Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

Question #821

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When a trial balance tallies, it provides:

A. Prima facie evidence of arithmetical accuracy

B. Conclusive proof of accuracy

C. Proof that no frauds occurred

D. Proof that all accounting standards are followed

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Correct Answer: Option A

Explanation:
A tallied Trial Balance only guarantees arithmetical accuracy; errors of principle or complete omission might still exist.

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

Question #822

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Which account acts as a 'contra' account to Gross Debtors in the Balance Sheet?

A. Discount Allowed Account

B. Sales Return Account

C. Provision for Doubtful Debts Account

D. Bad Debts Account

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Correct Answer: Option C

Explanation:
Provision for doubtful debts has a credit balance and is deducted from the debit balance of Debtors, acting as a contra-asset.

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Question #823

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In the ledger, what is the meaning of 'c/d'?

A. Current Date

B. Credit Debit

C. Carried Down

D. Cash Deposited

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Correct Answer: Option C

Explanation:
'Carried down' indicates the balancing figure at the end of a period, which will be brought down (b/d) at the start of the next period.

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Question #824

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Which of the following is typically maintained using the imprest system?

A. Sales Ledger

B. Purchase Day Book

C. Petty Cash Book

D. Main Cash Book

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Correct Answer: Option C

Explanation:
The Petty Cash Book uses the imprest system where a fixed float is maintained and actual expenses are reimbursed periodically.

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Question #825

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If a cheque received from a customer is endorsed to a creditor on the same day, it is recorded in:

A. Cash Book

B. Sales Book

C. Journal Proper

D. Pass Book only

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Correct Answer: Option C

Explanation:
Since no cash or bank balance of the business changes, endorsement of a cheque is recorded in the Journal Proper.

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

Question #826

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A Cash Book with Cash, Bank, and Discount columns is called a:

A. Petty Cash Book

B. Three-column Cash Book

C. Simple Cash Book

D. Two-column Cash Book

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Correct Answer: Option B

Explanation:
A three-column cash book tracks cash transactions, bank transactions, and discounts allowed/received simultaneously.

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Question #827

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If an asset is purchased and a post-dated cheque is given, the transaction is immediately recorded in:

A. Journal Proper

B. Sales Book

C. Cash Book

D. Purchase Book

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Correct Answer: Option A

Explanation:
Until the post-dated cheque becomes currently payable, the transaction is treated as credit and recorded in the Journal Proper.

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Question #828

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The Trading Account shows a gross profit of Rs 50,000. Indirect expenses are Rs 20,000 and indirect income is Rs 5,000. What is the Net Profit?

A. Rs 35,000

B. Rs 75,000

C. Rs 25,000

D. Rs 30,000

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Correct Answer: Option A

Explanation:
Net Profit = Gross Profit (50,000) + Indirect Income (5,000) - Indirect Expenses (20,000) = Rs 35,000.

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

Question #829

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Wages paid for the erection of a new boiler should be debited to:

A. Trading Account

B. Wages Account

C. Repairs Account

D. Boiler (Machinery) Account

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Correct Answer: Option D

Explanation:
Capitalizing erection costs is required under standard accounting principles, so it is debited to the specific asset account.

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Question #830

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An unearned income (income received in advance) appears in the Balance Sheet as a:

A. Contingent Liability

B. Non-Current Liability

C. Current Asset

D. Current Liability

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Correct Answer: Option D

Explanation:
Income received before the service is provided creates an obligation to deliver the service, making it a current liability.

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Question #831

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Under Schedule III of the Companies Act 2013, 'Trade Receivables' are classified under:

A. Non-Current Assets

B. Current Assets

C. Inventories

D. Cash and Cash Equivalents

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Correct Answer: Option B

Explanation:
Trade receivables (Debtors and Bills Receivable) expected to be realized within 12 months are classified as Current Assets.

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Question #832

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A manager is entitled to a 5% commission on net profit BEFORE charging his commission. If profit is Rs 1,05,000, his commission is:

A. Rs 5,250

B. Rs 4,750

C. Rs 5,000

D. Rs 10,500

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Correct Answer: Option A

Explanation:
Commission = Profit * (Rate/100) = 1,05,000 * 5% = Rs 5,250.

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Question #833

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When goods are distributed as free samples, the adjustment entry requires:

A. Debiting P&L A/c, Crediting Sales A/c

B. Debiting Purchases A/c, Crediting Advertisement A/c

C. Debiting Advertisement A/c, Crediting Trading A/c (or Purchases A/c)

D. Debiting Free Samples A/c, Crediting Cash A/c

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Correct Answer: Option C

Explanation:
Free samples are an advertising expense (debit), and they reduce the stock of purchased goods at cost price (credit Purchases/Trading).

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Question #834

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Interest on a bank loan accrued but not paid at year-end is shown in the final accounts by:

A. Debiting Trading A/c, Deducting from Bank Loan

B. Debiting P&L A/c, Adding to Bank Loan in Balance Sheet

C. Crediting P&L A/c, Showing as an Asset

D. Ignoring it until paid

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Correct Answer: Option B

Explanation:
Accrued interest is an expense for the year (Debit P&L) and an outstanding liability (Added to loan or shown separately in Balance Sheet).

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Question #835

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A provision for discount on debtors is calculated on:

A. Gross Debtors

B. Total Sales

C. Debtors less Bad Debts

D. Debtors less Bad Debts less Provision for Doubtful Debts

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Correct Answer: Option D

Explanation:
Discount is only offered to good debtors. Thus, it is calculated on the debtor balance remaining after deducting bad debts and provision for doubtful debts.

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

Question #836

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Which of the following describes 'Deferred Revenue Expenditure'?

A. Heavy initial advertising campaign for a new product

B. Payment of outstanding wages

C. Buying a building

D. Routine repairs to machinery

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Correct Answer: Option A

Explanation:
It is a revenue expense whose benefit is expected to extend beyond one accounting period, so it is amortized over a few years.

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Question #837

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In the absence of a partnership deed, what is the rule regarding salaries to partners?

A. Salary proportional to capital

B. Equal salary to all partners

C. No partner is entitled to a salary

D. Salary based on hours worked

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Correct Answer: Option C

Explanation:
Section 13(a) of the Indian Partnership Act, 1932 states that partners are not entitled to receive any remuneration for participating in the business.

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Question #838

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A and B are partners sharing profits 3:2. They admit C for 1/4th share. A and B decide to share future profits equally. What is the sacrificing ratio of A and B?

A. 1:1

B. 3:2

C. 9:1

D. 5:3

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Correct Answer: Option C

Explanation:
C gets 1/4. Remaining share = 3/4. New shares of A = 3/8, B = 3/8. Sacrifice = Old - New. A: 3/5 - 3/8 = 9/40. B: 2/5 - 3/8 = 1/40. Ratio is 9:1.

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Question #839

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When a new partner brings his share of goodwill in cash, the amount is credited to:

A. New Partner's Capital Account

B. Premium for Goodwill Account

C. Cash Account

D. Revaluation Account

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Correct Answer: Option B

Explanation:
The cash brought in for goodwill is initially credited to a temporary 'Premium for Goodwill A/c', which is then distributed to sacrificing partners.

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Question #840

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Hidden goodwill at the time of admission of a partner is calculated by comparing:

A. Assets and outside liabilities

B. Super profit and normal rate of return

C. Average profits of last 5 years

D. Total capital based on new partner's share and actual total capital of all partners

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Correct Answer: Option D

Explanation:
Hidden goodwill is the excess of the firm's inferred total capital (based on the new partner's contribution and share) over the actual combined capital balances.

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