accounting MCQs – Page 2

Practise multiple-choice questions from accounting for competitive examinations and subject revision. Review each marked answer and report any item that may be outdated or unclear.

accounting Mcqs

21. Which of the following methods is not a practical way of realizing revenue?
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A. Production method

B. Percentage-of-completion method

C. Delivery method

D. Moving average method

22. Which of the following is a type of cash receipt journal + cash payment journal?
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A. Cash documents

B. Bank statement

C. Statement of cash flow

D. Cash book

23. The concept of conservatism will have the effect of______________?
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A. Overstatement of Liabilities

B. Overstatement of Assets

C. Understatement of Assets

D. Understatement of Liabilities

24. A systematic way to maintain the books of accounts is called_________?
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A. Economics

B. Auditing

C. Accountancy

D. Book Keeping

25. Sales and purchase journal dont record__________?
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A. Cash sales and purchases

B. Credit sales and purchases

C. Credit sales

D. Credit purchases

26. Which of the following accounting equation is correct?
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A. Capital+ Liabilities=Assets+Income

B. Assets-Liabilities=Capital

C. Cash+Other assets=Capital-Liabilities

D. Assets+Capital=Liabilities

27. Any donation received for a specific purpose is a_________?
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A. Liability

B. Revenue receipts

C. Assets

D. Capital receipts

28. An account records the ___________ in the balance of an item?
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A. Increase

B. Increase or decrease

C. Decrease

D. Appreciation

29. Transactions that a BUSINESS doesnt record in any specialised journal are recorded in which of the following journals or day books?
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A. Cash receipts journal

B. Cash payments journal

C. Purchases return journal

D. General journal

30. Which of following best describes the increase in equity expands___________?
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A. Appropriation expenses

B. Business operations

C. Inflows of cash

D. cash outflows

31. A few errors committed in Ahhiwalias books of account are given below. State which errors would affect the Trial Balance.
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A. Sales of `500 to Sadiq entered in sales journal as sales to Mushtaq

B. . Purchases of `720 from Shyam entered in the purchases journal as `700

C. . Purchases Journal is overcast by `1,000

D. . Sales returns journal is undercast by `200

E. Bank overdraft shown under debit column in the Trial Balance

F. Amount paid to Agarwal wrongly posted to the debit to Mittals account

32. During the year 2011-2012, the value of closing inventory was overstated by 25,000. Which of the following is true?
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A. The income was overstated during 2011-12 and closing inventory will be overstated during 2012-2013

B. The cost of goods sold was overstated during 2011-2012 and income will be understated during 2012-2013

C. The retained earnings was overstated during 2011-2012 and retained earnings will be understated during 2012-2013

D. The cost of goods sold was understated during 2011-2012 but retained earnings will not be affected during 2012-2013

33. 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
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A. 12,000 (understated.

B. 17,000 (overstated.

C. 7,000 (overstated.

D. 7,000 (understated.

34. Which of the following is a Real A/c?
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A. Goodwill A/c

B. Bank A/c

C. Salary A/c

D. Building A/c

35. Which of the following statements is incorrect regarding capital account?
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A. Credit increases the capital account balance

B. Debit increases the capital account balance

C. Net income increases the capital account balance

D. Fresh capital increases the capital account balance

36. Which of these types of expenditure would not be treated as a Capital Expenditure?
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A. Acquisition of an Asset

B. Maintenance of the Asset

C. Extension of an Asset

D. Improvement of the existing Asset

37. Which of the following can be considered as the most important phase of accounting cycle and it is the primarily objective of financial accounting?
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A. Preparing trial balances

B. Identifying transactions

C. Preparing financial statements

D. Preparing T Accounts

38. Which of the following is the internal user of financial statements?
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A. Manager of the business

B. Creditor of the business

C. Government agency

D. Shareholder of the business

39. Bank reconciliation is a statement prepared to reconcile__________?
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A. Cash as per cash book with bank balance as per bank pass book

B. Trial balance

C. Cash book

D. Bank A/c

40. If the businesss owner withdraws cash for his/her personal use what will be the effect on capital?
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A. Remain the same

B. Decrease in capital

C. No effect on capital

D. Increase in capital

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