Accounting MCQs

Option A: Acceptor‘s Account is debited in the books of drawer

Option B: Bills Receivable Account is credited in the books of drawer

Option C: Bank Account is debited in the books of drawer

Option D: Bills Payable Account is debited in the books of drawer

Correct Answer: Acceptor‘s Account is debited in the books of drawer ✔

Option A: 30th June,2018

Option B: 1st July,2018

Option C: 4th July,2018

Option D: 4th August,2018

Correct Answer: 4th July,2018 ✔

Option A: 50,000

Option B: 55,000

Option C: 60,000

Option D: 65,000

Correct Answer: 60,000 ✔

Option A: Dressing Balance Sheet

Option B: Marshalling Balance Sheet

Option C: Formatting Balance Sheet

Option D: Make up of Balance Sheet

Correct Answer: Marshalling Balance Sheet ✔

Option A: 6441

Option B: 5431

Option C: 7150

Option D: 5876

Correct Answer: 7150 ✔

Option A: 6441

Option B: 5431

Option C: 7654

Option D: 9876

Correct Answer: 6441 ✔

Option A: 2,40,000

Option B: 2,10,000

Option C: 2,00,000

Option D: 1,80,000

Correct Answer: 2,40,000 ✔

Option A: Income from sale of trading goods

Option B: Bad debts recovered

Option C: Interest on FDs

Option D: None

Correct Answer: Interest on FDs ✔

Option A: Profit and Loss A/c

Option B: Capitalized with work in progress

Option C: Trading A/c

Option D: Shown in Balance Sheet

Correct Answer: Trading A/c ✔

Option A: In Trading A/c

Option B: In Profit and Loss Appropriation A/c

Option C: Profit and Loss A/c

Option D: Being a non operating item ignored

Correct Answer: Profit and Loss A/c ✔

Option A: Profit and Loss A/c

Option B: Trading A/c

Option C: Deducted from the concerned assets A/c

Option D: Shown on the liability side

Correct Answer: Profit and Loss A/c ✔

Option A: Trading A/c and Balance Sheet

Option B: Profit and Loss A/c

Option C: Balance Sheet only

Option D: Trading A/c only

Correct Answer: Balance Sheet only ✔

Option A: At the time of opening new books of account

Option B: At the time of closing the accounts

Option C: During the course of accounting period any time

Option D: After certification of accounts

Correct Answer: At the time of closing the accounts ✔

Option A: Both (i) and (iv) above

Option B: Both (ii) and (iii) above

Option C: (i),(ii) and (iii) above

Option D: (ii),(iii),(iv) and (v) above

Correct Answer: (ii),(iii),(iv) and (v) above ✔

Option A: Debts included in Sundry Debtors which are doubtful in nature

Option B: Uncalled liability on partly paid shares

Option C: Claims against the company not acknowledged as debts

Option D: Arrears of fixed cumulative dividend

Correct Answer: Debts included in Sundry Debtors which are doubtful in nature ✔

Option A: Business entity concept

Option B: Money measurement concept

Option C: Going concern concept

Option D: Matching concept

Correct Answer: Business entity concept ✔

Option A: Prepaid expenses

Option B: Trademark

Option C: Discount on issue of shares

Option D: Outstanding Salaries

Correct Answer: Outstanding Salaries ✔

Option A: Trade mark

Option B: Franchise

Option C: Accounts Receivable

Option D: Secret Profit

Correct Answer: Accounts Receivable ✔

Option A: Current assets

Option B: Intangible assets

Option C: Deferred revenue expenditure

Option D: Not an asset

Correct Answer: Not an asset ✔

Option A: Only (i) above

Option B: Only (iii) above

Option C: Both (i)and (iii) above

Option D: (i), (iii), (iv) and (v) above

Correct Answer: i. Stock at the end of the financial year ✔

Option A: Results of operations for a particular period

Option B: Financial position during a particular period

Option C: Profit earning capacity for a particular period

Option D: Financial position as on a particular date

Correct Answer: Financial position as on a particular date ✔

Option A: Balance Sheet discloses financial position of the business

Option B: A person who owes to the business is called Debtor

Option C: Decrease in the value of the asset could decrease the value of a liability

Option D: Assets are to be shown in the Balance Sheet at the realizable value

Correct Answer: Assets are to be shown in the Balance Sheet at the realizable value ✔

Option A: On the assets side under current assets

Option B: On the assets side under loans and advances

Option C: On the liabilities side under current liabilities

Option D: On the liabilities side under provisions

Correct Answer: On the liabilities side under current liabilities ✔

Option A: Sundry Debtors

Option B: Stock

Option C: Prepaid insurance

Option D: All of A. B. and C. above

Correct Answer: D. All of A. B. and C. above ✔

Option A: Stock

Option B: Vehicle

Option C: Fixed deposit in bank

Option D: Both A. and C. above

Correct Answer: D. Both A. and C. above ✔

Option A: Credited to the Profit & Loss Account

Option B: Debited to the Profit & Loss Account

Option C: Shown on the liabilities side of the Balance Sheet

Option D: Shown on the assets side of the Balance Sheet

Correct Answer: Shown on the assets side of the Balance Sheet ✔

Option A: Profit and Loss Account

Option B: Balance Sheet

Option C: Funds Flow Statement

Option D: Trial Balance

Correct Answer: Trial Balance ✔

Option A: Drawings

Option B: Bad debts

Option C: Accrued expenses

Option D: Reserve for discount on Sundry Creditors

Correct Answer: Drawings ✔

Option A: Financial results of the concern for a period

Option B: Financial position of the concern on a particular date

Option C: Financial results of the concern on a particular date

Option D: Cost of goods sold during the period

Correct Answer: Financial results of the concern for a period ✔

Option A: Profit & Loss Account is prepared for a certain period and hence it is an interim statement

Option B: Profit & Loss Account does not disclose the effect of non-financial items

Option C: Net Profits are ascertained on the basis of current costs

Option D: Net Profits as disclosed by P&L Account is not absolute

Correct Answer: A. Profit & Loss Account is prepared for a certain period and hence it is an interim statement ✔

Option A: Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock

Option B: Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock

Option C: Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales

Option D: Gross Profit – Opening Stock + Direct expenses + Purchases +Closing stock = Sales

Correct Answer: Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales ✔

Option A: Loss on sale of undertaking

Option B: Debts considered bad and written off

Option C: Liability arising from a breach of contract

Option D: Director‘s remuneration

Correct Answer: Director‘s remuneration ✔

Option A: Sales – Cost of goods sold

Option B: Sales – Closing Stock + Purchases

Option C: Opening Stock + Purchases – Closing Stock

Option D: None of the above

Correct Answer: Sales – Cost of goods sold ✔

Option A: Net Profit = Gross Profit – Administration and Other expenses

Option B: Net Profit = Gross Profit + Administration expenses and Other expenses

Option C: Opening Stock + Purchases – Closing Stock = Cost of Sales

Option D: Both B. and C. above

Correct Answer: D. Both B. and C. above ✔

Option A: Replacement cost

Option B: Current cost

Option C: Cost to acquire less accumulated amortization

Option D: Cost less expired portion

Correct Answer: Cost less expired portion ✔

Option A: Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and

Option B: Deduct the 800 from closing stock in the Trading Account

Option C: Credit insurance company for 600

Option D: Debit of 600 and 200 to insurance company and Profit and Loss Account respectively and

Correct Answer: D. Debit of 600 and 200 to insurance company and Profit and Loss Account respectively and
credit of 800 to Trading Account ✔

Option A: Adding 2,200 to closing stock

Option B: Deducting 1,800 from closing stock and deducting 2,200 each from debtors and sales

Option C: Adding 1,800 to closing stock and deducting 2,200 each from debtors and sales

Option D: Deducting 1,800 from debtors

Correct Answer: Adding 1,800 to closing stock and deducting 2,200 each from debtors and sales ✔

Option A: Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c

Option B: Debit Accounts Payable A/c and Credit P&L A/c

Option C: Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c

Option D: Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c

Correct Answer: C. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c ✔

Option A: 7,000 Overstated

Option B: 10,000 Overstated

Option C: 17,000 Understated

Option D: 17,000 Overstated

Correct Answer: i. Depreciation for 2011-2012- 7,000 understated ✔

Option A: Add prepaid expenses to respective expenses and show it as an asset

Option B: Deduct prepaid expenses from respective expenses and show it as an asset

Option C: Add prepaid expenses to respective expenses and show it as a liability

Option D: Deduct prepaid expenses from respective expenses and show it as a liability

Correct Answer: Deduct prepaid expenses from respective expenses and show it as an asset ✔

Option A: Credited to P&L A/c

Option B: Debited to P&L A/c

Option C: Reduced from debtors in Balance Sheet

Option D: Added to debtors in Balance Sheet

Correct Answer: A. Credited to P&L A/c ✔

Option A: P&L A/C is debited with 1,400

Option B: P&L A/C is debited with 1,200

Option C: 200 is shown as current asset

Option D: Both B. and C. above

Correct Answer: D. Both B. and C. above ✔

Option A: Debited to P&L A/c

Option B: Shown as liability in Balance Sheet

Option C: Reduced from related asset in Balance Sheet

Option D: Both A. and C. above

Correct Answer: A. Debited to P&L A/c ✔

Option A: Current Asset

Option B: Current Liability

Option C: Fixed Asset

Option D: Income

Correct Answer: Current Asset ✔

Option A: An Asset in the Balance Sheet

Option B: A Liability

Option C: By adjusting it in the P & L A/c

Option D: Both B. and C. above

Correct Answer: D. Both B. and C. above ✔

Option A: Replacement cost – Accumulated Depreciation

Option B: Historical cost – Salvage Value

Option C: Historical cost – Depreciation portion thereof

Option D: Original cost adjusted for general price-level changes

Correct Answer: Historical cost – Depreciation portion thereof ✔

Option A: Return outwords

Option B: Return inwards

Option C: cost of goods sold

Option D: carriage on sales

Correct Answer: Return inwards ✔

Option A: Prime cost

Option B: Explicit cost

Option C: Job order cost

Option D: Conversion cost

Correct Answer: Conversion cost ✔

Option A: Current Assets

Option B: Fixed Assets

Option C: Current Assets& current liabilities

Option D: All of the above

Correct Answer: Current Assets ✔

Option A: Balance sheet

Option B: income statement

Option C: common size income statement

Option D: All of the Above

Correct Answer: income statement ✔

Option A: Interest Rate

Option B: Required rate of return

Option C: Nominal interest rate

Option D: All of the above

Correct Answer: Interest Rate ✔

Option A: selling Expense

Option B: Direct labor

Option C: factory overhead

Option D: selling Expenses & administrative expenses

Correct Answer: selling Expense ✔

Option A: Income Statement

Option B: Balance Sheet

Option C: Cash Flow Statement

Option D: Retained Earning Statement

Correct Answer: Balance Sheet ✔

Option A: Sole-proprietorship

Option B: General Partnership

Option C: Limited Partnership

Option D: Corporation

Correct Answer: Sole-proprietorship ✔

Option A: Rs. 33,000

Option B: Rs. 25,000

Option C: Rs. 17,000

Option D: Rs. 8,000

Correct Answer: Rs. 17,000 ✔

Option A: Book value

Option B: Intrinsic value

Option C: Cost

Option D: Market value

Correct Answer: Book value ✔

Option A: General Reserve A/c

Option B: Profit & Loss A/c

Option C: Asset A/c

Option D: Capital Reserve A/c

Correct Answer: Capital Reserve A/c ✔

Option A: Debtors A/c

Option B: Profit & Loss A/c

Option C: Profit & Loss Adjustment A/c

Option D: Profit & Loss Appropriation A/c

Correct Answer: B. Profit & Loss A/c ✔

Option A: The bad debt expense is not matched with the related sales

Option B: Revenue is overstated in the year of sales

Option C: It violates the matching principle of accounting

Option D: All of the above

Correct Answer: All of the above ✔

Option A: Debit Profit and Loss Account and deduct the provision from debtors

Option B: Credit Profit & Loss Account and deduct the provision from debtors

Option C: Credit Profit and Loss Account and add the provision to debtors

Option D: Debit Profit & Loss Account and add the provision to debtors

Correct Answer: Debit Profit and Loss Account and deduct the provision from debtors ✔

Option A: Credit balance of Provision for Bad Debts Account

Option B: Debit balance of Provision for Bad Debts Account

Option C: Debit balance of Bad Debts Account

Option D: Debit balance of Discount on Debtors Account

Correct Answer: Debit balance of Provision for Bad Debts Account ✔

Option A: Finished goods

Option B: Work-in-process

Option C: Stores and spares

Option D: Advance payments made to suppliers for raw materials

Correct Answer: Advance payments made to suppliers for raw materials ✔

Option A: Written down to zero or its scrap value

Option B: Shown in the Balance Sheet at its replacement cost

Option C: Shown in the Balance Sheet at cost, but classified as a non-current asset

Option D: Carried in the accounting records at cost until it is sold

Correct Answer: Written down to zero or its scrap value ✔

Option A: Balance Sheet

Option B: Directors‘ report

Option C: Notes on account to Balance Sheet

Option D: Chairman‘s report

Correct Answer: Balance Sheet ✔

Option A: Shown as a deduction from contract work-in-progress on asset side

Option B: Shown as a liability

Option C: Credited to P&L A/c

Option D: Either A or B above

Correct Answer: Either A or B above ✔

Option A: Asset side

Option B: Liability side

Option C: Netted from Capital

Option D: Profit & Loss A/c

Correct Answer: Asset side ✔

Option A: Assets side

Option B: Liability side

Option C: Profit & Loss A/c

Option D: Debited to Capital A/c

Correct Answer: Assets side ✔

Option A: Opening Stock

Option B: Carriage inward

Option C: Wages & Salary

Option D: Postage & Stamps

Correct Answer: D. Postage & Stamps ✔

Option A: Debtor

Option B: Creditor

Option C: Defaulter

Option D: Offender

Correct Answer: Debtor ✔

Option A: Debit Provision for Bad Debts A/c and credit Debtors A/c

Option B: Debit Debtors A/c and credit Provision for Bad Debts A/c

Option C: Debit Provision for Bad Debts A/c and credit Profit & Loss A/c

Option D: Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.

Correct Answer: Debit Profit and Loss A/c and credit Provision for Bad Debts A/c. ✔

Option A: Debtor‘s Account

Option B: Profit and Loss Account

Option C: Provision for Doubtful Debt Account

Option D: Either B or C above

Correct Answer: Either B or C above ✔

Option A: Inventory system

Option B: Survey system

Option C: Annuity system

Option D: Insurance

Correct Answer: Inventory system ✔

Option A: Building

Option B: Land

Option C: Plant and Machinery

Option D: Office equipment

Correct Answer: Land ✔

Option A: Routine repair and maintenance

Option B: Misuse

Option C: Obsolescence

Option D: Wear and tear

Correct Answer: Obsolescence ✔

Option A: Cost price of asset

Option B: Market price

Option C: Cost+ Transport+ Installation expenses

Option D: Cost or market values whichever is less

Correct Answer: Cost+ Transport+ Installation expenses ✔

Option A: Depreciation cannot be provided in case of loss in a financial year

Option B: Depreciation is a charge against profit

Option C: Depreciation is provided in the books only when there is profit

Option D: Depreciation is an appropriation of profit

Correct Answer: Depreciation is a charge against profit ✔

Option A: Straight-line method

Option B: Written down value method

Option C: Units-of-production method

Option D: Sum-of-the years‘-digits method

Correct Answer: Straight-line method ✔

Option A: Passage of time, asset usage, and obsolescence

Option B: Tax regulations and SEBI guidelines

Option C: Tax regulations and asset usage

Option D: SEBI guidelines and Asset usage

Correct Answer: Passage of time, asset usage, and obsolescence ✔

Option A: Depreciation

Option B: Physical deterioration of the asset

Option C: Decrease in market value of the asset

Option D: Valuation of an asset at a point of time

Correct Answer: Depreciation ✔

Option A: Only (i) above

Option B: Only (ii) above

Option C: Both (i) and (ii) above

Option D: (i),(ii) and (iii) above

Correct Answer: Only (ii) above ✔

Option A: Written down value

Option B: Accumulated value

Option C: Salvage value

Option D: Residual Value

Correct Answer: Written down value ✔

Option A: Valuation

Option B: Valuation and allocation

Option C: Allocation

Option D: Appropriation

Correct Answer: Allocation ✔

Option A: Calculate the true profit

Option B: Show the true financial position in the Balance Sheet

Option C: Provide funds for replacement of fixed assets

Option D: Both A. and B. above

Correct Answer: Show the true financial position in the Balance Sheet ✔

Option A: Regular reduction of asset value to correspond to changes in market value as the asset ages

Option B: A process of correlating the market value of an asset with its gradual decline in physical efficiency

Option C: Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value

Option D: Allocation of the cost of an asset to the periods in which services are received from the asset

Correct Answer: Allocation of the cost of an asset to the periods in which services are received from the asset ✔

Option A: The amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing

Option B: The amount of depreciation and the rate of depreciation decrease every year

Option C: The amount of depreciation decreases while the rate of depreciation remains the same

Option D: The amount of depreciation and the rate of depreciation increases every year

Correct Answer: The amount of depreciation decreases while the rate of depreciation remains the same ✔

Option A: Loss of 20,000

Option B: Loss of 22,000

Option C: Loss of 11,000

Option D: Profit of 11,000

Correct Answer: Loss of 22,000 ✔

Option A: 20,000 Loss

Option B: 20,000 Profit

Option C: 10,000 Loss

Option D: 10,000 Profit

Correct Answer: 20,000 Loss ✔

Option A: Straight line Method

Option B: Written down value Method

Option C: Discounted present value Method

Option D: Sum of digits Method

Correct Answer: Discounted present value Method ✔

Option A: Unknown Liabilities

Option B: Known Liabilities

Option C: Creation of Secret Reserves

Option D: All the Three

Correct Answer: Known Liabilities ✔

Option A: Errors in cash book

Option B: Errors in pass book

Option C: Cheques deposited and cleared

Option D: Cheques issued but not presented for payment

Correct Answer: Cheques deposited and cleared ✔

Option A: Surplus cash

Option B: Bank Overdraft

Option C: Terms deposits with bank

Option D: None of these

Correct Answer: Bank Overdraft ✔

Option A: It bring out any errors committed in preparation of Cash book / Bank Pass Book

Option B: Highlights under delay in clearance of cheques deposited but not credited

Option C: Help know actual bank balance

Option D: All the three

Correct Answer: All the three ✔

Option A: Cash book

Option B: Trial balance

Option C: Auditors report

Option D: None of these

Correct Answer: Cash book ✔

Option A: Trial balance

Option B: Cash book

Option C: Bank A/c

Option D: Cash as per cash book with bank balance as per bank pass book

Correct Answer: Cash as per cash book with bank balance as per bank pass book ✔

Option A: To rectify the mistakes in the Cash Book

Option B: To arrive at the Bank Balance

Option C: To arrive at the Cash Balance

Option D: To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement

Correct Answer: To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement ✔

Option A: Cheque issued but not presented

Option B: Cheque issued but dishonoured

Option C: Cheque deposited and credited by bank

Option D: Both A and B

Correct Answer: Both A and B ✔

Option A: Credit side of Cash Book

Option B: Debit side of Cash Book

Option C: Debit side of Trial Balance

Option D: Credit side of Balance Sheet

Correct Answer: Credit side of Cash Book ✔

Option A: Surplus cash

Option B: Bank overdraft

Option C: Terms deposits with bank

Option D: None of these

Correct Answer: Bank overdraft ✔

Option A: Mistake in Cash Book

Option B: Mistake in Pass Book

Option C: Cheque issued but not presented for payment

Option D: Cheques deposited but not cleared

Correct Answer: Mistake in Cash Book ✔

Option A: Bank column of Cash Book

Option B: Bank Pass Book

Option C: Bank Statement

Option D: Trial Balance

Correct Answer: Trial Balance ✔