Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

Question #1121

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The 'Schedule III' format of Balance Sheet applies to:

A. Companies

B. Partnership firms

C. Sole proprietorship

D. All entities

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Correct Answer: Option A

Explanation:
Schedule III of Companies Act 2013 prescribes the format for companies.

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Question #1122

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In the Balance Sheet, 'Share Application Money Pending Allotment' is shown as:

A. Current liability

B. Non-current liability

C. Reserves and surplus

D. Share capital

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Correct Answer: Option A

Explanation:
It is a liability until shares are allotted, and if allotment is due within 12 months, it's current.

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Question #1123

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The 'Financial Year' for a company under Companies Act is:

A. Any 12-month period

B. 1st January to 31st December

C. Diwali to Diwali

D. 1st April to 31st March

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Correct Answer: Option D

Explanation:
Financial year for companies is uniform: April to March.

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Question #1124

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An unregistered partnership firm:

A. Cannot enter into contracts

B. Is illegal

C. Has no existence

D. Cannot sue but can be sued

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Correct Answer: Option D

Explanation:
An unregistered firm faces disabilities like not being able to enforce its rights in court.

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Question #1125

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The maximum number of partners in a banking partnership is:

A. 20

B. 50

C. No limit

D. 10

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Correct Answer: Option D

Explanation:
As per Banking Regulation Act, the maximum number of partners for a banking firm is 10.

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Question #1126

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Interest on capital is calculated on:

A. Capital introduced initially only

B. Average capital

C. Capital at the end of the year

D. Opening capital (with adjustments for additional capital and drawings if specified)

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Correct Answer: Option D

Explanation:
Interest is computed on the opening capital, and if the deed provides, adjustments for additions/withdrawals during the year.

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Question #1127

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A partner's drawings are ₹12,000 drawn evenly throughout the year. Interest on drawings @ 10% p.a. would be:

A. ₹1,200

B. ₹550

C. ₹600

D. ₹300

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Correct Answer: Option C

Explanation:
If drawings are made evenly throughout the year, average period = 6 months. Interest = 12,000 × 10% × 6/12 = ₹600.

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Question #1128

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In the absence of a partnership deed, the rate of interest on loan given by a partner to the firm is:

A. 10% p.a.

B. Not allowed

C. 6% p.a.

D. 5% p.a.

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Correct Answer: Option C

Explanation:
Section 13(d) of Partnership Act provides 6% p.a. interest on partner's loan.

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Question #1129

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A and B share profits 3:2. They admit C with 1/5th share. C brings ₹30,000 as capital and ₹10,000 as goodwill. The total goodwill of the firm is:

A. ₹2,00,000

B. ₹50,000

C. ₹10,000

D. Cannot determine

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Correct Answer: Option B

Explanation:
C's share of goodwill = 1/5 = ₹10,000. So total goodwill = 10,000 × 5/1 = ₹50,000.

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Question #1130

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Which of the following is a non-cash item in the Profit & Loss Account?

A. Salaries paid

B. Depreciation

C. Commission paid

D. Rent paid

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Correct Answer: Option B

Explanation:
Depreciation is a non-cash expense, as no cash outflow occurs.

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Question #1131

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The 'Going Concern Concept' implies:

A. The business will continue for the foreseeable future

B. The business will merge with another

C. The business is bankrupt

D. The business will be closed within a year

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Correct Answer: Option A

Explanation:
It assumes the entity will continue operations and not liquidate.

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Question #1132

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The 'Business Entity Concept' means:

A. The business is a separate entity from its owners

B. The owner and business are the same

C. The business is not liable for debts

D. Only companies are separate entities

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Correct Answer: Option A

Explanation:
For accounting purposes, the business is treated as distinct from the proprietor.

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Question #1133

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A provision for doubtful debts is created in accordance with:

A. Conservatism concept

B. Going concern concept

C. Consistency concept

D. Materiality concept

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Correct Answer: Option A

Explanation:
Conservatism (prudence) requires anticipating possible losses, hence the provision.

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Question #1134

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The term 'Debtors' represent:

A. Outstanding expenses

B. Amounts owed by the business

C. Amounts owed to the business by customers

D. Bills payable

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Correct Answer: Option C

Explanation:
Debtors are persons/entities who owe money to the business for goods/services provided on credit.

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Question #1135

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'Creditors' in the balance sheet are shown as:

A. Liabilities

B. Assets

C. Capital

D. Reserves

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Correct Answer: Option A

Explanation:
Creditors are amounts payable, hence liabilities.

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Question #1136

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The 'Accounting Cycle' begins with:

A. Preparation of trial balance

B. Posting to ledger

C. Identification and recording of transactions in journal

D. Preparation of financial statements

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Correct Answer: Option C

Explanation:
The cycle starts with journalizing (recording) transactions.

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Question #1137

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A 'Compound Journal Entry' may include:

A. Only personal accounts

B. Only nominal accounts

C. Multiple debits and multiple credits

D. Only one debit and one credit

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Correct Answer: Option C

Explanation:
It can have several accounts affected.

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Question #1138

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Goods distributed as free samples are debited to:

A. Advertisement Account

B. Purchases Account

C. Drawings Account

D. Sales Account

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Correct Answer: Option A

Explanation:
Free samples are treated as advertising expense.

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Question #1139

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If a machinery costing ₹80,000 is sold for ₹70,000 with accumulated depreciation ₹20,000, the profit/loss on sale is:

A. Profit ₹30,000

B. Profit ₹10,000

C. Loss ₹10,000

D. No profit no loss

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Correct Answer: Option B

Explanation:
Book value = 80,000 - 20,000 = 60,000. Sale price 70,000. Profit = 70,000 - 60,000 = ₹10,000.

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Question #1140

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The 'Petty Cash Book' is maintained on the imprest system. If the imprest amount is ₹2,000 and petty expenses are ₹1,400, the reimbursement required is:

A. ₹1,400

B. ₹2,000

C. ₹3,400

D. ₹600

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Correct Answer: Option A

Explanation:
Reimbursement should equal the amount spent, i.e., ₹1,400, to restore the imprest amount.

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