MULTIPLE CHOICE QUESTION AND TRUE-FALSE QUESTION

Chapter 1
1. Accounting is best explained as ___________.
A. describing relationship with one another in society
B. describing production systems
C. keeping accounts of goods purchase and sales
D. recording, classifying and explaining all financial transactions
2. The type or branch of accounting that generates reports for the use of external parties such as
account payables, investors, and government agencies is known as ___________.
A. financial accounting
B. managerial accounting
C. tax accounting
D. forensic accounting

3. What is the main objective of preparing the financial statement?

A. To show the value of the shares in the company.
B. To provide information on financial performance and financial position of a business.
C. To help management hiring additional workforces.
D. To show managers the results of their departments.

4. Which one of the following is not an external user of accounting information?

A. Investor
B. Creditor
C. Manager
D. Customer

5. Which one of the following is a characteristic of a valid business transaction?

A. It is an event measurable in terms of money.
B. It affects the financial position of the business.
C. It should be supported by a source document.
D. All of the above.

6. From the accounting point of view, which type of business organisation has no separate legal
entity from its owner, that is, the owner(s) is/are personally liable for the debts of the
business?
A. Limited company and partnership.
B. Partnership and sole-proprietorship.
C. Sole-proprietorship and limited company.
D. None of the above.
7. The accounting process involves all of the following EXCEPT ___________.
A. identifying economic transactions that are relevant to the business
B. communicating financial information to users by preparing financial reports
C. recording non-quantifiable economic events
D. analysing and interpreting financial reports

8. The following steps in the accounting cycle have not been listed in the correct order. Re-
arrange the following steps to show the correct steps in the accounting cycle.
a) Adjusted Trial Balance
b) Ledger
c) Trial Balance
d) Journal
e) Source Document
f) Financial Statement
g) Adjustment entries
A. e, b, c, d, e, a, f
B. e, d, b, g, a, c, f
C. e, d, b, c, g, a, f
D. e, g, b, c, d, a, f

9. Which of the following refers to a partnership business?

A. Unlimited liability.
B. Capital contributed by way of ordinary shares.
C. Income from business is not subject to tax.
D. Profit or loss is divided among owners and members.

10. A business that is owned by only one person is called as a __________.

A. company
B. sole-proprietorship
C. cooperative
D. partnership
Chapter 2
1. Identify the accounting concept that describes each situation below:
a. At the end of the accounting period, the stationery worth RM25 was counted as an expense rather
than an asset.
b. Ali Baba Biz acquired a new computer which can be used for 10 years in the business. Depreciation
is provided on a straight-line basis as to be similar to other computer owned by the business.
c. As an account clerk, Ms. Rose only records those transactions that can be measured in monetary
terms.
d. The owner of Tirai Seri Interior took RM1,000 worth of goods for his family. For accounting
purposes, the owner is always considered to be separate and distinct from the business which he owns.

B. MCQ
1. According to the accrual concept of accounting, financial or business transaction is recorded
___________.
A. when cash is received or paid
B. when a transaction occurs
C. when the Statement of Financial Position is prepared
D. when profit is computed

2. The FB Advert Excel provides advertising services to an investment company in the year 2017 but
received the payment in the year 2018. FB Advert Excel recognises this revenue in the year 2017. This
action of FB Advert Excel is justified by ___________.
A. the comparability concept
B. the accrual concept
C. the business entity concept
D. the going concern concept

3. A business is a going concern if ___________.

A. its Statement of Financial Position shows a strong financial position
B. its Statement of Profit or Loss for the current year shows a huge profit
C. there is no evidence that it will or will have to cease operations within the foreseeable future
D. it is company listed in Bursa Malaysia
4. Which accounting concept or principle states that the transactions of a business must be recorded
separately from those of its owners or other businesses?
A. Accrual concept
B. Going concern concept
C. Monetary measurement concept
D. Business entity concept

5. Which of the following states that a transaction is not recorded in the books of accounts unless it is
measurable in terms of money?
A. Accrual concept
B. Going concern concept
C. Monetary measurement concept
D. Neutrality concept

6. The revenue is not recognised until it is earned and realised or at least realisable. To which accounting
principle/concept this statement belongs?
A. Business entity concept
B. Accrual concept
C. Going concern concept
D. Monetary measurement concept

7. The auditor noticed that the financial statements of Meta Company were missing some important
footnotes for users in making a decision. This action of the management is a violation of ___________.
A. the materiality concept
B. the going concern concept
C. the business entity concept
D. the full disclosure concept
Chapter 3
Chapter 4

1. In a double entry system, a debit is used to record ________.

A. increase in asset and revenues, decrease in liability, revenue and capital
B. increase in asset and expenses, decrease in liability, revenue and capital
C. decrease in asset and capital, decrease in liability, revenue and expenses
D. decrease in asset, increase in capital, liability, revenue and expenses

2. Amira, who has a business of selling jewellery, sold a bracelet to her daughter, Anis costing
RM50,000 on credit. This should be recorded as ________.
A. debit Account Receivable - Anis , credit Sales Account
B. debit Drawings Account, credit Account Receivable - Anis
C. debit Account Receivable - Anis, credit Inventories Account
D. debit Drawings Account, credit Sales Account

3. All the following are the types of ledgers except ________.

A. purchases ledger
B. sales ledger
C. salaries and wages ledger
D. general ledger
4. Carriage inwards is charged to the trading account because _________.
A. it is not part of motor expenses
B. it should not be shown in the Statement of Financial Position
C. it is an expense connected with buying goods
D. carriage outwards is charged in the Statement of Profit or Loss

5. The double entry for RM500 cash taken from the cash in hand and deposited into the bank is
________.
A. debit Bank RM500, credit Bank RM500
B. debit Cash RM500, credit Cash RM500
C. debit Bank RM500, credit Cash RM500
D. debit Cash RM500, credit Bank RM500