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 52 of 94
Question #1021
Which of the following is a feature of the double entry system?
A. It records only one aspect of a transaction
B. It does not allow the preparation of a trial balance
C. It is only suitable for small businesses
D. It is a scientific and complete system
Discuss
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Correct Answer: Option D

Explanation:
The double entry system records both aspects of every transaction, making it a scientific, complete, and universally accepted system.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1022
In the context of recent developments, what is the full form of 'MCA'?
A. Monetary Control Authority
B. Management of Corporate Assets
C. Ministry of Corporate Affairs
D. Market Control Agency
Discuss
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Correct Answer: Option C

Explanation:
MCA stands for the Ministry of Corporate Affairs, which administers the Companies Act and regulates the corporate sector in India.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1023
Which of the following statements best describes the 'Money Measurement Concept'?
A. All transactions and events are recorded in terms of money.
B. All assets are recorded at market value.
C. Only profitable transactions are recorded.
D. Only cash transactions are recorded.
Discuss
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Correct Answer: Option A

Explanation:
The money measurement concept states that only those transactions which can be expressed in monetary terms are recorded in the books of accounts.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1024
If a business purchases goods worth ₹60,000 paying ₹20,000 cash and the balance on credit, the accounting equation will show:
A. Increase in assets ₹60,000, increase in liabilities ₹40,000, decrease in capital ₹20,000
B. Increase in assets ₹60,000, increase in liabilities ₹40,000, decrease in capital ₹0
C. Increase in assets ₹60,000, increase in liabilities ₹60,000
D. Increase in assets ₹40,000, increase in liabilities ₹40,000
Discuss
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Correct Answer: Option B

Explanation:
Assets increase by ₹60,000 (stock), cash decreases by ₹20,000, net assets increase ₹40,000; liabilities increase by ₹40,000 (creditors). Capital is unchanged. Equation: Assets = Liabilities + Capital, here +40,000 = +40,000 + 0.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1025
A journal entry with more than two accounts is known as:
A. Compound journal entry
B. Simple journal entry
C. Complex entry
D. Opening entry
Discuss
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Correct Answer: Option A

Explanation:
A compound journal entry involves three or more accounts (multiple debits or credits).
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1026
Which of the following documents serves as a source voucher for a credit purchase?
A. Invoice received from supplier
B. Pay-in slip
C. Cash memo
D. Debit note issued by us
Discuss
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Correct Answer: Option A

Explanation:
The supplier's invoice is the evidence of a credit purchase, acting as a source voucher.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1027
While preparing a bank reconciliation statement from the passbook overdraft balance, a cheque deposited but not yet collected by the bank should be:
A. Added
B. No effect
C. Depends on amount
D. Deducted
Discuss
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Correct Answer: Option D

Explanation:
Starting with overdraft as per passbook, a deposit in transit increases the overdraft in passbook (makes it less negative). To reconcile to cash book overdraft, we deduct it because the cash book already recorded it and shows a lower overdraft. So deduct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1028
Which financial statement shows the net profit or loss for an accounting period?
A. Trial Balance
B. Cash Flow Statement
C. Balance Sheet
D. Statement of Profit & Loss
Discuss
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Correct Answer: Option D

Explanation:
The Statement of Profit & Loss (Profit & Loss Account) calculates the net result of operations.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1029
The primary goal of financial management is:
A. Maximising shareholder wealth
B. Maximising revenue
C. Maximising earnings per share (EPS)
D. Minimising risk
Discuss
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Correct Answer: Option A

Explanation:
The prime objective is wealth maximisation, reflected in market value of shares.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1030
A and B are partners sharing profits 3:2. C is admitted for 1/5th share, which he acquires equally from A and B. The new profit-sharing ratio is:
A. 9:6:5
B. 3:2:1
C. 4:3:2
D. 5:3:2
Discuss
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Correct Answer: Option D

Explanation:
A's new share = 3/5 - 1/10 = 5/10, B's new = 2/5 - 1/10 = 3/10, C's = 2/10. Ratio 5:3:2.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1031
Which of the following is an error of principle?
A. Wages paid for installation of machinery debited to Wages Account
B. Purchase of goods recorded in purchase book but not posted to supplier's account
C. Sales of old furniture credited to Sales Account
D. Credit sale to Ram posted to Shyam's account
Discuss
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Correct Answer: Option A

Explanation:
Wages for installation of machinery should be capitalised (machinery). Debiting Wages Account treats it as revenue expenditure, violating principles.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1032
The main purpose of preparing a 'Ledger' is:
A. To detect errors
B. To ascertain profit or loss
C. To record transactions chronologically
D. To classify and summarise transactions account-wise
Discuss
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Correct Answer: Option D

Explanation:
Ledger is the principal book where all transactions are classified into various accounts.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1033
In a two-column cash book, the bank column showed a credit balance of ₹5,000. This means:
A. Fixed deposit ₹5,000
B. Cash at bank ₹5,000
C. Bank overdraft ₹5,000
D. Petty cash ₹5,000
Discuss
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Correct Answer: Option C

Explanation:
Credit balance in bank column indicates liability towards bank, i.e., overdraft.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1034
An auditor's primary responsibility is to:
A. Prepare financial statements
B. Detect all frauds
C. Express an opinion on the financial statements
D. Compute tax liability
Discuss
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Correct Answer: Option C

Explanation:
Auditor examines the financial statements and provides an opinion whether they give a true and fair view.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1035
Which accounting principle requires that the same accounting methods should be used from year to year?
A. Accrual
B. Going concern
C. Materiality
D. Consistency
Discuss
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Correct Answer: Option D

Explanation:
Consistency ensures comparability by applying same policies consistently.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1036
A trial balance shows equal totals but still contains an error of ₹2,000 where purchase of stationery was debited to furniture account. This is:
A. Compensating error
B. Error of principle
C. Error of omission
D. Error of commission
Discuss
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Correct Answer: Option B

Explanation:
Stationery is revenue expenditure, furniture is asset. Treating revenue as capital is error of principle.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1037
Which of the following is a direct income?
A. Discount received
B. Interest on investment
C. Commission received
D. Sale of scrap
Discuss
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Correct Answer: Option D

Explanation:
Sale of scrap is directly related to production, thus a direct income credited to Trading Account. Discount, commission, interest are indirect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1038
In the Balance Sheet, 'Loans and Advances' expected to be realised within 12 months are classified as:
A. Non-current assets
B. Current assets
C. Fictitious assets
D. Intangible assets
Discuss
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Correct Answer: Option B

Explanation:
As per Schedule III, assets realisable within 12 months are current assets.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1039
The 'Cash Basis' of accounting recognizes:
A. Only credit transactions
B. Revenue when earned and expenses when incurred
C. Only non-cash items
D. Revenue when cash is received and expenses when paid
Discuss
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Correct Answer: Option D

Explanation:
Cash basis records only cash inflows and outflows.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1040
Social Accounting primarily measures:
A. Dividends to shareholders
B. Tax paid to government
C. Only financial performance
D. Impact of an entity on society and environment
Discuss
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Correct Answer: Option D

Explanation:
It quantifies social costs and benefits generated by an enterprise.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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