mcq's i.com 01 accounting

MULTIPLE CHOICE QUESTIONS WITH ANSWERS

(ACCOUNTING-I)

PUNJAB COLLEGE OF COMMERCE

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1. Accounting is called of business: a) Heart b) Eye c) Ear d) Tongue 2. When a drawer discounts a bill, he debits: a) Bank account b) Cash account c) Drawee account d) B/R account 3. Journal means: a) Monthly b) Yearly c) Monthly d) Daily 4. The time after which the bill is to be paid: a) Due date b) Tenure c) Days of Grace d) A month 5. In three column cash book, contra entry means: a) Balance b) Parallel side c) same side d) Opposite Side 6. A cash discount always shows: a) Zero balance b) Equal balance c) Credit balance d) Debit balance 7 Interest paid on loan is a: a) Financial expense b) Selling expense c) Management expenses d) Loss 8. Goodwill, patents and copyrights are classified as: a) Fixed assets b) Current assets c) Tangible assets d) Intangible assets 9. Expenses increasing the earning capacity of business are: a) Deferred expense b) Capital loss c) Abnormal loss d) Capital Expenditure 10. Raw materials destroyed by fire show: a) Abnormal loss b) Normal loss c) Capital loss d) Revenue loss 11. Any difference in trial balance is transferred to: a) Sales account b) Purchases account c) Suspense account d) Capital account 12. Net income is equal to: a) Revenue + Expenses b) Sales -- Purchases c) Assets – Liabilities d) Revenue --Expenses 13. A trial balance is a: a) Income statement b) Opening balance c) Balance sheet d) List of ledger balances 14. A promissory note is made by: a) Creditor b) Debtor c) Seller d) Banker 15. A loss is a capital loss because it is due to: a) Fixed assets b) Withdrawal of capital c) Abnormal loss d) Business stoppage


(ACCOUNTING-I)


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16. A loss is a revenue loss because it relates to:

a) Normal reasons b) Current assets c) Decrease in tax liability d) Income 17. Carriage paid for a new plant purchased if debited to carriage account would effect: a) Carriage account b) Agents c) Plant account d) Plant & carriage account 18. Prepaid expenses should appear in: a) Stores b) Revenues c) Assets d) Liabilities 19. Pre-received income is shown in: a) Assets b) Liability c) Revenues d) None 20. Net loss is always more than: a) Gross profit b) Sales c) Capital d) None 21.A person who owes money is: a) A Creditor b) An Owner c) A Debtor d) Agent 22. Entry made on both sides of cash book is called: a) Double entry b) Compound entry c) Contra entry d) Mixed entry 23. Petty cash book is a branch of: a) Sales book b) Pass book c) Cash book d) Purchase book 24. Double entry system involves at least: a) One account b) Two account c) Three account d) Four account 25. The arithmetical accuracy of books of accounts is verified through: a) Journal b) Ledger c) Trial balance d) Cash book 26. Commission received is: a) Asset b) Liability c) Income d) Expenses 27. Transaction which is omitted from the records is called: a) Error of principle b) Error of Commission c) Compensating error d) Error of Omission 28. Receipt on sale of fixed asset is: a) Deferred receipt b) Current receipts c) Capital receipt d) Revenue receipt 29. Cash discount is provided on: a) Purchases b) Sales c) Sales returns d) Prompt payment 30. Carriage inward is: a) Direct expense b) Indirect expense c) Operating expense d) Selling expense


(ACCOUNTING-I)


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31. Cash sales are recorded in:

a) Journal b) Cash book c) Sales book d) Both A & B 32. Closing stock is recorded at the: a) Balance sheet & Trading account b) Trading account c) Balance sheet only d) Profit & loss account 33. Personal accounts are related to: a) Assets & Liabilities b) Goodwill c) Equity & Drawings d) Income & Expenses 34. Excess of debit over credit is called: a) Credit balance b) Debit balance c) Opening balance d) Closing balance 35. The excess of assets over liabilities is: a) Revenue b) Profit c) Loss d) Capital 36. A bill of exchange contains: a) A promise b) An unconditional order c) A conditional order d) A request to deliver goods 37. Wages paid to workers for erection of machinery are: a) Revenue expenditure b) Capital expenditure c) Capital loss d) Revenue loss 38. Withdrawal of merchandise for personal use is: a) Drawings b) Sale of merchandise c) Personal expense d) Charity 39. If business assets are more than its liabilities, this position is known as: a) Insolvency b) Solvency c) Both A & B d) Loan position 40. Which of the following is not a current asset? a) Cash b) Bank c) Debtors d) Machinery

41. The person to whom the goods have been sold on credit and amount is receivable from them at determinable future date is called:

a) Owner b) Creditor c) Bank d) Debtor 42. Accounting is language of: a) Chemistry b) Science c) Businessman d) Business 43. Any legal activity of production, exchange of goods and services for the purpose of earning profit is called: a) Social activity b) Religious activity c) Business d) None 44. Business classification are: a) Trading b) Manufacturing c) Services d) All of these


(ACCOUNTING-I)


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45. Trial balance contains capital Rs.50, 000, interest on capital at 5% p.a. at the yearend:

a) Rs.2500 b) Rs.1800 c) Rs.1875 d) Rs.2000 46. Current liabilities do no include: a) Unclaimed dividend b) Sundry creditors c) Prepaid insurance d) Bank overdraft 47. Bill receivable account is a: a) Nominal account b) Real account c) Personal account d) Expense account 48. Which group only contains fixed assets? a) Land, Machinery, Premises & Debtors b) Land, Machinery, Premises & Stock c) Land, Machinery, Premises & Vehicles d) Land, Machinery, Premises & Cash 49. Discount allowed appearing in the trial balance will be recorded in the: a) Balance sheet b) Trading account c) Profit & loss account ( Dr.) d) Profit & loss account ( Cr.) 50. Outstanding wages appearing in the trial balance, will record only: a) Balance sheet b) Trading account c) Profit & loss account d) Both A & B 51. Return inward given in adjustment will affect: a) Purchases returns & Debtor b) Sales returns & Debtor c) Cash purchases d) Discount received 52. Outstanding income given adjustment Rs.250. Income in trial balance Rs.2500 what ` amount will be recorded in profit and loss account: a) Rs.2250 b) Rs.2750 c) Rs.2500 d) Rs.2000 53. Retiring a bill under rebate means, payment a bill: a) After due date b) Before due date c) Dishonoring of bill d) All of these 54. Wrong addition is: a) Error of Omission b) Error of Commission c) Error of Principles d) None 55. Noting charges are paid, when bill is: a) Met at maturity b) Discount of bill c) Dishonored of bill d) None 56. Balance sheet is statement of: a) Assets b) Liabilities c) Both A & B d) Working capital 57. Written below each entry is the: a) Narration b) Voucher No. c) Transaction d) Date 58. A bill of exchange is accepted by: a) Drawer b) Drawee c) Payee d) Bank 59. Nominal accounts are related to: a) Assets b) Liabilities c) Creditors d) Expense + Income


(ACCOUNTING-I)


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60. The modern system of book keeping is based on:

a) Double account system b) Single entry system c) Single account system d) Double entry system 61. Goods returned to supplier should be credited to: a) Supplier account b) Sales return account c) Purchase return account d) Purchases account 62. Which of these accounts is increased by credit entries? a) Machinery account b) Sales account c) Rent account d) Purchases account 63. Which of these accounts is a fixed asset? a) Cash b) Stock c) Plant d) Prepaid Expenses 64. If more than two accounts are involved in a journal entry it is called: a) Double entry b) Compound entry c) Contra entry d) Single entry 65. Wich of the following book is called the book of original entry: a) Cash book b) Ledger c) Journal d) Sales book 66. Bank reconciliation statement is prepared by: a) Bank b) Auditors c) Creditors d) Accountant 67. In accounting equation, assets are equal to: a) Capital b) Capital + Liabilities c) Liabilities d) Capital – Liabilities 68. Bad debts are shown in the: a) Trading account b) Profit & Loss account c) Both first d) None of these 69. Amount paid for the purchase of machinery. a) Revenue expenditure b) Capital loss c) Capital expenditure d) Revenue loss 70. Carriage paid on goods purchased: a) Direct expense b) Indirect expense c) Selling expense d) Operating expense 71. Unearned income is shown as: a) Assets b) Liability c) Expenses d) Income 72. Balance sheet does not contain: a) Assets b) Liabilities c) Expense & Income d) None of these 73. When the bank made the payment of the cheque it is called………cheque: a) Honored b) Dishonored c) Discounted d) None of these


(ACCOUNTING-I)


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74. The errors which cancel themselves out are called:

a) Error of omission b) Errors of commission c) Compensating errors d) None of these 75. The amount of cash or goods withdrawn by the proprietor for personal use is called: a) Expenses b) Capital c) Revenue d) Drawings 76. The discount which is calculated on list price of goods is called: a) Trade discount b) Cash discount c) Rebate d) None of these 77. The book meant for recording all cash transactions is called: a) Purchase book b) Sales book c) Cash book d) Pass book 78. Trial balance is prepared to detect: a) Errors of Omission b) Errors of Commission c) Compensating errors d) Errors of Principles 79. The cheques which is returned by the bank unpaid is called: a) Cross cheque b) Bearer cheque c) Dishonor cheque d) Order cheque 80. Cash and goods invested by the proprietor in business is called: a) Investment b) Drawings c) Capital d) None of these 81. For payment of bills of exchange, grace days are: a) 2 days b) 3 days c) 4 days d) 5 days 82. Credit sales are recorded in: a) Cash book b) Sales book c) Purchase book d) Pass book 83. Which of the following account is increased by the debit entries? a) Capital account b) Sales account c) Building account d) Purchases return account 84. The person who draws a bill of exchange is known as: a) Drawer ( Creditor ) b) Drawee ( Debtor ) c) Payee d) Bank 85. Goods returned by a customer should be debited to: a) Sales account b) Purchases account c) Customers account d) Sales return account 86. To any business bad debts are: a) An asset b) A loss c) An income d) A liability 87. How many branches of accounting are? a) Two. b) Three c) Four d) One 88. Discount received is a: a) Asset b) Liability c) Revenue d) Expenses


(ACCOUNTING-I)


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89. The amount of salaries paid to Javed should be credited to:

a) Javed account b) Salaries account c) Cash account d) None of these 90. Favourable bank balance means: a) Credit balance of cash book b) Debit balance of cash book c) Debit balance of pass book d) None of these 91. Prepaid expenses are: a) Expense b) Asset c) Liability d) None of these 92. The science and art of correctly recording business dealing in a set of books is called: a) Book keeping b) Accounting c) Auditing d) Recording 93. The debts due by a business to its proprietor and others are termed ad: a) Capital b) Drawings c) Liabilities d) Assets 94. Sales return also called: a) Return inward b) Return outward c) Return to seller d) Both A & C 95. Accounting principles are generally based on: a) Theory b) Practicability c) Subjectively d) None of these 96. Bill receivable and debtor are: a) Long term assets b) Fixed assets c) Fictitious assets d) Current assets 97. Journal is prepared in: a) Columnar form b) Vertical form c) Horizontal form d) Raw form 98. Major accounts of ledger are: a) General ledger b) Creditors ledger c) Proprietor ledger d) Both A & B 99. Bank Reconciliation represents: a) Ledger b) Journal c) Statement d) Both A & C 100. Operating expenses represents: a) Gross profit - Operating Exp. b) Selling + General Exp. c) Selling & administrative Exp. d) All of these

101. Net loss is transferred in balance sheet to: a) Capital b) Assets c) Losses d) Deferred losses 102. Preliminary expenses incurred for formation of Joint Stock Company represent: a) Capital loss b) Revenue loss c) Capital expenditure d) Deferred revenue expenditure 103. Errors which affect income statement belong to: a) Personal account b) Nominal account c) Real account d) None of these


(ACCOUNTING-I)


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104. The process of recording business transactions in the journal is called:

a) Posting b) Journalizing c) Classifying d) Entry 105. The book in which small payments like stationery, postage etc. are recorded is called: a) Main cash book b) Petty cash book c) Cash account d) Both A & B 106. Credit balance of cash book is also called: a) Un-favorable balance b) Favorable balance c) Negative balance d) Both favorable & unfavorable balance 107. Assets which come into existence upon the happening of a certain event are called: a) Fictitious assets b) Contingent assets c) Floating assets d) Dependent assets 108. Legal expenses incurred in purchasing land, property represent: a) Capital expenditure b) Revenue expenditure c) Revenue loss d) Deferred revenue expenditure 109. A payment for freight on raw material purchased is called: a) Capital payment b) Revenue payment c) Deferred revenue payment d) None of these 110. Cheque received but not deposited, recorded in cash book only: a) Cash column b) Bank column c) Discount column d) None of these 111. Carriage paid on goods sold: a) Direct expense b) Indirect expense c) Selling expense d) Operating expense 112. Expense paid in advance is called: a) Prepaid expenses b) Expired expenses c) Deferred expenses d) Both A & C 113. The purchase of machinery on account would effect: a) Increase & decrease in asset b) Increase in asset & decrease in liability c) Increase in asset & decrease liability d) Increase in asset & Increase in liability 114. Bad debts arise from: a) Sale on account b) Cash sales c) Account receivable d) Account payable 115. Any physical thing that has money value: a) Transaction b) Intangible assets c) Assets d) Goodwill 116. Stationery is classified into: a) Factory supplies b) Office supplies c) Sales supplies d) Trade supplies 117. To record, classify and summarize business transactions is called: a) Cost accounting b) Financial accounting c) Book-keeping d) Accounting 118. The party most interested in accounting information is: a) Owners b) Managers c) Creditors d) Investors


(ACCOUNTING-I)


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119. The book in which business transactions are recorded on daily basis is called: a) Journal b) Ledger c) Account d) Summary 120. The entry system in which cash account and personal accounts are maintained is called: a) Double entry system b) Single entry system c) Accounting d) None of these 121 Universally accepted customs, rules or traditions: a) Accounting principles b) Accounting conventions c) Accounting traditions d) Accounting rules 122. The amount allowed by the creditor to the debtor for making payment before due date: a) Trade discount b) Cash discount c) Payment discount d) Purchase discount 123. The unsold merchandise of business at the end of a day is called: a) Closing stock b) Opening stock c) Opening merchandise d) Stock to be carried forward 124. Anything valuable possessed by a business is called: a) Property b) Resources c) Asset d) Capital asset 125. Cash sale to Mr. A will be credited to: a) Mr. A’s account b) Cash account c) Sales account d) Good’s account 126. While balancing an account, the difference of two sides is recorded in: a) Debit side b) Credit side c) Larger side d) Smaller side 127. Excess of credit side over debit side is called: a) Profit b) Income c) Surplus & Deficit d) Credit balance 128. An order drawn by a bank on one of its branches to pay a specified sum of money to the person named in is called: a) Cheque b) Moner order c) Hundi d) Bank draft 129. When a drawee signs his name across the face of the bill along with the word “accepted” is called: a) Acceptance b) Signing of bill c) Approval d) None of these 130. The paper containing evidence of payment is called: a) Debit voucher b) Debit note c) Credit note d) Credit voucher 131. The term imprest system is used in relation to: a) Purchase book c) Sales book c) Cash book d) Petty cash book 132. Bank reconciliation statement is: a) A memorandum statement b) A ledger account c) A part of cash book d) None of these


(ACCOUNTING-I)


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133. Dealing between two persons or things is called:

a) Introduction b) Meeting c) Discussion d) Transaction 134. The concession given by the supplier to the buyer on purchase of goods is known as: a) Trade discount b) Cash discount c) Sale discount d) Purchase discount 135. Real accounts are related to: a) Incomes b) Losses c) Assets d) Expense 136. Every transaction has: a) Four aspect b) Triple aspect c) Dual aspect d) Single aspeat 137. Which of the following books is called the king of books of accounts? a) Journal b) Ledger c) Trial balance d) Cash book 138. Liabilities normally show: A) Debit balance b) Credit balance c) None of them d) Both debit & credit 139. Transactions are finally recorded in: a) Balance sheet b) Trial balance c) Ledger d) Journal 140. A bill of exchange is exactly like a: a) Hundi b) Pay order c) Pay-in-slip d) Bank draft 141. When the cheque is paid by the drawer’s bank, it is said to be: a) Accepted b) Endrosed c) Dishonored d) Honored

142. The person to whom a bill is addressed is called: a) Agent b) Holder c) Debtor d) Creditor 143. Subsidiary books are called books of: a) Secondary entry b) Original entry c) Final entry d) Temporary entry 144. Bank account is: a) Real account b) Nominal account c) Personal account d) None of these 145. For a business concern “Capital” is a: a) Asset b) Expense c) Liability d) None of these 146. Money obtained by the issue of debenture is: a) Revenue Receipt b) Capital receipt c) Revenue profit d) Capital profit 147 The accounting equation is: a) Assets = Capital + Liabilities b) Liabilities = Assets + Capital c) Capital = Assets + Liabilities d) Assets = Capital - Liabilities


(ACCOUNTING-I)


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148. The balance of petty cash book is:

a) An asset b) A gain c) An expense d) A liability 149. Gross profit is equal to: a) Gross profit – Expense b) Sale – Cost of sale c) Capital – expense d) Sale – Expense 150. Day book is another name of: a) Purchase book b) Cash book c) Ledger d) Journal 151. How many forms of ledger are? a) One b) Two c) Three d) None of these 152. If two sides of an account are equal, that account will show: a) Debit balance b) Credit balance c) Zero balance d) All of them

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