About Accounting

Following are some of the multiple choice questions on the Accounting with answers that will help the students in developing their knowledge.

Accounting MCQ

1. Expense

  • debit
  • credit

2. A bank reconciliation statement is prepared by?

  • Banker
  • Accountant of the business
  • Auditors
  • Registrars

3. What are source documents?

  • these are the small track of transaction.
  • these are used to keep the business running
  • they are the small proof that the transaction did happen.
  • small documents

4. Unearned Revenues is what type of account?

  • Asset
  • Liability
  • Stockholders' Equity

5. The main purpose of preparing a bank reconciliation statement is?

  • Part of a Bank Statement
  • Part of the Cash Book
  • A separate statement
  • A sub-division of a journal

6. Assets are usually reported on the balance sheet at which amount?

  • Cost
  • Current Market Value
  • Expected Selling Price
  • None of These

7. Accounting entries involve a minimum of how many accounts?

  • One
  • Two
  • Three
  • Four

8. The business or economic entity concept is applicable to

  • sole proprietorship form of business
  • partnership form of business
  • corporate form of business
  • all of the above

9. Unfavourable balance means?

  • Credit balance in cash book
  • Credit balance in bank statement
  • Debit balance in cash book
  • Debit balance in petty cash book

10. Favourable balance means?

  • Credit balance in the cash book
  • Credit balance in the bank statement
  • Debit balance in cash book
  • Both B & C

11. The accounting equation is

  • Assets = Liabilities + Owner's Equity
  • Assets = Liabilities - Owner's Equity
  • Assets - Owner's Equity + Liability

12. Entries to expenses such as Rent Expense are usually

  • Debits
  • Credits

13. To which account in the Balance Sheet is the net income or net loss transferred to at the end of the accounting period?

  • Retained Earnings
  • Cash
  • Accounts Receivable
  • Inventory

14. Anything of value that is owned

  • account
  • asset
  • withdrawal
  • expense

15. A decrease in owner's equity resulting from the operation of a business

  • account
  • capital
  • asset
  • expense

16. Investment by owner

  • Dr. Cash Cr. Revenue
  • Dr. Owner's Capital Cr. Cash
  • Dr. Cash Cr. Accounts Receivable
  • Dr. Cash Cr. Owner's Capital

17. A business owned by one person

  • service business
  • revenue
  • expense
  • proprietorship

18. Entries to revenues accounts such as Service Revenues are usually

  • Debits
  • Credits

19. Amount owed by a business

  • liability
  • asset
  • capital
  • account

20. Which of the following are Assets?

  • Bank Account
  • Bank Loan
  • Vehicles
  • Bank overdraft
  • Furniture and fittings

21. What will usually cause the liability account Accounts Payable to increase?

  • Debit
  • Credit

22. Switching accounting principles every year would violate the

  • money measurement principle
  • consistency principle

23. A balance sheet reports a business's financial

  • Condition over a specific period of time
  • Progress over a specific period of time
  • Condition on a specific date
  • Progress on a specific date

24. Financial reports that summarize the financial condition and operations of a business

  • financial statements
  • ethics
  • withdrawals
  • equities

25. Ibu kota Australia

  • Sydney
  • Melbourne
  • Canberra
  • Washinton

26. The account used to summarize the owner's equity in a business

  • account
  • expense
  • capital
  • revenue

27. The amount in an account

  • account title
  • revenue
  • account balance
  • accounting records

28. Assets taken out of a business for the owner's personal use

  • capital
  • withdrawals
  • equities
  • revenue

29. What is the difference between cash and credit transaction?

  • credit no cash involved
  • you pay in cash
  • you buy witout using cash
  • none of the above

30. What will usually cause an asset account to increase?

  • Debit
  • Credit

31. An increase in owner's equity resulting from the operation of a business

  • asset
  • expense
  • withdrawl
  • revenue

32. Things you own

  • Asset
  • Liability

33. How would an accountant record an increase in sales?

  • debit
  • credit

34. How would an accountant record an increase in cash?

  • Debit
  • Credit

35. A petty cash fund is always replenished

  • a. daily.
  • b. weekly.
  • c. at the end of the month.
  • d. none of these.

36. ______________________ is the transfer of journalized transactions to their accounts.

  • Posting
  • Recording
  • Updating
  • Journalizing

37. Many businesses choose a one-year fiscal period that ends during a period of high business activity.

  • True
  • False

38. Accrual concept is based on :

  • matching principle
  • dual aspect principle
  • cost principle
  • going concern concept

39. Why is depreciation provided on non-current assets?

  • so that they are shown at market value
  • so that the cost is allocated to periods that benefit from them
  • so that there is enough cash in the business to replace them
  • so that the entity concept is applied

40. A company is classifying its costs. It discovers that for any level of output between 10 000 and 15 000 units the freight cost per unit is always the same figure of $2 per unit. Of which type of cost is this an example?

  • fixed cost
  • semi variable cost
  • stepped cost
  • variable cost

41. The issued ordinary share capital of a company at the beginning of a period was $240 000 (nominal value $0.60 per share). A rights issue of one share for every five held was made during the period at a price of $0.90 per share. At that time the market price was $1.10 per share. What was the issued ordinary share capital after the rights issue?

  • $292500
  • $312000
  • $328000
  • $288000

42. An investor owns 10 000 5% preference shares in Howdo Limited. One year Howdo Limited does not have enough profits to pay the preference dividend. The investor expects the profits to improve and he thinks the directors will pay the outstanding dividend in the following year. Which type of preference shares does the investor own?

  • cumulative
  • non-cumulative
  • participating
  • redeemable

43. A company’s trial balance showed trade receivables of $14 600 and an existing provision for doubtful debts of $470. It was discovered that the trade receivables included an irrecoverable debt of $500. A contra entry of $400 was also to be made. The provision for doubtful debts is to be maintained at 5% of trade receivables. Which amount for doubtful debts was charged in the income statement?

  • $215
  • $235
  • $470
  • $685

44. A book-keeper compared the business bank statement with the cash book. He then updated the cash book and finally prepared a bank reconciliation statement. Why was the bank reconciliation statement prepared?

  • to ensure no transactions had been omitted from the cash book.
  • to establish the value of unpresented cheques.
  • to explain the difference between the cash book balance and the bank statement  balance.
  • to find out if any cheques had been dishonoured.

45. A company purchased a lorry for $50000 on 1 January 2015. It has an estimated residual value of $10 000 and a four-year life. The company charges depreciation monthly on a straight-line basis. What will the charge for depreciation be for the year to 30 June 2015?

  • $5000
  • $6250
  • $10000
  • $12500

46. A company changes from the straight-line method of depreciation to the reducing balance method. Which accounting principle has not been applied?

  • consistency
  • going concern
  • historic cost
  • materiality

47. In the cash book, bank charges are recorded on the?

  • Credit side
  • Debit side
  • Both A & B
  • None of the above

48. When check is not paid by the bank, it is called?

  • Honoured
  • Endorsed
  • Dishonoured
  • Both A & B

49. An endorsement on the back of a check consisting only of a signature is a(n)

  • a. blank endorsement.
  • b. special endorsement.
  • c. restrictive endorsement.
  • d. incorrect endorsement.

50. :APP: how to calculate gross profit on the income statement?

  • 20 secoperating expenses -sales= Gross profit This is a wrong answer
  • Sales- cost of sales= Gross profit This is a correct answer operating
  • income - expenses = gross profit This is a wrong answer
  • cost of sales -sales =Gross profit

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