MCQ ON THEORY
DEFINITION OF ACCOUNTING
1. ……………. is used by business entities for
keeping records of their monetary or financial
transactions.
(a) Accounting
(b) Cost accounting
(c) Costing
(d) None of above
2. Accounting is “the art of recording, classifying
and summarizing in a significant manner and in
terms of money, transactions and events which
are, in part at least, of a financial character and
interpreting the results thereof”. This definition is
given by ……………
(a) The Institute of Chartered Accountants of
India (ICAI)
(b) The Institute of Chartered Accountant of
England
(c) American Institute of Certified Public
Accountants
(d) The Institute of Chartered Accountant of
Pakistan
3. Which of the following is attribute/s of
accounting?
(a) Accounting is social science
(b) It involves recording, classifying and
summarizing
(c) It records transaction of qualitative nature
(d) All of the above
4. …………….. is the language of business and
used to communicate financial and other
information to different interested parties like
creditors, investors, researches, governments
etc.
(a) Accounting
(b) Cost Accounting
(c) Costing
(d) Management Accounting
5. Accounting is ………….
(a) An art
(b) A science
(c) Partly art and partly science
(d) None of the above
STAGES OF ACCOUNTING
6. Accounting involves ………….
(a) Recording
(b) Classifying
(c) Summarizing
(d) All of the above
7. ………….. means systematically writing down
the transactions and events in account books
soon after their occurrence.
(a) Classifying
(b) Recording
(c) Summarizing
(d) All of the above
8. ……….. is the process of grouping transactions
or entries of the same type at one place.
(a) Classifying
(b) Recording
(c) Summarizing
(d) All of the above
9. …………….. involves the preparation of reports
and statements from the classified data (ledger)
under-standable and useful to management and
other interested parties.
(a) Classifying
(b) Recording
(c) Summarizing
(d) All of the above
10. Accounting records only those transactions and
events which are of ……………..
(a) Social character
(b) Financial character
(c) Both (a) & (b)
(d) None of above
11. The statements prepared by the summarizing
process is known as ………….which will show
the profit or loss made by the business over a
period of time and the total capital employed in
the business.
(a) Financial statements
(b) Budgeted statements
(c) Standard cost statements
(d) All of the above
BRANCHES OF ACCOUNTING
12. Which of the following is/are the branch of
accounting?
(a) Financial Accounting
(b) Cost Accounting
(c) Management Accounting
(d) All of the above
13. Which of the following is/are not the branch of
accounting?
(a) Cost Accounting
(b) Financial Accounting
(c) Human Resources Accounting
(d) All of the above
14. Which of the following is the branch of
accounting?
(a) Human Resources Accounting
(b) Social Accounting
(c) Security Accounting
(d) None of the above
FUNCTIONS OF ACCOUNTING
15. Which of the following is/are the main functions
of accounting?
(a) Keeping systematic records
(b)Protecting and controlling business properties
(c) Ascertaining the operational profit/loss
(d) All of the above
16. Which of the following is/are the main functions
of accounting?
(a) Allowing credit to customers
(b) Ascertaining the operational profit/loss
(c) Providing leadership to accounting staff
(d) All of the above
ADVANTAGES & LIMITATIONS OF
ACCOUNTING
17. Which of the following is/are the advantages of
accounting?
(a) Maintenance of legal records
(b) Preparation of financial statements
(c) Comparison of results
(d) (b) & (c)
18. Which of the following is/are the advantages of
accounting?
(a) Decision making relating to financial aspect
(b) Evidence in legal matters relating to
accounting
(c) Provides information to interested parties
(d) All of the above
19. Which of the following is/are NOT the
advantages of accounting?
(a) Helps in taxation matters
(b) Valuation of business
(c) Accounting information is based on
estimates
(d) All of the above
20. Which of the following is/are NOT the
advantages of accounting?
(a) Protecting and controlling strategic policy
formulation
(b) Preparation of financial statements
(c) Comparison of results
(d) All of the above
21. Which of the following is/are the limitations of
accounting?
(a) Accounting information is expressed in terms
of money
(b) Accounting information is based on
estimates
(c) Accounting information may be biased
(d) All of the above
22. Which of the following is/are the limitations of
accounting?
(a) Accounting can be manipulated
(b) Money as a measurement unit changes in
value
(c) Accounting information is based on
estimates
(d) All of the above
23. Which of the following is/are not the limitations
of accounting?
(a) Provides Information to Interested Parties
(b) Accounting information is expressed in terms
of money
(c) Accounting information is based on
estimates
(d) All of the above
BOOK KEEPING & ACCOUNTING
24. …………….. is mainly concerned with recording
of financial data relating to the business
operations in a significant and orderly manner.
(a) Accounting
(b) Book-keeping
(c) Posting
(d) Journalizing
25……………… covers procedural aspects of
accounting work and includes record keeping
function.
(a) Accounting
(b) Book-keeping
(c) Posting
(d) Journalizing
26. Book-keeping is concerned with the ……….. of
transactions while Accounting is concerned with
the ……….. of the recorded transactions.
(a) Recording, summarizing
(b) Summarizing, Recording
(c) Posting, Recording
(d) Summarizing, Posting
27. …………… constitutes the base for accounting.
(a) Book-keeping
(b) Posting
(c) Analyzing
(d) None of above
28. Financial statement do not form part of book
keeping.
(a) True
(b) False
(c) Partly true
(d) None of above
29. Financial position of the business is ascertained
on the basis of ……………
(a) Book-keeping
(b) Accounting reports
(c) Either (a) & (b)
(d) None of above
SYSTEM OF ACCOUNTING
30. ………………. It is a system in which accounting
entries are made only when cash is received or
paid.
(a) Accrual system of accounting
(b) Cash system of accounting
(c) Hybrid system of accounting
(d) Mercantile system of accounting
31. ………….. is a system in which transactions are
recorded on the basis of amounts having
become due for payment or receipt.
(a) Accrual system of accounting
(b) Cash system of accounting
(c) Hybrid system of accounting
(d) None of the above
32. Which of the following has no relevance whether
the receipts pertain to previous period or future
period?
(a) Accrual system of accounting
(b) Cash system of accounting
(c) Hybrid system of accounting
(d) None of the above
33. ……………... is incompatible with the matching
principle of income determination.
(a) Accrual system of accounting
(b) Cash basis of accounting
(c) Hybrid system of accounting
(d) None of the above
34. …………… attempt to record the financial
effects of the transactions, events, and
circumstances of an enterprise in the period in
which they occur rather than recording them in
period(s) in which cash is received or paid by
the enterprise.
(a) Accrual system of accounting
(b) Cash basis of accounting
(c) Hybrid system of accounting
(d) None of the above
35. Cash system of accounting is suitable in which
of the following cases?
(a) Where the organization is very small or in he
case of individuals
(b) Where credit transactions are almost
negligible and collections are uncertain
(c) Both (a) & (b)
(d) Neither (a) nor (b)
36. Doctors,
lawyers,
firms
of
chartered
accountants/company secretaries generally
follows ………… of accounting.
(a) Accrual system of accounting
(b) Cash basis of accounting
(c) Hybrid system of accounting
(d) None of the above
37. Which of the following is/are the essential
features of accrual basis of accounting?
(a) Revenue is recognized when cash is
received
(b) Costs are matched against revenues on the
basis of relevant time period to determine
periodic income
(c) Costs which are not charged to income are
carried forward and are kept under continuous
review
(d) Both (b) & (c)
USERS OF ACCOUNTING INFORMATION
38. Accounting is or primary importance to the
…………..
(a) Proprietors and the managers
(b) Creditors and workers
(c) Debtors & government
(d) Bankers & creditors
39. Financial statements can be used by
…………….
(a) Owners
(b) Creditors
(c) Investors
(d) All of the above
40. Which of the following are internal users of
accounting information’s?
(a) Board of directors
(b) Partners
(c) Managers
(d) All of the above
41. Which of the following is/are external users of
accounting information’s?
(a) Shareholders/investors
(b) Creditors
(c) Government agencies
(d) All of the above
42. Which of the following would be considered as
external users of accounting information’s?
(a) Board of Directors
(b) Shareholders
(c) Finance manager
(d) Sales manager
43. Select the odd one in relation to users of
accounting information’s.
(a) Officers
(b) Managers
(c) Debtors
(d) Board of directors
44. Regulatory Agencies interested as users of
accounting information’s includes …………….
(a) Various Government departments
(b) Agencies such as Company Law Board
(CLB)
(c) Registrar of Companies (ROC)
(d) All of the above
CHARACTERISTICS OF ACCOUNTING
INFORMATION
45. Which of the following is/are characteristics of
accounting information?
(a) Relevance
(b) Reliability
(c) Comparability
(d) All of the above
46. Which of the following is/are characteristics of
accounting information?
(a) Understandability
(b) Timeliness
(c) Cost-benefit
(d) All of the above
47. Which of the following is/are not characteristics
of accounting information?
(a) Understandability
(b) Relevance
(c) Future transactions
(d) Completeness
48. Which of the following is/are characteristics of
accounting information?
(a) Verifiability
(b) Neutrality
(c) Completeness
(d) All of the above
ROLE OF ACCOUNTANT
49. Which of the following is/are can be treated as
role of accountant?
(a) Personnel management
(b) Innovations & environmental scanning
(c) Advisory role in taxation
(d) All of the above
50. Which of the following is/are cannot be treated
as role of accountant?
(a) Strategy formulation
(b) Internal Audit
(c) Statutory Audit
(d) Maintenance of Books of Account
51. Which of the following is/are can be treated as
role of accountant?
(a) Maintenance of Books of Account
(b) Taxation services
(c) Investigation of accountants
(d) All of the above
ACCOUNTING CONCEPTS
52. ………. are defined as basic assumptions on the
basis of which financial statements of a
business entity are prepared.
(a) Accounting concepts
(b) Accounting methods
(c) Both (a) & (b)
(d) None of above
53. Which of the following is/are the common
accounting concepts?
(a) Business entity concept
(b) Money measurement concept
(c) Going concern concept
(d) All of the above
54. Which of the following is/are the common
accounting concept?
(a) Dual policy concept
(b) Periodicity audit concept
(c) Cost concept
(d) All of the above
55. Which of the following is/are the common
accounting concept?
(a) Accrual concept
(b) Matching concept
(c) Evidence concept
(d) (a) & (b)
56. According to ………..., business is treated as an
entity separate from its owners, creditors,
managers and others.
(a) Money Measurement
(b) Business Entity Concept
(c) Going Concern Concept
(d) Dual Aspect Concept
57. According to ………….., the various assets
acquired by a concern or firm should be
recorded on the basis of the actual amounts
involved or spent.
(a) Money Measurement
(b) Cost concept
(c) Going Concern Concept
(d) Dual Aspect Concept
58. ………….. holds that accounting is a
measurement and communication process of
the activities of the firm that are measurable in
monetary terms.
(a) Money Measurement
(b) Cost concept
(c) Going Concern Concept
(d) Dual Aspect Concept
59. As per ………………... business transactions
are recorded on the assumption that the
business will continue for long time.
(a) Money Measurement
(b) Cost concept
(c) Dual aspect concept
(d) Going concern concept
60. If the assumption of the going concern is not
valid, the financial statements should ………..
(a) Not be necessary to clearly state this fact
(b) Clearly state this fact
(c) Clearly state this fact if it suggested by
auditor
(d) Clearly state this fact if it suggested by
internal auditor
61. On the basis of ………… concept, a clear
distinction is made between assets and
expenses.
(a) Money measurement
(b) Cost concept
(c) Dual aspect concept
(d) Going concern concept
62. Non-monetary events like, death, dispute,
sentiments, efficiency etc. are ………… in the
books, even though these may have a great
effect.
(a) Not recorded
(b) Recorded
(c) Recorded if suggested by external auditors
(d) Recorded if suggested by internal auditors
63. According to “Business entity concept”,
business is treated as separate from its
…………..
(a) Owners
(b) Creditors
(c) Managers
(d) None of the above
64. …………… form of business organization is the
exception to the going concern concept.
(a) Consignment
(b) Partnership
(c) Joint venture
(d) Limited liability partnership
65. ………. concept is based on double entry bookkeeping which means that accounting system is
set up in such a way that a record is made of
the two aspects of each transaction that affects
the records.
(a) Money measurement
(b) Cost concept
(c) Going concern concept
(d) Dual aspect concept
66. The transactions recorded through accounting
equation are based on ……………
(a) Money measurement
(b) Cost concept
(c) Going concern concept
(d) Dual aspect concept
67. According to ………….. revenue is recognized
only when a sale is made.
(a) Accrual concept
(b) Realization concept
(c) Accounting period concept
(d) Revenue match concept
68. Which financial statement represents the
accounting equation, Assets = Liabilities +
Owner’s equity.
(a) Income statement
(b) Statement of cash flows
(c) Balance sheet
(d) None of the above
69. …………period is normally adopted for
accounting purpose.
(a) 6 months
(b) 12 months
(c) 9 months
(d) 24 months
70. As per ………… concepts in order to determine
the profit earned or loss suffered by the
business in a particular defined accounting
period, it is necessary that expenses of the
period should be matched with the revenues of
that period.
(a) Accrual concept
(b) Realization concept
(c) Accounting period concept
(d) Revenue match concept
71. Going concern concept is not followed by
……….
(a) Banks
(b) Partnership
(c) Companies
(d) Joint ventures
ACCOUNTING CONVENTIONS
72. Which of the following is/are accounting
convention?
(a) Convention of consistency
(b) Convention of materiality
(c) Convention of disclosure
(d) All of the above
73. According to the …………, accountants should
report only what is material and ignore
insignificant details while preparing the final
accounts.
(a) Convention of disclosure
(b) Convention of materiality
(c) Convention of consistency
(d) All of the above
74. As per ………….. apart from statutory
requirements good accounting practice also
demands all significant information should be
fully and fairly disclosed in the financial
statements.
(a) Convention of disclosure
(b) Convention of materiality
(c) Convention of consistency
(d) Convention of conservatism
75. As per ………… the accountant should not
anticipate income and should provide for all
possible losses.
(a) Convention of disclosure
(b) Convention of materiality
(c) Convention of consistency
(d) Convention of conservatism
76. As per ………….. if the accountant is faced with
the choice between two methods of valuing an
asset the accountant should choose a method
which leads to the lesser value.
(a) Convention of disclosure
(b) Convention of conservatism
(c) Convention of materiality
(d) Convention of consistency
77. Provisions for bad debts in respect of doubtful
debts are made due to …………..
(a) Convention of Conservatism
(b) Convention of disclosure
(c) Convention of materiality
(d) Convention of consistency
78. Closing stock in hand valued at lower of cost or
market value due to ………………..
(a) Convention of Conservatism
(b) Convention of disclosure
(c) Convention of materiality
(d) Convention of consistency
79. Which of the following is an accounting
convention?
(a) Consistency
(b) Accrual
(c) Going concern
(d) Realization
80. As per convention of conservatism, if the
accountant is faced with the choice between two
methods of valuing …………, the accountant
should choose a method which leads to the
lesser value.
(a) An asset
(b) A liability
(c) Expenses
(d) Revenue
81. Closing stock is valued at market price or cost
price whichever is less as per ………………
(a) Convention of disclosure
(b) Convention of materiality
(c) Convention of consistency
(d) Convention of Conservatism
82. ……………. principle requires that the same
accounting method should be used from one
accounting period to the next.
(a) Conservatism
(b) Consistency
(c) Business entity
(d) Money measurement
83. Which of the following is not an accounting
convention?
(a) Consistency
(b) Disclosure
(c) Going concern
(d) Conservatism
ACCOUNTING STANDARDS
84. Accounting Standards (ASs) are written policy
documents may be issued by ……………
(a) Expert accounting body
(b) Government
(c) Other regulatory body
(d) Any of the above
85. Accounting standards are ……………..
(a) Written policy documents issued by expert
accounting body
(b) Set of broad accounting policies to be
followed by an entity
(c) Set in the form of general principles
(d) All of the above
86. Accounting standards cover the aspects of
…………. of accounting transactions in the
financial statements.
(a) Recognition
(b) Measurements
(c) Presentation and disclosure
(d) Any of the above
87. In India Accounting standards are issued by
……………
(a) ICSI
(b) ICAI
(c) ICWA
(d) RBI
88. Accounting standards are issued for the
purpose of ……………
(a) Improving reliability of financial statements
(b) Harmonizing diverse accounting practices
(c) Elimination of non-comparability between
financial statements
(d) All of the above
89. The Institute of Chartered Accountants of India
(ICAI) constituted the ……….., with a view to
harmonizing the diverse accounting policies and
practices in use in India.
(a) Standards Board of Accounting (SBA)
(b) Accounting Standards Board (ASB)
(c) Accounting Standards Committee (ASC)
(d) Accounting Committee (AC)
90. The Institute of Chartered Accountants of India
(ICAI) constituted the Accounting Standards
Board (ASB) on ……….., with a view to
harmonizing the diverse accounting policies and
practices in use in India.
(a) 2nd Oct, 1977
(b) 21st April, 1977
(c) 15th Aug, 1977
(d) 21st April, 1997
91. The ICAI so far has issued ………… accounting
standards.
(a) 29
(b) 30
(c) 32
(d) 35
ACCOUNTING POLICIES & ESTIMATES
92. ………….. refer to the specific accounting
principles and the methods of applying those
principles adopted by the enterprise in the
preparation and presentation of financial
statements.
(a) Accounting methods
(b) Accounting policies
(c) Accounting concepts
(d) Accounting assumptions
93. Accounting policies followed by organizations
…………….
(a) Can be changed every year
(b) Should be consistently followed from year to
year
(c) Can be changed after 5 years
(d) None of the above
94. A change in accounting policy is justified ……..
(a) To comply with accounting standard
(b) To ensure more appropriate presentation of
the financial statement of the enterprise
(c) To comply with law
(d) All of the above
95. It is essential to standardize the accounting
principles and policies in order to ensure
…………………….
(a)Transparency
(b) Profitability
(c) Reputation
(d) All of the above
96. Different accounting policies can be adopted in
following areas …………………..
(a) Stock valuation
(b) Investment valuation
(c) Charging depreciation
(d) All of the above
97. A specific accounting policy refers to …………..
(a) Principles
(b) Methods of applying those principals
(c) Both (a) & (b)
(d) None of the above
98. The determination of the amount of bad debts is
an accounting ……………
(a) Policy
(b) Estimate
(c) Parameter
(d) None of the above
ACCOUNTING IS A MEASUREMENT DISCIPLINE
99. Generally, which of the following measurement
bases are usually accepted in accounting
parlance?
(a) Historical Cost
(b) Current Cost
(c) Realizable Value
(d) Any of the above
ACCOUNTS AND ITS CLASSIFICATION
100. According
to
…………Dictionary
for
Accountants, an account has been defined as
a formal record of a particular type of
transactions expressed in money.
(a) Kohler’s
(b) Oxfords
(c) Chate
(d) Taxmann
101. All accounts are classified into …………
(a) Personal accounts
(b) Real accounts
(c) Nominal accounts
(d) Any of the above
102. Accounts recording transactions with a person
or group of persons are known …………..
(a) Personal accounts
(b) Real accounts
(c) Nominal accounts
(d) impersonal accounts
103. Personal accounts is/are of the following
types.
(a) Natural persons
(b) Artificial or legal persons
(c) Representative personal accounts
(d) Any of the above
104. An account recording transactions with an
individual human being is termed as a
………….
(a) Artificial or legal persons account
(b) Natural person’s personal account
(c) Representative personal accounts
(d) Any of the above
105. Accounts relating to properties or assets are
known as …………..
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
106. An account recording financial transactions
with an artificial person created by law or
otherwise are termed as …………….
(a) Artificial or legal persons account
(b) Natural persons’ personal account
(c) Representative personal accounts
(d) Any of the above
107. Real accounts can be further classified into
…………….
(a) Tangible
(b) Intangible
(c) (a) or (b)
(d) None of above
108. Accounts which represent a certain person or
group of persons are termed as ………….
(a) Artificial or legal persons account
(b) Natural persons’ personal account
(c) Representative personal accounts
(d) Any of the above
109. …………… accounts represent assets and
properties which can be seen, touched, felt,
measured, purchased and sold.
(a) Tangible real accounts
(b) Intangible real accounts
(c) Representative personal accounts
(d) Artificial or legal persons account
110. Accounts relating to income, revenue, gain
expenses and losses are termed as ………..
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
111. ……………... accounts represent assets and
properties which cannot be seen, touched or
felt but they can be measured in terms of
money.
(a) Tangible real accounts
(b) Intangible real accounts
(c) Representative personal accounts
(d) Artificial or legal persons account
112. The rule for nominal accounts is ……………
(a) Debit the receiver, Credit the giver
(b) Debit what comes in, Credit what goes out
(c) Debit all expenses and losses, Credit all
incomes and gains
(d) All of the above
113. The rule for personal accounts is ………….
(a) Debit the receiver, Credit the giver
(b) Debit what comes in, Credit what goes out
(c) Debit all expenses and losses, Credit all
incomes and gains
(d) All of the above
114. The rule for real accounts is …………..
(a) Debit the receiver, Credit the giver
(b) Debit what comes in, Credit what goes out
(c) Debit all expenses and losses, Credit all
incomes and gains
(d) All of the above
115. Kamal’s account, Mala’s account, Sharma’s
accounts are example of ……………
(a) Artificial or legal persons personal account
(b) Natural persons’ personal account
(c) Representative personal accounts
(d) Any of the above
116. Firm’s accounts, limited companies accounts,
educational institutions accounts, co-operative
society account are example of ……………
(a) Artificial or legal persons personal account
(b) Natural persons’ personal account
(c) Representative personal accounts
(d) Any of the above
117. Prepaid insurance, outstanding salaries are
example of …………….
(a) Tangible real accounts
(b) Intangible real accounts
(c) Representative personal accounts
(d) Artificial or legal persons account
118. Wages account, rent account, commission
account, interest received account are
examples of ……………
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
119. Goodwill
accounts,
patents
account,
trademarks account, copyrights account are
examples of …………..
(a) Tangible real accounts
(b) Intangible real accounts
(c) Representative personal accounts
(d) Artificial or legal persons account
120. Provision for doubtful debts account, stock
reserve account etc are ……………….
(a) Valuation (Personal) accounts
(b) Artificial or legal persons personal account
(c) Tangible real accounts
(d) Nominal Accounts
121. ……….. is an intangible real account.
(a) Land
(b) Building
(c) Goodwill
(d) Cash
122. Purchase is ………..
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
123. Sales is ……………
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
124. Discount allowed is ………….
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
125. Drawing account is ………..
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
126. Prepaid salary is ………..
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
127. Bad debt recovered is ………
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
128. Patents account is ……………
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
129. Bill payable account is ………
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
130. Proprietor’s account is …………
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
131. Rent account is ………….
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
132. Trading account is a ……….
(a) Personal account
(b) Real account
(c) Nominal account
(d) Valuation account
133. Outstanding wages is a ………
(a) Real Accounts
(b) Personal Accounts
(c) Nominal Accounts
(d) None of above
134. Which of the following account is tangible real
account?
(a) Patent
(b) Goodwill
(c) Machinery
(d) Creditors
135. Which of the following account is the artificial
personal account?
(a) ICICI Bank A/c
(b) Neelam A/c
(c) Wages A/c
(d) Machinery A/c
136. Which of the following account is the odd one
out?
(a) Salary A/c
(b) Wages A/c
(c) Rent A/c
(d) Outstanding salary A/c
137. Which of the following account is the odd one
out?
(a) Cash A/c
(b) Wages A/c
(c) Building A/c
(d) Machinery A/c
138. Which of the following account is the odd one
out?
(a) Office furniture & equipment
(b) Freehold land & buildings
(c) Stock of materials
(d) Plant & machinery
CLASSIFICATION
ASSET, LIABILITY
–
REVENUE,
EXPENSE,
139. Salary can be classified as …………….
(a) Revenue
(b) Expense
(c) Asset
(d) Liability
140. Equipment can be classified as …………..
(a) Revenue
(b) Expense
(c) Asset
(d) Liability
141. Accounts payable/creditors can be classified
as ……………..
(a) Revenue
(b) Expense
(c) Asset
(d) Liability
142. Stock can be classified as …………
(a) Revenue
(b) Expense
(c) Asset
(d) Liability
143. Profit can be classified as ………….
(a) Revenue
(b) Expense
(c) Asset
(d) Liability
144. Building can be classified as ……….
(a) Revenue
(b) Expense
(c) Asset
(d) Liability
145. Accounts receivable/Debtors can be classified
as ………….
(a) Revenue
(b) Expense
(c) Asset
(d) Liability
146. Capital can be classified as …………
(a) Revenue
(b) Expense
(c) Asset
(d) Liability
147. Which of the following is a fictitious asset?
(a) Cash account
(b) Goodwill account
(c) Preliminary expenses
(d) Trademark account
148. Trademark is …………..
(a) Tangible account
(b) Intangible account
(c) Fictitious asset
(d) Nominal account
SINGLE & DOUBLE ENTRY SYSTEM
149. There are ……….. systems
records.
(a) Single entry system
(b) Double entry system
(c) Both (a) & (b)
(d) Duplicate account system
of
keeping
150. …………….. system recognizes the fact that
every transaction has two aspects and records
both aspects of each and every transaction.
(a) Single entry system
(b) Double entry system
(c) Double account system
(d) Duplicate account system
151. In double entry system of book-keeping every
business transaction affects:
(a) Two accounts with equal but opposite
effect
(b) Two sides of the same account
(c) The same account on two different dates
(d) All of the above
152. As per the provisions of the Companies Act,
1956, companies must maintain their accounts
under ………………..
(a) Double account system
(b) Single entry system
(c) Double entry system
(d) Duplicate account system
153. Which of the following is/are merit of double
entry system?
(a) It keeps a complete record of business
transactions
(b) It provides a check on the arithmetical
accuracy of accounts
(c) The detailed profit and loss account can be
prepared to show profits earned or loss
suffered during any given period
(d) All of the above
ACCOUNTING EQUATION
154. Which of the following accounting equation is
correct?
(a) Assets + Capital = Liabilities
(b) Assets + Liabilities = Capital
(c) Assets + Liabilities + Capital = Nil
(d) None of the above
155. Which of the following equation is correct?
(a) Capital + Liabilities = Fixed Assets +
Current Assets
(b) Capital + Liabilities – Current Assets =
Fixed Assets
(c) Assets = Liabilities + Capital
(d) All of the above
156. Which of the financial statement represents
the accounting equation?
(a) Manufacturing account
(b) Cash flow statement
(c) Balance sheet
(d) Profit and loss account
157. Difference between assets and outsiders
liability is ………….
(a) Creditors
(b) Capital
(c) Drawings
(d) Bills payable
PRACTICAL MCQ
ACCOUNTING CONCEPTS & CONVENTIONS
158. Mr. N purchased a furniture costing Rs.
13,000 on 1st October 2011. Transportation
and installation charges were incurred
amounting Rs. 1,300 and Rs. 520
respectively. Dismantling charges of the old
furniture in place of which new furniture was
purchased amounted Rs. 1,300. Market value
of the furniture was estimated at Rs. 15,600
on 31st March 2012. While finalizing the
annual accounts, Mr. N values the furniture at
Rs. 15,600 in his books. Which of the following
concepts was violated by Mr. N?
(a) Realization concept
(b) Cost concept
(c) Matching concept
(d) Periodicity concept
159. State the case where the going concern
concept is applied?
(a) When an enterprise was set up for a
particular purpose, which has been achieved,
or to be achieved shortly
(b) When a receiver or liquidator has been
appointed in case of as a company which is to
be liquidated
(c) Fixed assets are acquired for use in the
business for earning revenues and are not
meant for resale
(d) When an enterprise is declared sick
160. R. Ltd. purchased equipment from P Ltd. for
Rs. 50,000 on 1st April 2009. The freight and
cartage of Rs. 2,000 is spent to bring the
asset to the factory and Rs. 3,000 is incurred
on installing the equipment to make it possible
for the intended use. The market price of
machinery on 31st April 2010 is Rs. 60,000
and the accountant of the company wants to
disclose the machinery at Rs. 60,000 in
financial statements. However, the auditor
emphasizes that the machinery should be
valued at Rs. 55,000 (50,000 + 2,000 + 3,000)
according to ………………..
(a) Money measurement principle
(b) Historical cost concept
(c) Full disclosure principle
(d) Revenue recognition
161. The cost of a small calculator is accounted as
an expense and not shown as an asset in a
financial statement of a business entity due to
……………
(a) Convention of materiality
(b) Matching concept
(c) Periodicity concept
(d) Convention of Conservatism
162. A businessman purchased goods for Rs.
25,00,000 and sold 80% of such goods during
the accounting year ended 31st March 2010.
The market value of the remaining goods was
Rs. 4,00,000. He valued the closing stock at
cost. He violated the concept of ………………
(a) Periodicity
(b) Conservatism
(c) Money measurement
(d) Cost
163. Assets should be valued at the price paid to
acquire them is based on …………………..
(a) Realization concept
(b) Cost concept
(c) Matching concept
(d) Periodicity concept
164. If a machinery is purchased for Rs. 1,00,000,
the asset would be recorded in the books at
Rs. 1,00,000 even if its market value at that
time happens to be Rs. 1,40,000. In case a
year after, the market value of this asset
comes down to Rs. 90,000, it will ordinarily
continue to be shown at Rs. 1,00,000 and not
at Rs. 90,000 due to …………….
(a) Realization concept
(b) Present value concept
(c) Cost concept
(d) Money measurement concept
165. According to which concept, the owner of an
enterprise pays the ‘interest on drawings’?
(a) Conservatism concept
(b) Dual aspect concept
(c) Entity concept
(d) Accrual concept
166. Mr. Ashok buys clothing of Rs. 50,000 paying
cash Rs. 20,000. What is the amount of
expense as per the accrual concept?
(a) Rs. 30,000
(b) Rs. 20,000
(c) Rs. 50,000
(d) Nil
ACCOUNTING EQUATION
167. Capital – Rs. 1,00,000, Outsiders liability – Rs.
2,50,000, Total assets = ?
(a) 3,50,000
(b) 1,50,000
(c) 2,00,000
(d) 1,75,000
168. Fixed assets – Rs. 5,50,000, Current assets –
Rs. 2,25,000, Current liabilities – Rs. 1,50,000,
Bank Loan – Rs. 1,75,000. Capital = ?
(a) 3,50,000
(b) 5,50,000
(c) 4,50,000
(d) 6,50,000
169. Current Assets – Current liabilities = ?
(a) Working capital
(b) Capital
(c) Debtors
(d) Owners equity
Question No.
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Answers
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(b)
(a)
(d)
(c)
(d)
(d)
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(c)
(a)
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(d)
(a)
(b)
(a)
(a)
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(b)
(a)
(b)
(b)
(a)
(c)
(b)
(d)
(a)
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(d)
(b)
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(d)
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(a)
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(b)
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(b)
(a)
(d)
(b)
(d)
(a)
(a)
(c)
(d)
(d)
(b)
(c)
(b)
(d)
(d)
(d)
(b)
(a)
(d)
(b)
(a)
(a)
(a)
(a)
(d)
(b)
(c)
(d)
(d)
(d)
(b)
(d)
(b)
(b)
(c)
(b)
(b)
(d)
(a)
(d)
(c)
(b)
(d)
(a)
(d)
(a)
(d)
(b)
(a)
(a)
(c)
(c)
(a)
(c)
(b)
(c)
(a)
(b)
(b)
(a)
(c)
(c)
(b)
(a)
121.
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169.
(c)
(a)
(c)
(c)
(b)
(b)
(c)
(a)
(b)
(b)
(c)
(c)
(b)
(c)
(a)
(d)
(b)
(c)
(b)
(c)
(d)
(c)
(a)
(c)
(c)
(d)
(c)
(b)
(c)
(b)
(a)
(c)
(d)
(d)
(d)
(c)
(b)
(b)
(c)
(b)
(a)
(b)
(b)
(c)
(c)
(c)
(a)
(c)
(a)