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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Total Questions

Practice Questions

Page 29 of 94
Question #561
Cash Flow Statement as per AS 3 classifies activities into:
A. Direct and Indirect
B. Current and Non-current
C. Revenue and Capital
D. Operating, Investing, and Financing
Discuss
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Correct Answer: Option D

Explanation:
AS 3 requires classification into operating, investing, and financing activities.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #562
In the indirect method of cash flow, net profit is adjusted for:
A. Only dividends
B. Non-cash items and changes in working capital
C. Only taxes
D. Only depreciation
Discuss
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Correct Answer: Option B

Explanation:
Indirect method starts with net profit and adjusts for non-cash expenses, non-operating items, and working capital changes.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #563
The primary objective of 'Tax Audit' is:
A. To audit GST returns
B. To assess corporate governance
C. To check compliance with income tax provisions
D. To certify financial statements for banks
Discuss
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Correct Answer: Option C

Explanation:
Tax audit under Section 44AB ensures compliance with income tax law and correct reporting of income.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #564
Under GST, the 'Composition Scheme' is available to small taxpayers with aggregate turnover up to:
A. ₹20 lakh
B. ₹10 crore
C. ₹50 lakh
D. ₹1.5 crore
Discuss
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Correct Answer: Option D

Explanation:
For goods, composition scheme limit is ₹1.5 crore (₹75 lakh for some states). For services, separate limit. The general limit for goods is ₹1.5 crore.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #565
Which of the following is NOT a method of costing?
A. Forensic costing
B. Process costing
C. Marginal costing
D. Job costing
Discuss
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Correct Answer: Option A

Explanation:
Forensic costing is not a standard costing method. Job, process, batch, contract, marginal are methods/techniques.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #566
A 'Cost Centre' is:
A. A unit of product
B. A location, person, or item of equipment for which costs are accumulated
C. A sales territory
D. A method of pricing
Discuss
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Correct Answer: Option B

Explanation:
Cost centre is a segment of the organization where costs are collected, e.g., department, machine.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #567
Overhead absorption rate is calculated as:
A. None
B. Budgeted overheads / Actual base
C. Actual overheads / Actual base
D. Budgeted overheads / Budgeted base
Discuss
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Correct Answer: Option D

Explanation:
Overhead absorption rate is usually predetermined based on budgeted figures to absorb overheads into products.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #568
The difference between actual overhead and absorbed overhead is called:
A. Budgeted cost
B. Standard cost
C. Under/over absorption
D. Waste
Discuss
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Correct Answer: Option C

Explanation:
If absorbed overheads are less than actual, under-absorption; if more, over-absorption.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #569
A 'Flexible Budget' is also known as:
A. Sliding scale budget
B. Fixed budget
C. Cash budget
D. Master budget
Discuss
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Correct Answer: Option A

Explanation:
Flexible budget changes with activity levels, hence also called variable or sliding scale budget.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #570
The 'Cash Budget' primarily helps in:
A. Determining cash requirements
B. Sales planning
C. Capital expenditure decisions
D. Profit planning
Discuss
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Correct Answer: Option A

Explanation:
Cash budget forecasts cash receipts and payments to ascertain cash surplus or deficit.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #571
Zero Base Budgeting requires:
A. Only incremental changes
B. No justification
C. Justification of every budget item from scratch
D. Using last year's budget as base
Discuss
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Correct Answer: Option C

Explanation:
ZBB starts from a 'zero base', and every function and expenditure must be justified.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #572
The 'Cost of Goods Sold' in a manufacturing company includes:
A. Prime cost
B. Total manufacturing cost adjusted for WIP
C. Only direct material
D. Selling expenses
Discuss
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Correct Answer: Option B

Explanation:
COGS for manufacturer = Opening finished goods + Cost of production - Closing finished goods. Cost of production = total manufacturing cost + opening WIP - closing WIP.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #573
A 'Standard Cost' is:
A. A predetermined cost based on technical estimates
B. Historical cost
C. Average cost
D. Actual cost incurred
Discuss
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Correct Answer: Option A

Explanation:
Standard cost is a scientifically predetermined cost used as a benchmark for performance evaluation.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #574
Which of the following is a feature of 'Process Costing'?
A. Used for construction contracts
B. Used for unique products
C. Costs are accumulated by processes
D. Each job is separate
Discuss
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Correct Answer: Option C

Explanation:
Process costing applies to continuous production where output is homogeneous, costs tracked by process.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #575
In 'Job Costing', costs are accumulated for:
A. Each batch or specific order
B. Entire factory
C. Each department
D. Fixed assets
Discuss
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Correct Answer: Option A

Explanation:
Job costing collects costs for each job or order, useful in custom manufacturing.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #576
The 'Economic Order Quantity' (EOQ) model is used to determine:
A. Optimum production level
B. Optimum order size that minimizes total inventory costs
C. Break-even point
D. Selling price
Discuss
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Correct Answer: Option B

Explanation:
EOQ balances ordering costs and carrying costs to minimize total inventory cost.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #577
A firm's 'Re-order Level' is calculated as:
A. Minimum consumption * minimum lead time
B. Maximum consumption * minimum lead time
C. Average consumption * average lead time
D. Maximum consumption * maximum lead time
Discuss
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Correct Answer: Option D

Explanation:
Re-order level = Maximum consumption * Maximum lead time, ensuring stock doesn't run out.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #578
Which of the following is a non-integrated accounting system?
A. Cost accounts integrated with financial accounts
B. Computerized accounting
C. Cost and financial accounts maintained separately
D. Single entry system
Discuss
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Correct Answer: Option C

Explanation:
Non-integrated system keeps cost and financial accounts independently, with reconciliation.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #579
The 'Reconciliation of Cost and Financial Accounts' is necessary because:
A. Tax requirement
B. Both use same principles
C. Audit requirement
D. Different bases of valuation and items included lead to different profit figures
Discuss
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Correct Answer: Option D

Explanation:
Differences arise due to items like notional rent, depreciation method, etc., so reconciliation explains the divergence.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #580
Under the 'Public Financial Management System' (PFMS), the 'Just-in-Time' fund release mechanism ensures:
A. Delayed payments
B. Release of funds only when needed, reducing idle funds
C. Advance payment to all
D. Manual processing
Discuss
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Correct Answer: Option B

Explanation:
Just-in-Time in PFMS releases funds just in time for expenditure, avoiding float and idle balances.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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