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 69 of 94
Question #1361
A: Standard costing is a system of cost control. R: It involves comparing standard costs with actual costs to find variances. Choose the correct option.
A. A is false but R is true
B. Both A and R are true but R is NOT the correct explanation of A
C. A is true but R is false
D. Both A and R are true and R is the correct explanation of A
Discuss
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Correct Answer: Option D

Explanation:
Standard costing controls costs by setting predetermined standards and analyzing deviations (variances) from these standards. R correctly describes the core mechanism of standard costing.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1362
S1: Vouching is the examination of documentary evidence of transactions. R: Vouching ensures that transactions are authorized and properly recorded. Which statement(s) is/are correct?
A. S1 only
B. Both S1 and S2
C. S2 only
D. Neither S1 nor S2
Discuss
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Correct Answer: Option B

Explanation:
Vouching is the primary audit procedure involving the inspection of vouchers (receipts, invoices) to verify the authenticity of transactions. It ensures transactions are authorized, accurate, and recorded. Both are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1363
A: Internal check is a system of routine checks on the work of staff. R: Internal check is the same as internal audit. Choose the correct option.
A. Both A and R are true and R is the correct explanation of A
B. A is true but R is false
C. A is false but R is true
D. Both A and R are true but R is NOT the correct explanation of A
Discuss
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Correct Answer: Option B

Explanation:
Internal check is a continuous, routine system where the work of one employee is automatically checked by another. Internal audit is a separate, continuous appraisal system by specialized staff. They are not the same. A is true, R is false.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1364
S1: Audit in depth involves detailed examination of all transactions. S2: Audit in depth is also known as detailed audit. Which statement(s) is/are correct?
A. S1 only
B. Neither S1 nor S2
C. S2 only
D. Both S1 and S2
Discuss
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Correct Answer: Option D

Explanation:
Audit in depth (or detailed audit) involves examining every single transaction and voucher in the books. It is typically done for small organizations or when fraud is suspected. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1365
S1: GST is a destination-based consumption tax. S2: GST is levied only at the central level. Which statement(s) is/are correct?
A. S1 only
B. Neither S1 nor S2
C. S2 only
D. Both S1 and S2
Discuss
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Correct Answer: Option A

Explanation:
GST is a destination-based tax, meaning the revenue goes to the state where the goods are consumed, not where they are produced. It is a dual GST, levied by both the Centre (CGST) and States (SGST). S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1366
A: Input Tax Credit (ITC) allows a business to reduce the tax it has already paid on inputs. R: ITC prevents the cascading effect of taxes (tax on tax). Choose the correct option.
A. Both A and R are true and R is the correct explanation of A
B. A is true but R is false
C. Both A and R are true but R is NOT the correct explanation of A
D. A is false but R is true
Discuss
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Correct Answer: Option A

Explanation:
ITC allows businesses to claim credit for taxes paid on purchases against their output tax liability. This ensures tax is only levied on the value added at each stage, eliminating the cascading effect. R correctly explains the purpose of ITC.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1367
S1: TDS stands for Tax Deducted at Source. S2: TDS is a direct tax. Which statement(s) is/are correct?
A. S1 only
B. Both S1 and S2
C. S2 only
D. Neither S1 nor S2
Discuss
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Correct Answer: Option A

Explanation:
TDS stands for Tax Deducted at Source, a mechanism for collecting income tax. However, TDS is a *mode of collection* for direct taxes (like Income Tax), not a tax itself. S1 is correct, S2 is conceptually inaccurate as TDS is a collection method.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1368
S1: PFMS stands for Public Financial Management System. S2: PFMS is implemented by the Reserve Bank of India. Which statement(s) is/are correct?
A. Both S1 and S2
B. S1 only
C. S2 only
D. Neither S1 nor S2
Discuss
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Correct Answer: Option B

Explanation:
PFMS stands for Public Financial Management System, a web-based software system. It is implemented by the Controller General of Accounts (CGA) under the Ministry of Finance, not the RBI. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1369
A: The Consolidated Fund of India includes all revenues received by the Government. R: The government can withdraw money from the Consolidated Fund without parliamentary approval. Choose the correct option.
A. Both A and R are true and R is the correct explanation of A
B. A is true but R is false
C. Both A and R are true but R is NOT the correct explanation of A
D. A is false but R is true
Discuss
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Correct Answer: Option B

Explanation:
The Consolidated Fund of India includes all revenues, loans, and repayments. However, no money can be withdrawn from it without the authorization of Parliament through an Appropriation Bill. A is true, R is false.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1370
S1: Ind AS 115 deals with Revenue from Contracts with Customers. S2: Ind AS 116 deals with Leases. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. S2 only
C. Both S1 and S2
D. S1 only
Discuss
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Correct Answer: Option C

Explanation:
Ind AS 115 prescribes the principles for recognizing revenue from contracts with customers. Ind AS 116 specifies the accounting for leases. Both statements correctly identify the respective standards.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1371
S1: Social accounting reports the social and environmental impact of a business. S2: Social audit is a formal assessment of a company's social accounting systems. Which statement(s) is/are correct?
A. Both S1 and S2
B. S1 only
C. Neither S1 nor S2
D. S2 only
Discuss
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Correct Answer: Option A

Explanation:
Social accounting communicates the social and environmental effects of a company's actions. Social audit is the systematic evaluation of these social accounting reports to ensure accountability. Both are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1372
A: Cash-based accounting records transactions only when cash is received or paid. R: Cash-based accounting provides a true and fair view of the financial position. Choose the correct option.
A. A is true but R is false
B. Both A and R are true but R is NOT the correct explanation of A
C. A is false but R is true
D. Both A and R are true and R is the correct explanation of A
Discuss
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Correct Answer: Option A

Explanation:
Cash-based accounting only records cash inflows and outflows. It does not record credit transactions or outstanding/prepaid items, hence it fails to provide a true and fair view of the financial position. A is true, R is false.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1373
S1: In the Single Entry System, a Statement of Affairs is prepared instead of a Balance Sheet. S2: The Statement of Affairs is prepared to ascertain the profit or loss. Which statement(s) is/are correct?
A. S1 only
B. Both S1 and S2
C. S2 only
D. Neither S1 nor S2
Discuss
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Correct Answer: Option A

Explanation:
The Single Entry System is incomplete, so a Statement of Affairs (similar to a Balance Sheet) is prepared to find the capital at a given date. Profit or loss is ascertained by comparing opening and closing capital, not directly from the Statement of Affairs. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1374
S1: The Indian Financial System comprises both organized and unorganized sectors. S2: The organized sector includes moneylenders and indigenous bankers. Which statement(s) is/are correct?
A. S2 only
B. Neither S1 nor S2
C. S1 only
D. Both S1 and S2
Discuss
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Correct Answer: Option C

Explanation:
The Indian Financial System has both organized (banks, RBI, stock exchanges) and unorganized (moneylenders, indigenous bankers) sectors. S2 is incorrect because moneylenders belong to the unorganized sector.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1375
A: Financial management aims to maximize shareholder wealth. R: Financial management focuses solely on raising funds. Choose the correct option.
A. Both A and R are true but R is NOT the correct explanation of A
B. A is false but R is true
C. Both A and R are true and R is the correct explanation of A
D. A is true but R is false
Discuss
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Correct Answer: Option D

Explanation:
The primary objective of financial management is to maximize shareholder wealth. However, it involves not just raising funds, but also their effective utilization, dividend decisions, and working capital management. A is true, R is false.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1376
S1: Operating leverage measures the impact of fixed costs on operating profit. S2: Financial leverage measures the impact of fixed interest costs on earnings per share. Which statement(s) is/are correct?
A. S1 only
B. Neither S1 nor S2
C. Both S1 and S2
D. S2 only
Discuss
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Correct Answer: Option C

Explanation:
Operating leverage arises from fixed operating costs and affects EBIT. Financial leverage arises from fixed financial charges (interest) and affects EPS. Both statements correctly define the respective leverages.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1377
A: When a bill is discounted, the bank charges a fee called discounting charges. R: Discounting charges are debited to the Discount Account. Choose the correct option.
A. Both A and R are true but R is NOT the correct explanation of A
B. A is true but R is false
C. A is false but R is true
D. Both A and R are true and R is the correct explanation of A
Discuss
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Correct Answer: Option A

Explanation:
When a bill is discounted, the bank deducts a fee (discounting charges) for providing early cash. This fee is a financial expense and is debited to the Discount Account. Both are true, but R doesn't explain *why* the bank charges it (which is for providing early funds).
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1378
S1: In the absence of a partnership deed, interest on partner's loan is allowed at 6% per annum. S2: In the absence of a partnership deed, interest on partner's capital is not allowed. Which statement(s) is/are correct?
A. S1 only
B. Both S1 and S2
C. Neither S1 nor S2
D. S2 only
Discuss
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Correct Answer: Option B

Explanation:
The Partnership Act 1932 mandates that if the deed is silent, interest on a partner's loan is allowed at 6% p.a., but no interest on capital is allowed. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1379
S1: The Profit and Loss Appropriation Account is prepared by a partnership firm. S2: It is prepared to distribute the net profit among the partners. Which statement(s) is/are correct?
A. Both S1 and S2
B. S2 only
C. Neither S1 nor S2
D. S1 only
Discuss
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Correct Answer: Option A

Explanation:
A partnership firm prepares a Profit and Loss Appropriation Account after the Profit and Loss Account. Its purpose is to distribute the net profit among partners by accounting for interest on capital, salaries, and profit shares. Both are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1380
A: Fixed overheads are ignored in marginal costing. R: Marginal costing only considers variable costs for decision making. Choose the correct option.
A. A is false but R is true
B. Both A and R are true but R is NOT the correct explanation of A
C. Both A and R are true and R is the correct explanation of A
D. A is true but R is false
Discuss
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Correct Answer: Option B

Explanation:
In marginal costing, fixed overheads are treated as period costs and are not included in the cost of production. This is because marginal costing focuses on variable costs for short-term decision making. Both are true, but R is the underlying principle, not just an explanation of ignoring fixed costs.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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