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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Question #41
Which of the following decisions relates to determining the optimal capital structure?
A. Investment Decision
B. Financing Decision
C. Dividend Decision
D. Liquidity Decision
Discuss
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Correct Answer: Option B

Explanation:
The financing decision involves choosing the right mix of debt and equity (capital structure) to minimize the overall cost of capital.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #42
Capital Budgeting falls under which type of financial management decision?
A. Dividend Decision
B. Long-term Investment Decision
C. Financing Decision
D. Short-term Investment Decision
Discuss
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Correct Answer: Option B

Explanation:
Capital budgeting is the process of evaluating and selecting long-term investments that are consistent with the firm's goal of wealth maximization.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #43
Working Capital Management specifically deals with:
A. Dividend payouts
B. Issuing new equity shares
C. Current assets and current liabilities
D. Fixed assets and long-term debt
Discuss
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Correct Answer: Option C

Explanation:
It involves managing the relationship between a firm's short-term assets and its short-term liabilities to ensure adequate liquidity.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #44
The cost of capital serves as the:
A. Guaranteed return to equity shareholders
B. Interest rate charged by commercial banks
C. Maximum acceptable rate of return on investments
D. Minimum required rate of return for an investment
Discuss
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Correct Answer: Option D

Explanation:
Cost of capital is the hurdle rate or minimum return a company must earn on its investments to maintain its market value.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #45
A higher dividend payout ratio indicates that a firm:
A. Distributes a larger portion of earnings to shareholders
B. Has few profitable investment opportunities
C. Is facing a liquidity crisis
D. Retains most of its earnings for expansion
Discuss
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Correct Answer: Option A

Explanation:
The dividend payout ratio measures the percentage of net income distributed as dividends; a higher ratio means more cash returned to shareholders.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #46
In the absence of a Partnership Deed, what is the rate of interest on capital provided to partners?
A. 9% p.a.
B. No interest is allowed
C. 12% p.a.
D. 6% p.a.
Discuss
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Correct Answer: Option B

Explanation:
According to the Indian Partnership Act, 1932, if there is no deed, no interest on capital is allowed to any partner.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #47
If a partner advances a loan to the firm and the partnership deed is silent, the interest on the loan is payable at:
A. 5% p.a.
B. 6% p.a.
C. 12% p.a.
D. Bank rate
Discuss
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Correct Answer: Option B

Explanation:
The Indian Partnership Act stipulates that partners are entitled to 6% p.a. interest on any advances or loans given to the firm beyond their capital.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #48
Which account is opened for adjusting asset and liability values at the time of admission of a new partner?
A. Revaluation Account
B. Realisation Account
C. Goodwill Account
D. Suspense Account
Discuss
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Correct Answer: Option A

Explanation:
A Revaluation Account (or Profit & Loss Adjustment A/c) is opened to record gains and losses arising from the revaluation of assets and reassessment of liabilities.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #49
Under the Super Profit method, Goodwill is calculated as:
A. Super Profit / Normal Rate of Return
B. Super Profit x Number of years' purchase
C. Capital Employed x Normal Rate of Return
D. Average Profit x Number of years' purchase
Discuss
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Correct Answer: Option B

Explanation:
Super profit is the excess of actual average profit over normal profit. Goodwill is Super Profit multiplied by the agreed number of years' purchase.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #50
At the time of dissolution of a partnership firm, fictitious assets (like deferred revenue expenditure) are transferred to:
A. Bank Account
B. Cash Account
C. Partners' Capital Accounts
D. Realisation Account
Discuss
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Correct Answer: Option C

Explanation:
Fictitious assets are accumulated losses/expenses and are written off by transferring them to the debit side of Partners' Capital Accounts.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #51
The process of transferring entries from the Journal to the respective accounts is called:
A. Balancing
B. Summarising
C. Journalising
D. Posting
Discuss
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Correct Answer: Option D

Explanation:
Posting is the technical term for transferring debit and credit amounts from the journal to the appropriate ledger accounts.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #52
An account in the ledger has a debit total of Rs 10,000 and a credit total of Rs 8,000. It is said to have a:
A. Credit balance of Rs 18,000
B. Debit balance of Rs 2,000
C. Credit balance of Rs 2,000
D. Debit balance of Rs 18,000
Discuss
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Correct Answer: Option B

Explanation:
The balance is the difference between the sides. Since the debit side is heavier by Rs 2,000, it is a debit balance.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #53
Which of the following books is known as the 'Principal Book' of accounts?
A. Trial Balance
B. Ledger
C. Cash Book
D. Journal
Discuss
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Correct Answer: Option B

Explanation:
The ledger is the principal or chief book of accounts because all financial data is ultimately classified and summarized there.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #54
The column 'J.F.' in a ledger account stands for:
A. Journal Folio
B. Joint Finance
C. Journal Format
D. Journal Factor
Discuss
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Correct Answer: Option A

Explanation:
Journal Folio (J.F.) indicates the page number of the journal from where the specific entry was posted.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #55
Nominal accounts are closed at the end of the accounting year by transferring them to:
A. Trading and Profit & Loss Account
B. Balance Sheet
C. Capital Account
D. Suspense Account
Discuss
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Correct Answer: Option A

Explanation:
Nominal accounts represent expenses and incomes, which are summarized into the Trading and P&L accounts to determine net profit/loss.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #56
Personal and Real accounts are balanced and their closing balances are carried forward to:
A. Next accounting period via Balance Sheet
B. Manufacturing Account
C. Trading Account
D. Profit & Loss Account
Discuss
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Correct Answer: Option A

Explanation:
Real and Personal accounts reflect assets, liabilities, and equity; they are not closed but carried forward to the next period as opening balances.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #57
A Cash Book serves the purpose of:
A. A Trial Balance
B. A Ledger only
C. A Journal only
D. Both Journal and Ledger
Discuss
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Correct Answer: Option D

Explanation:
The cash book acts as a journal because transactions are recorded chronologically, and as a ledger because it contains the cash account balance.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #58
An entry recorded on both sides of a cash book is known as a:
A. Reversing entry
B. Compound entry
C. Double entry
D. Contra entry
Discuss
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Correct Answer: Option D

Explanation:
A contra entry affects both the cash and bank columns (e.g., cash deposited into bank), requiring no further ledger posting.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #59
Under the imprest system of petty cash, the petty cashier is reimbursed with:
A. A fixed arbitrary amount every week
B. Half of the original float
C. Ten percent of total cash sales
D. The exact amount spent during the period
Discuss
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Correct Answer: Option D

Explanation:
In the imprest system, the chief cashier reimburses the petty cashier the exact amount disbursed so the float returns to its original fixed amount.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #60
Which of the following is NOT recorded in a simple (single-column) cash book?
A. Cash sales
B. Cheque received and deposited same day
C. Cash purchases
D. Payment to creditors in cash
Discuss
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Correct Answer: Option B

Explanation:
A simple cash book only has a cash column. Bank transactions (like cheques deposited) require a two-column or three-column cash book.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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