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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Practice Questions

Page 44 of 94
Question #861
Which audit assesses whether management's policies and procedures are operating efficiently?
A. Cost Audit
B. Statutory Audit
C. Tax Audit
D. Management Audit
Discuss
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Correct Answer: Option D

Explanation:
Management audit focuses on the efficiency, effectiveness, and performance of management processes, beyond just financial accuracy.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #862
Cost Audit in India is mandatory for specific companies under which section of the Companies Act, 2013?
A. Section 44AB
B. Section 143
C. Section 139
D. Section 148
Discuss
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Correct Answer: Option D

Explanation:
Section 148 empowers the Central Government to mandate cost audits for companies engaged in specific production or manufacturing activities.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #863
Social Accounting relies on capturing a firm's impact on its environment. Which standard is widely used globally for such reporting?
A. Ind AS 115
B. GRI (Global Reporting Initiative) Standards
C. XBRL
D. IFRS 9
Discuss
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Correct Answer: Option B

Explanation:
GRI provides the most widely used comprehensive framework globally for sustainability and social impact reporting.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #864
In Social Accounting, treating pollution emitted by a factory as a negative entry is an example of pricing an:
A. External Cost (Negative Externality)
B. Internal Cost
C. Sunk Cost
D. Opportunity Cost
Discuss
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Correct Answer: Option A

Explanation:
Pollution is an external cost because the burden is borne by society, not directly reflected in the company's internal financial books.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #865
Under the concept of 'Triple Bottom Line' (TBL) reporting, a company focuses on:
A. Revenues, Expenses, and Taxes
B. Assets, Liabilities, and Equity
C. People, Planet, and Profit
D. Profits, Dividends, and Retained Earnings
Discuss
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Correct Answer: Option C

Explanation:
TBL is a framework advocating that companies commit to social (People) and environmental (Planet) concerns just as they do on financial (Profit) goals.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #866
Which of the following is an objective of conducting a Social Audit?
A. To check arithmetical accuracy of the cash book
B. To audit the personal wealth of directors
C. To compute corporate tax liability
D. To evaluate if a program is achieving its stated social objectives transparently
Discuss
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Correct Answer: Option D

Explanation:
Social audits assess the social impact and ethical behavior of an organization relative to its aims, ensuring accountability to stakeholders.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #867
A fundamental feature of the Cash Basis of Accounting is that:
A. Prepaid expenses are shown as assets
B. Income is recorded only when cash is received
C. Outstanding expenses are recorded as liabilities
D. Depreciation is recorded monthly
Discuss
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Correct Answer: Option B

Explanation:
The cash basis recognizes revenues and expenses strictly based on the actual flow of cash, ignoring accruals.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #868
Which entity is most likely to use the Cash Basis of accounting?
A. A commercial bank
B. An insurance company
C. A listed manufacturing company
D. A small medical practitioner
Discuss
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Correct Answer: Option D

Explanation:
Professionals (like doctors, lawyers) often use cash basis because of its simplicity, whereas companies must use accrual basis under the Companies Act.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #869
Converting Single Entry to Double Entry involves preparing a 'Total Creditors Account' to find out:
A. Closing Capital
B. Credit Sales
C. Cash Purchases
D. Credit Purchases
Discuss
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Correct Answer: Option D

Explanation:
Total Creditors Account reconstructs the relationship with suppliers; the balancing figure usually represents the missing credit purchases.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #870
Under the Single Entry System, if opening capital is Rs 1,00,000, closing capital is Rs 90,000, and drawings are Rs 30,000 (no fresh capital), the profit is:
A. Rs 10,000 Loss
B. Rs 20,000 Loss
C. Rs 20,000
D. Rs 40,000
Discuss
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Correct Answer: Option C

Explanation:
Profit = Closing Cap + Drawings - Opening Cap = 90,000 + 30,000 - 1,00,000 = Rs 20,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #871
A system of accounting that combines features of both cash and accrual bases is termed:
A. Mercantile System
B. Hybrid System
C. Government Accounting
D. Single Entry System
Discuss
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Correct Answer: Option B

Explanation:
In a hybrid system, revenues might be recorded on a cash basis while expenses are recorded on an accrual basis, often used by certain professionals.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #872
In government accounting under PFMS, what does the SNA model stand for?
A. State National Authority
B. Single Nodal Agency
C. Standard Nodal Account
D. System for National Audit
Discuss
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Correct Answer: Option B

Explanation:
The Single Nodal Agency (SNA) model ensures states operate a single account for each Centrally Sponsored Scheme to prevent idle float of funds.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #873
Which module of PFMS allows tracking of fund utilization by implementing agencies at lower tiers?
A. EAT (Expenditure, Advance and Transfer) Module
B. E-Kuber Module
C. DBT Module
D. GSTN Module
Discuss
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Correct Answer: Option A

Explanation:
The EAT module maps the entire hierarchy of implementing agencies, ensuring funds transferred are tracked until final expenditure.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #874
What is the primary benefit of Just-in-Time (JIT) funding under the PFMS framework?
A. Slows down project implementation
B. Eliminates state governments from the process
C. Reduces the borrowing cost of the Central Government by preventing unspent balances
D. Increases bank interest for agencies
Discuss
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Correct Answer: Option C

Explanation:
JIT ensures funds are released only when actually needed for expenditure, minimizing the government's borrowing costs on idle parked funds.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #875
PFMS is integrated with the RBI's Core Banking Solution known as:
A. SWIFT
B. UPI
C. NEFT
D. E-Kuber
Discuss
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Correct Answer: Option D

Explanation:
PFMS pushes payment instructions directly to E-Kuber, the RBI's core banking system, for swift settlement of government payments.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #876
Residential status under the Income Tax Act depends primarily on:
A. Citizenship of the individual
B. Location of assets owned
C. Physical presence (number of days) in India during the previous year
D. Place of birth
Discuss
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Correct Answer: Option C

Explanation:
An individual's residential status for tax purposes is determined by their period of stay in India during the relevant financial year, irrespective of citizenship.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #877
Under Section 80D of the Income Tax Act, a deduction is allowed for:
A. Donations to charities
B. Interest on education loan
C. Medical insurance premiums
D. Life insurance premiums
Discuss
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Correct Answer: Option C

Explanation:
Section 80D provides deductions for premiums paid toward health/medical insurance for self, family, and parents.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #878
For computing Capital Gains, the 'Cost Inflation Index' (CII) is used to:
A. Exempt the capital gain completely
B. Adjust the purchase cost of an asset for inflation over time
C. Calculate the applicable tax rate
D. Calculate depreciation
Discuss
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Correct Answer: Option B

Explanation:
Indexation uses the CII to inflate the original cost of a long-term asset, reducing the taxable capital gain by accounting for inflation.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #879
Which income is classified under 'Income from Other Sources'?
A. Dividend income and winning from lotteries
B. Capital gains on sale of shares
C. Salary received from an employer
D. Profit from a retail shop
Discuss
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Correct Answer: Option A

Explanation:
Incomes that do not fall into the first four specific heads (like dividends, lottery winnings, bank interest) are taxed as Income from Other Sources.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #880
Standard Deduction available to salaried employees under Section 16(ia) for FY 2023-24 is:
A. Rs 1,00,000
B. Rs 1,50,000
C. Rs 40,000
D. Rs 50,000
Discuss
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Correct Answer: Option D

Explanation:
A flat standard deduction of Rs 50,000 is allowed from the gross salary income.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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