Accounting MCQs Part 2 | 1

61. Cost of a fixed asset-Accumulated de- preciation expenses of the fixed asset =?
1. Book value of a fixed asset
2. Market value of a fixed asset
3. Historical cost of a fixed asset
4. Recoverable amount if a fixed as- set

62. Which of the following is not con- sidered as Research& Development costs?
1. Testing in search for product alternative
2. Legal work on patent application
3. Modification of design of a pro- cess
4. Searching for application of new research findings

63. The parties to joint venture are called

1. Friends
2. Principal and agent
3. Partners
4. Co-ventures

64. Opening inventory + Net purchases=?

1. Ending inventory
2. Closing stock
3. Cost of goods manufactured
4. Cost of goods available for sale

65. Current assets are also known as

1. Gross working capital
2. Invested capital
3. Assets
4. Cash

66. Which of the following is not an item of revenue expenditure?

1. Interest on deposits accepted
2. Annual insurance premium on in- ventory
3. Customs duty paid in connection with the import of equipment
4. Repairs and maintenance on ma- chinery

67. Which of the following is a selling expense?

1. Any tax/freight is paid on pur- chases
2. General salaries paid to laborers
3. Tax& freight paid on sale
4. Interest on deposits

68. Which of the following foxed assets is not depreciated in the ordinary cir- cumstances?
1. Plant& Machinery
2. Building account

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 Accounting MCQs Part 2 | 2

3. Land
4. Equipment’s

69. Recovery of bad debt is a

1. Revenue expenditure
2. Revenue receipt
3. Deferred expenses
4. Capital receipt

70. Which of the following account will be credited when a typewriter is sold that has been used in the office?
1. Office equipment account
2. Cash account
3. Sales account
4. Purchase account

71. Error which affect only one account can be

1. Error of complete omission
2. Error of posting
3. Compensatory errors
4. None of the above

72. Office equipment’s account is classi- fied as

1. Nominal accounts
2. Real account
3. Cash account
4. Capital account

73. Under which method of depreciation, the amount of depreciation expenses remains constant throughout the
life of the asset?
1. Reducing balance method
2. Unit of activity method
3. Straight line method
4. None of these

74. Identify the correct sequence of ac- counting process

1. Communicating-> Recording-> Identifying
2. Recording-> Communicating-> Identifying
3. Identifying-> Communicating-> Recording
4. Identifying-> Recording-> Com- municating

75. A current asset that is convertible to cash within 3 months can be referred to as
1. Cash asset
2. Operating asset
3. Intangible assets
4. Cash equivalent

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76. Joint venture account is a

1. Nominal account
2. Personal account
3. Real account
4. Dummy account

77. What does ’aged debtors analysis’ sig- nify?

1. shows how long debts have been outstanding
2. How old the customers are
3. How long does a business take to repay the bank loans
4. Minimum number of old debtors

78. The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received
from the asset, is termed as
1. Appreciation
2. Depreciation
3. Fluctuation
4. None of the above

79. A cash deposit made by business ap- pears on the bank statement as balance
1. Debit
2. Credit
3. Expenses
4. Liability

80. Cash book with cash and discount col- umn is mostly referred to as
1. Simple cash book
2. Two columns cash book
3. Three columns cash book
4. Petty cash book

81. Which account is the odd one out?

1. Office furniture and equipment
2. Freehold land and building
3. Stock of raw materials
4. Plant and machinery

82. A debit balance in the bank statement indicate

1. Cash at bank
2. Bank overdraft
3. Over payment to creditors
4. Cash in hand

83. Depreciable amount + Residual value of a fixed asset =?

1. Depreciation expenses

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 Accounting MCQs Part 2 | 4

2. Accumulated depreciation
3. Cost of the fixed asset
4. Future economic benefits of a fixed asset

84. Which of the following is the most common cause of bad debt?
1. Debtor refusal to repayment
2. Debtor left the country
3. Debtor committed a crime
4. Debtor declared to be a bankrupt

85. Bills receivable endorsed are debited to

1. Bills Payable A/c
2. Debtor’s A/c
3. Endorsee A/c
4. Bills Receivable A/c

86. Budgeting is difficult to apply in the following cases

1. Products subjected to rapid change
2. Job order manufacturing
3. Uncertain market condition
4. All of the above

87. Petty cash balance is

1. Liability
2. Income
3. Expense
4. Asset

88. are cheques that are issued by the business but not yet presented to bank for payment
1. Uncollected cheques
2. Uncredited cheques
3. Outstanding cheques
4. Bounced cheques

89. Discount for quick repayment of debt is normally referred to as

1. Trade discount
2. Prompt payment discount
3. Cash discount
4. Bulk discount

90. Heavy amount spent for the advertise- ment of new company product is
1. Revenue expenditure
2. Deferred Revenue expenditure
3. Capital expenditure
4. Either ’a’ or ’c’

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91. The process of entering all transac- tions from the Journal to Ledger is called
1. Posting
2. Entry
3. Accounting
4. None of the above

92. Which of the following financial state- ments show the financial health of an organisation at a stated point of
time?
1. Balance sheet
2. Trading and Profit& Loss account
3. Cash flow statement
4. Statement of retained earnings

93. The basic consideration(s) in distinc- tion between capital and revenue ex- penditure is/are
1. Nature of business
2. Effect on revenue generating ca- pacity of the business
3. Purpose of expenses
4. All of the above

94. Lower the Debt Equity ratio

1. Lower the protection to creditors
2. Higher the protection to creditors
3. It does not affect the creditors
4. None of the above

95. A Trial Balance contains the balances of

1. Only Real A/c
2. Real A/c and Nominal A/c
3. Personal A/c
4. Both ’b’ and ’c’

96. Postage stamps on hand are consid- ered as

1. Bank balance
2. Prepaid expenses
3. Accounts receivable
4. Creditors

97. Municipal tax Rs.6000 under dispute is a

1. Contingent liability
2. Revenue expenditure
3. Current liability
4. Current asset

98. Which of the following is NOT a cash inflow?

1. Sale of fixed asset

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2. Issue of debentures
3. Cash from business operation
4. Purchase of fixed asset

99. Rs.5000 spent on maintenance of computer is

1. Deferred capital expenditure
2. Capital expenditure
3. Revenue expenditure
4. None of the above

100. Which of the following is known as the base for preparing trial balance?
1. Journal
2. Cash account
3. Ledger account
4. Balance Sheet

101. Balance sheet is a statement of

1. Assets
2. Liabilities
3. Capital
4. All of the above

102. Revenue and expense accounts are referred to as

1. Nominal accounts
2. Real account
3. Cash account
4. Bank account

103. Which of the following item will be shown on debit side of debtors ac- count?
1. Discount received
2. Return inwards
3. Discount allowed
4. Credit sales

104. will be credited if goods are given as charity

1. Cash
2. Charity
3. Purchases
4. Sales

105. The revenue recognition principle dictates that all types of incomes should be recorded or recognized when
1. Cash is received
2. At the end of accounting period
3. When they are earned
4. When interest is paid

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106. Term ’Credit’ means by the business

1. Receiving of benefits
2. It has no effect on business
3. Providing benefits
4. It depends upon items

107. Which of the following documents contains rules and regulations for in- ternal management of the business?
1. Memorandum of association
2. Articles of association
3. Prospectus
4. Statutory Declaration

108. What is the basic accounting equation?

1. Capital + Liabilities = assets
2. Assets + Liabilities = Capital
3. Capital + Assets = Liabilities
4. Liabilities-Capital = Assets

109. An entry which is made on both sides of a cash book is called

1. Cash entry
2. Contra entry
3. Payment entry
4. Compound entry

110. Bank pass book is also known as

1. Bank book
2. Bank account
3. Bank column
4. Bank statement

111. The concept of ’separate entity’ is applicable to which of the following types of businesses?
1. Sole proprietorship
2. Corporation
3. Partnership
4. All of the above

112. What is the next step to Journalizing in accounting cycle?

1. Recording
2. Posting
3. Balancing
4. Analyzing

113. Present liability of uncertain amount, which can be measured reliably by us- ing a substantial degree of
estimation is termed as
1. Contingent liability

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2. Liability
3. Provision
4. Reserve

114. In case of opening Credit Balance, the word are written on the credit side.
1. By Balance b/d
2. To Balance b/d
3. By Balance c/d
4. To Balance c/d

115. Which of the following accounting equation is correct?

1. Cash + Other assets = Capital- Liabilities
2. Capital + Liabilities = Assets + In- come
3. Assets-Liabilities = Capital
4. Assets + Capital = Liabilities

116. Which of the following subsidiary books serves the purpose of ledger too, in addition to the recording of
accounting transaction?
1. Purchases book
2. Sales book
3. Bills receivable book
4. Cash Book

117. An asset that is NOT physical in na- ture is called

1. Intangible asset
2. Liquid asset
3. Current asset
4. Fixed asset

118. The term is generally used for the depreciation of natural resources
1. Amortization
2. Depletion
3. Appreciation
4. Disposal value

119. Purchase of office equipment for cash will be recorded on which side of a cash book?
1. Receipts
2. Payments
3. Incomes
4. Expenditures

120. The sales income (Credit and Cash) of a business during a given period is called
1. Transactions
2. Sales Returns
3. Turnover

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4. Purchase Returns

Answer:

61. A 62. B 63. D 64. D 65. A 66. C 67. C 68. C 69. B 70. A
71. B 72. B 73. C 74. D 75. D 76. A 77. A 78. B 79. B 80. C
81. C 82. B 83. C 84. D 85. C 86. D 87. D 88. C 89. C 90. B
91. A 92. A 93. D 94. B 95. D 96. B 97. A 98. D 99. C 100. C
101. D 102. A 103. D 104. C 105. C 106. A 107. B 108. A 109. B 110. D
111. D 112. B 113. C 114. A 115. C 116. D 117. A 118. B 119. B 120. C

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 Accounting MCQs Part 2 | 10

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