accounting MCQs – Page 7

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 Review each marked answer and report any item that may be outdated or unclear.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

121. Specialized journals are more adequate for which TYPE OF BUSINESSES?
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A. Small businesses

B. Sole proprietorship

C. Partnership

D. Big businesses

122. Financial statements differ from management account because
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A. They are mainly prepared for external users of financial information

B. The are prepared on basis of actual concept

C. They are more complex and hard to prepare

D. The are the summary of accounting data

123. Expenses of the following nature are treated as a Revenue expenses except__________?
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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

124. Collection of account receivable will
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A. Increase assets and decrease liabilities

B. Increase assets and decrease assets

C. Increase assets and increase capital

D. Increase assets and increase cash

125. Which of the following is true with respect to providing depreciation under diminishing balance method?
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A. The amount of depreciation and the rate of depreciation decrease every year

B. The amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing

C. The amount of depreciation decreases while the rate of depreciation remains the same

D. The amount of depreciation and the rate of depreciation increases every year

126. Which of the following is an one sided error?
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A. Both

B. 500 being expense on travelling expense credited to travelling expenses

C. 500 purchase of old equipment not recorded in the books of A/c at all

D. None

127. _________ is the first phase of accounting cycle?
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A. Preparing journals

B. Making decisions about business

C. Identifying an economic event or transaction

D. Posting entries to ledger accounts

128. The normal balance of liability account is____________?
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A. Credit balance

B. Debit balance

C. Neither debit nor credit balance

D. Cash balance

129. Which of the following statements is /are true?
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A. Entering wrong amount in the subsidiary book affects the agreement of the Trial Balance

B. Undercasting or overcastting of a subsidiary book is an example or error of commission

C. Errors of principle do not affect the agreement of Trial Balance

D. Both B. and C. above

130. Liability are arisen from which of the following events?
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A. Past event

B. Future event

C. Present event

D. None of them

131. SALE of old furniture will be recorded in which of the following specialised journals?
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A. General journal

B. Sales journal

C. Cash receipt journal

D. Purchase journal

132. Which of the following statements best describes the purpose of depreciation?
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A. Allocation of the cost of an asset to the periods in which services are received from the asset

B. A process of correlating the market value of an asset with its gradual decline in physical efficiency

C. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value

D. Regular reduction of asset value to correspond to changes in market value as the asset ages

133. Which of the following is a liability?
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A. Creditors

B. Cash

C. Equipment

D. Debtors

134. An asset must be _______ by the business to be shown as an asset in its balance sheet
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A. Used

B. Owned

C. Controlled

D. Possessed

135. _________ will be credited if goods are given as charity?
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