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.
If debit balances = credit balances, trial balance only shows or check the ____________ and it does not indicate that no errors were made during recording and posting?
A. Arithmetic accuracy
B. Errors of commission
C. Omissions of economic events
D. Understatements of balances
Right Answer: Arithmetic accuracy
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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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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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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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BUSINESS paid rent amounting to $100″ which of the following specialized journals records this transaction?
A. Cash receipts journal
B. Cash payments journal
C. Sales journal
D. Purchase journal
Right Answer: Cash payments journal
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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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The person to whom goods are sold on credit is called?
A. Buyer
B. Seller
C. Debtor
D. Creditor
Right Answer: Debtor
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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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Keeping the log of financial information in books of original entries is called?
A. Recording
B. summarizing
C. Grouping
D. Processing
Right Answer: Recording
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When goods, in which business deals are sold, it is called?
A. Purchases
B. Return inward
C. Sales
D. Return outwards
Right Answer: Sales
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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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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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Liabilities are which of the following?
A. Resources
B. Obligations
C. Future benefits
D. Expenses
Right Answer: Obligations
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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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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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Which one of the following should be considered a revenue expenditure?
A. 1000 paid for the execution of a new plant
B. Loss of 10,000 incurred in increasing the sitting accommodation of a hotel
C. Damage paid on account of breach of a contract to supply certain goods
D. Repair to machinery purchased, second hand.
Right Answer: Damage paid on account of breach of a contract to supply certain goods
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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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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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Discount received is a/an?
A. Asset
B. Expense
C. Liability
D. Revenue
Right Answer: Revenue
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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 normal balance of asset account is?
A. Credit balance
B. Debit balance
C. Cash balance
D. Neither debit nor credit balance
Right Answer: Debit balance
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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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Which of the following account with normal balance is shown at the debit side of a trial balance?
A. Rent income account
B. Creditors account
C. Unearned income account
D. Cash account
Right Answer: Cash account
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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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A brief explanation recorded below every entry in general journal is commonly known as?
A. Narration
B. Explanation
C. Summary
D. Other information
Right Answer: Narration
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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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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 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 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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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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Which of the following is known as an evidence that a transaction took place?
A. Cash receipts journal
B. General journal
C. Source document
D. Cash book
Right Answer: Source document
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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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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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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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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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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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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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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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reduction in price is called?
A. Paid price
B. Invoice price
C. Book price
D. Discount
Right Answer: Discount
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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 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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The portion of the acquisition cost of the asset yet to be allocated is known as?
A. Written down value
B. Accumulated value
C. Salvage value
D. Residual Value
Right Answer: Written down value
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Credit balance as per Cash Book mean?
A. Surplus cash
B. Bank overdraft
C. Terms deposits with bank
D. None of these
Right Answer: Bank overdraft
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In support of business transaction, any written evidence is called?
A. Discount
B. Voucher
C. Allowance
D. Price
Right Answer: Voucher
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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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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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Cash brought by the owner to start business is called?
A. Capital
B. Loan
C. Drawing
D. None of these
Right Answer: Capital
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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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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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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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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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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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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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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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What is the basic accounting equation?
A. Capital+Liabilities=Assets
B. Assets+ liabilities =Capital
C. Capital+assets=liabilities
D. Liabilities+Capital
Right Answer: Capital+Liabilities=Assets
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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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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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Depreciation is a process of?
A. Valuation
B. Valuation and allocation
C. Allocation
D. Appropriation
Right Answer: Allocation
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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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Debit balance = Credit balance in a trial balance indicates that?
A. No error in recording transactions
B. No error in posting entries to ledger accounts
C. Account balances are correct
D. Mathematically Capital+Liabilities=Assets
Right Answer: Mathematically Capital+Liabilities=Assets
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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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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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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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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 in the Trial Balance implies that?
A. It is already adjusted in the opening stock
B. It is adjusted in the Purchase A/c
C. It is adjusted in the Cost of Sale A/c
D. It is adjusted in the Profit &Loss A/c
Right Answer: It is adjusted in the Purchase A/c
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The accountant of Leo Ltd. recorded a payment by cheque to a creditor for supply of materials as 1,340.56. The bank recorded the cheque at its correct amount of 3,140.56. The Company has not passed any rectification entries and the error is not detected through the bank reconciliation. The impact of this error is?
A. The Trial Balance will not agree
B. The balance of creditors is understated
C. The purchases are understated
D. The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book
Right Answer: The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book
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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 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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An Art of reading, classifying & Summarizing of accounts in a systematic way is called?
A. Accounting
B. Accountancy
C. Auditing
D. Book Keeping
Right Answer: Accounting
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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 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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Which of the following assets is/are to be valued at the lower of cost and net realizable value?
A. Goodwill
B. Inventories
C. Investments
D. Both B. and C. above.
Right Answer: Inventories
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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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Bad debts recovered account will be transferred to?
A. Debtor‘s Account
B. Profit and Loss Account
C. Provision for Doubtful Debt Account
D. Either (b )or C. above
Right Answer: Either (b )or 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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_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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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 one of the following is a capital expenditure?
A. Compensation paid to Directors on termination of their services
B. Expenditure incurred in connection with the renewal of a Trade Mark.
C. Gratuities paid to Directors on termination of their services.
D. Royalty paid in installments for the purchase of rights to manufacture and sell patient medicines.
Right Answer: Compensation paid to Directors on termination of their services
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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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Purchase journal is kept to record?
A. All purchases of goods
B. All credit purchases of goods
C. All credit purchases
D. None of these
Right Answer: All credit purchases of goods
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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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Liability are arisen from which of the following events?
A. Present event
B. Future event
C. Past event
D. None of them
Right Answer: Past event
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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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The excess of current assets over current liabilities is called?
A. Working Capital
B. Circulating capital
C. Fixed capital
D. Trading capital
Right Answer: Working Capital
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Which of the following statements is correct about Trial Balance?
A. The Trial Balance is prepared after preparing the Profit and Loss Account
B. The Trial Balance shows only balances of Assets and Liabilities
C. The Trial Balance shows only nominal account balances
D. The Trial Balance has no statutory importance from the point of view of law
Right Answer: The Trial Balance has no statutory importance from the point of view of law
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