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 46 of 94
Question #901
When a firm adopts 'Lean Accounting', it primarily tries to:
A. Reduce the number of accountants
B. Eliminate waste and align accounting processes with lean manufacturing principles
C. Under-report profits to save tax
D. Stop issuing balance sheets
Discuss
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Correct Answer: Option B

Explanation:
Lean accounting supports lean manufacturing by eliminating complex, non-value-adding accounting transactions and focusing on value stream costing.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #902
Which of the following is NOT a fundamental accounting assumption as per AS-1?
A. Going Concern
B. Prudence
C. Accrual
D. Consistency
Discuss
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Correct Answer: Option B

Explanation:
Prudence is an accounting convention, not a fundamental assumption under AS-1. The three fundamental assumptions are Going Concern, Consistency, and Accrual.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #903
The accounting equation is based on which concept?
A. Money Measurement Concept
B. Business Entity Concept
C. Dual Aspect Concept
D. Matching Concept
Discuss
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Correct Answer: Option C

Explanation:
The dual aspect concept states that every transaction has two aspects, which forms the basis of the accounting equation: Assets = Liabilities + Capital.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #904
If total assets are ₹5,00,000 and outside liabilities are ₹2,00,000, what is the capital?
A. ₹2,00,000
B. ₹7,00,000
C. ₹5,00,000
D. ₹3,00,000
Discuss
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Correct Answer: Option D

Explanation:
Capital = Assets - Liabilities. Therefore, ₹5,00,000 - ₹2,00,000 = ₹3,00,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #905
Which voucher is prepared when cash is paid for stationery?
A. Payment Voucher
B. Receipt Voucher
C. Contra Voucher
D. Journal Voucher
Discuss
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Correct Answer: Option A

Explanation:
A payment voucher is prepared for all cash payments, including payments for expenses like stationery.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #906
In a bank reconciliation statement, an overdraft as per the cash book will be increased by:
A. Cheques deposited but not credited
B. Direct deposit by customer
C. Cheques issued but not presented for payment
D. Interest allowed by bank
Discuss
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Correct Answer: Option C

Explanation:
Cheques issued but not presented reduce the bank balance, so they are added to the overdraft balance as per the cash book to reconcile with the pass book.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #907
Under the straight-line method of depreciation, the amount of depreciation is:
A. Variable every year
B. Constant every year
C. Decreases every year
D. Increases every year
Discuss
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Correct Answer: Option B

Explanation:
Under the straight-line method, depreciation is calculated on the original cost of the asset, making the depreciation amount constant every year.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #908
In partnership accounts, interest on drawings is charged when:
A. It is mandatory as per Partnership Act 1932
B. The partners have equal capital
C. The firm makes a profit
D. It is agreed upon in the partnership deed
Discuss
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Correct Answer: Option D

Explanation:
Interest on drawings is only charged if it is explicitly mentioned and agreed upon in the partnership deed.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #909
Which account is debited when goods are distributed as free samples?
A. Advertising Account
B. Sales Account
C. Purchases Account
D. Drawings Account
Discuss
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Correct Answer: Option A

Explanation:
Goods distributed as free samples are treated as a promotional expense, so the Advertising or Sales Promotion account is debited.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #910
The balance of the Cash Book represents:
A. Cash in hand only
B. Cash in hand and cash at bank
C. Cash in hand, cash at bank, and petty cash
D. Cash at bank only
Discuss
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Correct Answer: Option B

Explanation:
A standard triple-column cash book records both cash in hand and cash at bank transactions, so its balance represents both.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #911
Which of the following errors does NOT affect the trial balance?
A. Omitting to post one side of a transaction
B. Recording a transaction twice
C. Wrongly totaling an account
D. Posting ₹500 to the wrong account
Discuss
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Correct Answer: Option D

Explanation:
Posting to the wrong account (error of principle or wrong personal account) keeps the debit and credit totals equal, so the trial balance still agrees.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #912
A trial balance is prepared to check:
A. The cash flow of the business
B. The profitability of the business
C. The financial position of the business
D. The arithmetical accuracy of the ledger
Discuss
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Correct Answer: Option D

Explanation:
The primary purpose of a trial balance is to verify the arithmetical accuracy of the ledger by ensuring total debits equal total credits.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #913
In a single entry system, which accounts are usually maintained?
A. Only real and nominal accounts
B. Only personal accounts and cash book
C. All personal and real accounts
D. All three types of accounts
Discuss
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Correct Answer: Option B

Explanation:
The single entry system is incomplete; typically, only personal accounts (debtors/creditors) and the cash book are fully maintained.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #914
Social accounting primarily focuses on:
A. Calculating tax liabilities
B. Auditing internal controls
C. Maximizing shareholder wealth
D. Reporting the social and environmental impact of a business
Discuss
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Correct Answer: Option D

Explanation:
Social accounting measures and reports the social, environmental, and economic effects of business activities on the community.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #915
Which of the following is an indirect tax?
A. Corporate Tax
B. Income Tax
C. Goods and Services Tax (GST)
D. Wealth Tax
Discuss
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Correct Answer: Option C

Explanation:
GST is an indirect tax because the liability to pay is on the seller, but the burden is passed on to the consumer.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #916
Budgetary control is a system of controlling costs that includes:
A. Fixing of selling prices
B. Continuous comparison of actuals with budgets
C. Hiring of staff
D. Preparation of budgets only
Discuss
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Correct Answer: Option B

Explanation:
Budgetary control involves preparing budgets and continuously comparing actual performance against the budget to take corrective action.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #917
In cost accounting, the prime cost is equal to:
A. Factory cost + Admin overheads
B. Total cost - Profit
C. Direct materials + Direct labor + Direct expenses
D. Cost of production + Selling overheads
Discuss
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Correct Answer: Option C

Explanation:
Prime cost is the aggregate of all direct costs, specifically direct materials, direct labor, and direct expenses.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #918
Financial audit is conducted mainly to:
A. Express an opinion on the true and fair view of financial statements
B. Evaluate management performance
C. Calculate tax liability
D. Detect frauds and errors
Discuss
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Correct Answer: Option A

Explanation:
The primary objective of a financial audit is to express an independent opinion on whether the financial statements present a true and fair view.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #919
Which ratio measures the short-term solvency of a firm?
A. Debt-Equity Ratio
B. Current Ratio
C. Proprietary Ratio
D. Interest Coverage Ratio
Discuss
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Correct Answer: Option B

Explanation:
The Current Ratio compares current assets to current liabilities, indicating the firm's ability to meet its short-term obligations.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #920
A contra entry is passed in the:
A. Trial Balance
B. Journal Proper
C. Ledger
D. Cash Book
Discuss
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Correct Answer: Option D

Explanation:
Contra entries involve transactions between cash and bank columns and are recorded exclusively in the triple-column cash book.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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