Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

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 &amp;amp; 12, B.Com, CA Foundation, CUET, Banking, SSC, JKSSB, JKPSC and competitive exams.

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Question #1841

S1: Under Ind AS 115, a contract with a customer can be combined with another contract and accounted for as a single contract if they are negotiated as a package with a single commercial objective. S2: If the amount of consideration in one contract depends on the price or performance of the other contract, they must be combined. Which statement(s) is/are correct?

A. S1 only

B. S2 only

C. Both S1 and S2

D. Neither S1 nor S2

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Correct Answer: Option C

Explanation:
Both statements are correct as per Ind AS 115. Contracts must be combined if they are part of a single commercial package, or if the consideration in one depends on the other, or if the goods/services are a single performance obligation.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1842

Under GST, the 'Composition Scheme' is not available to a person who:

A. All of the above

B. Is engaged in the manufacture of ice cream and pan masala

C. Makes inter-state supplies

D. Is engaged in the supply of services

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Correct Answer: Option A

Explanation:
The Composition Scheme is barred for suppliers of services (except restaurants), those making inter-state supplies, casual/non-resident taxable persons, and manufacturers of specified goods like ice cream, pan masala, and tobacco. Therefore, all options apply.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1843

In the context of PFMS, the 'Aadhaar Enabled Payment System' (AePS) allows which of the following basic transactions?

A. Cash Deposit

B. Cash Withdrawal

C. Both A and B

D. Balance Inquiry

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Correct Answer: Option C

Explanation:
AePS allows basic banking transactions like Balance Inquiry, Cash Withdrawal, and Mini Statement using Aadhaar authentication. Cash Deposit is generally not supported through AePS micro-ATMs.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1844

Assertion (A): Under Ind AS 16, subsequent expenditure on an item of PPE is capitalized only if it is probable that future economic benefits will flow to the entity and the cost can be measured reliably. Reason (R): Day-to-day servicing and repair costs are expensed as incurred because they do not meet the recognition criteria. Choose the correct option.

A. Both A and R are true and R is the correct explanation of A

B. A is false but R is true

C. Both A and R are true but R is NOT the correct explanation of A

D. A is true but R is false

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Correct Answer: Option A

Explanation:
Ind AS 16 requires capitalization of subsequent costs only if they meet the recognition criteria (future economic benefits and reliable measurement). Routine repairs and servicing do not add future economic benefits, so they are expensed. R correctly explains A.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1845

Under the Income Tax Act, the 'TDS' on payment of commission or brokerage exceeding ₹15,000 in a financial year is governed by which section, and what is the rate?

A. Section 194H at 5%

B. Section 194J at 10%

C. Section 194C at 1%

D. Section 194Q at 0.1%

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Correct Answer: Option A

Explanation:
Section 194H mandates TDS at 5% on income by way of commission or brokerage (other than insurance commission) if the amount exceeds ₹15,000 in a financial year.

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Question #1846

S1: In a partnership, if a new partner is admitted and brings his share of goodwill in cash, the goodwill account is credited. S2: If the goodwill account already exists in the books, it is written off among the old partners in their old profit-sharing ratio before admission. Which statement(s) is/are correct?

A. S2 only

B. S1 only

C. Neither S1 nor S2

D. Both S1 and S2

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Correct Answer: Option A

Explanation:
S1 is incorrect because AS 26 prohibits opening a goodwill account; the cash brought is credited to the old partners' capital accounts in their sacrificing ratio. S2 is correct; existing goodwill is written off in the old ratio before the new partner's admission.

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Question #1847

Under the Companies Act 2013, the 'National Company Law Appellate Tribunal' (NCLAT) hears appeals against the orders of:

A. SEBI

B. NCLT

C. CAG

D. RBI

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Correct Answer: Option B

Explanation:
The NCLAT is the appellate authority that hears appeals against the orders passed by the National Company Law Tribunal (NCLT) under the Companies Act 2013.

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Question #1848

S1: Under GST, the 'Reverse Charge Mechanism' (RCM) is applicable on the supply of notified goods by an unregistered person to a registered person. S2: Under RCM, the recipient must pay GST using his electronic cash ledger, not the electronic credit ledger. Which statement(s) is/are correct?

A. S2 only

B. Neither S1 nor S2

C. S1 only

D. Both S1 and S2

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Correct Answer: Option D

Explanation:
Both statements are correct. RCM applies to notified goods from unregistered suppliers, and the recipient must pay the tax in cash (via the electronic cash ledger) before claiming ITC in the electronic credit ledger.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1849

In the context of the Indian Financial System, the 'Deposit Insurance and Credit Guarantee Corporation' (DICGC) is a wholly owned subsidiary of:

A. Reserve Bank of India

B. Ministry of Finance

C. State Bank of India

D. Securities and Exchange Board of India

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Correct Answer: Option A

Explanation:
The DICGC was established as a wholly owned subsidiary of the Reserve Bank of India (RBI) to provide deposit insurance and guarantee credit facilities.

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Question #1850

Assertion (A): Under Ind AS 38, an intangible asset with an indefinite useful life is not amortized. Reason (R): Its useful life cannot be foreseen, so it is tested for impairment annually under Ind AS 36. Choose the correct option.

A. A is true but R is false

B. Both A and R are true and R is the correct explanation of A

C. Both A and R are true but R is NOT the correct explanation of A

D. A is false but R is true

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Correct Answer: Option B

Explanation:
Ind AS 38 states that indefinite-life intangible assets are not amortized because their useful life is not foreseeable. Instead, Ind AS 36 requires them to be tested for impairment annually. R correctly explains A.

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Question #1851

Under the Income Tax Act, the 'TDS' on payment of interest on securities (other than 8% taxable government securities) is governed by which section?

A. Section 194

B. Section 194C

C. Section 194J

D. Section 194A

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Correct Answer: Option A

Explanation:
Section 194 of the Income Tax Act mandates TDS on income by way of interest on securities (like debentures, corporate bonds) at the prescribed rates.

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Question #1852

S1: In standard costing, the 'Labour Efficiency Variance' is calculated as (Standard Hours for Actual Production - Actual Hours Worked) x Standard Rate. S2: If the actual hours worked are less than the standard hours, the variance is favorable. Which statement(s) is/are correct?

A. Both S1 and S2

B. Neither S1 nor S2

C. S2 only

D. S1 only

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Correct Answer: Option A

Explanation:
Both statements are correct. The formula for Labour Efficiency Variance is (SH - AH) x SR. If AH < SH, the result is positive, indicating a favorable variance (less time taken than standard).

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Question #1853

Under the General Financial Rules (GFR) 2017, the 'Reappropriation' of funds means:

A. Increasing the total budget allocation

B. Returning unspent funds to the Consolidated Fund

C. Transferring funds from one head to another without parliamentary approval

D. Transferring savings from one unit of appropriation to meet a deficit in another unit

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Correct Answer: Option D

Explanation:
Reappropriation under GFR refers to the transfer of savings from one unit of appropriation (like a specific grant or head) to meet a shortfall in another unit, without increasing the total authorized expenditure.

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Question #1854

In financial management, the 'Net Present Value' (NPV) of a project is ₹50,000 at a discount rate of 10%, and ₹(20,000) at a discount rate of 15%. What is the approximate Internal Rate of Return (IRR)?

A. 14.2%

B. 12.8%

C. 11.5%

D. 13.5%

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Correct Answer: Option B

Explanation:
IRR = Lower Rate + (NPV at Lower Rate / (NPV at Lower Rate - NPV at Higher Rate)) x Difference in Rates. IRR = 10 + (50,000 / (50,000 - (-20,000))) x 5 = 10 + (50,000 / 70,000) x 5 = 10 + 3.57 = 13.57%. Wait, 10 + (50/70)*5 = 10 + 3.57 = 13.57%. Let me adjust the options to match 13.5%.

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Question #1855

S1: Under Ind AS 115, a 'Contract Asset' is an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer, when that right is conditioned on something other than the passage of time. S2: A 'Contract Liability' is an entity's obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. Which statement(s) is/are correct?

A. S2 only

B. S1 only

C. Neither S1 nor S2

D. Both S1 and S2

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Correct Answer: Option D

Explanation:
Both statements correctly define Contract Asset and Contract Liability as per Ind AS 115. A contract asset is conditional on future performance, while a receivable is unconditional. A contract liability is the obligation to perform after receiving payment.

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Question #1856

Under GST, the 'E-way bill' is not required for the movement of goods:

A. Both A and B

B. From the consignor's place of business to the transporter's place of business for transportation

C. Where the consignment value is less than ₹50,000

D. None of the above

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Correct Answer: Option A

Explanation:
An e-way bill is not required if the consignment value is below ₹50,000, or for specific movements like goods being sent to a transporter for the purpose of transportation from the consignor's place of business.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1857

In the context of PFMS, the 'Core Banking Solution' (CBS) integration ensures that:

A. The RBI can monitor all private bank transactions

B. Funds are credited to the beneficiary's account in real-time without manual intervention

C. Tax collections are automatically deposited into the Consolidated Fund

D. Government departments can open bank accounts directly

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Correct Answer: Option B

Explanation:
CBS integration with PFMS ensures that once a payment instruction is processed, the funds are credited directly to the beneficiary's bank account in real-time, eliminating manual handling and delays.

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Question #1858

Assertion (A): Under Ind AS 21, the functional currency of an entity is the currency of the primary economic environment in which the entity operates. Reason (R): The presentation currency can be different from the functional currency, and financial statements can be translated into any currency for presentation. Choose the correct option.

A. A is false but R is true

B. Both A and R are true and R is the correct explanation of A

C. A is true but R is false

D. Both A and R are true but R is NOT the correct explanation of A

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Correct Answer: Option D

Explanation:
Both statements are correct as per Ind AS 21. The functional currency is based on the primary economic environment. The presentation currency is just the currency in which the financials are displayed, and it can be different from the functional currency. R does not explain A; they are two separate concepts.

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Question #1859

Under the Income Tax Act, the 'TDS' on payment of rent for land, building, or furniture exceeding ₹2,40,000 per annum is governed by which section, and what is the rate?

A. Section 194C at 2%

B. Section 194I at 2%

C. Section 194J at 10%

D. Section 194I at 10%

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Correct Answer: Option D

Explanation:
Section 194I(b) mandates TDS at 10% on rent paid for the use of land, building, or furniture, provided the rent exceeds ₹2,40,000 in a financial year.

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Question #1860

S1: In a partnership, if a partner retires, his loan to the firm is transferred to his loan account, which is a liability for the firm. S2: If the retiring partner's loan is not settled immediately, it is treated as a loan and interest is allowed as per the deed or at 6% p.a. if the deed is silent. Which statement(s) is/are correct?

A. Both S1 and S2

B. S2 only

C. Neither S1 nor S2

D. S1 only

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Correct Answer: Option A

Explanation:
Both statements are correct. Upon retirement, the partner's capital balance is transferred to his loan account if not paid immediately. This becomes a liability, and interest is charged to the P&L Account at the agreed rate or 6% p.a. if silent.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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