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.
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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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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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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Short term Assets expected to be converted into cash within 1 year or less than?
A. Current Assets
B. Fixed Assets
C. Current Assets& current liabilities
D. All of the above
Right Answer: Current Assets
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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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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 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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Obligation of the Business are known as?
A. Liabilities
B. Revenues
C. Expenses
D. Assets
Right Answer: Liabilities
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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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___________ helps business to classify transactions according to their nature?
A. General journal
B. Real accounts
C. Ledger accounts
D. Cash accounts
Right Answer: Ledger accounts
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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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Which of the following errors is an error of omission?
A. Sale of ` 100 was recorded in the Purchases Journal
B. Wages paid to Mohan have been debited to his account
C. The total of the sales journal has not been posted to the Sales Account
D. Repairs to buildings have been debited to buildings account
Right Answer: The total of the sales journal has not been posted to the Sales Account
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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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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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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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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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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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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 systems of accounting are?
A. Two
B. Three
C. Five
D. Six
Right Answer: Two
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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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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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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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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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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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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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Journal proper is meant for recording?
A. Credit purchase of fixed assets
B. Return of goods
C. All such transactions for which no special journal has been kept by the business
D. None of these
Right Answer: All such transactions for which no special journal has been kept by the business
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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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Transferring entries from journal to ledger account is commonly known as?
A. Recording
B. Transferring
C. Posting
D. Entry making
Right Answer: Posting
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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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Which of the following is a liability?
A. Cash
B. Equipment
C. Debtors
D. Creditors
Right Answer: Creditors
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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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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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For the business, capital is?
A. Expense
B. Liability
C. Assets
D. All of them
Right Answer: 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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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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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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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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The concession received on the price of defective goods is called?
A. Discount
B. Cash discount
C. Allowance
D. Trading discount
Right Answer: Allowance
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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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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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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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Institute of Chartered Accountants of Pakistan was established in?
A. 1949
B. 1956
C. 1961
D. 1972
Right Answer: 1961
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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 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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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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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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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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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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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 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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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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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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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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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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_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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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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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 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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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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Trial balance is commonly prepared?
A. Frequently during the year
B. At the end of an accounting period
C. At the end of a month
D. At the end of a year
Right Answer: At the end of an accounting period
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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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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 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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Which of the following is true regarding closing entries?
A. They must be followed by reversing entries
B. They transfer the balances in all of the Nominal Accounts to the Trading and Profit and Loss Account
C. They must be made after the reversing entries but before the adjusting entries
D. They must be made after the adjusting entries but before the reversing entries
Right Answer: They must be made after the adjusting entries but before the reversing entries
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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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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 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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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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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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Average Accounting Return is a measure of accounting profit relative to?
A. Book value
B. Intrinsic value
C. Cost
D. Market value
Right Answer: Book value
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Assets having physical existence are called?
A. Current asset
B. intangible asset
C. Tangible asset
D. Liquid asset
Right Answer: Tangible asset
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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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Depreciation is a process of?
A. Valuation
B. Valuation and allocation
C. Allocation
D. Appropriation
Right Answer: Allocation
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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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SALE of old furniture” will be recorded in which of the following specialised journals?
A. Purchase journal
B. Sales journal
C. General journal
D. Cash receipt journal
Right Answer: General journal
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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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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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_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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An asset must be _______ by the business to be shown as an asset in its “balance sheet”?
A. Possessed
B. Owned
C. Controlled
D. Used
Right Answer: Controlled
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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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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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Under the direct write-off method of recognizing a bad debt expense. Which of the following statements is/are true?
A. The bad debt expense is not matched with the related sales
B. Revenue is overstated in the year of sales
C. It violates the matching principle of accounting
D. All of the above
Right Answer: All of the above
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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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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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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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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 entry on March 31, 2012 to rectify these omissions would include a?
A. Credit to wage expense for ` 64,000
B. Debit to wage expense for ` 64,000
C. Debit to wage expense for ` 51,000
D. Debit to wage expense for ` 13,000
Right Answer: Debit to wage expense for ` 13,000
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Which of the following statements are / is true? – Events after Balance Sheet are?
A. All the significant events after the Balance Sheet date
B. The events after Balance Sheet date but before submitting it to the Registrar of Companies
C. The events after Balance Sheet date but before its approval by the board
D. All changes after Balance Sheet date before its approval
Right Answer: The events after Balance Sheet date but before its approval by the board
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__ will be credited if goods are given as charity?
A. Cash
B. Charity
C. Purchases
D. Sales
Right Answer: Purchases
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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 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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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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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 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 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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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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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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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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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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In which of the following methods, the cost of the asset is spread over in equal proportion during its useful economic life?
A. Straight-line method
B. Written down value method
C. Units-of-production method
D. Sum-of-the years‘-digits method
Right Answer: Straight-line method
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