Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

Question #301

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The system of recording transactions based on both debit and credit aspects is called:

A. Cash basis system

B. Double entry system

C. Accrual basis system

D. Single entry system

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Correct Answer: Option B

Explanation:
Double entry system records every transaction with a debit and a corresponding credit.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #302

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A discount received from creditors is recorded in:

A. Sales Book

B. Journal Proper

C. Purchases Book

D. Cash Book

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Correct Answer: Option D

Explanation:
Discount received is a cash/bank related item and is recorded in the Discount Received column of the Cash Book.

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Question #303

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Which accounting concept prevents the anticipation of profits but allows recognition of all losses?

A. Realization concept

B. Materiality concept

C. Consistency concept

D. Prudence (Conservatism) concept

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Correct Answer: Option D

Explanation:
Prudence concept states that one should not anticipate profits but provide for all possible losses.

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Question #304

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In the absence of a partnership deed, profits are shared:

A. Equally

B. Based on experience

C. Based on age

D. In the ratio of capital

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Correct Answer: Option A

Explanation:
As per Indian Partnership Act, 1932, in absence of a deed, profits and losses are shared equally among partners.

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Question #305

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A Trial Balance shows a difference of ₹5,000 debit side excess. This difference is transferred to:

A. Suspense A/c (Credit)

B. Capital A/c

C. Suspense A/c (Debit)

D. Profit & Loss A/c

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Correct Answer: Option A

Explanation:
If debit side is more, credit side is short. To balance, Suspense Account is credited. So, Suspense A/c (Credit) ₹5,000.

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Question #306

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A bank reconciliation statement starting with overdraft as per Cash Book will treat a cheque issued but not presented:

A. Added

B. No effect

C. Subtracted

D. Adjusted in capital

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Correct Answer: Option A

Explanation:
When starting with overdraft as per Cash Book (negative bank balance), cheque issued reduces the overdraft in cash book but not yet in passbook, so to reconcile, add back.

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Question #307

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Which of the following is a direct tax?

A. Income tax

B. GST

C. Excise duty

D. Customs duty

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Correct Answer: Option A

Explanation:
Income tax is a direct tax as the burden falls directly on the taxpayer. GST, excise, customs are indirect taxes.

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Question #308

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Input Tax Credit under GST is available for:

A. Goods and services used for business purposes

B. All goods and services

C. Personal consumption goods

D. Exempted supplies only

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Correct Answer: Option A

Explanation:
Input tax credit can be availed only on inputs used for business purposes, subject to conditions under GST law.

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Question #309

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The financial statement that shows the financial position of an entity at a specific date is:

A. Balance Sheet

B. Profit & Loss Account

C. Cash Flow Statement

D. Trading Account

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Correct Answer: Option A

Explanation:
Balance Sheet is a statement of assets and liabilities as on a specific date, showing financial position.

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Question #310

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Which of the following is not a part of the Balance Sheet?

A. Share Capital

B. Current Liabilities

C. Fixed Assets

D. Gross Profit

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Correct Answer: Option D

Explanation:
Gross profit is shown in Trading/Profit & Loss Account, not in the Balance Sheet.

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Question #311

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As per the concept of Social Accounting, the entity should account for:

A. Government levies only

B. Social costs and benefits

C. Only economic transactions

D. Financial performance alone

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Correct Answer: Option B

Explanation:
Social Accounting involves measuring and reporting the social and environmental impact of an entity's activities.

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Question #312

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A social audit is:

A. An evaluation of a company's social responsibility performance

B. Audit of government welfare schemes only

C. An audit of social clubs

D. Financial audit by social organizations

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Correct Answer: Option A

Explanation:
Social audit assesses a company's performance in social, environmental, and ethical areas, beyond financials.

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Question #313

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Cash basis accounting recognizes revenue when:

A. Services are performed

B. Cash is received

C. Sale invoice is raised

D. Order is received

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Correct Answer: Option B

Explanation:
Under cash basis, transactions are recorded only when cash is received or paid, not when accrued.

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Question #314

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In single entry system, profit is generally determined by:

A. Comparing opening and closing capital

B. Preparing Trading and P&L A/c

C. Cash book balance

D. Trial balance

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Correct Answer: Option A

Explanation:
Under single entry, incomplete records are used, and profit is often derived from the statement of affairs (net worth comparison) with adjustments.

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Question #315

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Public Financial Management System (PFMS) in India is primarily used for:

A. Tax collection only

B. Corporate financial reporting

C. Stock market regulation

D. Government financial transactions and fund tracking

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Correct Answer: Option D

Explanation:
PFMS is a government portal for tracking fund disbursement, ensuring transparency and efficiency in public financial management.

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Question #316

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Which of the following is a feature of the Indian Financial Management System?

A. Decentralized budgeting only

B. Use of appropriation accounts

C. Absence of audit

D. Zero-based budgeting is prohibited

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Correct Answer: Option B

Explanation:
Indian government accounting uses appropriation accounts to compare actual spending against grants approved by Parliament.

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Question #317

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Tax deduction at source (TDS) is a mechanism under:

A. Direct tax

B. Both direct and indirect tax

C. Local body tax

D. Indirect tax

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Correct Answer: Option A

Explanation:
TDS is part of the Income Tax Act, a direct tax, requiring the payer to deduct tax at source on certain payments.

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Question #318

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Budgetary control involves:

A. Calculating tax liability

B. Only preparation of budgets

C. Comparison of actual performance with budgets and taking corrective actions

D. Forecasting sales only

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Correct Answer: Option C

Explanation:
Budgetary control is the process of establishing budgets, comparing actuals, and acting on variances to achieve objectives.

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Question #319

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In cost accounting, fixed cost per unit:

A. Increases with increase in production

B. Decreases with increase in production

C. Fluctuates arbitrarily

D. Remains constant

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Correct Answer: Option B

Explanation:
Total fixed cost remains constant within a relevant range, so per unit fixed cost decreases as production volume increases.

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Question #320

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The concept of 'Zero Base Budgeting' was introduced in India for government budgeting in:

A. 1990s

B. 2000s

C. 1970s

D. 1980s

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Correct Answer: Option D

Explanation:
Zero Base Budgeting (ZBB) was introduced in India in the 1980s as a reform in government budgeting.

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