Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

Question #161

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XBRL stands for:

A. Extensible Business Reporting Language

B. Extra Balance and Revenue Ledger

C. External Business Record Language

D. Extended Banking Reporting Ledger

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Correct Answer: Option A

Explanation:
XBRL is an open international standard for digital business reporting, tagging financial data for easy automated analysis.

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Question #162

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A distributed ledger technology providing a secure and immutable record of transactions is:

A. Cloud Accounting

B. ERP System

C. Blockchain Accounting

D. Tally Prime

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Correct Answer: Option C

Explanation:
Blockchain creates decentralized, tamper-proof ledgers, significantly reducing the scope for fraud and simplifying the auditing process.

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Question #163

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ESG Reporting focuses on an organization's performance regarding:

A. Environmental, Social, and Governance factors

B. External, Strategic, and Global operations

C. Earnings, Sales, and Growth

D. Equity, Shares, and Gearing

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Correct Answer: Option A

Explanation:
ESG reporting discloses a company's non-financial impacts, assessing its sustainability, societal impact, and corporate governance practices.

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Question #164

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Forensic Accounting primarily deals with:

A. Tax planning

B. Preparing routine financial statements

C. Investigating financial fraud and providing evidence for legal proceedings

D. Calculating depreciation

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Correct Answer: Option C

Explanation:
Forensic accountants utilize accounting, auditing, and investigative skills to analyze financial records in conjunction with dispute resolution and litigation.

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Question #165

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Integrated Reporting (IR) differs from traditional financial reporting because it:

A. Only reports cash flows

B. Combines financial and non-financial data to show how value is created over time

C. Eliminates the balance sheet

D. Is used strictly for internal management

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Correct Answer: Option B

Explanation:
IR provides a holistic view of the organization by interconnecting financial performance with sustainability, capitals (human, natural), and strategy.

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Question #166

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If rent paid is Rs 10,000 and prepaid rent at year-end is Rs 2,000, what is the rent expense for the current year under accrual accounting?

A. Rs 12,000

B. Rs 10,000

C. Rs 8,000

D. Rs 2,000

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Correct Answer: Option C

Explanation:
Current year expense = Paid amount - Prepaid for next year = 10,000 - 2,000 = Rs 8,000.

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Question #167

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In a journal entry, if an asset is destroyed by fire and fully insured, which account is debited?

A. Sales Account

B. Profit & Loss Account

C. Asset Account

D. Insurance Company (Claim) Account

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Correct Answer: Option D

Explanation:
Because the loss is fully insured, the insurance company becomes a debtor for the claim amount, hence debited.

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Question #168

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A petty cash book kept on the Imprest system has an imprest amount of Rs 5,000. If total expenses were Rs 4,200, the reimbursement amount is:

A. Rs 800

B. Rs 4,200

C. Rs 5,000

D. Rs 9,200

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Correct Answer: Option B

Explanation:
The cashier is reimbursed exactly the amount spent (Rs 4,200) so the balance returns to the imprest figure of Rs 5,000.

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Question #169

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When credit sales of Rs 5,000 to Ram are wrongly posted as Rs 500 in his account, it is an error of:

A. Commission

B. Omission

C. Compensating

D. Principle

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Correct Answer: Option A

Explanation:
An error of commission includes posting wrong amounts. It will cause a mismatch in the Trial Balance.

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Question #170

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The formula to calculate Cost of Goods Sold (COGS) is:

A. Opening Stock - Purchases - Closing Stock

B. Opening Stock + Purchases + Direct Expenses - Closing Stock

C. Sales - Net Profit

D. Purchases + Closing Stock - Opening Stock

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Correct Answer: Option B

Explanation:
COGS accounts for all direct costs of making/buying the goods actually sold during the period.

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Question #171

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Return of goods by a customer should be debited to:

A. Sales Return (Return Inwards) Account

B. Customer Account

C. Purchase Return Account

D. Sales Account

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Correct Answer: Option A

Explanation:
Goods are coming back (Debit what comes in), representing a reduction in sales revenue, handled via the Sales Return account.

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Question #172

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Goodwill brought in cash by a new partner is distributed among old partners in their:

A. Old profit sharing ratio

B. Sacrificing ratio

C. Capital ratio

D. New profit sharing ratio

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Correct Answer: Option B

Explanation:
Premium for goodwill compensates the old partners for the share of profit they sacrifice in favor of the new partner.

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Question #173

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Assertion (A): Capital Expenditure is shown in the Balance Sheet. Reason (R): Its benefit is exhausted within the current accounting period.

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

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Correct Answer: Option A

Explanation:
Capital expenditure yields benefits over multiple future periods (hence an asset), making Reason R false. R describes revenue expenditure.

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Question #174

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Heavy advertisement expenditure to launch a new product, whose benefit will last for 3-5 years, is an example of:

A. Revenue Expenditure

B. Fictitious Expenditure

C. Deferred Revenue Expenditure

D. Capital Expenditure

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Correct Answer: Option C

Explanation:
It is revenue in nature but deferred because the benefit spans multiple years, written off partially each year.

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Question #175

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According to AS-2 (Valuation of Inventories), which cost formula is widely accepted for measuring historical cost of inventory?

A. LIFO (Last In First Out)

B. Next-In-First-Out (NIFO)

C. FIFO or Weighted Average Cost

D. Replacement Cost

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Correct Answer: Option C

Explanation:
AS-2 recommends FIFO or Weighted Average Cost. LIFO is generally not permitted under Indian Accounting Standards.

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Question #176

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A favourable variance in materials cost indicates that:

A. Material price increased in the market

B. More material was used than budgeted

C. Sales volume increased

D. Actual cost of materials was less than the standard cost

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Correct Answer: Option D

Explanation:
Favourable means beneficial to profit, which happens when actual costs are lower than standard expected costs.

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Question #177

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If a partner retires, the balance in his capital account is either paid off or transferred to his:

A. Current Account

B. Drawings Account

C. Suspense Account

D. Loan Account

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Correct Answer: Option D

Explanation:
If the firm cannot pay cash immediately, the retiring partner's dues are transferred to a Loan Account, carrying an interest of 6% p.a.

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Question #178

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Bank Overdraft appears in the balance sheet under:

A. Current Liabilities

B. Non-Current Liabilities

C. Current Assets

D. Contingent Liabilities

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Correct Answer: Option A

Explanation:
Bank overdraft is a short-term borrowing repayable on demand, hence classified as a Current Liability.

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Question #179

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When preparing a BRS from the Pass Book balance (favorable), a cheque deposited but not collected will be:

A. Added

B. Ignored

C. Deducted

D. Divided

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Correct Answer: Option A

Explanation:
The cash book balance is higher (receipt was recorded). To move from pass book to match the cash book, the amount must be added.

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Question #180

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Discount Allowed is considered a:

A. Factory Expense

B. Financial Expense

C. Selling & Distribution Expense

D. Direct Expense

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Correct Answer: Option C

Explanation:
Discount allowed is given to encourage prompt payment by customers, treated as a selling/administrative expense in the P&L Account.

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