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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Page 24 of 94
Question #461
In India, the Finance Commission is responsible for:
A. Conducting audit
B. Preparation of Union Budget
C. Tax collection
D. Distribution of tax revenues between Centre and States
Discuss
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Correct Answer: Option D

Explanation:
Finance Commission recommends the sharing of central taxes with states, as per Article 280 of the Constitution.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #462
The Comptroller and Auditor General (CAG) of India audits:
A. Private companies
B. Government departments and public sector undertakings
C. Local businesses
D. All companies
Discuss
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Correct Answer: Option B

Explanation:
CAG audits the accounts of the Union and State governments and bodies substantially financed by government.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #463
The concept of 'Appropriation Accounts' in government accounting is to:
A. Show actual expenditure against grants approved by Parliament
B. Audit public accounts
C. Show profit of government companies
D. Record tax revenue
Discuss
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Correct Answer: Option A

Explanation:
Appropriation Accounts compare the actual expenditure with the amounts granted by Parliament for each head.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #464
Which of the following is a direct tax levied and collected by the Union Government?
A. Sales tax
B. GST
C. Excise duty
D. Income tax
Discuss
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Correct Answer: Option D

Explanation:
Income tax is a direct tax collected by the Central Government. (GST is indirect, excise duty is indirect, sales tax is state indirect).
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #465
A partnership deed is:
A. Mandatory by law
B. Required only for banking partnership
C. Necessary only if more than 2 partners
D. Desirable but not mandatory
Discuss
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Correct Answer: Option D

Explanation:
Partnership deed is not compulsory but advisable to avoid disputes. Partnership can exist based on oral agreement.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #466
In the absence of a partnership deed, interest on loan advanced by a partner to the firm is:
A. 12% p.a.
B. 5% p.a.
C. Not allowed
D. 6% p.a.
Discuss
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Correct Answer: Option D

Explanation:
Section 13(d) of Partnership Act allows interest at 6% p.a. on partner's loan in absence of agreement.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #467
A and B are partners. A draws ₹5,000 at the beginning of each month. Interest on drawings @ 12% p.a. for the year will be:
A. ₹3,300
B. ₹3,000
C. ₹3,600
D. ₹3,900
Discuss
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Correct Answer: Option D

Explanation:
If drawings are made in the beginning of every month, average period = (12+1)/2 = 6.5 months. Total drawings = 5000*12 = 60,000. Interest = 60,000 * 12% * 6.5/12 = 60000 * 0.12 * 0.54167 = ₹3,900.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #468
Goodwill of a firm is valued at 2 years purchase of average profits of last 4 years. Profits: 2019- ₹20,000; 2020- ₹30,000; 2021- ₹40,000; 2022- ₹50,000 (including speculative profit ₹10,000). Average profit for goodwill will be:
A. ₹30,000
B. ₹35,000
C. ₹25,000
D. ₹40,000
Discuss
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Correct Answer: Option A

Explanation:
Speculative profit is excluded. Normal profit for last year = 40,000 - 10,000 = 30,000. Total profits: 25,000 + 30,000 + 35,000 + 30,000 = 1,20,000. Average = ₹30,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #469
A company's net profit before tax is ₹5,00,000, tax rate 30%. Preference dividend ₹20,000. Number of equity shares 50,000. EPS is:
A. ₹7.00
B. ₹6.00
C. ₹6.60
D. ₹5.60
Discuss
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Correct Answer: Option C

Explanation:
PAT = 5,00,000 - 1,50,000 tax = 3,50,000. Less preference dividend 20,000 = 3,30,000. EPS = 3,30,000 / 50,000 = ₹6.60.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #470
A bill of exchange for ₹20,000 discounted with bank for ₹19,500. The discount charged is:
A. ₹20,000
B. ₹500
C. ₹19,500
D. ₹1,000
Discuss
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Correct Answer: Option B

Explanation:
Discount = Face value - Amount received = 20,000 - 19,500 = ₹500.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #471
When a bill is dishonoured, the drawer records:
A. Debit sales, credit bank
B. Debit bank, credit drawee
C. Debit drawee, credit bank
D. No entry
Discuss
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Correct Answer: Option C

Explanation:
On dishonour, drawee's account is debited (debtor again), and bank is credited as bank returns the bill.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #472
The term 'Noting Charges' is associated with:
A. Voucher system
B. Depreciation
C. Bills of exchange
D. Bank reconciliation
Discuss
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Correct Answer: Option C

Explanation:
Noting charges are paid to notary public for recording dishonour of a bill.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #473
Which of the following is an example of a 'Revenue Reserve'?
A. Revaluation reserve
B. Capital redemption reserve
C. General reserve
D. Securities premium
Discuss
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Correct Answer: Option C

Explanation:
General reserve is created from revenue profits, hence a revenue reserve. Securities premium and capital redemption reserve are capital reserves. Revaluation reserve arises from revaluation of assets, also capital.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #474
A 'Secret Reserve' is created by:
A. Only banks
B. Undervaluation of assets or overstatement of liabilities
C. Overstatement of assets
D. Disclosure in notes
Discuss
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Correct Answer: Option B

Explanation:
Secret reserve is created by showing lower profits, like undervaluing stock or overstating provision, not disclosed in balance sheet.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #475
The 'Accrual Concept' is also known as:
A. Cash system
B. Hybrid system
C. Single entry
D. Mercantile system
Discuss
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Correct Answer: Option D

Explanation:
Accrual basis is also called mercantile basis, where transactions are recorded when they occur, not when cash is paid/received.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #476
A 'Capital Reserve' can be used for:
A. Writing off revenue losses
B. Payment of salaries
C. Distribution of dividend
D. Issue of bonus shares
Discuss
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Correct Answer: Option D

Explanation:
Capital reserve, generally, can be used for issuing fully paid bonus shares, not for dividend distribution (except some specific reserves).
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #477
A company issues 10,000 equity shares of ₹10 each at a premium of ₹5. The amount credited to Securities Premium A/c is:
A. ₹10,000
B. ₹1,00,000
C. ₹50,000
D. ₹1,50,000
Discuss
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Correct Answer: Option C

Explanation:
Securities premium = shares * premium per share = 10,000 * 5 = ₹50,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #478
Calls-in-arrears is shown in Balance Sheet as:
A. Current liability
B. Deduction from share capital
C. Addition to share capital
D. Current asset
Discuss
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Correct Answer: Option B

Explanation:
Calls-in-arrears represents unpaid amount on shares, deducted from called-up capital in Balance Sheet.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #479
Debentures are shown in Balance Sheet under:
A. Reserves and surplus
B. Share capital
C. Long-term borrowings
D. Current liabilities
Discuss
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Correct Answer: Option C

Explanation:
Debentures are long-term borrowings unless they are due within 12 months, then current liabilities.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #480
The 'Dividend' is paid on:
A. Issued capital
B. Authorised capital
C. Called-up capital
D. Paid-up capital
Discuss
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Correct Answer: Option D

Explanation:
Dividend is paid on the paid-up share capital, i.e., the amount actually received from shareholders.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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