Monday, 3 August 2020

Accounting Multiple Choice Questions with answers | Download PDF for MCQs

MCQs BASED ON " INTRODUCTION TO ACCOUNTING"

1. The first step of accounting process is

(a) identifying a transaction

(b) recording a transaction

(c) summarizing a transaction

(d) None of the above 


2. The purpose(s) of cost accounting is/are

(a) to analyse the expenditure

(b) to ascertain the cost of various products

(c) to fix the price of the products

(d) All of the above


3. Who would most likely use an entities financial report to determine whether or not the business entity is eligible for a loan?

(a) Lenders and financial institutions

(b) Debtors

(c) Government

(d) Customer


4. Accounting serves as a

(a) historical data

(b) commodity

(c) language

(d) All of these


5. Which of the following is referred to management accounting?

(a) Focuses on estimating future revenues, costs and other measures to forecast activities and their results

(b) Provides information about the company as a whole

(c) Reports information that has occurred in the past that is verifiable and reliable

(d) Provides information that is generally available only on a quarterly or annual basis


6. Cost accounting provides all of the following except

(a) information for management accounting and financial accounting

(b) pricing information from marketing studies

(c) financial information regarding the cost of acquiring resources

(d) non-financial information regarding the cost of operational efficiencies


7. Which qualitative characteristics of accounting information is reflected when user of information is able to depend on the information?

(a) Understandability

(b) Relevance

(c) Comparability

(d) Reliability


8. The amount received or receivable by selling assets, goods or services is known as

(a) receipts

(b) profit

(c) income

(d) gain


9. Mr Ikram starts business with ₹5,00,000, the amount introduced by him is termed as

(a) capital

(b) loan

(c) debentures

(d) All of these


10. Deepti wants to buy a building for her business today. What of the following is relevant data for his decision?

(a) Similar business acquired the required building in ₹2000 for ₹10,00,000

(b) Building cost details of 2003

(c) Building cost details of 1998

(d) Similar building cost in August, 2005 for ₹25,00,000


11. Use of common unit of measurement and common format of reporting promotes

(a) Comparability

(b) Understandibility

(c) Relevance

(d) Reliability


12. ABC Ltd deals in selling and purchasing of furniture. Furniture is

(a) goods for ABC Ltd

(b) asset for ABC Ltd

(c) intangible assets for ABC Ltd

(d) None of the above


13. Trade receivables implies

(a) Debtors + Bills receivables

(b) Debtors - Bill receivables

(c) Debtors + Bills payable

(d) Debtors - Bills payable


14. Which of these is not a business transaction?

(a) Bought furniture of ₹10,000 for business

(b) Paid for salaries of employees ₹5,000

(c) Paid sons' fees from her personal bank account ₹20,000

(d) Paid sons' fees from business ₹2,000


15.' Mr A an electronic goods dealer, gifted a TV of value of ₹25,000 to his friend Mr B. It will be recorded in books as

(a) drawings

(b) expenses

(c) capital

(d) sales


16. A firm earns a revenue of ₹20,000 and the expenses to earn this revenue are ₹12,000. Calculate its income.

(a) 20,000

(b) 12,000

(c) 8,000

(d) Zero


17. What is the last step of accounting as a process of information? NCERT

(a) Recording of data in books of accounts

(b) Preparation of summaries in form of financial statements

(c) Communication of information

(d) Analysis and interpretation of information


18. _______ of accounting are like the foundation Pillars on which the structure of accounting is based.

(a) Basic assumption

(b) Basic principles

(c) Basic concept

(d) None of these


19. Stock-in-trade are to be recorded at cost price or market price whichever is less, it is based on principle.

(a) prudence

(b) cost

(c) cost benefit

(d) business entity


20. When the information about two different enterprises have been prepared presented in a similar manner the information exhibits the characteristic of (a) verifiability

(b) relevance

(c) reliability

(d) None of these


21. The primary qualities that make accounting information useful for decision-making are

(a) relevance and freedom from bias

(b) reliability and comparability

(c) comparability and consistency

(d) None of the above


22. A trader has made a sale of ₹65,500 out of which cash sales amounted to ₹25,000. He showed trade receivables on 31st March, 2017 at ₹40,500. Which concept is followed by him?

(a) Going concern

(b) Cost

(c) Accrual

(d) Money measurement


23. In income measurement and recognisation of assets and liabilities, which of the following concepts goes together?

(a) Periodicity, accrual, matching

(b) Cost, accrual, matching

(c) Going concern, cost, realisation

(d) Going concern, periodicity, reliability


24. According to which principle, the economic life of an enterprise is artificially split into periodic intervals?

(a) Consistency principle

(b) Accounting period principle

(c) going concern principle

(d) Accrual principle


25. During life time of an entity, accounting produce financial statements in accordance with which basic accounting concept.

(a) Conservatism

(b) Matching

(c) Accounting period

(d) None of the above


26. A concept that a business enterprise will not be sold or liquidated in the near future is known as

(a) going concern

(b) economic entity

(c) monetary unit

(d)None of the above


27. Identify the incorrect statement.

(a) India has followed dual GST model i.e. centre (GST) and state (GST)

(b) Goods and services tax is a value added tax

(c) An integrated tax (GST) would be levied and collected by the center on

inter state supply of goods and services

(d) The list of exempted goods and services are different or the centre and

the state


28. What is the number of categories of GST for accounting purpose?

(a) 5

(b) 6

(c) 7

(d) 4


29. Which principle states that every transaction has a dual or two-fold effect?

(a) Matching principle

(b) Historical cost principle

(c) Duality principle

(d) Materiality principle


30. If a piece of land is purchased for ₹6,00.000 and its market value is ₹9,00,000. At the time of preparing final accounts, the land value is recorded at which value and which concept support this?

(a) ₹6,00,000,historical concept

(b) ₹6,00,000,matching concept

(c) ₹9,00,000,matching concept

(d) ₹9,00,000,historical concept


31. Management concealing important financial information violates theprinciple.

(a) materialtiy

(b) full disclosure

(c) consistency

(d) None of these


32. Which board in India developed accounting standard?

(a) Accounting Standard Board

(b) All India Standard Board

(c) Standard Board of India

(d) None of the above


33. Which accounting concept satisfy the valuation criteria

(a) Going concern, Realisation, Cost

(b) Going concern, Cost, Dual aspect

(c) Cost, Dual aspect, Conservatism

(d) Realisation, Conservatism, Going concern.


34. A trader has made a sale of ₹75,500 out of which cash sales amounted to ₹25,500. He showed trade receivables on 31-3-2014 at ₹25,500. Which concept is followed by him?

(a) Going concern

(b) Cost

(c) Accrual

(d) Money measurement


35. In which of the following cases, accounting estimates are needed?

(a) Employs benefit schemes

(b) Impairment of losses

(c) Inventory obsolescence

(d) All of the above


36. Deewali advance given to an employee is

(a) Revenue Expenditure

(b) Capital Expenditure

(c) Deferred Revenue Expenditure

(d) Not an Expenditure


37. A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-2014 after taking into consideration the following items.

(i) The cost of an asset Rs.23,000 has been taken as an expense

(ii) The firm anticipated a profit of Rs.12,000 on the sale of an old furniture

(iii) Salary of Rs.7,000 outstanding for the year has not been taken into account.

(iv) An asset of Rs.85,000 was purchased for Rs.75,000 and was recorded in the books at Rs.85,000.


38. What is the correct amount of profit to be reported in the books?

a) Rs.1,47,000

b) Rs. 1,51,000

c) Rs.1,63,000

d) Rs.1,41,000


39. The process of recording financial data upto trial balance is

a) Book keeping

b) Classifying

c) Summarising

d) Analyzing


40. Rohit carrying on real estate business sold a piece of land for Rs.4,00,00,000 (cost

Rs.3,50,00,000) then the type of receipt is ______ nature and profit on sale is

a) Capital & transferred to capital reserve b) Revenue & transferred to P & L a/c

c)Capital & transferred to P & L a/c

d) Revenue & transferred to general reserve


41. In income measurement & recognisation of assets & liabilities which of the following concepts goes together ?

(a) Periodicity, Accural, Matching

(b) Cost, Accural, matching

(c) Going concern, cost, Realization

(d) Going concern, Periodicity, Reliability


42. Interpretation means

(a) Explanation of meaning and significance of the data in Financial Statements.

(b) Concerned with preparation and presentation of classified data

(c) Systematic analysis of recorded data

(d) Methodical classification of data given in Financial Statements.


43. A trader purchases goods for Rs. 2500000, of these 70% of goods were sold during the year. At the end of 31st December 2009, the market value of such goods were Rs. 500000. But the trader recorded in his books for Rs. 750000. Which of the following concept is violated.

(a) Money measurement

(b) Conservatism

(c) Consistency

(d) None of these


44. Which of the following is wrong?

(a) All real and personal accounts are transferred to balance sheet

(b) Nominal accounts are transferred to P & L account

(c) Each account is opened separately in ledger

(d) Rent is a personal account, outstanding rent is nominal account


45.__________ is root cause for financial accounting

(a) Stewardship accounting

(b) Social accounting

(c) Management accounting

(d) Human resource accounting


46. If nothing is given in the financial statements about the three accounting assumptions then it is to be treated as it

a) Is assumed that it is not followed

b) Is assumed to be followed

c) Is assumed to be followed to some extent

d) None of the above


47. The proprietor of the business is treated as creditor for the capital introduced by him due to_____ concept.

a) Money measurement

b) Cost

c) Entity

d) Dual aspect


48. Fixed assets are held by business for _____

a) Converting into cash

b) Generating revenue

c) Resale

d) None of the above


49. Which accounting concept specifies the practice of crediting closing stock to the trading account?

a) Cost

b) Realisation

c) Going concern

d) Matching


50. Amount spent to increasing the earning capacity is a ______ expenditure

a) Capital

b) Revenue

c) Deferred revenue

d) Capital Loss


Introduction to Accounting Answers:

1. (a)

2. (d)

3. (a)

4. (d)

5. (a)

6. (d)

7. (d)

8. (a)

9. (a)

10. (d)

11. (a)

12. (a)

13. (a)

14. (c)

15. (a)

16. (c)

17. (c)

18. (a)

19. (a)

20. (a)

21. (b)

22. (c)

23. (a)

24. (b)

25. (c)

26. (a)

27. (d)

28. (b)

29. (c)

30. (a)

31. (b)

32. (a)

33. (a)

34. (c)

35. (d)

36. (d)

37. (b)

38. (a)

39. (b)

40. (a)

41. (a)

42. (b)

43. (d)

44. (a)

45. (b)

46. (c)

47. (b)

48. (d)

49. (a)

50. (d)


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