accounting Mcqs
51. Closing stock is generally valued at______________?
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A. Market Price

B. Cost price or Market price whichever is lower

C. Cost price or Market price whichever is higher

D. Cost Price

52. Obligation of the Business are known as___________?
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A. Expenses

B. Assets

C. Revenues

D. Liabilities
53. Which of the following is true?
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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
54. Net loss occurs when______________?
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A. Expenses=Income

B. Liabilities are greater than income

C. Expenses are less than Income

D. Expenses are greater than Income
55. Capital of a business decreases if there is an increase in___________?
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A. Drawings

B. Income

C. Fresh capital

D. Gains

56. For the past 3 years, DK Ltd. has failed to accrue unpaid wages earned by workers during the last week of the year. The amounts omitted, which were considered material, were as follows:
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A. ch 31,2010 ` 56,000

B. ch 31, 2012 ` 64,000</strong>

C. ch 31, 2011 ` 51,000

57. Office equipments account is classified as _________ account?
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A. Nominal

B. Real

C. Cash

D. Capital

58. 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?
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A. 10,000 Profit

B. 20,000 Loss

C. 10,000 Loss

D. 20,000 Profit

59. Discount allowed is___________?
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A. Abnormal loss of business

B. Loss of business

C. Income of business

D. Expense of business
60. Closing stock in the Trial Balance implies that______________?
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A. It is adjusted in the Cost of Sale A/c

B. It is adjusted in the Purchase A/c

C. It is adjusted in the Profit &Loss A/c

D. It is already adjusted in the opening stock

61. Petty cash balance is a/an___________?
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A. Liability

B. None

C. Expenditure

D. Assets
62. Revenue and expense accounts are referred as______________?
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A. Banks account

B. Nominal accounts

C. Real account

D. Cash accounts

63. Which of these is a Part of cash in hand?
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A. B/R

B. Cheque Deposited with Bank

C. B/R endorsed

D. Postage stamps
64. Purchase journal is kept to record_____________?
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A. All purchases of goods

B. None of these

C. All credit purchases of goods

D. All credit purchases

65. Credit balance as per Cash Book mean____________?
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A. None of these

B. Surplus cash

C. Terms deposits with bank

D. Bank overdraft
66. Total depreciation of an asset cannot exceed its:
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A. Residual value

B. Depreciable value

C. Market value

D. Scrap value

67. Identify the nominal account
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A. Rent expenses account

B. Machinery account

C. Creditors account

D. Building account

68. For the business, capital is ____________?
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A. Expense

B. All of them

C. financial assets

D. Liability

69. Which of the following items should not be capitalized relating to fixed assets?
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A. Interest payable on loans or deferred credits taken for the acquisition or construction of fixed assets before they are ready for use

B. Administration and general expenses

C. Expenditure incurred on test runs and experimental production

D. Stand by equipment and servicing equipment

70. The process of recording transactions in different journals is called_________?
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A. Journalizing

B. Entry making

C. Adjusting

D. Posting

71. Benefits of preparing Bank Reconciliation Statement includes___________?
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A. All the three

B. Help know actual bank balance

C. Highlights under delay in clearance of cheques deposited but not credited

D. It bring out any errors committed in preparation of Cash book / Bank Pass Book

72. A book wherein various accounts are opened is called____________?
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A. Ledger

B. Trial Balance

C. Subsidiary books

D. Journal

73. BUSINESS paid rent amounting to $100? which of the following specialized journals records this transaction?
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A. Cash payments journal

B. Sales journal

C. Purchase journal

D. Cash receipts journal

74. The concession received on the price of defective goods is called:
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A. Discount

B. Cash discount

C. Allowance

D. Trading discount

75. Capital expenses are shown in___________?
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A. None of these

B. Trading A/c

C. Profit and Loss A/c

D. Balance Sheet
76. The balance of which of the following accounts do not disappear, once they are debited/credited to Trading Account?
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A. Purchases

B. Inward returns

C. Closing stock

D. Sales

77. When owner withdraw cash for its private use, it is called ___________?
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A. Expense

B. Drawing

C. Profit

D. Income

78. Capital increases if _________ increases?
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A. Drawings

B. Revenue

C. Expenses

D. Interest on capital

79. Debit balance = Credit balance in a trial balance indicates that:
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A. Mathematically Capital+Liabilities=Assets

B. Account balances are correct

C. No error in posting entries to ledger accounts

D. No error in recording transactions

80. Which of the following errors is an error of omission?
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A. Wages paid to Mohan have been debited to his account

B. Sale of ` 100 was recorded in the Purchases Journal

C. Repairs to buildings have been debited to buildings account

D. The total of the sales journal has not been posted to the Sales Account
81. The first step in accounting process is___________?
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A. Posting the transaction

B. Identifying the transaction

C. Preparing the source documents

D. Recording the transaction

82. Calculate the amount of cash if: Total assets=$10,000 Total liabilities=$10,000 Total Capital=$5000
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A. $10,000

B. $6,000

C. $5000

D. $1,000

83. The periodic total of sales day book is posted to___________?
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A. Credit sales A/c

B. Sales return A/c

C. Cash sales A/c

D. Sales A/c
84. Which of the following assets is/are to be valued at the lower of cost and net realizable value?
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A. Goodwill

B. Inventories

C. Investments

D. Both B. and C. above.

85. Discount allowed is a kind of deduction from_____________?
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A. Cash account

B. Account payable

C. Account receivable

D. Discount account

86. Debit note is the basis for recording a transaction in which of the following journals?
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A. Purchase journal

B. Cash journal

C. General journal

D. Purchase return journal
87. The amount invested by the proprietor to start the business is called:
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A. Business

B. Drawings

C. Capital

D. All of them

88. ________ is a separate legal entity that Total capital can be divided in many shares.
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A. Company

B. Non-profit organization

C. Partnership

D. Sole proprietorship

89. Cash purchases is recorded in which of the following specialized journals?
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A. Purchases return journal

B. Purchase journal

C. Sales journal

D. Cash payments journal
90. The process of recording is done?
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A. At the end of a accounting period

B. Two times a year

C. Frequently during the accounting period

D. once a year

91. Transferring entries from journal to ledger account is commonly known as____________?
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A. Recording

B. Posting

C. Entry making

D. Transferring

92. Keeping the log of financial information in books of original entries is called__________?
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A. Grouping

B. summarizing

C. Processing

D. Recording
93. Which of the following account with normal balance is shown at the debit side of a trial balance?
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A. Rent income account

B. Unearned income account

C. Creditors account

D. Cash account
94. Trial balance is prepared to check accuracy of_______________?
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A. Ledger accounts balances

B. Income statement balances

C. Cash flow statement balances

D. Balance sheet balances

95. Cash discount is provided on _______________?
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A. Sales

B. Prompt payment

C. Sales return

D. Purchases

96. Credit note is the basis for recording a transaction in which of the following SPECIALIZED journals?
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A. Cash receipt journal

B. Purchase journal

C. Sales return journal

D. General journal

97. Identify the correct sequence of accounting process
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A. Communicating?Recording?Identifying

B. Identifying?recording?communicating

C. Identifying?communicating?recording

D. Recording?Communicating?Identifying

98. 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 written down value method, find the profit or loss on sale of the Second hand car?
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A. Loss of 22,000

B. Profit of 11,000

C. Loss of 20,000

D. Loss of 11,000

99. Which of the following is the external user of financial statements?
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A. CEO of the business

B. Controller of the business

C. Creditor of the business

D. Manager of the business

100. The systems of accounting are _____________?
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A. Three

B. Five

C. Six

D. Two