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MCQs 1: What is the basic accounting equation?

Capital+Liabilities=Assets Assets+ liabilities =Capital Capital+assets=liabilities Liabilities+Capital
Answer Explanation

MCQs 2: Which of the following is a liability?

Cash Equipment Debtors Creditors
Answer Explanation

MCQs 3: What is equity?

Cash from the business liability of a business Owner’s claim on total assets Owner’s claim on total liabilities
Answer Explanation

MCQs 4: Identify the asset from the following:

Cash and cash equivalent Creditors Notes payable Bank loan
Answer Explanation

MCQs 5: _______ the withdrawal of cash and goods by the owner of the busienss for his/her personal use?

Depreciation Drawings Outflow of cash Appreciation
Answer Explanation

MCQs 6: Net loss occurs when______________?

Expenses are greater than Income Expenses are less than Income Expenses=Income Liabilities are greater than income
Answer Explanation

MCQs 7: Double entry implies that

Recording entries in journal Recording entries in Ledger account Recording two aspects of every transaction Recording every transaction in books
Answer Explanation

MCQs 8: Identify the nominal account

Machinery account Building account Creditors account Rent expenses account
Answer Explanation

MCQs 9: Which of the following accounts can be classified as a real account?

Rent expenses account Rent income account insurance expenses account Cash account
Answer Explanation

MCQs 10: Transferring entries from journal to ledger account is commonly known as____________?

Recording Transferring Posting Entry making
Answer Explanation

MCQs 11: An account records the ___________ in the balance of an item?

Increase Decrease Increase or decrease Appreciation
Answer Explanation

MCQs 12: If credit side of a bank account is greater than the debit side, it indicates which of the following?

Bank overdraft Cash at bank Bank balance Current Asset
Answer Explanation

MCQs 13: If debit side of a bank account is greater than credit side it indicates which of the following?

Cash at bank Bank understatement Bank overdraft Balance overstatement
Answer Explanation

MCQs 14: _________ will be credited if goods are given as charity?

Cash Charity Purchases Sales
Answer Explanation

MCQs 15: Which of the following is known as the base for preparing trial balance?

Journal Cash account Ledger account Balance sheet
Answer Explanation

MCQs 16: If debit balance is greater than creadit balance then the account blance will be__________?

Credit balance Debit and credit balance Cash balance Debit balance
Answer Explanation

MCQs 17: The normal balance of capital account is_____________?

Credit balance Debit balance Cash balance Neither debit nor credit balance
Answer Explanation

MCQs 18: The normal balance of asset account is____________?

Credit balance Debit balance Cash balance Neither debit nor credit balance
Answer Explanation

MCQs 19: The normal balance of liability account is____________?

Debit balance Credit balance Cash balance Neither debit nor credit balance
Answer Explanation

MCQs 20: Which of the following statements is incorrect regarding capital account?

Debit increases the capital account balance Credit increases the capital account balance Fresh capital increases the capital account balance Net income increases the capital account balance
Answer Explanation

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