comprises of:
(a) Balance sheet (c) Income statement

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(b) None of the above (d) Both income statement and Balance sheet
78. Which of them have some similarities?
(a) Financial Accounting & Management Accounting
(b) Cost Accounting and Management Accounting
(c) Financial Accounting and Management Accounting
(d) None of these.
79. Financial Statement of business at any targeted time in terms of assets and liabilities
is:
(a) Audit Report (c) Balance Sheet
(b) Book Keeping (d) Profitability statement
80. Financial Accounting considers the transactions:
(a) In terms of money (c) Not in terms of money
(b) Important from the point of business (d) All of the above
81. Systematic recording of business transactions in books of account is
(a) Financial Accounting (c) Book Keeping
(b) Auditing (d) Balance Sheet
82. When an owner credits or debits any amount, he cannot put that transaction in
financial account records of organization. This is known as:
(a) Accrual Concept (c) conservatism
(b) Business Entity (d) Consistency
83. In financial accounting records the entities whose monetary value is not known are not
entered. This concept is:
(a) Accounting period concept (c) Money measurement concept
(b) Cost concept (d) Consistency
84. Businessman always see business running for an indefinite period. This concept is
(a) Going concern (c) Business entity Concept
(b) Time period Concept (d). Cost Concept
85. The Financial record should always be published in a definite time period according to
(a) Accounting period concept (c) Cost concept
(b) Money measurement concept (d) Consistency
86. Accounting Policies and Procedures once decided should not be changed till any
sound reason is there. This is known as
(a) Accounting period concept (c) Money measurement concept
(b) Cost concept (d) Consistency
87. Which type of expenditure is shown in asset side of Balance sheets?
(a) Capital Expenditure (c) Revenue Expenditure
(b) Deferred Revenue Expenditure (d) None of these.
88. Which type of expenditure affects the Profitability Statement?
(a) Capital Expenditure (c) Revenue Expenditure
(b) Deferred Revenue Expenditure (d) None of these.
89. Which is a Real Account?
(a) Land and building (c) Furniture and Fixtures
(b) All of the above (d) None of these.
90. Which of the following is a nominal account?

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(a) Depreciation Account (c) Furniture and Fixtures

(b) Discount Account (d) Both (a) and (b)
91. Imprest system of maintain records applies to the preparation of:
(a) Petty cash book (c) Purchase Book
(b) Sales Book (d) Double column cash book
92. Cash sales will be first recorded in :
(a) Sales Book (c) Cash book
(b) Profit & Loss A/c (d) Credit Note
93. Entries for rare transactions will be recorded in:
(a) Sales Book (c) Journal Proper
(b) Purchase Book (d) Bills Payable Book
94. Loan granted by the business should be shown on:
(a) Balance sheet Liability (c) Balance sheet Asset
(b) Profit & Loss A/c (d) Below the Balance sheet
95. While making an entry, the wrong amount is written either in the subsidiary book or in
the ledger or the entry is made on the wrong side of the account
(a) Error of omission (c) Error of Commission
(b) Error of Principle (d) Compensating Error
96. Stores Consumed can be shown on :
(a) Trading account (c) Purchases A/c
(b) P&L A/c (d) Balance sheet
97. Prepaid expenses given in the adjustment should be:
(a) Added along with expense (c) Deducted from the expense
(b) Shown on balance sheet Liability (d) Shown as a foot note in balance sheet
98. Receipt and Payment A/c is prepared by:
(a) Sole Trader (c) Joint Stock Company
(b) Partnership Firms (d) Non Profit Organization.
99. Life Membership fees collected by a non-profit organization can be treated as:
(a) Revenue (c) Capital
(b) Deferred Revenue (d) Expenditure
100. Receipt and Payment Account is a:
(a) Real Account (c) Nominal Account
(b) Personal Account (d) None of these

Answers:

1. (d) Convenience in Recording 8. (b) A liability

2. (c) Convention of conservatism 9. (b) Inventory
3. (d) Business entity concept 10. (b) Net profit
4. (c) Personal Account 11. (a) Stock
5. (d) All of the above. 12. (c) Discount on issue of securities
6. (b) A liability 13. (c) Purchases
7. (d) Financial position on a 14. (a) Sales
particular date. 15. (c) Debit side of P & L A/c

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16. (d) Below the Balance Sheet as a 59. (c) Revenues and cost
foot note 60. (c) Payment of Rs. 10,000 to
bank in discharge of outstanding
17. (a) Real Account loan
18. (b)Nominal Account 61. (d) None of these.
19. (c) Income and Expenditure A/c 62. (d) Both investors and suppliers
63. (b) Both Profitability Statement
20. (a) Sale of old newspaper & balance sheet
21. (b)Liability Side of Balance Sheet 64. (d) Balance sheet
22. (a) Charged to sports fund 65. (d) All of the above
66. (a) Revenue
23. (b) A liability 67. (a) Account of the customer
24. (d) Treated as revenue unless the 68. (c) Cash System
amount is pretty large. 69. (b) Reduction
70. (a) Revenue
25. (a)Non Profit organization 71. (c) Capital
26. (c) Surplus 72. (d) Consistency
27. (b) P& L A/c 73. (c) Materiality
74. (a) Accounting period concept
28. (b) Deducted 75. (d) Money measurement concept
29. (a) Legacy
30. (a) Revenue Receipt 76. (d) Both Suppliers and investors
77. (d) Both income statement and
31. (a) Revenue Receipt Balance sheet
32. (a) Final Accounts 78. (d) None of these
33. (c) Liability 79. (c) Balance Sheet
80. (a) In terms of money
34. (c) Capital and revenue 81. (c) Book Keeping
35. (c) Assets 82. (a) Business Entity
36. (c) Gross Loss 83. (c) Money measurement concept
84. (a) Going concern
37. (c) Liability 85. (a) Accounting period concept
38. (d) Revenue expenditure 86. (d) Consistency
39. (c) Outstanding 87. (b) Deferred Revenue
40. (a) Asser Expenditure
88. (c) Revenue Expenditure
41. (c) Sundry Debtors 89. (b) All of the above
42. (b) Cash 90. (d) Both (a) and (b)
43. (b) Deferred revenue expenditure 91. (a) Petty cash book
92. (c) Cash book
44. (b) Monetary units 93. (c) Journal Proper
45. (a) Journalizing 94. (c) Balance sheet Asset
46. (a) Statement 95. (c) Error of Commission
96. (a) Trading account
47. (b) Wages 97. (c) Deducted from the expense
48. (b) Posting 98. (d) Non Profit Organization
49. (c) Liquidity 99. (a) Revenue
50. (a) Profit 100. (a) Real Account
51. (a) Assets
52. (a) An increase in assets account
53. (d) Principle of time perspective
54. (c) Business entity Concept
55. (b) An indefinite life
56. (b) Cost price or Market price
whichever is less
57. (b) Time period Concept
58. (a) Money measurement concept

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