accounting MCQs – Page 3

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 Review each marked answer and report any item that may be outdated or unclear.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
41. Which of the following should not be treated as revenue expenditure?
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A. Small expenditures on long- lived assets, such as ` 20 for a paper weight.

B. Interest on loans and debentures

C. Annual fire insurance premiums on Plant and Equipment

D. Sales tax paid in connection with the purchase of office equipment
42. 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.
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A. Arithmetic accuracy

B. Omissions of economic events

C. Errors of commission

D. Understatements of balances

43. Which of the following is true about a trial balance?
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A. It is not a part of accounting cycle

B. It is a kind of financial statement

C. It lists down the balances of accounts

D. It lists down the balances of a balance sheet

44. Generally the term fund is used to mean the difference between?
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A. Current liabilities and non-current liabilities

B. Current assets and current liabilities

C. Current assets and non-current liabilities

D. Profit and loss A/C and Balance sheet

45. Which of the following will affect the agreement of a trial balance?
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A. Partial omission of a transaction

B. Complete omission of a transaction

C. Error of principle

D. Compensating errors

46. The assets which come into existence upon the happening of a certain event are called__________?
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A. Fictitious assets

B. Quick assets

C. Fixed assets

D. Contingent assets
47. The unsold goods are ______________?
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A. Sale return

B. Inventory

C. Purchases

D. Equity

48. Which of the following statements is true?
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A. A customer to whom goods have been sold on credit cannot avail himself of a cash discount

B. If a Trial Balance tallies, it always means that none of the transactions has been completely omitted

C. A credit balance in the Pass Book indicates excess of deposits over withdrawals

D. A Trial Balance will not tally if a transaction is omitted

49. If the total liabilities of a business decrease by $5000 what will be the effect on total asset?
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A. suming the amount of capital remain same)
50. Which of the following is not a method of charging depreciation?
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A. Discounted present value Method

B. Straight line Method

C. Sum of digits Method

D. Written down value Method

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