Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

Question #521

A business paid ₹12,000 as insurance premium for the year ending 31st March 2025, out of which ₹3,000 relates to next year. Insurance expense for current year is:

A. ₹12,000

B. ₹15,000

C. ₹3,000

D. ₹9,000

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Correct Answer: Option D

Explanation:
Prepaid ₹3,000, so current year expense = 12,000 - 3,000 = ₹9,000.

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

Question #522

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A 'Bank Overdraft' is shown in Balance Sheet as:

A. Current liability

B. Current asset

C. Long-term liability

D. Contra asset

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Correct Answer: Option A

Explanation:
Bank overdraft is repayable on demand, hence a current liability.

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Question #523

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The term 'Imprest Money' is related to:

A. Fixed deposit

B. Overdraft

C. Cash credit

D. Petty cash

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Correct Answer: Option D

Explanation:
Imprest system is used to maintain petty cash.

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Question #524

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A 'Voucher' that records non-cash transactions is called:

A. Cash voucher

B. Receipt voucher

C. Transfer voucher (Journal voucher)

D. Bank voucher

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Correct Answer: Option C

Explanation:
Non-cash transactions like depreciation, credit sales are recorded via transfer vouchers or journal vouchers.

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

Question #525

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In a partnership, interest on capital is allowed only when:

A. The firm has cash

B. It is mandatory under law

C. The firm makes profit

D. It is provided in the partnership deed

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Correct Answer: Option D

Explanation:
Interest on capital is payable only if the partnership deed so provides, and only out of profits.

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

Question #526

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A and B share profits 3:2. They admit C for 1/5th share. C brings ₹50,000 as capital and ₹20,000 as goodwill. Goodwill is withdrawn by old partners. The amount credited to A's capital for goodwill will be:

A. ₹20,000

B. ₹10,000

C. ₹8,000

D. ₹12,000

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Correct Answer: Option D

Explanation:
Goodwill brought by C is distributed in sacrificing ratio, which is old ratio 3:2. A's share = 20,000 * 3/5 = ₹12,000.

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

Question #527

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X and Y are partners with capitals ₹60,000 and ₹40,000. Z brings ₹50,000 as capital for 1/3rd share. Goodwill already appears in books at ₹30,000. The entry for existing goodwill will be:

A. No entry

B. Debit X and Y, credit goodwill

C. Debit all partners' capital in old ratio, credit goodwill

D. Debit goodwill, credit all partners in new ratio

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Correct Answer: Option C

Explanation:
Existing goodwill must be written off by debiting old partners' capital accounts in old ratio.

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

Question #528

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On retirement of a partner, if the retiring partner is paid his dues in instalments, the method used is:

A. Maximum loss method

B. Piecemeal distribution

C. Surplus capital method

D. Proportionate capital method

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Correct Answer: Option B

Explanation:
When dues are paid in instalments, piecemeal distribution (as per Garner vs Murray rule) is applied.

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Question #529

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Which of the following is a feature of a company as per Companies Act?

A. Unlimited liability

B. No separate legal entity

C. Perpetual succession

D. Cannot own property

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Correct Answer: Option C

Explanation:
A company has perpetual succession, separate legal entity, limited liability, and can own property.

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Question #530

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The minimum subscription in a public issue should be at least:

A. 75% of issued capital

B. 90% of issued capital

C. 100%

D. 50% of issued capital

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Correct Answer: Option B

Explanation:
As per SEBI, minimum subscription is 90% of the issue size for public offers.

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Question #531

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The term 'Sweat Equity' refers to:

A. Rights shares

B. Shares issued to employees at discount or for consideration other than cash

C. Bonus shares

D. Shares issued to promoters for their efforts

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Correct Answer: Option B

Explanation:
Sweat equity shares are issued to employees or directors for providing know-how or value addition.

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Question #532

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A 'Letter of Credit' is a:

A. Voucher

B. Credit note

C. Bank guarantee for payment

D. Debit note

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Correct Answer: Option C

Explanation:
Letter of credit is a bank's commitment to pay the seller on behalf of buyer, reducing risk.

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

Question #533

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In a bank reconciliation, a 'Direct deposit by customer' into bank not recorded in cash book will:

A. Be adjusted in passbook

B. Decrease cash book balance

C. Increase cash book balance

D. No effect

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Correct Answer: Option C

Explanation:
When starting with cash book balance, direct deposit increases bank balance, so add to cash book to reconcile with passbook.

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Question #534

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The 'Accounting Equation' remains intact under:

A. Cash system

B. All systems

C. Double entry system

D. Single entry only

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Correct Answer: Option C

Explanation:
Double entry system always maintains the balance of accounting equation. Single entry does not.

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Question #535

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A 'Drawings' account is a:

A. Real account

B. Nominal account

C. Valuation account

D. Personal account

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Correct Answer: Option D

Explanation:
Drawings account represents the proprietor, hence it is a personal account.

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Question #536

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The term 'Window Dressing' in accounting means:

A. Making accounts transparent

B. Manipulating accounts to present a better picture

C. Using standard accounting software

D. Preparing accounts as per law

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Correct Answer: Option B

Explanation:
Window dressing refers to presenting financial statements in a way that gives a more favorable impression than reality.

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Question #537

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Which of the following is not an accounting concept?

A. Dual citizenship concept

B. Money measurement concept

C. Dual aspect concept

D. Conservatism concept

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Correct Answer: Option A

Explanation:
Dual citizenship is not an accounting concept. Others are fundamental accounting concepts.

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Question #538

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The 'Full Disclosure Principle' requires:

A. Disclosure of only assets

B. No disclosure

C. Disclosure of only profits

D. Disclosure of all material information in financial statements

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Correct Answer: Option D

Explanation:
Full disclosure means all significant information should be reported in financial statements and notes.

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Question #539

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In a bank reconciliation, a 'Dishonoured cheque' recorded in passbook but not in cash book will: (starting with cash book Dr.)

A. Be added

B. Double entry

C. No effect

D. Be deducted

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Correct Answer: Option D

Explanation:
Dishonoured cheque reduces bank balance as per passbook, so to reconcile from cash book to passbook, deduct.

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Question #540

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A 'Cheque issued but not presented' causes:

A. Overdraft in passbook

B. Both equal

C. Cash book balance lower than passbook

D. Passbook balance lower than cash book

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Correct Answer: Option C

Explanation:
Unpresented cheque means cash book already reduced, but passbook not reduced, so passbook balance higher.

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