Accounting MCQs With Answers

Accounting MCQs with Answers:
Question 1
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
Answer: D
Question 2
Long term assets having no physical existence but, possessing a value are called
A) Intangible assets
B) Fixed assets
C) Current assets
D) Investments
Answer: A
Question 3
The assets that can be easily 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
Answer: A
Question 4
Copyrights, Patents and Trademarks are,
A) Current assets
B) Fixed assets
C) Intangible assets
D) Investments
Answer: C
Question 5
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
Answer: A
Question 6
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
Answer: B
Question 7
Net profit is computed in the
A) Profit and loss account
B) Balance sheet
C) Trial balance
D) Trading account
Answer: A
Question 8
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
Answer: A
Question 9
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
Answer: D
Question 10
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
Answer: B
Question 11
Suppliers personal a/c are seen in the
A) Sales Ledger
B) Nominal ledger
C) Purchases Ledger
D) General Ledger
Answer: C
Question 12
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
Answer: B
Question 13
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
Answer: A
Question 14
Sales invoices are first entered in
A) The Cash Book
B) The Purchases Journal
C) The Sales Journal
D) The Sales Account
Answer: C
Question 15
Entered in the Purchases Journal are
A) Discounts received
B) Purchases invoices
C) Payments to suppliers
D) Trade discounts
Answer: B
Question 16
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
Answer: D
Question 17
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
Answer: A
Question 18
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
Answer: C
Question 19
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
Answer: D
Q1. Among these transactions, which transaction will have no impact on stockholders’
equity?
(a) Net loss
(b) Investment of cash by stockholders
(c) Dividends to stockholders
(d) Purchase of the land from the proceeds of bank loan
Answer: d
Q2. Amount invested by the proprietor in the business should be credit to:
(a) A/c payable
(b) Capital
(c) Cash
(d) Drawing
Answer: b
Q3. Transactions are first recorded in which book/account?
(a) Book of Original Entry
(b) T Accounts
(c) Accounting Equation
(d) Book of Final Entry
Answer: a
Q4. Customer goods returned will be credited to which account?
(a) Purchases A/C
(b) Return outward
(c) Customer’s A/C
(d) Return inward
Answer: d
Q5. Journal is also called a?
(a) A day book
(b) History book
(c) Ledger book
(d) An entry book
Answer: a
Q6. ________ A/c is credited and ____ A/c is debited in case wages are paid for
construction of business premises
A) Cash, Wages
B) Cash, Premises
C) Premises, Cash
D) Wages, Cash
Answer: a
Q7. Journal lists transactions in which order?
(a) Decreasing
(b) Chronological
(c) Alphabetical
(d) Increasing
Answer: b
Q8. Among these statements which one is incorrect regarding journal entry?
(a) The debited account titles are listed first
(b) Journal entries show the effects of transactions
(c) Each journal entry should begin with a date
(d) Journal entries provide account balances
Answer: d
Q.9 Cash withdrawal from business by the proprietor should be credited to
(a) Cash account
(b) Purchase account
(c) Capital account
(d) Drawings account
Answer: c
Q10. Which one of the following is called the book of original entry?
(a) Receipt and Payment Account
(b) Trial Balance
(c) General Journal
(d) General Ledger
Answer: d
Trial Balance MCQs

1. Trial balance is used to check the accuracy of
A) Balance sheet balances
B) Ledger accounts balances
C) Cash flow statement balances
D) Income statement balances
Answer: B
2. In the books of account if a transaction is completely deleted, will it affect the trial balance?
A) No
B) Yes
C) A transaction cannot be omitted
Answer: A
3. What is used in preparing trial balance?
A) Specialised Journals
B) Balance Sheet
C) Ledger Accounts
D) General Journal
Answer: C
4. What is the trial balance used?
A) It is a financial statement
B) It records balances of a balance sheet
C) It doesn’t contribute to the accounting cycle
D) It records balances of accounts
Answer: D
5. When debit balance is equal to credit balance then the trial balance means
A) Account balances are correct
B) Mathematically Capital+Liabilities=Assets
C) No mistake in recording transactions
D) No mistake in posting entries to ledger accounts
Answer: B
6. When is trial balance prepared?
A) At the end of an accounting period
B) At the end of a year
C) Frequently during the year
D) At the end of a month
Answer: A
7. Which items influence the trial balance agreement?
A) Deposit in transit
B) Compensating errors
C) Complete omission of a transaction
D) Partial omission of a transaction
Answer: D
8. When credit balances = debit balances, the trial balance check and shows ____________ . It
also indicates that there were no errors made during posting and recording and posting.
A) Understatements of Balances
B) Errors of Commission
C) Arithmetic Accuracy
D) Omissions of Economic Events
Answer: C
9. Which of the following account with normal balance is shown at the debit side of a trial
balance?
A) Creditors account
B) Unearned income account
C) Rent income account
D) Cash account
Answer: D
10. In trial balance, which accounts with normal balance is recorded at the credit side?
A) Bank account
B) Equipment account
C) Cash account
D) Accrued expenses account
Answer: D
1. A ledger is called a book of
(a) Primary entry
(b) Final entry
(c) Original entry
(d) None of the above
Answer: b
2. From which of the following is a ledger account prepared?
(a) Transactions
(b) Journal
(c) Events
(d) None of the above
Answer: b
3.The process of transferring of items from a journal to their respective ledger accounts is
called as?
(a) Entry
(b) Arithmetic
(c) Balancing
(d) Posting
Answer: d
4. The ledger column that links the entry with the journal is called as?
(a) J.F column
(b) L.F column
(c) Credit column
(d) Debit column
Answer: a
5. The left hand side of the ledger account is referred to as?
(a) Footing
(b) Credit side
(c) Debit side
(d) Balance
Answer: c
6. Ledger is a principal book that contains
(a) Real accounts only
(b) Personal accounts only
(c) All accounts
(d) Nominal accounts only
Answer: c
7. Accounts that have credit balance are closed by using the statement
(a) By balance b/d
(b) By balance c/d
(c) To balance b/d
(d) To balance c/d
Answer: 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
Answer: b
9. Which item will appear on the credit side of the ledger account?
(a) Discount received
(b) Cash received
(c) Rent Expenses
(d) Purchases
Answer: a
10. Among these, which item is used as the base for preparing trial balance?
(a) Cash account
(b) Balance sheet
(c) Journal
(d) Ledger account
Answer: d
Balance Sheet MCQs

1. On balance sheet, accruals, notes payable, and account payable are listed under which
category?
A) Current Liabilities
B) Accumulated Liabilities
C) Noncurrent Liabilities
D) Accrued Liabilities
Answer: A
2. Inventories, cash and equivalents, and accounts receivables are listed as
A) Earnings on Income Statement
B) Payments on Income Statement
C) Assets on the Balance Sheet
D) Liabilities on the Balance Sheet
Answer: C
3. Which of the following is not a current asset
A) Supplies
B) Land
C) Accounts Receivable
D) Prepaid Insurance
Answer: B
4. In the situation of bankruptcy, a stock which is recorded above common stock and below debt
account is
A) Preferred Stock
B) Debt Liabilities
C) Common Liabilities
D) Hybrid Stock
Answer: A
5. A firm buys products but does not pay to suppliers instantly. This is recorded as
A) Account Receivable
B) Account Payable
C) Accumulated Liabilities
D) Current Liabilities
Answer: B
6. In a balance sheet, the total of common stock and retained earnings are denoted as
A) Common Equity
B) Due Equity
C) Preferred Equity
D) Common Perpetuity
Answer: A
7. The process of recording inventory that gives a lower cost of a commodity sold in an income
statement is denoted as
A) First Out Receivable
B) Last in First Out
C) Last Out Receivable
D) First in First Out
Answer: D
8. Financial securities which can be changed into cash to their book value price are categorised
as
A) Short-term Investments
B) Inventories
C) Long-term Investments
D) Cash Equivalents
Answer: D
9. Earnings that have a cumulative amount and are not paid to the stockholder as a dividend is
known as
A) Common Earnings
B) Preferred Earnings
C) Non-paid Earnings
D) Retained Earnings
Answer: D
10. Information that is used by investors for expecting future earnings is recorded in
A) Annual Report
B) Five Years Report
C) Exchange Report
D) Stock Report
Answer: A
Q.1- Which of the following is not fundamental accounting assumptions?
a. Going concern
b. Consistency
c. Accrual
d. Business entity
Q.2-_______ assumption means neither any intention to close down the business nor any
necessity.
a. Accrual
b. Going Concern
c. Matching
d. Consistency
Meaning & Objective of Accounting with Answers

1. The main objective of Book-keeping is :
(A) Complete recording of transactions
(B) Ascertainment of Financial effect on the business
(C) Analysis and interpretation of data
(D) ‘A’ ‘B’ (Both ‘A’ and ‘B’)
2. In accounts recording is made of :
(A) Only financial transactions
(B) Only non-financial transactions
(C) Financial and non-financial transactions
(D) Personal transactions of the proprietor
3. ` 5,000 paid as rent of office premises is an/a ……. :
(A) Event
(B) Transaction
(C) Both ‘A’ and ‘B’
(D) None of these
4. Which of the following transactions is not of financial character :
(A) Purchase of goods on credit

(B) Purchase of a building
(C) Payment of salaries
(D) Strike by employees
5. Internal users of accounting information are :
(A) Creditors
(B) Potential investors
(C) Managers
(D) Researchers
6. External users of accounting information are :
(A) Researchers
(B) Government
(C) Tax authorities
(D) All of the above
7. On 31st December, 2010 Ashok Ltd. purchased a machine from Mohan
Ltd. for ` 1 ,75,000. This is :
(A) A transaction
(B) An event
(C) Both a transaction as well as an event
(D) None of these
8. Management Accounting :
(A) Is a clerical work
(B) Is accounting for future

(C) Is a recording technique of the management related transactions
(D) None of the above
9. Which of the following is not a limitations of Accounting ?
(A) Based on Accounting Convention
( B) Evidence in Legal Matters
(C) Incomplete Information
( D) Omission of Qualitative Information
10. Accounting is :
(A) Accounting : A Profession
( B) Accounting : A Social Force
(C) Accounting : A Service Activity
( D) All of the above
Answer Key
1. (D), 2. (A), 3. (B), 4. (D), 5. (C), 6. (D), 7 . (C), 8. (C), 9. (B), 10. (D)
Basic Terms of Accounting with Answers

1. Current liability includes ——–
a) Bills payable
b) Creditors
c) O/s expenses
d) all of these
2. Current asset do not include —
a) debtors
b) motor car
c) bank balance
d) prepaid expenses
3. Tangible asset do not include —-
a) goodwill
b) furniture
c) stock
d) cash in hand
4. Which of the following is capital expenditure?
a) Wages
b) wages paid for building construction
c) repair expenses of building
d) advertisement expenses
5. Cash discount is —–
a) Which is allowed at the time of making the payment
b) allowed at the time of sale of goods
c) Received at the time of purchases of goods
d) received both at the time of making payment and purchase of goods.
6. Purchases refers to the buying of ——–
a) stationery for office use
b) assets for the factory
c) goods of resale
d) investment
7. A person who owes money to the firm is called —–
a) Debtor
b) creditor
c) supplier
d) none of these
8. Out of the following assets which one is not an intangible asset?
a) Patents
b) investment
c) goodwill
d) trade mark
9. Goods means ….
a) Commodity to be bought and sold
b) Commodity to be bought but not to be sold
c) Commodity to be used as an asset
d) all of the above.
10. Main feature of business transaction is ——
a) An economic activity
b) change in the financial position of the firm
c) express in terms of money
d) all of the above

Answer Key
1. (d) 2. (b) 3. (a) 4. (b) 5. (a) 6. (c) 7. (a) 8. (b) 9.
(a) 10. (d)
Process & Basis of accounting Analysis with Answers

1. Which of the following highlights the correct order of the stages in the
accounting cycle?
1. Journalizing, final accounts, posting to the ledger and trial
balance
2. Journalizing, posting to the ledger, trial balance and final
accounts
3. Posting to the ledger, trial balance, final accounts and
journalizing
4. Posting to the ledger, journalizing, final accounts and trial
balance
2. The first step in accounting process is
1. Measurement
2. Classification
3. Identification
4. Recording
3. Transactions recorded in books are of
1. Non-financial and Quantitative in nature
2. Financial and Quantitative in nature
3. financial and Qualitative in nature
4. None of the above
4. What are the basis of accounting
1. Cash Basis
2. Accrual Basis
3. Mixed Basis
4. Both A & B
5. All of the above
5. Outstanding expenses are recorded in which basis of accounting
1. Cash Basis
2. Accrual Basis
3. Both method
6. Does cash basis of accounting violates GAAP
1. No, as it doesn’t follow matching principle and accrual
concept.
2. Yes, It follows GAAP
3. Yes, it follow GAAP but only in case of few transactions
4. Both b & C
7. Which doesn’t relates to accrual basis of accounting
1. It includes recording of cash Expenses
2. It includes recording of outstanding and prepaid Expenses
3. It includes future expenses also
8. Which accounting method is recognised by Companies Act, 2013
1. Accrual Basis
2. Cash Basis
3. Both a & B
4. Companies Act 2013 has no relation with accounting
method
9. The concept of capital and revenue item exist in
1. Accrual Basis
2. Cash Basis
3. Both a & B
10. Which statement is true related to Hybrid or Mixed system of accounting,
1. Revenue and assets are recorded on cash basis
2. Revenue and assets are recorded on Accrual basis
3. Expenses and Liabilities are recorded on cash basis
Answer Key
1. (b) 2. (c) 3. (b) 4. (e) 5. (b) 6. (a) 7. (c) 8. (a) 9. (a) 10. (a)
Accounting Standards and IFRS with Answers
1. Which accounting standard is applicable for valuation of inventories?

(a) AS -1
(b) AS-2
(c) AS-3
(d)As-4
2. How many standards are issued by ICAI which are mandatory?
(a) 28
(b) 32
(c) 10
(d) None of these
3. Which accounting standard is applicable for fixed assets?
. (a) AS- 1
(b) AS-10
(c) AS-19
(d)AS-18
4. Which accounting standard is applicable for intangible assets?
(a) AS- 10
(b) AS-6
(c) AS-26
(d)AS-3
5. Which accounting standard is applicable for depreciation accounting?
(a) As-6
(b) AS-9
(c)AS-1
(d)AS-3
6. Which accounting standard is applicable for revenue recognition?
(a) AS-9
(b) AS-10
(c)As-3
(d)AS-23
7. Which accounting standard is applicable for cash flow statement?
(a) AS- 1
(b) AS-10
(c) AS-19
(d)AS-3
8. Which accounting standard is applicable for contingencies and events

occurring after the balance sheet date?
(a) AS- 1
(b) AS-10
(c) AS-4
(d)AS-18
9. Which accounting standard is applicable for impairment of assets?
(a) AS- 1
(b) AS-10
(c) AS-19
(d)AS-28
10. Which accounting standard is withdrawn and included in AS-26?
(a) AS-3
(b) AS-8
(c) AS-23
(d) None of these
Answer Key
1. (b) 2. (b) 3.(b) 4(c) 5(a) 6(a) 7(d) 8(c) 9(d) 10(b)
Accounting Equation Analysis with Answers

1. Which of the following statements is incorrect?
1. Liabilities + Assets = Capital
2. Assets – Liabilities = Capital
3. Liabilities + Capital = Assets
4. Assets – Capital = Liabilities
2. On January 1st, 2009 an entity’s balance sheet showed total assets of
Rs. 750 and liabilities of Rs. 250. Owners’ equity at January 1st was?
1. Rs. 750
2. Rs. 1,000
3. Rs. 500
4. Rs. 250
3. If the assets of a business are Rs. 100,000 and equity is Rs. 20,000, the
value of liability will be?
1. Rs. 100,000
2. Rs. 80,000
3. Rs. 120,000
4. 20,000
4. Find out the missing value liabilities in an accounting equation with the
help of given data?
1. Rs. 201,000 liabilities
2. Rs. 111, 000 liabilities
5. The accounting equation should remain in balance because every
transaction affects how many accounts?
1. Only one
2. Only two
3. Two or more
4. All of given options
6. Which of the following is not a correct form of the Accounting Equation?
1. Assets = Claims
2. Assets = Liabilities + Owner Equity
3. Assets – Liabilities = Owner’s Equity
4. Assets + Owner’s Equity = Liabilities
7. Consider the following data?
1. Rs. 49,000
2. Rs. 55,000
3. Rs. 440,000
4. Rs. 198,000
8. Find out value of account receivable from following Cash Rs. 48,000
account payable Rs. 33,000 office equipment Rs. 21,000 owner equity
Rs. 77,000?
1. Rs. 21,000
2. Rs. 41,000
3. Rs. 15,000
4. Rs. 110,000
9. During a reporting period, a company’s assets increase by Rs.
80,000,000. Liabilities decrease by Rs. 20,000,000. Equity must
therefore?
1. Decrease by Rs. 100,000,000
2. Increase by Rs. 100,000,000
3. Decrease by Rs. 60,00,000
4. Increase by Rs. 60,000,000
10. Which one of the following equations correctly expresses the
relationship between assets , liabilities (L), revenues (R), expenses (E)
and capital ?
1. A = L + R + E + C
2. A = C + L + (R-E)
3. A = C – (R – E) + L
4. A = (L – C) + (R – E)
Answer Key
1. (a) 2. (c) 3. (b) 4. (b) 5. (c) 6. (d) 7. (c) 8. (b) 9. (b) 10. (b)
Books of Original Entry – Journal with Answers

1. Sales to Mohsin on account should be debited to:
1. Cash A/C
2. Sales A/C
3. Mohsin
4. Account Receivable
2. Amount of interest paid to Ali should be debited to:
1. Ali A/C
2. Interest A/C
3. Cash A/C
4. A/C Payable
3. Amount invested by the proprietor in the business should be credit to:
1. Cash
2. Drawing
3. A/c payable
4. Capital
4. Goods returned to supplier should be debited to:
1. Sales return
2. Return outward
3. Return inward
4. Supplier’s Account
5. Customer goods returned should be credited to:
1. Customer’s A/C
2. Return inward
3. Return outward A/C
4. Purchases A/C
6. Goods returned from Khubaib should be credited to:
1. Purchase Return
2. Return outward
3. Cash A/C
4. Khubaib A/C
7. A journal entry that requires more than two accounts is called:
1. Double entry
2. Compound entry
3. Combined entry
4. Single entry
8. Cash discount allowed to a debtor should be debited to:
1. Debtor’s A/C
2. Discount A/C
3. Creditor’s A/c
4. Cash A/C
9. Cash discount received from supplier should debited to:
1. Debtor’s A/c
2. Cash Discount
3. Cash A/C
4. Supplier A/C
10. A transaction is recorded on the same day it take place so journal is also
called.
1. An entry book
2. Ledger book
3. A day book
4. History book
Answer Key
1. (c) 2. (b) 3. (d) 4. (d) 5. (b) 6. (d) 7. (b) 8. (b) 9. (d) 10. (c)
Books of Original Entry – Cash Book with Answers
1. The most common imprest system is the ________ system?
1. Petty cash
2. Cash book
3. Cash receipt
4. Discount
2. A cash book with cash, bank and discount column is commonly referred
as________?
1. Cash book
2. Two columns cash book
3. Three columns cash book
4. Petty cash book
3. Introduction capital by owner of business is recorded on which side of a
cash book?
1. Receipts
2. Payments
3. Incomes
4. Expenditure
4. Cash discount is allowed on _______ repayment of debt.
1. Lump sum
2. Prompt
3. Actual
4. None of them
5. Payment of rent expenses is recorded on which side of cash book?
1. Receipts
2. Payments
3. Income
4. Expense
6. Drawings by owner of business are generally recorded on which of the
following side of a cash book?
1. Receipts
2. Payments
3. Incomes
4. Expenditures
7. A cash book that is used to record the small payments of cash is
generally referred as_________?
1. Simple cash book
2. Two column cash book
3. Three column cash book
4. Petty cash book
8. Postage stamps on hand are considered as_________?
1. Bank
2. Prepaid expenses
3. Accounts receivable
4. Creditor
9. Purchase of office equipment for cash will be recorded on which of the
following sides of a cash book?
1. Receipts
2. Payments
3. Incomes
4. Expenditures
10. A simple or one column cash book usually has which of the following
main columns?
1. Bank
2. Payments
3. Discount
4. Cash
Answer Key
1. (a) 2. (c) 3. (a) 4. (b) 5. (b) 6. (b) 7. (d) 8. (b) 9. (b) 10. (d)
Books of Original Entry with Answers
1. Which of the following may have both Dr and Cr balance?
a. Only cash column of the cash book
b. Only bank column of the cash book
c. Both cash and bank column
d. Neither cash or bank balance
2. Salary due for the month of march will appear in ………… side of the cash
book.
a. Receipt
b. Payment
c. Contra
d. None of the above.
3. ……………… is not a subsidiary book.
a. Purchase book
b. Purchases return book
c. Sales book

d. Ledger
4. Recording is made in journal proper of
a. Opening entries
b. Closing entries
c. Adjustment entries
d. All of the above
5. A …………. Is sent to a supplier when we return goods.
a. Debit note
b. Credit note
c. Proforma invoice
d. None of these
6. Personal accounts are related to:
a. Assets and liabilities
b. Expenses, losses and incomes
c. Debtors and creditors
7. Goods worth Rs 7,000 were given away as charity would be credited to :
a. Sales a/c
b. Purchases a/c
c. Charity a/c
d. Trustee a/c
8. Loss of goods by fire should be credited to

a. Sales a/c
b. Loss a/c
c. Profit and loss a/c
d. Purchases a/c
9. Pick out a source voucher / document from the following:
a. Debit voucher
b. Credit voucher
c. Cash voucher
d. Transfer voucher
10. Credit purchase of furniture will be recorded through which voucher?
a. Debit voucher
b. Credit voucher
c. Cash voucher
d. Transfer voucher
Answer Key
1. (b) 2. (d) 3. (d) 4. (d) 5. (a) 6. (c) 7. (b) 8. (d) 9.
(d) 10. (d)
Ledger with Answers
1. If debit side of bank account is greater than credit side it represents?
1. Cash at Bank
2. Bank Loan
3. Bank Overdraft
4. None of them
2. The payment to a creditor will?
1. Increase one asset and decrease another
2. Decrease an asset and decrease owner’s equity
3. Decrease an asset and decrease a liability
4. Increase an asset and increase a liability
3. The T-account is used to summarize which of the following?
1. Increase and decrease to a single account in the
accounting system
2. Debit and credit to a single account in the accounting
system
3. Changes in specific account balances over a time period
4. All of the above describe how T-accounts are used by
accountants
4. Credit means?
1. Entries on the right hand side
2. A decrease in liabilities
3. An increase in expenses
4. An increase in assets
5. Ledger is a principal book in which?
1. Only real account are kept
2. Only personal accounts are kept
3. All accounts are kept
4. Only nominal accounts are kept
6. Excess of Debit side over Credit side is called?
1. Debit Balance
2. Credit Balance
3. Liability Accounts
4. All of before
7. Which item will appear on the credit side of ledger account?
1. Cash received
2. Purchases
3. Discount received
4. Rent Expenses
8. The process of transferring the debit and credit items from a journal to
their respective account in the ledger is termed as?
1. Balancing
2. Posting
3. Arithmetic
4. Entry
9. Calculating balance of any account, after posting all entries to account,
is known as
1. Balancing
2. Posting
3. Arithmetic
4. Entry
10. Cash received from Ram as interest, which account to be credited
1. Ram account
2. Cash Account
3. Interest Account
Answer Key
1. (a) 2. (c) 3. (d) 4. (a) 5. (c) 6. (a) 7. (c) 8. (b) 9. (a) 10. (c)
Trial Balance and Errors with Answers
1. Which items shows a debit balance in the Trial Balance:
1. Purchase return
2. Salary outstanding
3. Sales
4. Prepaid expenses
2. Which item shows a credit balance in the Trial Balance?
1. Sales returns
2. Commission paid
3. Purchase returns
4. Salary
3. Trial balance is used to check the accuracy of
1. Balance sheet balances
2. Ledger accounts balances
3. Cash flow statement balances
4. Income statement balances
4. In the books of account if a transaction is completely deleted, will it affect
the trial balance?
1. No
2. Yes
3. A transaction cannot be omitted
5. What is used in preparing trial balance?
1. Specialized Journals
2. Balance Sheet
3. Ledger Accounts
4. General Journal
6. What is the trial balance used?
1. It is a financial statement
2. It records balances of a balance sheet
3. It doesn’t contribute to the accounting cycle
4. It records balances of accounts
7. When debit balance is equal to credit balance then the trial balance
means
1. Account balances are correct
2. Mathematically Capital + Liabilities=Assets
3. No mistake in recording transactions
4. No mistake in posting entries to ledger accounts
8. When is trial balance prepared?
1. At the end of an accounting period
2. At the end of a year
3. Frequently during the year
4. At the end of a month
9. Which items influence the trial balance agreement?
1. Deposit in transit
2. Compensating errors
3. Complete omission of a transaction
4. Partial omission of a transaction
10. When credit balances = debit balances, the trial balance check and
shows ________. It also indicates that there were no errors made during
posting and recording and posting.
1. Understatements of Balances
2. Errors of Commission
3. Arithmetic Accuracy
4. Omissions of Economic Events
Answer Key
1. (d) 2. (c) 3. (b) 4. (a) 5. (c) 6. (d) 7. (b) 8. (a) 9. (d) 10 (c)
Bank Reconciliation Statement with Answers
1. A Bank Reconciliation Statement is:
1. A part of cash book
2. A part of pass book
3. A statement prepared by bank
4. A statement prepared by a customer
2. A pass book is a copy of
1. A customer’s account in the bank’s books
2. Cash book relating to bank column
3. Cash book relating to cash column
4. Firm’s receipts and payments
3. A bank reconciliation statement is prepared with the balance of:
1. Cash book
2. Pass book
3. Either cash book or pass book
4. Neither cash book nor pass book
4. Unfavourable bank balances means:
1. Credit balance in the cash book
2. debit balance in the pass book
3. Debit balance in the cash book
4. Favourable balance in the cash book
5. The main purpose of preparing a bank reconciliation statement is?
1. To know the bank balance
2. To know the balance of bank statement
3. To correct the cash book
4. To identify causes of difference between cash book and
bank statement
6. Uncollected checks are also known as?
1. Outstanding checks
2. Uncleared checks
3. Outstation checks
4. Both b & c
7. When check is not paid by the bank, it is called?
1. Honored
2. Endorsed
3. Dishonored
4. a & b
8. Bank reconciliation is not a?
1. Reconcile records
2. Memorandum statement
3. Ledger account
4. Procedure to provide cash book adjustments
9. Bank statement also called?
1. Pass book
2. Cash book
3. Credit book
4. Debit book
10. The balance on the debit side of the bank column of cash book
indicates?
1. The total amount has drawn from the bank
2. Cash at bank
3. The total amount overdraft in the bank
4. None of above
Answer Key
1. (d) 2. (a) 3. (c) 4. (b) 5. (d) 6. (d) 7. (C) 8. (c) 9. (a) 10. (b)
Financial Statements with Answers
1. Arrange in the order of liquidity in the B/S—Cash, Building Goodwill,
Debtors, Machine.
1. Debtors Cash, Building Goodwill, Machine.
2. Cash, Goodwill, Debtors, Machine. Building
3. Cash, Building Goodwill, Debtors, Cash Machine.
4. Cash, Debtors, Machine. Building Goodwill.
2. Profit earn through normal activities of business
1. Operating profit
2. Net profit
3. Gross profit
4. Manufacturing profit.
3. Expenditure of recurring nature are
1. Capital
2. Revenue
3. Deferred revenue
4. Preliminary.
4. Which is example of Fictitious Assets
1. Building
2. Bill receivable
3. Adverting suspense
4. Cash
5. Custom duty will go to
1. Trading Cr
2. Trading Dr
3. Profit &Loss Dr
4. Profit &Loss Cr.
6. Trade mark is
1. Intangible assets
2. Fixed assets
3. Current assets
4. Liability.
7. Which of the following is position statement
1. Trial balance
2. Profit & Loss
3. BRS
4. Balance sheet
8. Gross loss is find from which account
1. Trading account
2. Profit &Loss account
3. Balance sheet
4. None of these.
9. By Profit &Loss account we get
1. Net profit
2. Capital
3. Gross profit
4. Gross loss.
10. Closing stock is entered in
1. Trading account
2. Balance sheet
3. Both
4. None of these.
Answer Key
1. (d) 2. (a) 3. (b) 4. (c) 5. (b) 6. (a) 7. (d) 8. (a) 9.
(a) 10. (c)
Financial Statements with Answers
1. Arrange in the order of liquidity in the B/S—Cash, Building Goodwill,
Debtors, Machine.
1. Debtors Cash, Building Goodwill, Machine.
2. Cash, Goodwill, Debtors, Machine. Building
3. Cash, Building Goodwill, Debtors, Cash Machine.
4. Cash, Debtors, Machine. Building Goodwill.
2. Profit earn through normal activities of business
1. Operating profit
2. Net profit
3. Gross profit
4. Manufacturing profit.
3. Expenditure of recurring nature are
1. Capital
2. Revenue
3. Deferred revenue
4. Preliminary.
4. Which is example of Fictitious Assets
1. Building
2. Bill receivable
3. Adverting suspense
4. Cash
5. Custom duty will go to
1. Trading Cr
2. Trading Dr
3. Profit &Loss Dr
4. Profit &Loss Cr.
6. Trade mark is
1. Intangible assets
2. Fixed assets
3. Current assets
4. Liability.
7. Which of the following is position statement
1. Trial balance
2. Profit & Loss
3. BRS
4. Balance sheet
8. Gross loss is find from which account
1. Trading account
2. Profit &Loss account
3. Balance sheet
4. None of these.
9. By Profit &Loss account we get
1. Net profit
2. Capital
3. Gross profit
4. Gross loss.
10. Closing stock is entered in
1. Trading account
2. Balance sheet
3. Both
4. None of these.
Answer Key
1. (d) 2. (a) 3. (b) 4. (c) 5. (b) 6. (a) 7. (d) 8. (a) 9.
(a) 10. (c)
Bank Reconciliation Statement Class 11 MCQs
Questions with Answers
Question 1.
When check is not paid by the bank, it is called?
(a) Honored
(b) Endorsed
(c) Dishonored
(d) a & b
Answer
Question 2.
A bank reconciliation statement is prepared by?
(a) Banker
(b) Accountant of the business
(c) Auditors
(d) Registrar
Answer
Answer: (b) Accountant of the business
Question 3.
Bank reconciliation is not a?
(a) Reconcile records
(b) Memorandum statement
(c) Ledger account
(d) Procedure to provide cash book adjustments
Answer
Question 4.
The balance on the debit side of the bank column of cash book indicates?
(a) The total amount has drawn from the bank
(b) Cash at bank
(c) The total amount overdraft in the bank
(d) None of above
Answer
Question 5.
Bank statement also called?
(a) Pass book
(b) Cash book
(c) Credit book
(d) Debit book
Answer
Question 6.
The main purpose of preparing a bank reconciliation statement is?
(a) To know the bank balance
(b) To know the balance of bank statement
(c) To correct the cash book
(d) To identify causes of difference between cash book and bank statement
Answer
Question 7.
Bank reconciliation statement is?
(a) Part of bank statement
(b) Part of the cash book
(c) A separate statement
(d) a sub-division of journal
Answer
Question 8.
Uncollected checks are also known as?
(a) Outstanding checks
(b) Uncleared checks
(c) Outstation checks
(d) Both b & c
Answer
Question 9.
Favorable balance means?
(a) Credit balance in the cash book
(b) Credit balance in Bank statement
(c) Debit balance in cash book
(d) both b and c
Answer
Question 10.
Unfavorable balance means?
(b) Credit balance in Bank statement
(c) Debit balance in cash book
(d) Debit balance in petty cash book
Answer
Question 11.
Farkhanda Jabeen Ltd. receives a check for Rs. 100 records it in cash book and
deposits it on the same day. A statement sent by the bank that day does not show
this Rs. 100. How is this shown on the bank reconciliation statement?
(a) As an uncredited deposits added to the bank statement balance
(b) As an uncredited deposits deducted from the bank statement balance
(c) As an Unpresented check added to the bank statement balance
(d) As an Unpresented check deducted from the bank statement balance
Answer
Question 12.
A bank reconciliation statement is prepared by?
(a) Internal auditor
(b) Business accountant
(c) Businessman
(d) All of These
Answer
Question 13.
Which of the following items is not a reason for difference between bank balance as
per cash book and pass book?
(a) Dishonored check
(b) Cheques deposited but not yet cleared
(c) Credit sales
(d) Cheques issued but not yet presented for payment
Answer
Question 14.
Credit balance in bank pass book means?
(a) Bank overdraft
(b) Bank balance
(c) Balance as per cash book
(d) None
Answer
Question 15.
A check that bears a date latter than date of issue is called?
(a) Anti dated check
(b) Post-dated check
(c) Dishonored check
(d) Outdated check
Answer
Question 16.
The main function of a commercial bank is to?
(a) Barrow and lend money
(b) Only barrow money
(c) Only lend money
(d) None of theses
Answer
Question 17.
When a cheque is returned by the bank showing some technical reason is known
as?
(a) Honor of the cheque
(b) Balance of account
(c) Dishonor of the cheque
(d) None of these
Answer
Question 18.
The outstanding check is the missing entry of?
(a) Cash book
(b) Passbook
(c) both
(d) None
Answer
Question 19.
Directly collections of bank are to be ___________ in cash book?
(a) Dr
(b) Cr
(c) both
(d) None
Answer
Question 20.
The cheque which is issued to creditor but is not presented for payment is called?
(a) Uncredited cheque
(b) Outstanding cheque
(c) Omitted cheque
(d) Dishonored cheque
Answer
Question 21.
A Bank Reconciliation Statement is:
(a) A part of cash book
(b) A part of pass book
(c) A statement prepared by bank
(d) A statement prepared by a customer
Answer
Question 22.
A pass book is a copy of
(a) A customer’s account in the bank’s books
(b) Cash book relating to bank column
(c) Cash book relating to cash column
(d) Firm’s receipts and payments
Answer
Question 23.
A bank reconciliation statement is prepared with the balance of:
(a) Cash book
(b) Pass book
(c) Either cash book or pass book
(d) Neither cash book nor pass book
Answer
Question 24.
Unfavourable bank balances means:
(b) debit balance in the pass book
(c) Debit balance in the cash book
(d) Favourable balance in the cash book
Answer
Question 25.
The main purpose of preparing a bank reconciliation statement is?
(a) To know the bank balance
(b) To know the balance of bank statement
(c) To correct the cash book
(d) To identify causes of difference between cash book and bank statement
Answer
Question 26.
In cash book, the favourable balance indicates
(a) Credit Balance
(b) Debit Balance
(c) Bank Overdraft
(d) Adjusted Balance
Answer
Question 27.
On the bank statement, cash deposited by the company is known as
(a) Credit
(b) Debit
(c) Liability
(d) Expenses
Answer
Question 28.
Bank reconciliation statement compares a bank statement with _________
(a) Cash payment journal
(b) Cash receipt journal
(c) Financial statements
(d) Cashbook
Answer
Question 29.
What is “Deposit in transit” in bank reconciliation?
(a) Added to Bank Balance
(b) Subtracted From Bank Balance
(c) Subtracted From the Cash Book Balance
(d) Added to Cashbook Balance
Answer
Question 30.
‘NSF’ marked in cheque sent back by the bank indicates
(a) Cheque has been forged
(b) A bank couldn’t verify the identity
(c) No sufficient money
(d) A cheque cannot be cashed because it’s illegal
Answer
Recording of Transactions 2 Class 11 MCQs Questions

with Answers
Question 1.
The first book of original entry is-
(a) Journal
(b) Ledger
(c) Trial Balance
(d)None of these.
Answer
Question 2.
‘Drawings’ falls under which account-
(a) Personal account
(b) Real account
(c) Nominal account
(d) None of these.
Answer
Question 3.
Income tax is treated as-
(a) Business Expense
(b) Direct Expense
(c) Personal Expense
(d) Indirect Expense.
Answer
Question 4.
A cheque on which two parallel lines are drawn in the left top corner is called –
(a) Bearer cheque
(b) Traveller’s cheque
(c) Account payee cheque
(d) None of these.
Answer
Question 5.
Cash purchase of goods is recorded in-
(a) Purchase book
(b) Sales book
(c) Cash – book
(d) None of these.
Answer
Question 6.
Credit purchase of furniture shall be recorded in-
(a) Purchase book
(b) Journal book
(c) Cash – book
(d) None of these.
Answer
Question 7.
Who prepares a debit note-
(a) Seller
(b) Purchaser
(c) Cashier
(d) None of these.
Answer
Question 8.
Return of goods by a customer is recorded in-
(a) Purchase book
(b) Sales book
(c) Sales return book
(d) Purchase return book.
Answer
Fill in the blanks:
1. The amount which cannot be recovered from debtors is called ……………..
Answer
2. The account in which amount can be deposited or withdrawn daily and which
allows no interest on deposit is called ……………..
Answer
3. The discount allowed on cash transactions is called ……………..
Answer
4. Sales account always shows …………….. balance.
Answer
5. The purchase of packing material along with goods purchased is recorded in

……………
Answer
6. Such transactions for which no separate subsidiary books are maintained are
recorded in ……………..
Answer
7. Sub – division of Journal is called …………….
Answer
8. Credit note is sent to …………….
Answer
State True or False:
1. Weekly information is sought from the subsidiary books.
Answer
2. Drawings account is a personal account.
Answer
3. Purchase account is always debited.

Answer
4. Order for sending goods is not a business transaction.
Answer
5. Cash A/c is a real A/c.
Answer
6. Purchase book is a principle book.
Answer
7. Preparation of sales account is not essential when sales book is maintained.
Answer
8. Goods received on consignment is recorded in purchase book.
Answer
9. Cash sale of asset is recorded in main journal book.
Answer
Match the following:
1.
Column A Column B
1. Asset (a) Bank
2. Personal account (b) Furniture
3. income tax (c) Real account
4. Asset installation expense (d) Personal account.
Answer
2.
Column A Column B
1. Debit note (a) Purchase book
2. Credit note (b) Principle book/journal book
3. Credit sale of asset (c) Purchaser

4. Cash purchase of asset (d) Seller
5. Credit purchase of goods (e) Cash-book.
Answer
Answer in one word/sentence:
1. Under how many heads, the accounts have been categorised for the purpose of
recording transactions in Journal?
Answer
2. When a single journal entry is passed for two transactions of same nature on
same date, such an entry is called?
Answer
3. Give an example of intangible asset?
Answer
4. The discount which is offered to increase sale and attract customers is called?
Answer
5. Mention the transaction which is not recorded in purchase book?
Answer
6. Credit sale of goods is recorded in which book?
Answer
7. Interest on capital is recorded in which subsidiary book?
Answer
8. Which discount is recorded in purchase and sales book?
Answer
Recording of Transactions 1 Class 11 MCQs Questions

with Answers
Question 1.
The Mathematical Expression defining the comparative relationship between Assets
and Liabilities of any person, institution or Business concern is called-
(a) Accounting
(b) Accounting Equation
(c) Book – keeping
(d) None of these.
Answer
Question 2.
Liabilities and Assets amount to Rs. 50,000 and Rs. 7,800 respectively. The
difference Amount shall represent-
(a) Creditors
(b) Debentures
(c) Profit
(d) Capital.
Answer
Question 3.
The basis of recording transactions is-
(a) Vouchers
(b) Profit
(c) Order form
(d) Quotation list.
Answer
Question 4.
As per American Belief, Accounts are of how many types-
(a) Two
(b) Three
(c) Five
(d) Four.
Answer
Question 5.
Which of the following is entered in cash – book-
(a) Only cash transactions
(b) Only credit transactions
(c) Both cash and credit transactions
(d) None of these.
Answer
Question 6.
Cash – book always show-
(a) Debit balance
(b) Credit balance
(c) Debit or Credit balance
(d) None of these.
Answer
Question 7.
The cash – book meant for recording petty expenses is called –
(a) Simple cash – book
(b) Petty cash – book
(c) Triple column
(d) None of these.
Answer
Question 8.
The entry which affects cash and bank column of a triple column cash – book is
known as –
(a) Compound entry
(b) Contra entry
(c) Journal entry
(d) None of these.
Answer
Question 9.
What statement is used while closing a Drawing Account-
(a) Balance c/d
(b) By Trading A/c
(c) By P & L A/c
(d) By Capital Account.
Answer
Question 10.
The entry which is passed for bringing forward the balances of personal and Real
Account as shown in the last year’s balance sheet is called –
(a) Closing entry
(b) Journal entry
(c) Opening entry
(d) None of these.
Answer
Question 11.
The balance of good’s Account is transferred to-
(a) Profit and loss Account
(b) Trading Account
(c) Balance sheet
(d) None of these.
Answer
Question 12.
Which Account is opened first in ledger book-
(a) Personal
(b) Real
(c) Non – real
(d) None of these.
Answer
Question 13.
How many columns are there in a Ledger (in one side)-
(a) Six
(b) Four
(c) Five
(d) Seven.
Answer
Fill in the blanks:
1. Only …………… transactions are recorded in cash – book.
Answer
2. Cash – book is a main book as well as …………… book.
Answer
3. …………. entry is passed in triple column cash – book for depositing cash in bank.
Answer
4. Advancing money to petty cashier is called ……………
Answer
5. Contra entry is made in …………… book.

Answer
6. Ledger posting is done on the basis of ……………..
Answer
7. …………… of transaction is not written in Ledger Account.
Answer
8. The recording of page number from subsidiary books to Ledger book and vice
versa is called ……………..
Answer
9. The balance of Income and Expenditure Accounts is transferred to ……………..
Answer
State True or False:
1. Assets = Liabilities – Capital.
Answer
2. The sum of Assets is equal to the sum of liabilities.
Answer
3. Capital Account represents owner’s Account in Business.
Answer
4. Assets – Liabilities = Capital.
Answer
5. No need of voucher to be written.
Answer
6. Cash – book is only a subsidiary book.
Answer
7. When a cheque is received, it is recorded in both sides of cash – book?
Answer
8. Cash – book always shows debit balance.
Answer
9. The cash balance as per cash-book is tallied daily with the physical cash balance.
Answer
10. The word ‘By’ should be used always while making and entry in debit side of an
account.
Answer
11. The debit balance of personal accounts denotes debtors.
Answer
12. The balance of goods accounts is transferred to trading account.
Answer
13. Ledger book does not possess legal acceptability.
Answer
14. In ledger narration is not required.
Answer
Match the following:
1.
Column A Column B
1. Increase of Assets & Liabilities (a) Investment of capital in business.
2. Decrease of Assets and Liabilities (b) Drawings or Expenses.
3. Increase of Capital and Assets (c) Payment of Liabilities.
4. Decrease of Capital and Assets (d) Credit purchase of Assets.
Answer
2.
Column A Column B
1. Amount withdrawn from bank (a) Credit

2. Petty cash book (b) Debit
3. Balance of cash-book (c) Contra entry
4. Bank overdraft (d) Petty cashier.
Answer
1. The book used for recording cash and bank related transactions is.
Answer
2. Which book is maintained to record day – to – day expenses?
Answer
3. Mention any transaction for which contra entry will be done.
Answer
4. Which side of cash – book records all cash payments?
Answer
5. The book in which accounts relating to person, goods, income and expenditure is
maintained and transactions are recorded is called.
Answer
6. On which date account are closed?
Answer
7. Sales account always shows which balance?
Answer
8. The process of totaling the debit and credit side of a ledger account is called.
Answer
Theory Base of Accounting Class 11 MCQs Questions

with Answers
Question 1.
Generally the duration of an Accounting period is of-
(a) 6 months
(b) 3 months
(c) 12 months
(d) 1 month.
Answer
Question 2.
The sum of Liabilities and Capital is-
(a) Expense
(b) Income
(c) Drawings
(d) Assets.
Answer
Question 3.
In India, the accounting standard board was set up in the year-
(a) 1972
(b) 1977
(c) 1956
(d) 1932.
Answer
Question 4.
The basic accounting postulates are denoted by –
(a) Concepts
(b) Book – keeping
(c) Accounting standards
(d) None of these.
Answer
Question 5.
The amount drawn by businessmen for his personal use is-
(a) Capital
(b) Drawing
(c) Expenditure
(d) Loss.
Answer
Question 6.
Meaning of credibility of going concern is :
(a) Closing of business
(b) Opening of business
(c) Continuing of business
(d) None of these.
Answer
Fill in the blanks:
1. …………… is a document that verifies the business transaction.
Answer
2. The existence of business is different from its ………………
Answer
3. ……………. has been applied on accountants by accounting standard board, law

or professional institutions.
Answer
4. ……………. aspects are affected in every transaction.
Answer
1. When was Indian Accounting standard board formed?
Answer
2. “The rules and conventions of accounting are commonly referred to as principles.”

Who said it?
Answer
3. On what basis accounting principles are developed?
Answer
4. Which concept denotes that the existence of business is separate from its owner?
Answer
MULTIPLE CHOICE QUESTIONS

Theory base of Accounting
1. According to Principle of Conservatism
a. Provision is made for bad and doubtful debts
b. Depreciation is charged on assets
c. Recording is made of outstanding expenses
d. All of the above
Ans: a.
2. According to the cost concept
a. Assets are recorded at lower of cost and market value
b. Assets are recorded by estimating the market value at the time of purchase
c. Assets are not recorded
d. Assets are recorded at the value paid for acquiring it.
Ans: a.
3. The owner of the firm records his medical expenses in the firm’s income statement.
Indicate the principle that is violated
a. Cost principle
b. Prudence
c. Full disclosure
d. Entity concept
Ans: c
4. Due to which of the following, contingent liabilities are shown in the Balance
Sheet:
a. Dual aspect
b. Full disclosure
c. Materiality
d. Going concern
Ans: b.
5. According to which principle the same accounting methods should be used each
year:
a. Prudence
b. Full disclosure
c. Materiality
d. Consistency
Ans: d
6. Accrual concept is based on
a. Matching principle
b. Dual aspect
c. Cost
d. Going concern
Ans: a
7. Income is measured on the basis of
a. Matching concept
b. Consistency
c. Cost
d. None of the above
Ans: c
8. Omission of paise and showing the round figures in financial statements is based on
a. Conservatism
b. Consistency
c. Materiality
d. Money measurement
Ans: c
9. Which of these is not a fundamental accounting assumption?
a. Going concern
b. Consistency
c. Accrual
d. Materiality
Ans: a
10. Due to which principle qualitative transactions are not recorded in the books
a. Business entity
b. Money measurement
c. Historical cost
d. Dual aspect
Ans: b
BASIC ACCOUNTING TERMS

1. Current liability includes --------
a) Bills payable b) creditors c) o/s expenses d) all of these
2. Current asset do not include ---
a) debtors b) motor car c) bank balance d) pre paid expenses
3. tangible asset do not include ----
a) goodwill b) furniture c) stock d) cash in hand
4. Which of the following is capital expenditure?
a) Wages b) wages paid for building construction c) repair expenses of building d)
advertisement expenses
5. Cash discount is -----
a) Which is allowed at the time of making the payment b) allowed at the time of sale of
goods c) received at the time of purchases of goods d)received both at the time of making
payment and purchase of goods.
6. Purchases refers to the buying of --------
a) stationery for office use b) assets for the factory c) goods of resale d) investment
7. A person who owes money to the firm is called -----
a) Debtor b) creditor c) supplier d) none of these
8. Out of the following assets which one is not an intangible asset?
a) Patents b) investment c) goodwill d) trade mark
9. Goods means ….
a) Commodity to be bought and sold b) Commodity to be bought but not to be sold c)
Commodity to be used as an asset d) all of the above.
10. Main feature of business transaction is ------
a) An economic activity b) change in the financial position of the firm c) express in terms of
money d) all of the above
Accounting standard
1. Which accounting standard is applicable for valuation of inventories?
(a) AS -1 (b) AS-2 (c) AS-3 (d)As-4
(a)28 (b)32 (c)10 (d) none of these
3. Which accounting standard is applicable for Fixed assets.?
. (a) AS- 1 (b) AS-10 (c) AS-19 (d)AS-18
4. Which accounting standard is applicable for intangible assets?
. (a) AS- 10 (b) AS-6 (c) AS-26 (d)AS-3
5. Which accounting standard is applicable for depreciation accounting?
(a) As-6 (b) AS-9 (c)AS-1 (d)AS-3
6. Which accounting standard is applicable for revenue recoginition?
(a) AS-9 (b) AS-10 (c)As-3 (d)AS-23
7. Which accounting standard is applicable for cash flow statement?
(a) AS- 1 (b) AS-10 (c) AS-19 (d)AS-3
8. Which accounting standard is applicable for contingencies and events occurring after the
balance sheet date?
(a) AS- 1 (b) AS-10 (c) AS-4 (d)AS-18
9. Which accounting standard is applicable for impairment of assets?
(a) AS- 1 (b) AS-10 (c) AS-19 (d)AS-28
10. Which accounting standard is withdrawn and included in AS-26?
(a) AS-3 (b) AS-8 (c) AS-23 (d) none of these
11. Under which section of companies Act,1956 accounting standard are specified by
Chartered Accountants?
(a) U/S 201 (b) U/S 112 (c) U/s 211 (d) none of these
(a)28 (b)32 (c)10 (d) none of these
13. how many IFRS are issued by the IASB?
(a) 10 (b) nil (c)23 (d)32
ANSWERS: 1. (b) 2. (b) 3.(b)4(c) 5(a) 6(a) 7(d)8(c) 9(d) 10(b) 11(c) 12(b) 13(a)
3.Recording of transaction
Recording of transactions
Group 3
Multiple choice questions
1. Which of the following may have both Dr or Cr balance?
a. Only cash column of the cash book
b. Only bank column of the cash book
c. Both cash and bank column
d. Neither cash or bank balance
Ans. (b)
2. Salary due for the month of march will appear in ………… side of the cash book.
a. Receipt
b. Payment
c. Contra
d. None of the above.
Ans. (d)
3. ……………… is not a subsidiary book.
a. Purchase book
b. Purchases return book
c. Sales book
d. Ledger
Ans. Ledger
4. Recording is made in journal proper of
a. Opening entries
b. Closing entries
c. Adjustment entries
d. All of the above
Ans. (d)
5. A …………. Is sent to a supplier when we return goods.
a. Debit note
b. Credit note
c. Proforma invoice
d. None of these
Ans. (a)
6. Personal accounts are related to :
a. Assets and liabilities
b. Expenses, losses and incomes
c. Debtors and creditors
Ans. (c)
7. Goods worth Rs 7,000 were given away as charity would be credited to :
a. Sales a/c
b. Purchases a/c
c. Charity a/c
d. Trustee a/c
Ans. (b)
8. Loss of goods by fire should be credited to
a. Sales a/c
b. Loss a/c
c. Profit and loss a/c
d. Purchases a/c
ans. (d)
9. Pick out a source voucher / document from the following:
a. Debit voucher
b. Credit voucher
c. Cash voucher
d. Transfer voucher
Ans. (d)
10. Credit purchase of furniture will be recorded through which voucher ?
a. Debit voucher
b. Credit voucher
c. Cash voucher
d. Transfer voucher
ans. (d)
4.Trial Balance and Bank reconciliation statement

Bank reconciliation statement, Ledger and trial balance
1. A Bank Reconciliation Statement is :
a. A part of cash book b) A part of pass book c) A statement prepared by bank d) A
statement prepared by a customer
2. A pass book is a copy of
a) A customer’s account in the bank’s books b) cash book rel;ating to bank column
c) cash book relating to cash column d) firm’s receipts and payments
3. A bank reconciliation statement is prepared with the balance of :
a) cash book b) pass book c) either cash book or pass book d) neither cash book nor pass
book
4. Unfavourable bank balances means:
a) credit balance in the cash book b). credit balance in the pass book c) debit
balance in the cash book d) favourable balance in the cash book
5. While posting in personal accounts from the purchases book, posting is done:
a) on debit side b) on credit side c) on debit or credit side d) none of the above
6. Which of the following accounts always shows a debit balance :
a) capital account b) sales account c) purchase return account d) none of these
7. Which of the following is known as Principal book of Accounting?
a) Ledger b) Journal c) Trial balance d) Balance sheet
8. The credit balance of a personal account is...
a) cash in hand b) amount receivable c) income earned d) amount payable
9. Which items shows a debit balance in the Trial Balance:
a) Purchase return b) salary outstanding c) sales d) prepaid expenses
10. Which item shows a credit balance in the Trial Balance:
a) sales returns b) commission paid c) purchase returns d) salary
5.Depreciation, Provisions and Reserve

Q1.which method of depreciation is approved by income tax act
a) REDUCING BALANCE METHODE METHOD
b) Straight line method
c) Annuity method
d) None of these
Q2. Amortization referred to writing off

a) Depleting
b) Wasting assets
c) Intangible asset
d) Fictitious asset
Q3. Which of the following best describe depreciation
A) Valuation og fixed assets at the end of the year
B) Verification of the assest
C) Decreasing the market value of asset
D) Allocation of cost of fixed asset over its use full life
Q4. Depreciation is calculated from the date of
a) Purchase of assets
b) Receipt of assets at business premises
c) Intangible asset
d) Assets installed
Q5. x ltd purchase a machine on 1stjuly 2012 for rs 50000 depreciation is to charge @10%
pa. what will be the amount of depreciation if the books are closed on 31st march every
year.
a)5000
b) 3750
c) 10000
d)5000
Q6. X ltd sold a machine for Rs. 55000 at a loss of Rs. 5000 on which depreciation has
been charged Rs. 12000. The cost of machine was
a) 62000
b) 72000
c) 55000
d) 50000
Q7. In WDV method depreciation is charged on
a) Cost price
b) Market price
c) Reduced Value
d) Non on these
Q8. In this method of depreciation the value of the asset will be zero at the end of its use
full life
e) WDV METHOD
f) Straight line method
g) Annuity method
h) None of these
Q9. The book value of asset was after charging 3 year depreciation @ 10 % pa is rs
7290. What was thw cost of the machine
a) 10000
b) 11000
c) 8000
d) 9000
Q10. In which method of depreciation equal amount of depreciation debited to p/l a/c.
a)WDV METHOD
b)Straight line method
c)Annuity method
d)None of these.
6.Accounting for Bill of Exchange

1. A BILL OF EXCHANGE HAS PARTIES
A. 2
B. 3
C. 4
D. 6
Ans: a
2. The party which is ordered to pay the amount of bill of exchange is called
A. Drawer
B. Drawee
C. Payee
D. Endorsee
Answer: b
3. The party which is entitled to receive the payment of the bill is known as
A. Drawer
B. Drawee
C. Bank
D. Payee
Ans:d
4. A bill is drawn on 31th January due date after 1 month will be
A. 4 march
B. 3 march
C. 28 feb
D. 2 march
Anw: b
5. Bill of exchange is a conditional order to pay the bill
A. Within the month
B. When the bank asks
C. On due date
D. When the drawer asks
Ans: c
6. When noting charges are paid by the bank at the time of dishonour of bill the drawee
credits
A. Drawer
B. Payee
C. Bank
D. Endorsee
Ans: a
7. When calculating the due date of the bill how many days are added as days of grace
A. 4
B. 3
C. 2
D. 0
Ans: b
8. Encashing the bill before the due date is called
A. Endorsement
B. Retirement
C. Discount
D. Bills sent for collection
Ans: b
9. One who draws the bill is the
A. Creditor
B. Debtor
C. Bank
D. Chartered accountant
Ans: a
10. Noting charges are to be paid to
A. Income tax department
B. Court
C. Notary
D. Company secretary
Ans: c
7.Rectification of Errors
Q1. On the basis of nature of errors, all the errors can be divided into.
(1) 3 (2) 4 (3) 5 (4) 10 Ans (5)
Q2. Error of commission committed due to the following
(1)Wrong Recording (2)Wrong casting (3)Wrong posting (4) All of these Ans—All of
these
Q3. Errors of Omission means
(1)Errors of complete omission (2)Errors of partial omission (3)Both of them (4) None of
them Ans Both of them
Q4. In compensating errors how many errors are committed.
(1) 4 (2) 7 (3)2 (4)9 Ans 2
Q5. Account which is opened to put the different in the trial balance by some name so that
trial balance can be tallied.
(1) Personal A/C (2)Real A/C (3)Suspense A/C (4) None of these
Ans Suspense A/c
Q6. One sided Errors are Located before which account.
(1)Closing Account (2)Opening Account (3)Both (4) None of these
Ans Closing Account
Q7. Credit sale to shiv for Rs 20,000 was recorded as Rs 2,000 which error is this
(1)Commission (2)omission (3) principle (4)Compensating Ans(1)
Q8. Rs 550 enter as 500 which type of error
(1) Omission (2)Commision (3)Principle (4) Compensating
Q9 Suspense is (1) Nominal
(2) real (3) personal (4) unreal
Q10. Charity expense is credit to sales
(1)charity dr to sales
(2)charity cr sales cr
(1)charity dr sales dr
(1)charity cr sales dr
8.Financial Statements of sole proprietorship

Q11. Arrange in the order of liquidity in the B/S—Cash ,Building Goodwill, Debtors ,
Machine.
(1) Debtors Cash ,Building Goodwill, , Machine.
(2) Cash , Goodwill, Debtors , Machine. Building
(3) Cash ,Building Goodwill, Debtors , Cash Machine.
(4) Cash , Debtors , Machine. Building Goodwill.
Ans. (4)
Q12. Profit earn throught normal activities of business
(1) operating profit
(2) net profit
(3) gross profit
(4)manufacturing profit.
Ans. (1)
Q13.Expenditure of recurring nature are
(1)Captial
(2)Revenue
(3) Defered revenue
(4)preminary.
Ans. (2)
Q14. Which is example of Fictituos Assets
(1)Building
(2)Bill receible
(3)Adverting suspense
(4)cash
Ans. (3)
Q15. Custom duty will go to
(1) Trading cr
(2) Trading dr
(3)Profit &Loss dr
(4) Profit &Loss cr.
Ans. (2)
Q16 TRADE MARK Is
(1) Tangible assets
(2)Fixed assets
(3) Current assets
(4)Liabilty.
Ans. (1)
Q17 Which of the following is position statement
(1) Trial balance
(2) Profit & Loss
(3)BRS
(4)Balance sheet
Ans. (4)
Q18. Gross loss is find from which account
(1)Trading account
(2)Profit &Loss account
(3)Balance sheet
(4)None of these.
Ans. (1)
Q19. By Profit &Loss account we get
(1) net profit
(2) capital
(3) gross profit
(4) gross loss.
Ans. (1)
Q20. closing stock is entered in
(1) trading account
(2) balance sheet
(3) both
(d) none of these.
Ans. (3)
9.Financial statements of not-for-profit organisations

Non Profit organisation
1. Receipts and payments account generally shows:
a) a debit balance b) a credit balance c) surplus or deficit d) capital fund
2. Income and expenditure account records transactions of:
a) revenue nature only b) capital nature only c) both revenue and capital nature d)
income of only revenue nature and expenditure of revenue and capital nature
3. Income and expenditure account reveals :
a) surplus or deficiency b) cash in hand c) net profit d) capital account
4. Subscription received by a school for organising annual function is treated as:
a) capital receipt b) revenue receipt c) asset d) earned income
5. Amount received from sale of grass by a club should be treated as :
a) capital receipt b) revenue receipt c) asset d) earned income
6. Subscription received in advance during the current year is:
a) an income b) an asset c) a liability d) none of these
7. Subscription received in cash during the year amounted to Rs. 60,000; subscription received
in advance for next year was Rs. 3000 and received in advance during previous year was
Rs. 2000. subscription in arrear at the end of current year was Rs. 5,400. The amount
credited to income & expenditure account will be:
a)53,600 b) 66,400 c) 55,600 d) 64,400
8. Life membership fee received by an institution is a ......... receipt.
a) capital b) revenue c)personal d) real
9. Entrance fees is treated as .......... receipt.
a) capital b) revenue c)personal d) real
10. Subsription outsatnding in case of a club are sown on the ........... side of the Balance
Sheet.
a) Assets b) liablities c) none of these
10.Accounts form incomplete records
Single entry systems
Multiple choice questions
1. Single entry systems are maintained by
(a) Company (b)income tax authorities (c) govt. (d)sole trader
2. Single entry system of book keeping is
(a) Simple (b) unauthorized by tax authorities (c) unscientific (d) all of these
3. If closing capital is >opening capital, it denotes
(a) Loss (b) profit (c) no profit no loss (d) profit, if there is no introduction of fresh capital
4. If closing capital is < opening capital , it denotes that
(b)Loss (b) profit (c) no profit no loss (d)loss, if there is no introduction of fresh capital
5. If capital at the end of the year is 40,000: capital introduced during the year Rs. 30,000;
drawings 20,000 and loss for the year is 60,000; then Capital at the beginning of the year
was: (a) 90,000 (b) 80,000 (c) 70,000 (d) 10,000
6. If capital at the end of the year is 50,000: capital introduced during the year Rs. 30,000;
drawings 20,000 and profit for the year is 60,000; then Capital at the beginning of the year
(a) 60,000 (b)30,000 (c)20,000 (d) 35,000
7. Profit = capital at the end+drawings-additional capital-…………..
(a) Opening capital (b) closing capital (c) loss (d) none of these
8. What should be added in closing capital for calculating opening capital?
(a) Loss and drawing (b) profit and drawing (c) profit only (d) loss only
9. When the amount of closing capital (after adjusting drawings ) is less than that of opening
capital the difference will be treated as:-
(a) Loss (b) profit (c)additional capital (d) none of them
10. If opening capital is 24,000; closing capital40,000 ; drawing 7,000; fresh capital 8,000.
Calculate profit or loss.
(a) Profit 15,000 (b) loss 15,000 (c) profit 20,000 (d) loss 20,000
Answers:1(d) 2(d) 3(d) 4(d)5(a)6(a) 7(a) 8(b) 9(a) 10(a)

Accounting MCQs With Answers

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Accounting MCQs With Answers

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Accounting MCQs with Answers:

Trial Balance MCQs

Balance Sheet MCQs

Meaning & Objective of Accounting with Answers

(A) Complete recording of transactions

(B) Ascertainment of Financial effect on the business

(C) Analysis and interpretation of data

(D) ‘A’ ‘B’ (Both ‘A’ and ‘B’)

2. In accounts recording is made of :

(A) Only financial transactions

(B) Only non-financial transactions

(C) Financial and non-financial transactions

(D) Personal transactions of the proprietor

3. ` 5,000 paid as rent of office premises is an/a ……. :

(C) Both ‘A’ and ‘B’

(D) None of these

4. Which of the following transactions is not of financial character :

(A) Purchase of goods on credit

(C) Payment of salaries

(D) Strike by employees

5. Internal users of accounting information are :

(B) Potential investors

6. External users of accounting information are :

(C) Tax authorities

(D) All of the above

(C) Both a transaction as well as an event

(D) None of these

8. Management Accounting :

(A) Is a clerical work

(B) Is accounting for future

(D) None of the above

9. Which of the following is not a limitations of Accounting ?

(A) Based on Accounting Convention

( B) Evidence in Legal Matters

(C) Incomplete Information

( D) Omission of Qualitative Information

(A) Accounting : A Profession

( B) Accounting : A Social Force

(C) Accounting : A Service Activity

( D) All of the above

Basic Terms of Accounting with Answers

2. Current asset do not include —

3. Tangible asset do not include —-

4. Which of the following is capital expenditure?

b) wages paid for building construction

c) repair expenses of building

a) Which is allowed at the time of making the payment

b) allowed at the time of sale of goods

c) Received at the time of purchases of goods

d) received both at the time of making payment and purchase of goods.

6. Purchases refers to the buying of ——–

a) stationery for office use

b) assets for the factory

7. A person who owes money to the firm is called —–

a) Commodity to be bought and sold

b) Commodity to be bought but not to be sold

c) Commodity to be used as an asset

d) all of the above.

10. Main feature of business transaction is ——

b) change in the financial position of the firm

c) express in terms of money

d) all of the above

Process & Basis of accounting Analysis with Answers