The 'Accrual System' of accounting records transactions: MCQ with Answer and Explanation

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The 'Accrual System' of accounting records transactions:

A. When they become due (earned/incurred)

B. On order placement

C. At the end of year

D. When cash is received or paid

Answer: Option A

Solution (By JKSSB Mock Tests)

Accrual basis recognises income when earned and expenses when incurred, regardless of cash flow.

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

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Question #1

In government accounting under PFMS, what does the SNA model stand for?

A. Standard Nodal Account

B. State National Authority

C. Single Nodal Agency

D. System for National Audit

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Correct Answer: Option C

Explanation:
The Single Nodal Agency (SNA) model ensures states operate a single account for each Centrally Sponsored Scheme to prevent idle float of funds.

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

Question #2

Which of the following errors is an Error of Principle?

A. Treating wages paid for installation of machinery as normal wages

B. Posting Rs 500 as Rs 5,000

C. Posting a debit entry to the credit side

D. Forgetting to record a sales invoice entirely

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Correct Answer: Option A

Explanation:
Treating capital expenditure (installation of machinery) as revenue expenditure (normal wages) violates fundamental accounting principles.

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

Question #3

Which of the following is not a purpose of financial audit?

A. Detecting fraud and error

B. Ensuring compliance with laws

C. Expressing opinion on true and fair view

D. Preparing financial statements

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Correct Answer: Option D

Explanation:
Preparation of financial statements is management's responsibility. Auditor expresses opinion on them.

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

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