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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Page 45 of 94
Question #881
The threshold limit for paying Advance Tax is when the estimated tax liability for the year is:
A. Rs 10,000 or more
B. Rs 5,000 or more
C. Rs 20,000 or more
D. Rs 50,000 or more
Discuss
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Correct Answer: Option A

Explanation:
If the estimated tax liability (after TDS) exceeds Rs 10,000, the taxpayer is obligated to pay advance tax in installments.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #882
A tax levied on a person based on their net wealth was the Wealth Tax. In India, Wealth Tax was abolished in:
A. 2017
B. 1991
C. 2015
D. 2005
Discuss
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Correct Answer: Option C

Explanation:
Wealth tax was abolished in the Union Budget of 2015-16, replaced by an additional surcharge on the super-rich.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #883
Under GST, the Reverse Charge Mechanism (RCM) means:
A. The tax rate is negative
B. Exports are tax-free
C. The government pays tax to the supplier
D. Liability to pay tax shifts from the supplier to the recipient of goods/services
Discuss
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Correct Answer: Option D

Explanation:
Normally, the supplier collects and pays GST. Under RCM, the buyer/recipient is directly liable to pay the tax to the government.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #884
GSTR-1 is a return filed for:
A. TDS deduction
B. Details of inward supplies (purchases)
C. Details of outward supplies (sales)
D. Annual consolidated tax
Discuss
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Correct Answer: Option C

Explanation:
GSTR-1 is the monthly/quarterly return where regular taxpayers declare their outward supplies (sales) and tax liability.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #885
The GST Composition Scheme is designed primarily to benefit:
A. Large multinational corporations
B. E-commerce operators
C. Exporters
D. Small taxpayers by reducing compliance burden
Discuss
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Correct Answer: Option D

Explanation:
It allows small businesses (up to a certain turnover) to pay a fixed percentage of turnover as tax and file simpler, less frequent returns.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #886
A business buying machinery pays 18% GST. Can it claim Input Tax Credit (ITC) on this GST?
A. No, ITC is only for raw materials
B. No, capital goods are exempted from ITC
C. Yes, provided the machinery is used in the course of business
D. Yes, but only 50%
Discuss
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Correct Answer: Option C

Explanation:
ITC can be claimed on capital goods (like machinery) used for business purposes, subject to certain conditions in the GST Act.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #887
What is the maximum rate of CGST prescribed under the CGST Act?
A. 28%
B. 18%
C. 20%
D. 14%
Discuss
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Correct Answer: Option C

Explanation:
The maximum rate of CGST is capped at 20% by the Act, making the combined maximum GST (CGST + SGST) 40%.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #888
Which document is issued by an unregistered supplier under GST when they sell exempted goods?
A. Debit Note
B. Bill of Supply
C. Tax Invoice
D. Receipt Voucher
Discuss
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Correct Answer: Option B

Explanation:
A Bill of Supply is issued instead of a Tax Invoice when dealing in exempted goods or when the supplier is under the Composition Scheme.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #889
Cost Accounting defines 'Cost Centre' as:
A. The total profit of the organization
B. A person, location, or item of equipment for which costs may be ascertained for control
C. A unit of product ready for sale
D. The bank account where funds are kept
Discuss
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Correct Answer: Option B

Explanation:
A cost centre is a logical segment (like a department or machine) used to accumulate and trace costs for management purposes.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #890
Which formula correctly represents 'Cost of Production'?
A. Factory Cost + Administrative Overheads
B. Cost of Production + Selling Overheads
C. Prime Cost + Factory Overheads
D. Prime Cost + Selling Overheads
Discuss
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Correct Answer: Option A

Explanation:
In a cost sheet, Factory Cost added to Office and Administrative Overheads yields the Cost of Production.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #891
Under Activity Based Costing (ABC), the number of purchase orders processed is an example of a:
A. Direct Cost
B. Cost Driver
C. Cost Object
D. Cost Pool
Discuss
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Correct Answer: Option B

Explanation:
A cost driver is the factor that creates or influences a cost. The number of orders 'drives' the purchasing department's costs.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #892
If a factory uses standard costing, the Material Price Variance is calculated as:
A. (Standard Quantity - Actual Quantity) * Standard Price
B. Standard Cost - Actual Cost
C. (Standard Price - Actual Price) * Standard Quantity
D. (Standard Price - Actual Price) * Actual Quantity
Discuss
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Correct Answer: Option D

Explanation:
Material Price Variance isolates the price effect by multiplying the difference in price (Standard - Actual) by the Actual Quantity purchased.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #893
Economic Order Quantity (EOQ) is calculated to minimize:
A. Total of ordering cost and inventory carrying cost
B. Material price variance
C. Selling costs
D. Factory rent
Discuss
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Correct Answer: Option A

Explanation:
EOQ determines the optimal order size that perfectly balances and minimizes the costs of placing orders and holding inventory.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #894
A 'Flexible Budget' is most useful because it:
A. Only targets cash flows
B. Assumes all costs are fixed
C. Can be changed by managers without approval
D. Shows expected costs at various levels of actual production
Discuss
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Correct Answer: Option D

Explanation:
Unlike a static budget, a flexible budget adjusts based on the actual activity level, providing a realistic benchmark for variance analysis.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #895
In Cost-Volume-Profit (CVP) analysis, 'Angle of Incidence' represents:
A. The percentage of variable cost to sales
B. The point of zero profit
C. The angle of the fixed cost line
D. The angle between total sales line and total cost line above the BEP
Discuss
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Correct Answer: Option D

Explanation:
A wider angle of incidence on a break-even chart indicates a higher rate of profit generation once the break-even point is crossed.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #896
If fixed costs are Rs 1,00,000, selling price is Rs 20, and variable cost is Rs 10 per unit, the Break-Even Sales in Rupees is:
A. Rs 10,000
B. Rs 50,000
C. Rs 2,00,000
D. Rs 1,00,000
Discuss
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Correct Answer: Option C

Explanation:
Contribution per unit = 20 - 10 = Rs 10. BEP (Units) = 1,00,000 / 10 = 10,000 units. BEP (Sales) = 10,000 * 20 = Rs 2,00,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #897
A costing technique where only variable costs are charged to products, and fixed costs are written off to the P&L account in the period incurred, is:
A. Job Costing
B. Absorption Costing
C. Standard Costing
D. Marginal Costing
Discuss
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Correct Answer: Option D

Explanation:
Marginal costing strictly separates fixed and variable costs, treating fixed costs as period costs rather than product costs.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #898
Which of the following is considered a 'Recent Development' in environmental accounting?
A. Carbon Credit Accounting
B. Cash Book Management
C. Double Entry System
D. Trial Balance Preparation
Discuss
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Correct Answer: Option A

Explanation:
Accounting for carbon credits (emissions trading) is a modern concept dealing with intangible assets related to environmental compliance.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #899
The use of artificial intelligence (AI) in accounting is currently transforming:
A. Automated invoice processing and anomaly detection
B. The legal definition of a company
C. The abolition of all taxes
D. The basic accounting equation
Discuss
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Correct Answer: Option A

Explanation:
AI automates routine tasks like data entry and enhances fraud detection by recognizing patterns (anomalies) faster than human auditors.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #900
IFRS stands for:
A. Internal Fraud Recording System
B. International Financial Reporting Standards
C. Indian Financial Reporting Standards
D. Integrated Financial Record System
Discuss
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Correct Answer: Option B

Explanation:
IFRS are globally recognized accounting standards issued by the IASB to bring consistency and comparability to financial statements worldwide.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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