Journal Entry MCQs

1. The amount brought in by owner of the business should be credited to?

(a) Owner Equity (c) Cash

(b) Drawing (d) All of above

2. Which of the following transactions would have no impact on stockholders' equity?

(a) Purchase of the land from the proceeds (c) Net loss
of bank loan
(d) Investment of cash by stockholders
(b) Dividends to stock holders

3. Which of the following transactions occurs on daily basis in a large business organization?

(a) Purchaser of equipment (c) Credit sales

(b) Payroll (d) Payment of suppliers

4. How much types a transaction has?

(a) One (c) Three

(b) Two (d) Four

5. Transactions are initially recorded in the?

(a) Book of Final Entry (c) T Accounts

(b) Accounting Equation (d) Book of Original Entry

6. Of the following account types, which would be increased by a debit?

(a) Liabilities and expenses (c) Assets and expenses

(b) Assets and equity (d) Equity and revenues

7. Sales made to Ahmed on credit should be debited to?

(a) Account Receivable (c) Account Receivable-Ahmed

(b) Cash (d) Sales

8. According to the rules of debit and credit for balance sheet accounts?

(a) Increase in assets, liabilities and owner equity recorded by debit

(b) Decrease in asset and liability are recorded by credit

(c) Increase in asset and owner’s equity are recorded by debit

(d) Decrease in liability and owner’s equity are recorded by debit

9. In which order does the Journal list transactions?

(a) Chronological (c) Increasing

(b) Decreasing (d) Alphabetical

10. All of the following are true regarding journal entries except?

(a) Journal entries show the effects of transactions

(b) Journal entries provide account balances

(c) The debited account titles are listed first

(d) Each journal entry should begin with a date

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Ledger MCQs
1. A ledger is called a book of.
(a) Primary entry (c) Original entry
(b) Final entry (d) None of the above
2. From which of the following is a ledger account prepared.
(a) Transactions (c) Events
(b) Journal (d) None of the above
3.The process of transferring of items from a journal to their respective ledger accounts is called as.
(a) Entry (c) Balancing
(b) Arithmetic (d) Posting
4. The ledger column that links the entry with the journal is called as.
(a) J.F column (c) Credit column
(b) L.F column (d) Debit column
5. The left-hand side of the ledger account is referred to as.
(a) Footing (c) Debit side
(b) Credit side (d) Balance
6. Ledger is a principal book that contains.
(a) Real accounts only (b) Personal accounts only
(c) All accounts (d) Nominal accounts only
7. Accounts that have credit balance are closed by using the statement.
(a) By balance b/d (c) To balance b/d
(b) By balance c/d (d) To balance c/d
8. An account is having debit balance is established when.
(a) The last entry of the accounting period was posted on the debit side
(b) The amount of debit exceeds the amount of the credits
(c) There are more entries on the debit side than on the credit side
(d) None of above
9. Which of the following item will be appearing on the credit side of the ledger account?
(a) Discount received (c) Rent Expenses
(b) Cash received (d) Purchases
10. Among these, which item is used as the base for preparing trial balance?
(a) Cash account (c) Journal
(b) Balance sheet (d) Ledger account

Trial Balance MCQs

1. The type of account with a normal credit balance is?
(a) An asset (c) Drawing

(b) An expense (d) Revenue

2. Which one of the following accounts would usually have a debit balance?
(a) Account Payable (c) Owner Equity

(b) Cash (d) Bank Loan

3. Which account has usually debit balance?

(a) Owner Equity (c) Purchase returns

(b) Purchase (d) Discount received

4. A Trial balance which shows equal totals for both debit and credit columns?
(a) Shows that there must be more than one error within the bookkeeping system

(b) Shows that the bookkeeping system is free of errors

(c) Shows that the arithmetic is correct, but errors may still be present in the bookkeeping system

(d) Shows that there is only one error within the bookkeeping system

5. Which of the following accounts normally has credit balance?

(a) Wages Outstanding (c) Prepaid Rent

(b) Motor vehicles (d) Return Inwards

6. Why does a business prepare a Trial Balance?
(a) To calculate the profit and loss (c) To check the arithmetical accuracy of the ledgers

(b) To check the cash and bank balance (d) To show the financial position

7. Is it true that the trial balance totals should agree?

(a) Yes, always

(b) No, because it is not a balance sheet

(c) Yes, except where the trial balance is extracted at the year end

(d) No, there are sometimes good reasons why they differ

8. The arithmetical accuracy of books of account is verified through?

(a) Journal (c) Ledger

(b) Trial Balance (d) None of the given options

9. Ahmed gives a cash discount of 40 to a customer. The discount is credited to the discounts allowed
account. The effect of recording the discount in this way is that profit will be?
(a) Understated by 80 (c) Correct

(b) Overstated by 80 (d) Understated by 40

10. A Trial balance is a?

(a) Real account (c) Personal account

(b) Nominal account (d) None

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Financial Statement MCQs

1. A financial statement that summarizes company revenue and expenses is?
(a) Balance sheet (c) Income statement

(b) Statement of owner equity (d) Cash flow statement

2. Which one of the following tangible fixed assets would not normally be depreciated?
(a) Buildings (c) Land

(b) Machinery (d) Equipment

3. Which financial statement presents a summary of the Assets, Liabilities, and Owners' Equity of a firm?
(a) General ledger (b) Work sheet
(c) Balance sheet (d) Cash flow statement

4. Subtracting all expenses from revenues yields?

(a) Net profit/Loss (c) Long-term assets

(b) Carrying value (d) Net liabilities

5. A financial statement to show what a business owns and owes at a particular point in time?
(a) A cash flow statement (c) A balance sheet

(b) The bank statement for the business (d) A statement of retained earnings

6. If the Gross profit is Rs. 5,000 and the net profit is 25% of the Gross profit. The expenses must be?
(a) Rs. 3,750 (c) Rs. 4,150

(b) Rs. 1,250 (d) Rs. 6,250

7. A financial document that indicates the success or failure of a business trading over a period of time is
called?
(a) A cash flow statement (c) An income statements

(b) Retained earnings statement (d) A bank statements

8. The report of company that shows overall profit on the sale of their goods or the provision of their
services?
(a) Trading and Profit & loss account (c) Income Statement

(b) Cash flow statement (d) Both a and c

9. A company has, by the end of its financial period, paid out more Tax than it has to pay. How would this be
shown in the balance sheet?
(a) As an accrual Revenue (c) As a 'creditor due within one year'

(b) As a Prepaid within current assets (d) As a creditor due after more than one year'

10. Which of the following financial statements is also known as financial condition?
(a) Balance Sheet (c) Statement of Cash flows

(b) Income Statement (d) Bank Statement

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