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 73 of 94
Question #1441
S1: A triple column cash book has a discount column on both sides. S2: Discount allowed is debited and discount received is credited. Which statement(s) is/are correct?
A. Both S1 and S2
B. S2 only
C. S1 only
D. Neither S1 nor S2
Discuss
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Correct Answer: Option A

Explanation:
A triple column cash book has cash, bank, and discount columns on both debit and credit sides. Discount allowed (an expense) is recorded on the debit side, and discount received (an income) is recorded on the credit side. Both are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1442
S1: Bank Reconciliation Statement is prepared by the bank. S2: Bank Reconciliation Statement is prepared on a specific date. Which statement(s) is/are correct?
A. Both S1 and S2
B. S2 only
C. S1 only
D. Neither S1 nor S2
Discuss
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Correct Answer: Option B

Explanation:
BRS is prepared by the account holder (the customer), not the bank. It is prepared for a specific date to reconcile the balances as per the Cash Book and the Pass Book on that day. S1 is incorrect, S2 is correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1443
A: Errors of principle do not affect the Trial Balance. R: Errors of principle involve recording a transaction in the wrong class of account. 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 C

Explanation:
An error of principle (e.g., treating a capital expense as revenue) violates accounting rules but keeps the debit and credit amounts equal. Therefore, the Trial Balance still agrees. R correctly explains the nature of the error.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1444
S1: The Trading Account is prepared to ascertain gross profit. S2: The Trading Account includes indirect expenses. 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:
The Trading Account is prepared to calculate Gross Profit by matching direct expenses with net sales. Indirect expenses (like office rent, salaries) are recorded in the Profit and Loss Account, not the Trading Account. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1445
S1: Depreciation is charged on all fixed assets except land. S2: Depreciation is charged on land if it is a freehold land. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. S1 only
C. S2 only
D. Both S1 and S2
Discuss
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Correct Answer: Option B

Explanation:
Depreciation is charged on all depreciable fixed assets. Land (specifically freehold land) has an unlimited useful life and is not depreciated. Leasehold land is depreciated over the lease term. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1446
A: The Quick Ratio is more stringent than the Current Ratio. R: The Quick Ratio excludes inventory and prepaid expenses from current assets. 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 C

Explanation:
The Quick (Acid-Test) Ratio is a more stringent measure of short-term liquidity than the Current Ratio. It excludes inventory and prepaid expenses because they are not immediately convertible to cash. R correctly explains why it is more stringent.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1447
S1: In the absence of a partnership deed, a partner is entitled to a salary for participating in management. S2: In the absence of a partnership deed, interest on partner's loan is allowed at 6% p.a. 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 A

Explanation:
The Partnership Act 1932 does not allow any partner to claim a salary for management participation if the deed is silent. However, it does allow interest on a partner's loan at 6% p.a. S1 is incorrect, S2 is correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1448
S1: The Profit and Loss Appropriation Account is prepared by a company. S2: The Profit and Loss Appropriation Account is prepared by a partnership firm. Which statement(s) is/are correct?
A. S2 only
B. Both S1 and S2
C. S1 only
D. Neither S1 nor S2
Discuss
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Correct Answer: Option A

Explanation:
A company does not prepare a Profit and Loss Appropriation Account; it transfers profits to reserves and dividends via the Statement of Changes in Equity. Only a partnership firm prepares this account to distribute profits among partners. S1 is incorrect, S2 is correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1449
A: Goodwill is an intangible asset. R: Goodwill has a physical existence. 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:
Goodwill is indeed an intangible asset. However, by definition, intangible assets lack physical substance. Therefore, goodwill does not have a physical existence. A is true, R is false.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1450
S1: Revaluation Account is prepared at the time of admission of a partner. S2: Revaluation Account is prepared at the time of retirement of a partner. 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:
A Revaluation Account is prepared whenever there is a change in the constitution of the firm, including admission, retirement, or death of a partner, to adjust the values of assets and liabilities. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1451
S1: Marginal cost is the sum of prime cost and variable overheads. S2: Marginal cost includes fixed overheads. 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 D

Explanation:
Marginal cost represents the total variable cost of production, which is Prime Cost (Direct Material + Direct Labor + Direct Expenses) plus Variable Overheads. It strictly excludes fixed overheads. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1452
A: Standard costing is used for cost control. R: It involves setting predetermined costs and analyzing variances. 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 and R is the correct explanation of A
D. Both A and R are true but R is NOT the correct explanation of A
Discuss
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Correct Answer: Option C

Explanation:
Standard costing is a management tool for cost control. It achieves this by establishing standard (predetermined) costs and comparing them with actual costs to identify and analyze variances for corrective action. R correctly explains A.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1453
S1: Flexible budget is prepared for a single level of activity. S2: Flexible budget is prepared for a range of activity levels. Which statement(s) is/are correct?
A. S2 only
B. S1 only
C. Neither S1 nor S2
D. Both S1 and S2
Discuss
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Correct Answer: Option A

Explanation:
A Fixed Budget is prepared for a single, predetermined level of activity. A Flexible Budget is designed to change with the level of activity and is prepared for a range of activity levels. S1 is incorrect, S2 is correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1454
S1: Audit is an independent examination of financial statements. S2: Audit is conducted to detect all frauds and errors. 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:
Audit is an independent examination to express an opinion on the financial statements. While it aims to detect material misstatements, it cannot guarantee the detection of *all* frauds and errors due to inherent limitations like sampling and collusion. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1455
A: Vouching is the examination of documentary evidence. R: Vouching is the same as verification. 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 B

Explanation:
Vouching is indeed the examination of vouchers to verify transactions. However, verification is a broader term that includes proving the existence, ownership, and valuation of assets and liabilities at the balance sheet date. They are not the same. A is true, R is false.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1456
S1: Internal check is a system of routine checks. S2: Internal check is conducted by external auditors. Which statement(s) is/are correct?
A. S2 only
B. S1 only
C. Neither S1 nor S2
D. Both S1 and S2
Discuss
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Correct Answer: Option B

Explanation:
Internal check is a routine system where the work of one employee is automatically checked by another to prevent errors and frauds. It is an internal management function, not conducted by external auditors. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1457
S1: Direct taxes are levied on income and wealth. S2: Direct taxes are regressive in nature. 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:
Direct taxes (like Income Tax) are levied on income and wealth. They are progressive in nature, meaning the tax rate increases with higher income, not regressive. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1458
S1: GST is a comprehensive indirect tax. S2: GST is levied on the supply of goods and services. Which statement(s) is/are correct?
A. S2 only
B. S1 only
C. Both S1 and S2
D. Neither S1 nor S2
Discuss
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Correct Answer: Option C

Explanation:
GST is a comprehensive, multi-stage, destination-based indirect tax. It is levied on every value addition, specifically on the supply of goods and services. Both statements are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1459
A: The Public Account of India includes Provident Funds. R: The government can withdraw money from the Public Account without parliamentary approval. 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:
The Public Account holds money like Provident Funds where the government acts as a banker. Since these funds belong to others, the government can make payments from this account without parliamentary approval. R correctly explains the nature of the account.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #1460
S1: SEBI regulates the capital markets in India. S2: SEBI was established by an executive order. 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 D

Explanation:
SEBI regulates the capital markets to protect investors and promote development. It was initially set up by an executive resolution in 1988, but it was given statutory powers by the SEBI Act, 1992. S1 is correct, S2 is incorrect as it is now a statutory body.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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