Accounting is the art of recording classifying and summarize financial transactions in the preparation of financial statements.It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm’s assets, liabilities and owners’ equity.It encompass Financial Cost Advance, and managerial Accounting as well. Latest GAAP principles have been updated over here in form of Mcqs respectively.Just follow the Mcqs online quiz being dispatched over here with respect to your preparation for entry admission test NTS PPSC OTS PTS and missllenous job exams simultaneously.
Here we have large collection of Accounting Mcqs for all Students and jobs test preparation purpose. These Accounting Mcqs will be updated on daily basis and added more multiple choice question about Accounting frequently.You can prepare your Accounting Subject for different Entry Test, Jobs Test,Recruitment Test and interviews here.
Accounting Mcqs Online with Answer for Entry Test NTS PPSC PTS OTS
Accounting
Latest Accounting Mcqs Online with Answers.
A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of?
A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle
Right Answer: Error of commission
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The periodic total of purchase day book is posted to?
A. Purchase register
B. Purchase A/c
C. Cash purchase A/c
D. Credit purchase A/c
Right Answer: Purchase A/c
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Which of the following is the external user of financial statements?
A. Manager of the business
B. CEO of the business
C. Creditor of the business
D. Controller of the business
Right Answer: Creditor of the business
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Generally the term fund is used to mean the difference between?
A. Current assets and current liabilities
B. Profit and loss A/C and Balance sheet
C. Current assets and non-current liabilities
D. Current liabilities and non-current liabilities
Right Answer: Current assets and current liabilities
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The gross decrease in economic benefits for the business are what?
A. Expenses
B. Obligations
C. Creditors
D. Income or gain
Right Answer: Expenses
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Which of the following can be considered as the most important phase of accounting cycle and it is the primarily objective of financial accounting?
A. Identifying transactions
B. Preparing “T Accounts”
C. Preparing financial statements
D. Preparing trial balances
Right Answer: Preparing financial statements
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Which of the following is true?
A. Error of casting affects personal accounts
B. Omission of a transaction from a subsidiary record affects only one account
C. Error of carry forward affects two accounts
D. Error of principle involves an incorrect allocation of expenditure or receipt between capital and revenue
Right Answer: Error of principle involves an incorrect allocation of expenditure or receipt between capital and revenue
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The normal balance of capital account is?
A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance
Right Answer: Credit balance
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Which of the following is a representative Personal A/c?
A. Outstanding Salary A/c
B. Rent A/c
C. SBI A/c
D. Bad debts A/c
Right Answer: Outstanding Salary A/c
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Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of?
A. Error of principle
B. Error of commission
C. Error of omission
D. Error of duplication
Right Answer: Error of principle
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Which of the following should not be treated as revenue expenditure?
A. Interest on loans and debentures
B. Annual fire insurance premiums on Plant and Equipment
C. Sales tax paid in connection with the purchase of office equipment
D. Small expenditures on long- lived assets, such as ` 20 for a paper weight.
Right Answer: Sales tax paid in connection with the purchase of office equipment
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Which of the following account with normal balance is shown at the credit side of a trial balance?
A. Cash account
B. Bank account
C. Equipment account
D. Accrued expenses account
Right Answer: Accrued expenses account
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Which of the following specialized journals records “goods returned by customers”?
A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Sales return journal
Right Answer: Sales return journal
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The closing balance of a petty cash book is a / an?
A. Liability
B. Gain
C. Assets
D. Loss
Right Answer: Assets
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Goodwill A/c is a/an?
A. Nominal A/c
B. Tangible Asset
C. Intangible Asset
D. Fictitious Asset
Right Answer: Intangible Asset
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Net loss occurs when?
A. Expenses are greater than Income
B. Expenses are less than Income
C. Expenses=Income
D. Liabilities are greater than income
Right Answer: Expenses are greater than Income
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If debit side of a bank account is greater than credit side it indicates which of the following?
A. Cash at bank
B. Bank understatement
C. Bank overdraft
D. Balance overstatement
Right Answer: Cash at bank
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Which of the following statements is true?
A. If a Trial Balance tallies, it always means that none of the transactions has been completely omitted
B. A Trial Balance will not tally if a transaction is omitted
C. A customer to whom goods have been sold on credit cannot avail himself of a cash discount
D. A credit balance in the Pass Book indicates excess of deposits over withdrawals
Right Answer: A credit balance in the Pass Book indicates excess of deposits over withdrawals
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In accounting an Economic event is referred to as?
A. Cash
B. Bank statement
C. Transaction
D. Exchange of money
Right Answer: Transaction
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The entry for creating a Provision for bad debts is?
A. Debit Provision for Bad Debts A/c and credit Debtors A/c
B. Debit Debtors A/c and credit Provision for Bad Debts A/c
C. Debit Provision for Bad Debts A/c and credit Profit & Loss A/c
D. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.
Right Answer: Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.
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Bank reconciliation is a statement prepared to reconcile?
A. Trial balance
B. Cash book
C. Bank A/c
D. Cash as per cash book with bank balance as per bank pass book
Right Answer: Cash as per cash book with bank balance as per bank pass book
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An income statement in which each item expressed as percentage of Sale?
A. Balance sheet
B. income statement
C. common size income statement
D. All of the Above
Right Answer: common size income statement
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If a transaction is completely omitted from the books of accounts, will it affect the agreement of a trial balance?
A. Yes
B. No
C. Transactions can’t be omitted
D. none of these
Right Answer: No
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Which of the following statements is/are true ?
A. A sale of an asset is recorded in the Sales Book
B. Total of Return Outward Book is debited to Return Outward Account
C. The balance of Petty Cash Book is a liability
D. Cash Book is a subsidiary book as well as a ledger
Right Answer: Cash Book is a subsidiary book as well as a ledger
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The assets which come into existence upon the happening of a certain event are called?
A. Contingent assets
B. Fixed assets
C. Fictitious assets
D. Quick assets
Right Answer: Contingent assets
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Sales on credit is recorded in which of the following journal?
A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Sales return journal
Right Answer: Sales journal
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Which of these errors affect two or more accounts?
A. Errors of complete omission
B. Errors of principle
C. Errors of posting to wrong account
D. All the three
Right Answer: All the three
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Tax deducted at source A/c appears in?
A. Assets side
B. Liability side
C. Profit & Loss A/c
D. Debited to Capital A/c
Right Answer: Assets side
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Which of the following is true about a trial balance?
A. It lists down the balances of accounts
B. It lists down the balances of a balance sheet
C. It is a kind of financial statement
D. It is not a part of accounting cycle
Right Answer: It lists down the balances of accounts
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reduction in price is called?
A. Paid price
B. Invoice price
C. Book price
D. Discount
Right Answer: Discount
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A systematic way to maintain the books of accounts is called?
A. Accountancy
B. Economics
C. Book Keeping
D. Auditing
Right Answer: Book Keeping
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_is the cost of converting raw material into finished products?
A. Prime cost
B. Explicit cost
C. Job order cost
D. Conversion cost
Right Answer: Conversion cost
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The balance of Revaluation Reserve pertaining to an asset that has been disposed off or retired can be transferred to?
A. General Reserve A/c
B. Profit & Loss A/c
C. Asset A/c
D. Capital Reserve A/c
Right Answer: Capital Reserve A/c
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The amount invested by the proprietor to start the business is called?
A. Capital
B. Business
C. Drawings
D. All of them
Right Answer: Capital
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Investment in own share A/c appears in?
A. Asset side
B. Liability side
C. Netted from Capital
D. Profit & Loss A/c
Right Answer: Asset side
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Cost of goods sold excludes?
A. Opening Stock
B. Carriage inward
C. Wages & Salary
D. Postage & Stamps
Right Answer: Postage & Stamps
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Depreciation is a process of?
A. Valuation
B. Valuation and allocation
C. Allocation
D. Appropriation
Right Answer: Allocation
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If debit balance is greater than creadit balance then the account blance will be?
A. Credit balance
B. Debit and credit balance
C. Cash balance
D. Debit balance
Right Answer: Debit balance
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Which of the following items should not be capitalized relating to fixed assets?
A. Interest payable on loans or deferred credits taken for the acquisition or construction of fixed assets before they are ready for use
B. Stand by equipment and servicing equipment
C. Expenditure incurred on test runs and experimental production
D. Administration and general expenses
Right Answer: Administration and general expenses
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Which of the following enhances the earning capacity of an asset?
A. Increase in working capacity of an asset
B. Reduction in operating costs
C. Replacing damaged parts of an asset
D. Both A. and C. above
Right Answer: Both A. and C. above
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Which of the following errors affects the agreement of a Trial Balance?
A. Mistake in balancing an account
B. Omitting to record a transaction entirely in the subsidiary books
C. Recording of a wrong entry in the subsidiary books
D. Posting an entry on the correct side but in the wrong account
Right Answer: Mistake in balancing an account
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Which of the following statements is incorrect regarding capital account?
A. Debit increases the capital account balance
B. Credit increases the capital account balance
C. Fresh capital increases the capital account balance
D. Net income increases the capital account balance
Right Answer: Debit increases the capital account balance
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Which of the following is the normal balance of a rent expense account?
A. Credit balance
B. Cash balance
C. Overdraft
D. Debit balance
Right Answer: Debit balance
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Closing stock is generally valued at?
A. Cost Price
B. Market Price
C. Cost price or Market price whichever is higher
D. Cost price or Market price whichever is lower
Right Answer: Cost price or Market price whichever is lower
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Which of the following is the internal user of financial statements?
A. Creditor of the business
B. Government agency
C. Shareholder of the business
D. Manager of the business
Right Answer: Manager of the business
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An asset posses which of the following?
A. Future economic benefits for the business
B. All kind of benefits for the business
C. Expenses for the business
D. Merits and Demerits for the business
Right Answer: Future economic benefits for the business
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Which of the following specialised journals will record “goods returned by the BUSINESS “?
A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Sales return journal
Right Answer: Purchases return journal
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Petty cash balance is a/an?
A. Assets
B. Expenditure
C. Liability
D. None
Right Answer: Assets
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Which is the most important characteristic that all assets of a business have?
A. Long life of assets
B. Value of assets
C. Intangible nature of assets
D. Future economic benefits
Right Answer: Future economic benefits
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Which of these documents is not required for Bank Reconciliation?
A. Bank column of Cash Book
B. Bank Pass Book
C. Bank Statement
D. Trial Balance
Right Answer: Trial Balance
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Institute of Chartered Accountants of Pakistan was established in?
A. 1949
B. 1956
C. 1961
D. 1972
Right Answer: 1961
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Cash received from debtor is recorded in which of the following SPECIALIZED journals?
A. Purchase journal
B. Sales journal
C. Cash receipts
D. Cash payments journal
Right Answer: Cash receipts
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Which of the following is a real account?
A. Office equipment
B. Rent expenses
C. Rent income
D. Insurance expense
Right Answer: Office equipment
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Which of the following form of business organization is least regulated?
A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation
Right Answer: Sole-proprietorship
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The normal balance of liability account is?
A. Debit balance
B. Credit balance
C. Cash balance
D. Neither debit nor credit balance
Right Answer: Credit balance
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Double entry means?
A. Entry in two sets of books
B. Entry at two ends
C. Entry at two dates
D. Entry for two aspects of the transaction
Right Answer: Entry for two aspects of the transaction
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Which of the following is a type of cash receipt journal + cash payment journal?
A. Bank statement
B. Statement of cash flow
C. Cash book
D. Cash documents
Right Answer: Cash book
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Bank reconciliation statement is a part of?
A. Cash book
B. Trial balance
C. Auditors report
D. None of these
Right Answer: Cash book
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Which of the following statement is considered as the accountant’s snapshot of firm’s accounting value as of a particular date?
A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Retained Earning Statement
Right Answer: Balance Sheet
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Financial accounting provides financial information to all of the following external users except?
A. Government agencies
B. investors
C. Creditors
D. Managers
Right Answer: Managers
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Financial statements differ from management account because?
A. They are mainly prepared for external users of financial information
B. They are more complex and hard to prepare
C. The are the summary of accounting data
D. The are prepared on basis of actual concept
Right Answer: They are mainly prepared for external users of financial information
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Cash book records?
A. Only cash sales
B. All types of cash receipts and payments
C. Only revenue receipts
D. Only capital receipts
Right Answer: All types of cash receipts and payments
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Auditing is what?
A. Reporting the financial information
B. Examination of financial statements
C. Preparation financial statements
D. maintaining the ledger records
Right Answer: Examination of financial statements
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A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car?
A. 20,000 Loss
B. 20,000 Profit
C. 10,000 Loss
D. 10,000 Profit
Right Answer: 20,000 Loss
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Which of the following is a liability?
A. Cash
B. Equipment
C. Debtors
D. Creditors
Right Answer: Creditors
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Any donation received for a specific purpose is a?
A. Liability
B. Assets
C. Revenue receipts
D. Capital receipts
Right Answer: Capital receipts
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Goods return to customer are known as?
A. Merchandise return
B. Purchase return
C. Return inwards
D. Sales return
Right Answer: Purchase return
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Building and furniture are called?
A. Current asset
B. Fictitious asset
C. Tangible asset
D. Fixed assets
Right Answer: Fixed assets
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The systems of accounting are?
A. Two
B. Three
C. Five
D. Six
Right Answer: Two
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Depreciation is calculated on the?
A. Cost price of asset
B. Market price
C. Cost+ Transport+ Installation expenses
D. Cost or market values whichever is less
Right Answer: Cost+ Transport+ Installation expenses
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In a three column cash book_______________does not exist?
A. Cash column
B. Bank column
C. Petty cash column
D. Discount column
Right Answer: Petty cash column
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Which of these errors affect only one account?
A. Errors of casting
B. Errors of carry forward
C. Errors of posting
D. All the three
Right Answer: All the three
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Difference in Bank Balance as per Pass Book and Cash Book may arise on account of?
A. Cheque issued but not presented
B. Cheque issued but dishonoured
C. Cheque deposited and credited by bank
D. All of A. and B. above
Right Answer: Cheque issued but not presented
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Which of the following is a revenue expenses?
A. Raw material consumed
B. Plant purchased
C. Long term loan raised from bank
D. Share Capital
Right Answer: Raw material consumed
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Revenue receipts are shown in?
A. Balance Sheet
B. Profit and Loss appropriation A/c
C. Manufacturing A/c
D. Trading and Profit and Loss A/c
Right Answer: Trading and Profit and Loss A/c
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Which of the following statements is correct about Depreciation?
A. Depreciation cannot be provided in case of loss in a financial year
B. Depreciation is a charge against profit
C. Depreciation is provided in the books only when there is profit
D. Depreciation is an appropriation of profit
Right Answer: Depreciation is a charge against profit
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Which of the following is not a method of charging depreciation?
A. Straight line Method
B. Written down value Method
C. Discounted present value Method
D. Sum of digits Method
Right Answer: Discounted present value Method
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Identify the correct sequence of accounting process?
A. Communicating→Recording→Identifying
B. Recording→Communicating→Identifying
C. Identifying→communicating→recording
D. Identifying→recording→communicating
Right Answer: Identifying→recording→communicating
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Which of these types of expenditure would not be treated as a Capital Expenditure?
A. Acquisition of an Asset
B. Extension of an Asset
C. Improvement of the existing Asset
D. Maintenance of the Asset
Right Answer: Maintenance of the Asset
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________ is a separate legal entity that Total capital can be divided in many shares?
A. Partnership
B. Sole proprietorship
C. Company
D. Non-profit organization
Right Answer: Company
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The balance of which of the following accounts do not disappear, once they are debited/credited to Trading Account?
A. Sales
B. Purchases
C. Inward returns
D. Closing stock
Right Answer: Closing stock
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The amount payable to a person as consideration for the use of rights vested in him is?
A. Dividend
B. Royalty
C. Purchase consideration
D. Installment
Right Answer: Royalty
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Payments received in advance from a customer for a contract can be?
A. Shown as a deduction from contract work-in-progress on asset side
B. Shown as a liability
C. Credited to P&L A/c
D. Either A. or B. above
Right Answer: Either A. or B. above
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Obligation of the Business are known as?
A. Liabilities
B. Revenues
C. Expenses
D. Assets
Right Answer: Liabilities
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The main objective of providing depreciation is to?
A. Calculate the true profit
B. Show the true financial position in the Balance Sheet
C. Provide funds for replacement of fixed assets
D. Both A. and B. above
Right Answer: Show the true financial position in the Balance Sheet
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Transactions that a BUSINESS doesn’t record in any specialised journal are recorded in which of the following journals or day books?
A. Cash payments journal
B. Cash receipts journal
C. Purchases return journal
D. General journal
Right Answer: General journal
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If goods worth 1,750 returned to a supplier is wrongly entered in sales return book as 1,570, then?
A. Net Profit will decrease by 3,140
B. Gross Profit will increase by 3,320
C. Gross Profit will decrease by 3,500
D. Gross Profit will decrease by 3,320
Right Answer: Gross Profit will decrease by 3,320
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The adjustment to be made for income received in advance is?
A. Add income received in advance to respective income and show it as a liability
B. Deduct income received in advance from respective income and show it as a liability
C. Add income received in advance to respective income and show it as asset
D. Deduct income received in advance from respective income and show it as an asset in the Balance Sheet
Right Answer: Deduct income received in advance from respective income and show it as a liability
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Debit side of Bank Pass book corresponds to?
A. Credit side of Cash Book
B. Debit side of Cash Book
C. Debit side of Trial Balance
D. Credit side of Balance Sheet
Right Answer: Credit side of Cash Book
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Which of these is a Part of cash in hand?
A. Postage stamps
B. B/R
C. Cheque Deposited with Bank
D. B/R endorsed
Right Answer: Postage stamps
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The Bank Reconciliation Statement is prepared?
A. To rectify the mistakes in the Cash Book
B. To arrive at the Bank Balance
C. To arrive at the Cash Balance
D. To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement
Right Answer: To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement
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The maintenance of accounts in a systematic way is called?
A. Accounting
B. Reading
C. Book Keeping
D. Auditing
Right Answer: Book Keeping
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Revenue and expense accounts are referred as?
A. Nominal accounts
B. Real account
C. Cash accounts
D. Banks account
Right Answer: Nominal accounts
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The periodic total of purchase day book is posted to?
A. Creditors A/c
B. Debtors A/c
C. Purchase A/c
D. None
Right Answer: Creditors A/c
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Building account is classified as _________ account?
A. Nominal
B. Real
C. Cash
D. Capital
Right Answer: Real
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Which of the following statements is /are true?
A. Entering wrong amount in the subsidiary book affects the agreement of the Trial Balance
B. Undercasting or overcastting of a subsidiary book is an example or error of commission
C. Errors of principle do not affect the agreement of Trial Balance
D. Both B. and C. above
Right Answer: Both B. and C. above
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Which of the following is a Real A/c?
A. Salary A/c
B. Bank A/c
C. Building A/c
D. Goodwill A/c
Right Answer: Building A/c
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Bookkeeping mainly concerns with which part of accounting process?
A. Analyzing
B. Preparing financial statements
C. Recording financial information
D. Auditing the books of accounts
Right Answer: Recording financial information
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Which of the following is an item of capital expenditure?
A. Research and development costs during the year
B. Interest on borrowed fund utilized for acquisition of Office Furniture
C. Installation charges paid in conjunction with the purchase of Office Equipment
D. Monthly rent of a machinery used in the business
Right Answer: Installation charges paid in conjunction with the purchase of Office Equipment
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What is equity?
A. Cash from the business
B. liability of a business
C. Owner’s claim on total assets
D. Owner’s claim on total liabilities
Right Answer: Owner’s claim on total assets
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