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MCQs 1: Which of the following will be debited if a business purchases goods on credit?

Cash Debtor Creditor Purchases
Answer Explanation

MCQs 2: Which of the following accounts will be debited if the business’s owner withdraws cash from business for his personal use?

Drawings Cash Business Stock
Answer Explanation

MCQs 3: Journals are also referred as_____________?

Book of entries Book of original entries T account Books of economic event
Answer Explanation

MCQs 4: The standard format of journal does not include which of the following?

Assets column Date column Description column Amount column
Answer Explanation

MCQs 5: In which of the following orders data is entered in journal?

Alphabetical order Numeric order Bullets order Chronological order
Answer Explanation

MCQs 6: Which of the following accounts will be credited if a company purchases building for cash?

Capital account Fixed assets account Building account Cash account
Answer Explanation

MCQs 7: Discount for quick repayment of debt is normally referred as____________?

Trade discount Prompt payment discount Cash discount Bulk discount
Answer Explanation

MCQs 8: The first step in accounting process is___________?

Recording the transaction Identifying the transaction Posting the transaction Preparing the source documents
Answer Explanation

MCQs 9: A chart of accounts generally start with which of the following types of accounts?

Assets accounts liability accounts Cash accounts Revenue accounts
Answer Explanation

MCQs 10: Total depreciation of an asset cannot exceed its:

Scrap value Residual value Market value Depreciable value
Answer Explanation

MCQs 11: Amount paid to Masood posted to the credit side of his account would affect___________?

Masood’s account Cash account Cash account and Gagan’s account None of these
Answer Explanation

MCQs 12: Which of the following statements is/are true ?

A sale of an asset is recorded in the Sales Book Total of Return Outward Book is debited to Return Outward Account The balance of Petty Cash Book is a liability Cash Book is a subsidiary book as well as a ledger
Answer Explanation

MCQs 13: Which of the following is true regarding closing entries?

They must be followed by reversing entries They transfer the balances in all of the Nominal Accounts to the Trading and Profit and Loss Account They must be made after the reversing entries but before the adjusting entries They must be made after the adjusting entries but before the reversing entries
Answer Explanation

MCQs 14: Closing stock is generally valued at______________?

Cost Price Market Price Cost price or Market price whichever is higher Cost price or Market price whichever is lower
Answer Explanation

MCQs 15: Which of the following assets is/are to be valued at the lower of cost and net realizable value?

Goodwill Inventories Investments Both B. and C. above.
Answer Explanation

MCQs 16: A few errors committed in Ahhiwalia’s books of account are given below. State which errors would affect the Trial Balance.

(a). Sales of `950 to Ram completely omitted from books of account
(b). Purchases of `720 from Shyam entered in the purchases journal as `700
(c). Purchases Journal is overcast by `1,000
(d). Sales returns journal is undercast by `200
(e) Amount paid to Agarwal wrongly posted to the debit to Mittal’s account
(f) Bank overdraft shown under debit column in the Trial Balance
(g) Sales of `500 to Sadiq entered in sales journal as sales to Mushtaq
(h) Wages paid for installation of machinery debited to wages account

a, c and g c, d and f c, d, e and h c, d, f and h
Answer Explanation

MCQs 17: Which of the following methods is not a practical way of realizing revenue?

Delivery method Percentage-of-completion method Production method Moving average method
Answer Explanation

MCQs 18: The amount payable to a person as consideration for the use of rights vested in him is

Dividend Royalty Purchase consideration Installment
Answer Explanation

MCQs 19: Buildings account is debited with an amount towards repairs. This is an example of?

Error of commission Error of principle Error of omission Compensating error
Answer Explanation

MCQs 20: The concept of conservatism will have the effect of______________?

Overstatement of Assets Understatement of Assets Overstatement of Liabilities Understatement of Liabilities
Answer Explanation

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