Accountancy mcq of previous year question paper

 Unit 2: Accounting concepts, principles and conventions

Objective Type Questions: The following multiple choice questions are taken from the question papers of various Government recruitments occurred in the past.

accounts objective type questions with answers pdf  mcq questions for class 11 accountancy pdf  accountancy mcq book  accounts mcq for competitive exams pdf  mcq questions for class 11 accountancy chapter wise  accounts mcq questions with answers  mcq questions for class 12 accountancy pdf  mcq questions for class 11 accountancy chapter 2

[1] Omission of paise and showing the round figures in financial statements is based on: 

(a) Conservatism concept

(b) Consistency concept

(c) Materiality concept

(d) Realization concept

ANSWER-(c)

 

[2] Accounting does not record nonfinancial transactions because of:

 (a) Accrual concept

(b) Cost concept

(c) Continuity concept

(d) Money Measurement concept

ANSWER-(d)

 

[3] The adjustments to be made for prepaid expenses is:

 (a) Add prepaid expenses to respective expenses and show it as an asset

(b) Deduct prepaid expenses from respective expenses and show it as an asset

(c) Add prepaid expenses to respective expenses and show it as a liability

(d) Deduct prepaid expenses from respective expenses and show it as a liability

ANSWER-(b)

 

[4] Which of these is not a fundamental accounting assumption?

 (a) Going concern

(b) Consistency

(c) Conservatism

(d) Accrual

ANSWER-(c)


[5] Fixed assets and Current assets are categorized as per concept of:

 (a) Separate entity

(b) Going concern

(c) Consistency

(d) Time period 

ANSWER-(b)

 

[6] The obligations of an enterprise other than owner's fund are known as:

 (a) Assets

(b) Liabilities

(c) Capital

(d) None of these

ANSWER-(b)

 

[7] Which concept requires that those transactions which can be expressed in terms of money should be recorded in books of account?

 (a) Business Entity

(b) Dual Aspect

(c) Money measurement

(d) None of these

ANSWER-(c)

 

[8] An asset was purchased for ~ 6,60,000. Cash was paid ~ 1,20,000 and for the balance a bill was drawn for 60 days. What will be the effect on fixed assets?

 (a) ~ 1,20,000

(b) ~ 5,40,000

(c) ~ 6,60,000

(d) Nil

ANSWER-(c)

 

[9] Guru Ltd. purchased a machinery for ~ 10 lakhs. Installation charges= ~ 20,000. Market value ~ 12 lakhs. Company valued the machine at market price at the end of the year at ~ 12 lakhs which concept is violated?

 (a) Cost Concept

(b) Realization Concept

(c) Matching Concept

(d) Accrual Concept

ANSWER-(a)

 

 [10] Cash of ~ 2,000 is withdrawn for personal expenses. This will be debited to which account:

 (a) Drawings Alc

(b) Creditors Alc

(c) Capital Alc

(d) Cash Alc

ANSWER-(a)

 

[11] Estimated selling price less estimated cost of sales is

 (a) Net Realisable Value

(b) Cost of purchase

(c) Cost of goods sold

(d) None.

ANSWER-(a)

 

[12] Unpaid expenses are:

 (a) Outstanding Liabilities

(b) Prepaid expenses

(c) Unaccrued expenses

(d) All of these

ANSWER-(a)

 

[13] In the accounting period, according to which concept, cost incurred to acquire an asset is shown in the Balance Sheet.

(a) Business Concept

(b) Realization Concept

(c) Cost Concept

(d) Accounting Period Concept

ANSWER-(c)

 

[14] What is the effect on the Net Assets if cash is received from debtors of ~ 50,000?

(a) Increase

(b) Decrease

(c) No Change

(d) None of these

ANSWER-(c)

 

[15] Proprietor (owner) is treated as creditor of business due to:

 (a) Periodicity concept

(b) Materiality Principle

(c) Entity concept

(d) Consistency concept

ANSWER-(c)

 

[16] Provision for discount is made due to concept of:

 (a) Conservatism

(b) Matching

(c) Both (a) and (b)

(d) Materiality

ANSWER-(a)

 

[17] The three fundamental accounting assumptions are –

 (i) Accrual

(ii) Conservatism

(iii) Going Concern

(iv) Consistency

(v) Matching

            (a) (ii), (iii) and (iv)

            (b) (i), (iii) and (iv)

            (c) (ii), (iv) and (v)

            (d) (iii), (iv) and (v)

ANSWER-(b)

 

[18] Debtors - ~ 50,000. A provision for bad debt is created @ 5% according to which concept?

 (a) Conservatism

(b) Matching

(c) Accrual

(d) Dual Aspect

ANSWER-(a)

 

[19] Outstanding expenses is included in Profit & Loss Alc at the year end according to which concept ______ _

 (a) Matching

(b) Full disclosure

(c) Accrual

(d) Going Concern

ANSWER-(c)

 

[20] What is the objective of conservatism?

 (a) Take all incomes and losses

(b) Anticipate losses but not profits

(c) Take all losses

(d) None of the above

ANSWER-(b)

 

[21] Contingent liabilities are shown in footnote of Balance Sheet as per which concept?

 (a) Materiality

(b) Disclosure

(c) Realization

(d) Dual Aspect

ANSWER-(b)

 

[22] Which of the following does not follow Dual Aspect?

 (a) Increase in one asset, decrease in other.

(b) Increase in both asset and liability

(c) Decrease in one asset, decrease in other

(d) Increase in one asset & capital

ANSWER-(c)

 

[23] The Rule of "Lower of Cost or . Market Value" is based on which concept?

 (a) Dual Aspect

(b) Conservatism

(c) Disclosure

(d) Prudence

ANSWER-(b)

 

[24] According to which concept the owner of an enterprise pays the "interest on drawings"?

 (a) Accrual concept

(b) Conservative concept

(c) Entity concept

(d) Dual Aspect concept

ANSWER-(c)

 

 

[25] If market value of closing inventory is reduced below cost prices, which of the following concepts will playa role?

 (a) Materiality concept

(b) Business Entity concept

(c) Realisation concept

(d) Consistency concept

ANSWER-(c)

 

[26] Cost concept basically recognizes

 (a) Fair Market Value

(b) Historical Cost

(c) Realisable Value

(d) Replacement Cost 

ANSWER-(b)

 

[27] A trader started retail business. During the year he sold goods worth ~ 60,000 for ~ 1,20,000 out of which only ~ 1,00,000 was collected during the year. He had a closing stock of ~ 10,000. His other business expenses for the period were ~ 20,000 out of which ~ 5,000 was outstanding at year end His total profit for the year 2008-09 as . per the terms of accrual concept was:

 (a) ~ 30,000

(b) ~ 40,000

(c) ~ 45,060

(d) ~ 20,000

ANSWER-(a)

 

[28] As per Accrual Concept, which of the following is not true?

 (a) Revenue - Expense = Profit

(b) Revenue - Profit = Expense

(c) Sales - Gross Profit = Revenue

(d) Revenue = Profit + Expenses.

ANSWER-(b)

 

[29] If nothing is written in the financial statements about the three fundamental assumptions, then it could be pressured that:

 (a) They have not been followed.

(b) They have been followed.

(c) They have been followed to some extent.

(d) None of the above.

ANSWER-(c)

 

[30] Rosa pays ~ 1200 on 01.06.2009 towards yearly subscription (July' 01 2009 to June' 30 2010) of a newspaper. It means she has to make adjustment of __ for finalization of accounts for the year ended 31.3.10.

 (a) ~ 300 as prepaid

(b) ~ 300 as outstanding

(c) ~ 200 as prepaid

(d) ~ 200 as outstanding.

ANSWER-(b)

 

[31] Matching concept is based on: Revenue - _ = Profit.

 (a) Liability

(b) Expense

(c) Asset

(d) . None of these

ANSWER-(a)

 

[32] According to the prudence concept, closing stock be valued at cost or ____ whichever is less.

 (a) market price

(b) accounting price

(c) standard price

(d) net realizable value

ANSWER-(b)

 

[33] Small items like Stapler, Calculator, etc. are not shown in books as Fixed Assets although they are used in business for long period due to:-

 (a) Consistency Concept

(b) Materialiy Concept

(c) Accrual Concept

(d) Cost Concept

ANSWER-(d)

 

[34] Business enterprise is a separate identity apart from' its owner. Accountant should treat a business as distinct from its owner. This concept is known as:

(a) Money Measurement Concept

(b) Matching Concept

(c) Entity Concept

(d) Dual Aspect Concept.

ANSWER-(b)

 

[35] XYZ Ltd. follows the written down value method for depreciating machinery year after year due to

 (a) consistency

(b) convenience

(c) comparability

(d) conservatism

ANSWER-(c)

 

[36] X of Delhi purchased a machinery from Yof Chennai for ~ 10,00,000. He paid freight of ~ 2,00,000 and excise duty of ~ 1,00,000. He used the machinery in his business. At the end of the year he charged depreciation ~ 1,50,000. The market value of the machine was estimated at ~ 15,00,000. At what value the machinery should be shown in the balance sheet at the yearend?

 (a) ~ 13,00,000

(b) ~ 13,50,000

(c) ~ 11,50,000

(d) ~ 15,00,000

ANSWER-(a)

 

[37] Human resources can't be shown in Balance Sheet because of _____ concept.

 (a) realization

(b) conservatism

(c) going concern

(d) money measurement.

ANSWER-(c)

 

[38] The policy of "anticipate no profit and provide for all possible losses" arises due to convention of

 (a) Consistency

(b) Disclosure

(c) Conservation

(d) Matching

ANSWER-(d)

 

[39] "For every debit there is an equivalent credit" this statement demonstrates:

 (a) Matching concept

(b) Cost concept

(c) Money Measurement concept

(d) Dual aspect concept

ANSWER-(c)


[40] The comparison of the financial statement of one accounting period with that of another accounting period is possible only when __ concept is followed.

(a) Cost

(b) Consistency

(c) Going concern

(d) Materiality 

ANSWER-(d)

 

[41] The concept means that similar items in a set of accounts should be given similar accounting treatment and it should be applied for one' period after another:

(a) Going concern

(b) Prudence

(c) Consistency

(d) Materiality.

ANSWER-(b)

 

[42] Matching concept means:

(a) Assets equal to liabilities plus capital

(b) Transactions are recorded at actual cost

(c) Anticipate no profits but recognize all losses

(d) Expenses should be matched with the revenue of the period 

ANSWER-(c)

 

[43] Proprietor's personal travelling expenses are not to be charged in business accounts. It is due to ____ concept.

(a) materiality

(b) conservatism

(c) going concern

(d) entity

ANSWER-(d)

 

 

[44] As per basic accounting Equation Assets = Capital + liabilities which of the following equation will be true if Ram starts a business with ~ 5,50,000 &then buy goods worth ~ 1,50,000 from Madan on credit?

(a) ~ 7,00,000 = ~ 5,50,000 + ~ 1,50,000

(b) ~ 7,00,000 = f 6,50,000 - ~ 50,000

(c) ~ 5,50,000 = ~ 5,00,000 + ~ 50,000

(d) ~ 5,50,000 = ~ 7,00,000 - ~ 1,50,000

ANSWER-(d)

 

[45] To achieve comparability of the financial statements of an enterprise, the same accounting policies should be followed from one period to another period due to ____ concept.

(a) materiality

(b) consistency

(c) conservatism

(d) going concern

ANSWER-(a)

 

[46] Which accounting concept makes a distinction between the receipt of cash and the right to receive the cash?

(a) Money measurement concept

(b) Going concern concept

(c) Realisation concept

(d) Accrual concept

ANSWER-(b)

 

[47] ACE Traders purchased goods for ~ 30,00,000 and sold 70% of such goods during the accounting year ended 315t March, 2012. The market value of the remaining goods was ~ 6,00,000. ACE Traders valued the closing stock at ~ 6,00,000 and not at ~ 9,00,000 due to concept of _________ .

 (a) money measurement

(b) periodicity

(c) cost

(d) conservatism

ANSWER-(d)

 

[48] If owner's equity of a business are ~ 90,000 and profits are of ~ 60,000 for the year calculate total assets of the business:-

(a) ~ 1,50,000

(b) ~ 1,20,000

(c) .~ 30,000

(d) ~ 1,70,000.

ANSWER-(d)

 

[49] If nothing is written in the financial statements about the fundamental accounting assumptions, then it could be presumed that:-

(a) they have not been followed

(b) they have been followed

(c) hey have been followed to some extent

(d) none of the above.

ANSWER-(a)

 

(50) The proprietor of a business is treated as a creditor for capital introduced by him, according to:-

(a) Money Measurement Concept

(b) Cost Concept

(c) Entity Concept

(d) Dual Aspect Concept.

ANSWER-(b)

 

[51] Which is the accounting concept that requires the practice of crediting closing stock in the trading account?

(a) Cost

(b) Realisation

(c) Going concern

(d) Matching.

ANSWER-(c)

 

[52] Which concepts work together for income measurement and recognition of assets and liabilities?

(a) Cost, going Concern and Realization

(b) Cost, Accrual and Matching

(c) Accrual, Matching and Periodicity

(d) Going Concern, Periodicity and Realization

ANSWER-(d)

 

[53] Gyan received ~ 5,000 advance from a customer. He showed this amount as his income, which Accounting Concept is not followed?

(a) Money Measurement

(b) Accrual

(c) Consistency

(d) Conservatism

ANSWER-(c)

 

[54] A businessman purchased goods for 25,00,000 and sold 70% of such goods during the accounting ye~ ar ended on 31.3.2014. The market value of remaining goods' was ~ 5,00,000. He valued the closing stock at ~ 5,00,000 and not at ~ 7,50,000 due to:

(a) Money Measurement

(b) Conservatism

(c) Cost

(d) Periodicity

ANSWER-(d)

 

[55] Which accounting concepts give the valuation criteria?

(a) Going Concern, Realization and cost

(b) Going Concern, Cost and Dual aspect

(c) Cost, Conservatism and Dual aspect

(d) Realization Conservatism and Going Concern

ANSWER-(b)

 

[56] A firm has reported a profit of t1,47,000 at the end of the financial year after taking into consideration the following amount:

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

(ii) The partner anticipated a profit of t 12,000 on the future sale of a car shown as an asset in his books.

(iii) Salary of t 7,000 payable in the financial year has not been taken into account.

(iv) An asset of t 85,000 was purchased for t 75,000 and was recorded in the books as t 85,000

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

 

                (a) t 1,47,000 

                (b) t 1,51,000

                (c) t 1,63,000

                (d) t 1,41,000

ANSWER-(a)

 

[57] Mr. Z sold goods worth t 75,500 in the ordinary course of business. He has, t 50,000 in cash and t 25,500 as account receivables as at 31 st March, 2014. Which concept of accounting is being followed?

(a) Going Concern Concept

(b) Cost Concept

(c) Accrual Concept

(d) Money Measurement Concept

ANSWER-(b)

 

 [58] Mr. Z purchased goods for t 20,00,000 and sold 4/51h of the goods for t 22,00,000 of which he received t 20,00,000 in cash. He incurred expenses amounting to t 2,50,000 during the year. For that year he counted net profit as t 1,50,000. Which of the accounting concept was violated by him?

(a) Entity –

(b) Period

(c) Conservatism

(d) Accrual

ANSWER-(a)

 

[59] Simon purchased goods for t20,00,000 and sold 4/5th of the goods amounting t 21,00,000 and net expenses amounting t3,OO,000 during the year 2015. He counted net profit as t 2,00,000. Which ot the accounting concept was followed by him? 

(a) Matching

(b) Periodicity

(c) Entity

(d) Conservatism.

ANSWER-(d)

 

[60] shows profit of t 6,00,000 for the year ended 31.3.2015. The figure has been arrived at after charging following against revenue:

 (i) Purchase of Car on 28.3.2015 for use in business t 1,30,000 and treated as vehicle expenses.

(ii) Omitting to record unpaid electricity bills for Feb and March 2015 t1 0,000 per month. The correct profit for the year ended 315t March, 2015 will be:

                (a) t 6,40,000

                (b) t 7,80,000

                (c) t 7,10,000

                (d) t5,10,000

ANSWER-(a)

 

[61] Which of the following is correct:

(a) Liabilities = Capital + Asset

(b) Capital = Assets + Liabilities

(c) Capital = Assets - Liabilities

(d) Assets = Liabilities – Capital

ANSWER-(c)

 

[62] A Trader purchased 100 mobiles @ t 10,000 each and sold 90 mobiles during the accounting year ended 3151 March, 2015. The marketing value of the remaining mobiles was t 90,000. He valued the closing inventories at cost. He had violated the concept of:

(a) Periodicity Concept

(b) Money Measurement Concept

(c) Cost Concept

(d) Conservatism Concept 

ANSWER-(b)

 

[63] Sohan purchased goods for t 18,00,000 and sold 4/5th of the goods amounting t 21,60,000 and met expenses amounting t 3,00,000 during the year, 2015. He counted net profit as t 4,20,000. Which of the following accounting concepts was followed by him?

(a) Entity

(b) Periodicity

(c) Matching

(d) Conservatism.

ANSWER-(d)

 

[64] A businessman purchased goods for t 25,00,000 and sold 70% of such goods during the year ended 31.3.2016. The market value of the remaining goods was t 5,00,000. He valued the closing stock at t 5,00,000 and not at t 7,50,000 due to:

(a) Money measurement

(b) Conservatism

(c) Cost

(d) Periodicity

ANSWER-(c)

 

[65] The golden rule of current asset valuation- 'cost or market price' whichever is lower, originated from the concept of:

(a) Consistency

(b) Conservatism

(c) Accrual

(d) Going Concern.

ANSWER-(b)

 

[66] The convention of conservatism when applied to the Balance Sheet, results in:

(a) Understatement of Assets

(b) Understatement of liabilities

(c) Overstatement of Capital

(d) Overstatement of Assets

ANSWER-(b)

 

[67] X started a business on 1 st January, 2016 with capital of ~ 5,00,000. On 31 st December, 2016 his books shows total assets and total liabilities ~ 8,50,000 and ~ 75,000 respectively. He withdrew ~ 1,20,000 during the year. His closing capital and profit would be:

 (a) ~ 8,50,000 and ~ 3,80,000

(b) ~ 7,75,000 and ~ 3,95,000

(c) ~ 7,75,000 and ~ 1,55,000

(d) ~ 8,50,000 and ~ 4,70,000

ANSWER-(a)

 

[68] A trader purchased goods for ~ 20,00,000 and sold 70% of such goods during the accounting year. The market value of the remaining goods was ~ 5,50,000. He valued the closing inventory at cost. He violated concept of accounting

(a) periodicity

(b) cost

(c) conservatism

(d) money measurement

ANSWER-(b)

 

[69] From the following, find out the correct equation, if A = Opening . Stock; B = Purchases; C = Closing Stock D = Cost of Goods Sold.

(a) D - A = B + C

(b) A + B = D - C

(c) A - C:, D + B

(d) A + B = C + D

ANSWER-(c)

 

[70] If an asset is increased, there will be a corresponding:

(a) Decrease of specific liability or decrease of capital

(b) Increase of another asset or increase of capital

(c)· Decrease of another asset or increase of llability

(d) Increase of drawings and liability.

ANSWER-(d)

 

[71] _______ principle requires that the same accounting method should be followed from one accounting period to the next.

(a) Conservatism

(b) Consistency

(c) Business entity

(d) Money measurement

ANSWER-(c)

 

[72] Guarantee given in respect of the third parties is ______ .

(a) Contingent liability

(b) Current liability

(c) Contingent assets ,

(d) Provision

ANSWER-(b)

 

[73] A person is having inventory of cost of ~ 1,00,000. Its market value as on 31s1 March, 2017 is ~ 80,000. He valued the inventory . at ~ 1,00,000. In during so, which of the concept was voilated by him?

(a) ·Money measurement

(b) Cost

(c) Conservation 

(d) Periodicity

ANSWER-(a)

 

[74] Economic life of an enterprise is split into the periodic interval as per __ concept.

(a) Money measurement

(b) Matching

(c) Periodicity

(d) Accrual

ANSWER-(c)

 

[75 ] Which one of the following is not the fundamental accounting assumption?

(a) Going concern

(b) Prudence

(c) Consistency

(d) Accrual

ANSWER-(c)

Comments

Popular posts from this blog

Accounting Multiple Choice Questions with answers | Download PDF for MCQs

Accounting Multiple Choice Questions with answers | Download PDF for MCQs