Accountancy and Book Keeping MCQs

Accountancy and Statistics

Accountancy and Book Keeping MCQs

Practice the latest Accountancy MCQs with answers and detailed explanations. Explore chapter-wise multiple-choice questions covering important accounting concepts, bookkeeping, financial statements, journal entries, ledger, trial balance, depreciation, ratio analysis, partnership accounts, company accounts, and more. Perfect for Class 11 & 12, B.Com, CA Foundation, CUET, Banking, SSC, JKSSB, JKPSC and competitive exams.

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Practice Questions

Page 21 of 94
Question #401
A flexible budget is designed to change in relation to:
A. Level of activity
B. Management decision
C. Fixed expenses
D. Time period
Discuss
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Correct Answer: Option A

Explanation:
Flexible budget adjusts budgeted figures based on actual level of activity.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #402
Standard costing involves:
A. Calculating only variable costs
B. Recording historical costs
C. Setting predetermined costs and comparing with actual costs
D. Budgeting only
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Correct Answer: Option C

Explanation:
Standard costing is a technique where standard costs are established, and variances from actual costs are analyzed.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #403
The concept of 'Management by Exception' is applied in:
A. Financial accounting
B. Audit only
C. Standard costing and budgetary control
D. Tax accounting
Discuss
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Correct Answer: Option C

Explanation:
Management by exception focuses on significant variances between actual and standard/budgeted performance, ignoring minor deviations.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #404
In cost accounting, 'Cost Unit' means:
A. A unit of product or service for which cost is ascertained
B. A location where costs are incurred
C. An expense head
D. A group of costs
Discuss
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Correct Answer: Option A

Explanation:
Cost unit is a quantitative unit of product or service for which costs are determined, e.g., per ton, per km.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #405
The term 'Current Cost Accounting' deals with:
A. Historical cost
B. Replacement cost
C. Opportunity cost
D. Sunk cost
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Correct Answer: Option B

Explanation:
Current cost accounting values assets at their current replacement cost, not historical cost.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #406
Which of the following is a method of inventory valuation?
A. FIFO
B. All of these
C. LIFO
D. Weighted Average
Discuss
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Correct Answer: Option B

Explanation:
FIFO, LIFO, and Weighted Average are all common methods of inventory valuation.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #407
Which inventory valuation method is not permitted under Ind AS 2?
A. LIFO
B. Specific identification
C. Weighted Average
D. FIFO
Discuss
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Correct Answer: Option A

Explanation:
Ind AS 2 does not permit LIFO as an acceptable method for inventory valuation.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #408
Revenue from sale of goods is recognized when:
A. Risks and rewards are transferred to the buyer
B. Production is completed
C. Order is received
D. Cash is received
Discuss
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Correct Answer: Option A

Explanation:
As per AS 9 (Revenue Recognition), revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #409
An unearned income is classified as:
A. Expense
B. Income
C. Liability
D. Asset
Discuss
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Correct Answer: Option C

Explanation:
Unearned income (advance received) represents obligation to render service, hence a liability.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #410
The matching concept requires that:
A. Profits should match cash
B. Expenses should be matched with revenues of the same period
C. Debits equal credits
D. Assets should equal liabilities
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Correct Answer: Option B

Explanation:
Matching principle states that expenses incurred to earn revenues should be recognized in the same accounting period.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #411
The term 'Depletion' is used for:
A. Tangible fixed assets
B. Intangible assets
C. Wasting assets like mines
D. Current assets
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Correct Answer: Option C

Explanation:
Depletion refers to the exhaustion of natural resources like oil, minerals, timber.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #412
Amortisation is related to:
A. Fictitious assets only
B. Tangible assets
C. Intangible assets
D. Current assets
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Correct Answer: Option C

Explanation:
Amortisation is the systematic write-off of intangible assets like patents, copyrights.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #413
The main difference between a partnership and a company is:
A. Partnership has limited liability
B. Partnership pays corporate tax
C. Company has separate legal entity, partnership does not
D. Company cannot own assets
Discuss
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Correct Answer: Option C

Explanation:
A company is a separate legal entity, while a partnership (except LLP) is not.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #414
In case of a partnership firm, the liability of partners is:
A. Unlimited but proportionate
B. Limited
C. Unlimited and joint and several
D. Limited to capital
Discuss
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Correct Answer: Option C

Explanation:
In a general partnership, partners have unlimited liability, jointly and severally, for firm's debts.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #415
A partner's current account will have a credit balance if:
A. He has withdrawn all profits
B. Firm incurs loss
C. His drawings exceed his share of profit
D. His share of profit and interest on capital exceed his drawings
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Correct Answer: Option D

Explanation:
Current account credit balance indicates net amount owed by firm to partner, i.e., profits and interest etc. exceed drawings.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #416
Which of the following is not a purpose of financial audit?
A. Detecting fraud and error
B. Expressing opinion on true and fair view
C. Preparing financial statements
D. Ensuring compliance with laws
Discuss
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Correct Answer: Option C

Explanation:
Preparation of financial statements is management's responsibility. Auditor expresses opinion on them.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #417
Internal audit is conducted by:
A. Employees of the company
B. External auditor
C. Statutory auditor
D. Government auditor
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Correct Answer: Option A

Explanation:
Internal audit is an independent appraisal function within the organization, performed by internal staff or outsourced, but it's internal to the management.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #418
A statutory audit is mandatory under:
A. Only for companies
B. Income Tax Act only
C. Partnership Act
D. Companies Act, 2013 for companies
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Correct Answer: Option D

Explanation:
Statutory audit is required by law, e.g., companies as per Companies Act 2013, and other entities as per relevant statutes.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #419
The audit report is addressed to:
A. Management
B. Board of directors
C. Shareholders
D. Government
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Correct Answer: Option C

Explanation:
The auditor's report is addressed to the members (shareholders) of the company.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #420
A 'qualified audit report' means:
A. Financial statements are true and fair
B. No audit performed
C. Financial statements are not true and fair
D. Financial statements are true and fair except for certain matters
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Correct Answer: Option D

Explanation:
A qualified opinion indicates that except for the effects of the matter(s) described, the financial statements give a true and fair view.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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