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.
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Accounting Mcqs Online with Answer for Entry Test NTS PPSC PTS OTS
Accounting
Latest Accounting Mcqs Online with Answers.
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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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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Identify the asset from the following?
A. Cash and cash equivalent
B. Creditors
C. Notes payable
D. Bank loan
Right Answer: Cash and cash equivalent
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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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Amount paid to Masood posted to the credit side of his account would affect?
A. Masood’s account
B. Cash account
C. Cash account and Gagan’s account
D. None of these
Right Answer: Masood’s account
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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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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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_______ the withdrawal of cash and goods by the owner of the busienss for his/her personal use?
A. Depreciation
B. Drawings
C. Outflow of cash
D. Appreciation
Right Answer: Drawings
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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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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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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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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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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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Depreciation is a process of?
A. Valuation
B. Valuation and allocation
C. Allocation
D. Appropriation
Right Answer: Allocation
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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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For which step of accounting process the accountants of business entity prepare financial statements?
A. Identification of economic event
B. Communication of financial information
C. Recording financial information
D. Making decisions about business
Right Answer: Communication of financial information
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Buildings account is debited with an amount towards repairs. This is an example of?
A. Error of commission
B. Error of principle
C. Error of omission
D. Compensating error
Right Answer: Error of principle
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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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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 these is not a special purpose journal?
A. Cash journal
B. Purchase journal
C. Debtors journal
D. Sales journal
Right Answer: Debtors journal
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Which of the following is a capital expenditure?
A. Repair of plant and machinery
B. Salary paid to workers
C. Cost of stand by equipment
D. Annual whitewash of the office building
Right Answer: Cost of stand by equipment
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Cash purchases is recorded in which of the following specialized journals?
A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Cash payments journal
Right Answer: Cash payments journal
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Which of the following is known as the base for preparing trial balance?
A. Journal
B. Cash account
C. Ledger account
D. Balance sheet
Right Answer: Ledger account
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Which of the following is an one sided error?
A. 500 purchase of old equipment not recorded in the books of A/c at all
B. 500 being expense on travelling expense credited to travelling expenses
C. Both
D. None
Right Answer: 500 being expense on travelling expense credited to travelling expenses
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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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While finalizing the current year‘s accounts, the company realized that an error was made in the calculation of closing stock of the previous year. In the previous year, closing stock was valued more by 50,000. As a result?
A. Previous year‘s profit is overstated and current year‘s profit is also overstated.
B. Previous year‘s profit is understated and current year‘s profit is overstated.
C. Previous year‘s profit is overstated and current year‘s profit is understated.
D. There will be no impact on the profit of either the previous year or the current year.
Right Answer: Previous year‘s profit is overstated and current year‘s profit is understated.
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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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When a person purchasing goods on credit he becomes a_________in the books of the seller?
A. Debtor
B. Creditor
C. Defaulter
D. Offender
Right Answer: Debtor
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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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Debit note is the basis for recording a transaction in which of the following journals?
A. General journal
B. Cash journal
C. Purchase journal
D. Purchase return journal
Right Answer: General journal
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Cash discount is provided on?
A. Purchases
B. Prompt payment
C. Sales
D. Sales return
Right Answer: Prompt payment
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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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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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Another name of journal is?
A. Specialized journal
B. Day book
C. Cash book
D. Record book
Right Answer: Day book
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The systems of accounting are?
A. Two
B. Three
C. Five
D. Six
Right Answer: Two
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The concept of conservatism will have the effect of?
A. Overstatement of Assets
B. Understatement of Assets
C. Overstatement of Liabilities
D. Understatement of Liabilities
Right Answer: Understatement of Assets
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Expenses of the following nature are treated as a Revenue expenses except?
A. Expenses for day to day running of the business
B. Putting the new asset in working condition
C. Depreciation
D. Purchase of raw material
Right Answer: Putting the new asset in working condition
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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 an external cause of depreciation?
A. Routine repair and maintenance
B. Misuse
C. Obsolescence
D. Wear and tear
Right Answer: Obsolescence
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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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When owner withdraw cash for its private use, it is called?
A. Profit
B. Income
C. Expense
D. Drawing
Right Answer: Drawing
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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 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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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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Any gain on the sale of non-current assets should be _________ from the net profit and the loss must be _________to the net profit in determining fund from operation?
A. Added, Reduced
B. Added, Added
C. Deducted, Added
D. Deducted, Deducted
Right Answer: Deducted, Added
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The assets which have some market value are called?
A. Fixed asset
B. Quick asset
C. Fictitious assets
D. Real assets
Right Answer: Real assets
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Which of these items are taken into consideration for preparation of adjusted Cash Book?
A. Mistake in Cash Book
B. Mistake in Pass Book
C. Cheque issued but not presented for payment
D. Cheques deposited but not cleared
Right Answer: Mistake in Cash Book
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Which of the following methods is not a practical way of realizing revenue?
A. Delivery method
B. Percentage-of-completion method
C. Production method
D. Moving average method
Right Answer: Moving average method
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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 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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Sales return is also known as?
A. Return received
B. Return Payed
C. Return inward
D. Return outward
Right Answer: Return inward
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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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The unsold goods are?
A. Equity
B. Sale return
C. Inventory
D. Purchases
Right Answer: Inventory
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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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An account records the ___________ in the balance of an item?
A. Increase
B. Decrease
C. Increase or decrease
D. Appreciation
Right Answer: Increase or decrease
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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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If a company has contingent liabilities, they appear in the?
A. Balance Sheet
B. Directors‘ report
C. Notes on account to Balance Sheet
D. Chairman‘s report
Right Answer: Notes on account to Balance Sheet
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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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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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__ is the first phase of accounting cycle?
A. Identifying an economic event or transaction
B. Preparing journals
C. Posting entries to ledger accounts
D. Making decisions about business
Right Answer: Identifying an economic event or transaction
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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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A book wherein various accounts are opened is called?
A. Subsidiary books
B. Journal
C. Ledger
D. Trial Balance
Right Answer: Ledger
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Identify the nominal account?
A. Machinery account
B. Building account
C. Creditors account
D. Rent expenses account
Right Answer: Rent expenses account
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Revenue is generally recognized as being earned at that point of time when?
A. sale is effected
B. cash is received
C. production is completed
D. debts are collected
Right Answer: sale is effected
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At the time of preparation of financial accounts, bad debt recovered account will be transferred to?
A. Debtors A/c
B. Profit & Loss A/c
C. Profit & Loss Adjustment A/c
D. Profit & Loss Appropriation A/c
Right Answer: Profit & Loss A/c
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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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Capital expenses are shown in?
A. Balance Sheet
B. Profit and Loss A/c
C. Trading A/c
D. None of these
Right Answer: Balance Sheet
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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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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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_is also known as Appraisal system of depreciation?
A. Inventory system
B. Survey system
C. Annuity system
D. Insurance
Right Answer: Inventory system
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Trial balance is prepared to check accuracy of?
A. Ledger accounts balances
B. Balance sheet balances
C. Income statement balances
D. Cash flow statement balances
Right Answer: Ledger accounts balances
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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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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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Which of the following is not depreciated?
A. Building
B. Land
C. Plant and Machinery
D. Office equipment
Right Answer: Land
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The real accounts are accounts of Assets, liabilities and?
A. Expenses
B. Revenues
C. Capital
D. Drawing
Right Answer: Capital
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Cash received from debtors would be deemed as___________of funds?
A. No flow
B. Sources
C. Uses
D. Gain
Right Answer: No flow
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Which of the following will affect the agreement of a trial balance?
A. Complete omission of a transaction
B. Partial omission of a transaction
C. Error of principle
D. Compensating errors
Right Answer: Partial omission of a transaction
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The beginnings inventory of the current year is overstated by 5,000 and closing inventory is overstated by 12,000. These errors will cause the net income for the current year by?
A. 17,000 (overstated.
B. 12,000 (understated.
C. 7,000 (overstated.
D. 7,000 (understated.
Right Answer: 7,000 (overstated.
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Credit purchase of plant and machinery is recorded in which of the following journals?
A. General journal
B. Cash journal
C. Purchase journal
D. Purchase return journal
Right Answer: General journal
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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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The accounting process of gradually converting the unexpired cost of fixed assets into expenses over a series of accounting periods is?
A. Depreciation
B. Physical deterioration of the asset
C. Decrease in market value of the asset
D. Valuation of an asset at a point of time
Right Answer: Depreciation
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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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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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Specialized journals are more adequate for which TYPE OF BUSINESSES?
A. Small businesses
B. Big businesses
C. Sole proprietorship
D. Partnership
Right Answer: Big businesses
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Credit note is the basis for recording a transaction in which of the following SPECIALIZED journals?
A. Purchase journal
B. Sales return journal
C. General journal
D. Cash receipt journal
Right Answer: Sales return journal
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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 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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Benefits of preparing Bank Reconciliation Statement includes?
A. It bring out any errors committed in preparation of Cash book / Bank Pass Book
B. Highlights under delay in clearance of cheques deposited but not credited
C. Help know actual bank balance
D. All the three
Right Answer: All the three
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Which column of a cash book will not have credit balance?
A. Bank column
B. Discount column
C. Cash column
D. None
Right Answer: Cash column
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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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For the business, capital is?
A. Expense
B. Liability
C. Assets
D. All of them
Right Answer: Assets
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Posting is the process of?
A. Posting the letters in drop box
B. Posting suitable person to a suitable job
C. Entering in the ledger the information contained in the ledger
D. All the three
Right Answer: Entering in the ledger the information contained in the ledger
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During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases by Rs. 8,000. What will be the amount of cash received from customers for the period?
A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000
Right Answer: Rs. 17,000
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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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Period cost include which of the following ?
A. selling Expense
B. Direct labor
C. factory overhead
D. selling Expenses & administrative expenses
Right Answer: selling Expenses & administrative expenses
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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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________ is the common base for preparing a trial balance?
A. Ledger accounts
B. General Journal
C. Specialized journals
D. Balance sheet
Right Answer: Ledger accounts
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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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Double entry implies that?
A. Recording entries in journal
B. Recording entries in Ledger account
C. Recording two aspects of every transaction
D. Recording every transaction in books
Right Answer: Recording two aspects of every transaction
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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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