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 71 of 94
Question #1401
A: Marginal cost is the cost of producing one additional unit. R: Marginal cost includes both fixed and variable costs. 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 C

Explanation:
Marginal cost is indeed the cost of producing one additional unit. However, it only includes variable costs, as fixed costs do not change with the level of production in the short term. A is true, R is false.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1402
S1: Break-even point is the level of sales where total revenue equals total costs. S2: At the break-even point, the contribution equals fixed costs. 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:
The break-even point is where Total Revenue = Total Costs (Fixed + Variable), resulting in zero profit. At this point, Contribution (Sales - Variable Costs) exactly equals Fixed Costs. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1403
S1: Standard costing is a technique of cost ascertainment. S2: Standard costing is a technique of cost control. 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 C

Explanation:
Standard costing is primarily a technique of cost control and performance evaluation, not just cost ascertainment. While it involves setting standards, its main purpose is to compare actuals with standards to find variances. S1 is incorrect, S2 is correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1404
A: Flexible budget is prepared for a range of activity levels. R: It helps in performance evaluation at different actual activity levels. 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:
A flexible budget is designed to change with the level of activity, providing budgeted costs for various levels. This allows management to compare actual performance with the budgeted costs for the *actual* level of activity, aiding in fair performance evaluation. R correctly explains A.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1405
S1: Audit reporting is the final stage of the audit process. S2: The auditor's report is addressed to the shareholders of the company. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. S2 only
C. S1 only
D. Both S1 and S2
Discuss
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Correct Answer: Option D

Explanation:
Audit reporting is indeed the final stage where the auditor expresses their opinion. Under the Companies Act, the auditor's report is addressed to the members (shareholders) of the company. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1406
S1: Vouching checks the arithmetical accuracy of the books. S2: Vouching checks the authenticity of the transactions. Which statement(s) is/are correct?
A. S2 only
B. Neither S1 nor S2
C. Both S1 and S2
D. S1 only
Discuss
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Correct Answer: Option A

Explanation:
Vouching is the examination of documentary evidence to verify the authenticity and accuracy of transactions, not their arithmetical accuracy (which is checked by the Trial Balance). S1 is incorrect, S2 is correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1407
A: Internal control is a process designed to provide reasonable assurance regarding the achievement of objectives. R: Internal control can guarantee the prevention of all frauds. Choose the correct option.
A. Both A and R are true but R is NOT the correct explanation of A
B. Both A and R are true and R is the correct explanation of A
C. A is true but R is false
D. A is false but R is true
Discuss
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Correct Answer: Option C

Explanation:
Internal control provides *reasonable* assurance, not absolute assurance, regarding operational efficiency, reliable reporting, and compliance. It cannot guarantee the prevention of all frauds due to inherent limitations like collusion or management override. A is true, R is false.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1408
S1: Income Tax is a direct tax. S2: Income Tax is levied by the State Governments in India. Which statement(s) is/are correct?
A. Both S1 and S2
B. Neither S1 nor S2
C. S1 only
D. S2 only
Discuss
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Correct Answer: Option C

Explanation:
Income Tax is a direct tax levied on the income of individuals and entities. However, it is levied and collected by the Central Government, not the State Governments. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1409
S1: GST is a comprehensive indirect tax. S2: GST is levied on the manufacture of goods. 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:
GST is a comprehensive indirect tax levied on the *supply* of goods and services. It replaced the tax on manufacture (Excise Duty) and tax on sale (VAT). S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1410
A: The Contingency Fund of India is established to meet unforeseen expenditures. R: The President can make advances from this fund without parliamentary approval. Choose the correct option.
A. Both A and R are true but R is NOT the correct explanation of A
B. Both A and R are true and R is the correct explanation of A
C. A is true but R is false
D. A is false but R is true
Discuss
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Correct Answer: Option B

Explanation:
The Contingency Fund of India is an imprest held by the President to meet urgent, unforeseen expenditures. The President can authorize advances from it, which are later regularized by Parliament. R correctly explains the mechanism.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1411
S1: The Reserve Bank of India (RBI) is the central bank of India. S2: RBI regulates the entire financial system of India. 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:
RBI is the central bank, established under the RBI Act, 1934. It regulates the monetary policy, banking system, and foreign exchange, effectively regulating the core of the Indian financial system. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1412
S1: Ind AS 1 deals with Presentation of Financial Statements. S2: Ind AS 101 deals with First-time Adoption of Ind AS. 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 A

Explanation:
Ind AS 1 prescribes the basis for presentation of general purpose financial statements. Ind AS 101 provides the procedures for an entity adopting Ind AS for the first time. Both statements correctly identify the standards.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1413
A: The Accounting Equation is Assets = Liabilities + Equity. R: This equation is based on the Dual Aspect Concept. Choose the correct option.
A. A is false but R is true
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. Both A and R are true and R is the correct explanation of A
Discuss
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Correct Answer: Option D

Explanation:
The accounting equation mathematically represents the balance sheet. It is directly derived from the Dual Aspect Concept, which states that every transaction has two equal and opposite effects. R correctly explains the basis of A.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1414
S1: A Receipt Voucher is prepared for cash receipts. S2: A Payment Voucher is prepared for cash payments. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. Both S1 and S2
C. S2 only
D. S1 only
Discuss
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Correct Answer: Option B

Explanation:
In the voucher entry system, a Receipt Voucher is used to record all cash and bank receipts. A Payment Voucher is used to record all cash and bank payments. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1415
S1: The Sales Book records only credit sales of goods. S2: The Sales Return Book records returns of goods sold on credit. Which statement(s) is/are correct?
A. S1 only
B. S2 only
C. Neither S1 nor S2
D. Both S1 and S2
Discuss
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Correct Answer: Option D

Explanation:
The Sales Book (or Sales Day Book) is strictly for credit sales of trading goods. The Sales Return Book (or Returns Inwards Book) records goods returned by customers that were originally sold on credit. Both are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1416
A: A Ledger account is opened for each type of asset, liability, equity, income, and expense. R: The Ledger is the principal book of accounts. 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. Both A and R are true and R is the correct explanation of A
D. A is false but R is true
Discuss
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Correct Answer: Option B

Explanation:
A ledger account is indeed opened for every element of the financial statements to classify and summarize transactions. It is the principal book of accounts. Both are true, but R doesn't explain *why* accounts are opened for each element.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1417
S1: A Cash Book is a subsidiary book. S2: A Cash Book also acts as a ledger account. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. Both S1 and S2
C. S1 only
D. S2 only
Discuss
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Correct Answer: Option B

Explanation:
The Cash Book is a subsidiary book (book of original entry) for cash transactions. It also serves as the Cash and Bank accounts in the ledger, eliminating the need to post them separately. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1418
S1: Bank Reconciliation Statement is prepared to find the causes of difference between Cash Book and Pass Book. S2: BRS is prepared on a specific date. 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:
The primary objective of BRS is to identify and explain the reasons for the difference in balances between the Cash Book and the Bank Pass Book. It is always prepared for a specific date to compare the balances on that day. Both are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1419
A: Errors of complete omission do not affect the Trial Balance. R: In an error of complete omission, neither the debit nor the credit aspect is recorded. Choose the correct option.
A. Both A and R are true and R is the correct explanation of A
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. A is true but R is false
Discuss
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Correct Answer: Option A

Explanation:
An error of complete omission means the transaction is not recorded at all. Since neither debit nor credit is entered, the total debits and credits remain equal, and the Trial Balance still agrees. R correctly explains A.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1420
S1: The Trading Account shows the gross profit or loss. S2: The Profit and Loss Account shows the net profit or loss. Which statement(s) is/are correct?
A. S2 only
B. Neither S1 nor S2
C. Both S1 and S2
D. S1 only
Discuss
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Correct Answer: Option C

Explanation:
The Trading Account calculates Gross Profit/Loss by matching direct expenses with net sales. The Profit and Loss Account calculates Net Profit/Loss by matching all indirect expenses and incomes with the Gross Profit. Both are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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