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 48 of 94
Question #941
Under the Companies Act, 2013, a company must maintain its books of accounts on which basis?
A. Accrual basis
B. Tax basis
C. Hybrid basis
D. Cash basis
Discuss
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Correct Answer: Option A

Explanation:
Section 128 of the Companies Act, 2013, mandates that companies must maintain books of accounts on an accrual basis and according to the double-entry system.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #942
Which of the following is a nominal account?
A. Rent Account
B. Capital Account
C. Building Account
D. Ramesh Account
Discuss
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Correct Answer: Option A

Explanation:
Rent Account represents an expense, which is a nominal account. The rule is 'Debit all expenses and losses, credit all incomes and gains'.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #943
In the diminishing balance method, if the rate is 10% and the asset cost is ₹10,000, what is the depreciation for the second year?
A. ₹1,000
B. ₹900
C. ₹8,000
D. ₹9,000
Discuss
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Correct Answer: Option B

Explanation:
Year 1 Dep = 10% of 10,000 = 1,000. WDV = 9,000. Year 2 Dep = 10% of 9,000 = ₹900.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #944
The process of recording transactions in the journal is called:
A. Footing
B. Journalizing
C. Posting
D. Balancing
Discuss
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Correct Answer: Option B

Explanation:
Journalizing is the process of recording business transactions chronologically in the journal, which is the book of original entry.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #945
Which of the following is a contra account?
A. Bank Account in Cash Book
B. Accumulated Depreciation
C. All of the above
D. Provision for Doubtful Debts
Discuss
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Correct Answer: Option C

Explanation:
Provision for Doubtful Debts is a contra asset to Debtors, Bank/Cash is a contra account in the cash book, and Accumulated Depreciation is a contra asset to Fixed Assets.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #946
In the context of GST, IGST is levied on:
A. Intra-state supply
B. Export of goods
C. Import of services only
D. Inter-state supply
Discuss
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Correct Answer: Option D

Explanation:
Integrated GST (IGST) is levied on inter-state supply of goods and services, including imports, under the GST regime in India.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #947
The term 'Window Dressing' in accounting refers to:
A. Manipulation of financial statements to present a better picture
B. Auditing process
C. Decorating the office
D. Maintaining proper records
Discuss
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Correct Answer: Option A

Explanation:
Window dressing is the act of manipulating financial data to make the company's financial position appear more favorable than it actually is.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #948
In the single entry system, the statement of affairs is prepared to ascertain:
A. Cash balance
B. Tax liability
C. Capital at a given date
D. Profit or Loss
Discuss
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Correct Answer: Option C

Explanation:
A statement of affairs is prepared like a balance sheet to determine the capital of the business at the beginning or end of the period in a single entry system.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #949
Which of the following is NOT a function of financial management?
A. Estimating capital requirements
B. Determining capital structure
C. Recording daily transactions
D. Disposing of surplus funds
Discuss
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Correct Answer: Option C

Explanation:
Recording daily transactions is a function of financial accounting, not financial management. Financial management focuses on planning, organizing, and controlling funds.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #950
In cost accounting, marginal cost is equal to:
A. Total cost - Fixed cost
B. Prime cost + Variable overheads
C. Total cost - Profit
D. Fixed cost + Variable cost
Discuss
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Correct Answer: Option B

Explanation:
Marginal cost represents the total variable cost of production, which is the sum of prime cost (direct material, labor, expenses) and variable overheads.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #951
Which of the following is a test of audit?
A. Planning
B. Verification
C. Reporting
D. Vouching
Discuss
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Correct Answer: Option D

Explanation:
Vouching is the primary test of audit, involving the examination of documentary evidence to support the transactions recorded in the books of accounts.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #952
The debt-equity ratio is calculated as:
A. Total Assets / Shareholders' Equity
B. Current Liabilities / Shareholders' Equity
C. Total Debts / Shareholders' Equity
D. Long-term Debts / Shareholders' Equity
Discuss
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Correct Answer: Option D

Explanation:
The debt-equity ratio typically measures long-term solvency and is calculated as Long-term Debts divided by Shareholders' Equity.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #953
Which of the following is NOT a principle of cash-based accounting?
A. Expenses are recognized when cash is paid
B. Revenue is recognized when earned
C. No record of credit transactions
D. Revenue is recognized when cash is received
Discuss
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Correct Answer: Option B

Explanation:
Recognizing revenue when earned is a principle of accrual accounting. Cash-based accounting only recognizes revenue when cash is actually received.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #954
In the context of recent developments, Ind-AS 116 deals with:
A. Leases
B. Revenue from Contracts with Customers
C. Fair Value Measurement
D. Financial Instruments
Discuss
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Correct Answer: Option A

Explanation:
Ind-AS 116 is the Indian Accounting Standard that deals with the recognition, measurement, presentation, and disclosure of leases.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #955
Which of the following is an example of a real account?
A. Machinery Account
B. Creditor Account
C. Salary Account
D. Sales Account
Discuss
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Correct Answer: Option A

Explanation:
Machinery Account represents a tangible asset, which is a real account. The rule is 'Debit what comes in, credit what goes out'.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #956
If a bill is discounted with the bank, the account debited in the books of the drawer is:
A. Discounting Charges Account
B. Bills Receivable Account
C. Bank Account
D. Drawee Account
Discuss
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Correct Answer: Option C

Explanation:
When a bill is discounted, the bank gives cash (or credits the bank account) before the due date, so the Bank Account is debited.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #957
Which of the following is a feature of a limited liability partnership (LLP)?
A. Unlimited liability of partners
B. No perpetual succession
C. Separate legal entity
D. Governed by the Partnership Act, 1932
Discuss
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Correct Answer: Option C

Explanation:
An LLP is a separate legal entity distinct from its partners, and it enjoys perpetual succession, governed by the LLP Act, 2008.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #958
The term 'Amortization' refers to:
A. Obsolescence of machinery
B. Systematic write-off of intangible assets
C. Depreciation of tangible assets
D. Depletion of natural resources
Discuss
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Correct Answer: Option B

Explanation:
Amortization is the process of systematically writing off the cost of an intangible asset over its useful life.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #959
In a trial balance, if the total of the debit side is ₹50,000 and the credit side is ₹45,000, the difference is placed in:
A. Trading Account
B. Capital Account
C. Profit & Loss Account
D. Suspense Account
Discuss
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Correct Answer: Option D

Explanation:
When the trial balance does not tally, the difference is temporarily placed in a Suspense Account to allow the preparation of financial statements.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #960
Which of the following is NOT a component of the Indian Financial System?
A. Financial Auditors
B. Financial Institutions
C. Financial Instruments
D. Financial Markets
Discuss
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Correct Answer: Option A

Explanation:
The Indian Financial System comprises financial institutions, markets, instruments, and services. Auditors are professionals who verify financial data, not a structural component of the financial system itself.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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