Accountancy mcq of previous year question paper

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

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[1] In Accounting Money is the:

 (a) Measurement Value

(b) Scale of Measurement

(c) Scale of Soc1al Measurement

(d) Store of Value

ANSWER-(b)

 

[2] Money is a measurement scale and has a universal denomination:

 (a) True

(b) Partly True

(c) False

(d) Can't Say

ANSWER-(c)

 

[3] Gross Book Value of a Fixed Asset is its:

 (a) Cost less depreciation

(b) Historical Cost

(c) Fair Market value

(d) Realizable value

ANSWER-(b)

 

[4] ABC Ltd. purchased a building by paying ~ 50,00,000 as on pI April, 2000. On 151 April, 2007 it found that it would cost ~1 ,50,00,000 to purchase the similar building. This value of ~1 ,50,00,000 is known as

 (a) Historical Cost

(b) Realizable value

(c) Curr.ent Cost

(d) Present

ANSWER-(c)

 

[5] Change in accounting estimate means:

(a) Differences arising between certain parameters reestimated during the current period and actual results achieved during the current period

(b) Differences arising between certain parameters estimated earlier and re-estimated during the current period

(c) Differences arising between certain parameters estimated earlier and actual results achieved during the currerit period

(d) Both (b) and (c)

ANSWER-(d)

 

[6] There are accepted measurement valuation principles:

 (a) two

(b) three

(c) four

(d) five

ANSWER-(c)

 

[7] All of the following are valuation principles except:

 (a) Historical cost

(b) Present value

(c) Future value

(d) Realizable value

ANSWER-(c)

 

[8] Historical cost concept requires the recording of an asset:

 (a) At its Cost Value

(b) At its Market value

(c) At its Net Realisable value

(d) At its Replacement cost

ANSWER-(a)

 

[9] Change in Accounting estimate means:

 (a) Difference arising between certain parameters estimated earlier and re- estimated during the current period.

(b) Difference arising between certain parameters estimated earlier and actual results achieved during current period.

(c) Differences arising between certain parameters during the current period and actual results achieved during the previous period.

(d) Both (a) and (b).

ANSWER-(d)

 

[10] Change in accounting estimate means:

 (a) Difference arises between certain parameters estimated earlier and re-estimated during the current period.

(b) Difference arises between certain parameters estimated earlier and actual result achieved during the current period.

(c) Difference arises between certain parameters reestimated during the current period and actual result achieved during the current period.

(d) Both (a) and (b).

ANSWER-(d)

 

Topic- Basic accounting procedures- Journal Entries

  

[11] The rule regarding PERSONAL ACCOUNT is:

 (a) Debit what comes in, credit what goes out.

(b) Debit all expenses and losses, credit all incomes and gains

(c) Debit the receiver, credit the r giver

(d) None

ANSWER-(c)

 

[12] The Rule 'Debit all expenses & losses and Credit all incomes & gains' relates to:

 (a) Personal Account

(b) Real Account

(c) Nominal Account

(d) None of these

ANSWER-(c)

 

[13] Unexpired expense is __________ account.

 (a) real

(b) nominal

(c) personal

(d) representative Personal

ANSWER-(d)

 

[14] ~ 1500 withdrawn for personal use should be debited to ___ _

 (a) expense account

(b) purchases account

(c) sales account

(d) drawings account

ANSWER-(d)

 

[15] Narration is given along with journal entry:

(a) To signify the impact of entry on profitability

(b) To disclose the profit or loss of the transaction.

(c) To give a precise explanation for proper understanding of the entry. .

(d) To secretly understanding the inner meaning of entries.

 

[16] In case of a debt becoming bad and doubtful, the amount is credited to ? .

 (a) bad debts alc

(b) creditors

(c) debtors alc

(d) capital alc.

ANSWER-(c)

 

[17] Proprietor's Account is ______ _ account.

 (a) real

(b) nominal

(c) personal

(d) none of these

ANSWER-(c)

 

[18] Purchase of second-hand computer on credit by a cloth merchant will be recorded in:

 (a) Journal

(b) Cash Book

(c) Purchase Book

(d) None of the above

ANSWER-(a)

 

[19] Discount is allowed by Arun to Varun. Which of the following should be the course of action in the books of Arun?

 (a) Credit Varun Alc and debit Discount Allowed Alc

(b) Debit Varun Alc and credit Discount Received Alc

(c) Credit Arun Alc and debit Discount Allowed Alc

(d)· Debit Arun Alc and credit Discount Received Alc

ANSWER-(a)

 

[20] Recovery of bad debts written off previously will be?

 (a) Credited to debtors Alc

(b) Adjusted against provision for doubtful debts

(c) Debited to debtors Alc

(d) Credited to Profit and Loss Alc

ANSWER-(d)


[21] ~ 5,000 received from Ram on 1.1.09 for the old furniture sold to him on 1.06.08 which of the following entry should be passed for recording the transaction in the books of accounts

 (a) Cash Alc Dr. 5,000 To Furniture Alc                                   5,000

(b) Cash Alc Dr. 5,000 To Suspense Alc                                   5,000

(c) Cash Ale Dr. 5,000 To Bad-debts recovered Alc               $,000

(d) Cash Alc Dr. 5,000 . To Ram Alc                                           5,000

ANSWER-(d)

 

[22] 'A' owed ~ 25,000 to 'B' 'A' becomes insolvent. 'B' got A's computer valuing ~ 11,500 in his full settlement. Journal Entry will be passed in the books of 'B'.

 (a) Purchase Nc Dr. 11,500 ToA 11,500

(b) Computer Dr. 11,500 Bad-debts Dr. 13,500 To A 25,000

(c) Computer Nc Dr.25,000 To A 25,000

(d) Computer Nc Dr. 11,500 Purchases Nc Dr. 13,500 To A 25,000

ANSWER-(b)

 

[23] Provision for bad-debts as on 1.4.08 ~ 1,000, during the year 2008-09 there were no bad-debts and debtors as on 31.3.09 were ~ 90,000. Provision for bad-debts required @ 1 % which of the following journal Entry will be passed on 31.3.09?

 (a) P &L Nc Dr. 100 To Provision for doubtful debts 100

(b) Provision for doubtful debts Dr. 100 To P/L Nc 100

(c) P &L Nc Dr. 900 To Provision for doubtful debts 900

(d) No entry will be passed.

ANSWER-(b)

 

[24] "Debit the receiver and credit the giver" is the golden rule for which type of account?

 (a) Real Nc

(b) Personal Nc

(c) Nominal Nc

(d) None of these.

ANSWER-(b)

 

[25] Journal and Subsidiary books in which transactions and events are first recorded are known as:

 (a) Secondary Books.

(b) Memorandum Books.

(c) Primary Books.

(d) Principal Books.

ANSWER-(c)

 

[26] Goods given as charity credited to:

(a) Charity Nc

(b) Purchase Nc

(c) Drawings Nc

(d) Sales Nc

ANSWER-(b)

 

[27] Capital Account is a ________

 (a) real alc

(b) personal alc

(c) nominal alc

(d) none of these

ANSWER-(b)

 

[28 The debt written off as bad, sUbsequently collected by proprietor in his personal capacity and kept by him. What is accounting treatment for this transaction?

 (a) Debit - Drawings Nc &Credit - Debtors Nc

(b) Debit - Cash Nc &CreditBad debts Recovered Nc

(c) Debit - Drawings Nc &Credit Bad debts Recovered Nc

(d) Simply ignore the transaction.

ANSWER-(c)

 

[29] If wages are paid for construction of business premises, Nc is credited and Nc is debited.

 (a) wages, cash

(b) premises, cash

(c) cash, wages

(d) cash, premises

ANSWER-(d)

 

[30] MIS Stationery Mart will debit purchase of stationery to

 (a) stationery account

(b) general expenses account

(c) purchase account

(d) stock account

ANSWER-(c)

 

[31] Value of goods drawn by proprietor should be credited to:

(a) Capital Account .

(b) Sales Account

(c) Drawings Account

(d) Purchases Account

ANSWER-(d)

 

[32] "Machinery sold for ~ 30,000 on credit." In which subsidiary book this transaction will be recorded? (a) Sales Register

(b) Cash Book

(c) Journal

(d) No Entry will be made.

ANSWER-(c)

 

[33] Which of the following is not a real account?

(a) Cash account

(b) Investment account

(c) Outstanding rent account

(d) Purchases account

ANSWER-(c)

 

[34] X is a dealer of electrical" goods (such as Refrigerator, Washing Machines, Televisions etc.).

He purchased two Air Conditioners and installed in his showroom. In the books of X, the cost of air conditioner would be debited in:

 (a) Drawings Account

(b) Capital Account

(c) Fixed asset account

(d) Purchase account

ANSWER-(c)

 

[35] Which of the following is not an example of nominal account?

(a) Outstanding liability account.

(b) Salary account

(c) Interest paid account

(d) Interest received account.

ANSWER-(a)

 

[36] A diamond ring worth ~ 1,00,000 was stolen from the shop of Mis Shine Jewellers during the accounting year 2011-12. Insurance claim of ~ 60,000 was admitted by the insurance company but not disbursed up to the end of the accounting year. In this regard no entry was passed in the books of accounts. The correct journal entry for preparing the final accounts for the year ended 31 st March 2012, would be

 (a) Profit &Loss alc Dr. 1,00,000 To Purchases alc 1,00,000

(b) Insurance claim Receivable alc Dr. 60,000 Loss by theft alc Dr. 40,000 To Purchases alc 1,00,000

(c) Profit &Loss alc Dr. 40,000 Insurance claim receivable alc Dr. 60,000 To Purchase alc 1,00,000

(d) Insurance claim Receivable alc Dr. 60,000 Insurance company alc Dr. 40,000 To Purchases alc 1,00,000

ANSWER-(c)

 

[37] A Furniture dealer during the financial year 2010-11, sold furniture of ~ 25,000 to Mr. Sunil on cash basis. In the books of dealer ____ account will be debited and _________ account will be credited.

 (a) cash, fixed assets

(b) cash, furniture

(c) cash, sales

(d) cash, Sunil's

ANSWER-(c)

 

[38] ~ 1,500 received from Ram which were written off as bad-debts earlier. To record this receipt, cash account will be debited and account will be credited.

 (a) Ram's

(b) bad - debts .

(c) bad - debt recovered

(d) sales 

ANSWER-(c)

 

[39] X Purchased land for ~ 10,00,000. He gave a cheque of ~ 2,00,000 and accepts a bill of ~ 8,00,000 due after 60 days. As a result:

 (a) Total assets increased by ~ 10,00,000 &total liabilities decreased by ~ 10,00,000.

(b) Total assets increased by ~ 8,00,000 &total liabilities decreased by ~ 8,00,000.

(c) Total assets increased by ~ 8,00,000 &total liabilities increased by ~ 8,00,000.

(d) Total assets increased by ~ 10,00,000 &total liabilities increased by ~ 10,00,000.

ANSWER-(c)

 

[40] Debit the expenses or losses, credit all incomes' and gains, is the rule for:

(a) Real Account

(b) Personal Account

(c) Nominal Account

(d) All of the above

ANSWER-(c)

 

[41] Goods are distributed as free samples worth ~ 50,000 for advertisement purpose. Which of the following journal entry would be passed:

 (a) Advertisement Ale Dr 50,000 To Purehases Ale 50,000

(b) Purehases Ale Dr 50,000 To Advertisement AIr:, 50,000

(c) Advertisement Ale Dr 50,000 To Sales Ale 50,000

(d) None of the above

ANSWER-(a)

 

[42] Rent of proprietor's house paid from business account by cash will:

 (a) Decrease the profit

(b) Increase the profit

(c) Reduce the capital of business

(d) Reduce the cash as well as capital ot business

ANSWER-(d)

 

[43] Fixed assets are held by business organization for ___________ .

 (a) conversion into cash

(b) generating income

(c) resale

(d) none of the above.

ANSWER-(b)

 

[44] Mr. X purchased a computer for ~ 60,000 by making a down payment of ~ 10,000 and balance ~ 50,000 signing the agreement of bills payable due in 50 days. As a result of these transactions.

 (a) Total assets increased by ~ 50,000 with the corresponding increase in liability ~ 50,000

(b) Total assets increased by ~ 50,000

(c) Total assets increased by ~ 60,000 with the corresponding increase in liability by ~ 50,000

(d) Total assets increased by ~ 60,000 with the corresponding increase in liability by ~ 60,000

ANSWER-(a)

 

[45] Changes in the capital account of a proprietor may occur due to:

 (a) Profits earned

(b) Losses incurred

(c) Capital introduced

(d) Any of the above

ANSWER-(d)

 

[46] Morning Tours has a ~ 70,000 Account receivable from Rahul. On January 20, 2015 Rahul makes a partial payment of ~50,OOO to Sunset Tours. The journal entry made on January 20, 2015 by Morning Tours to record the above transaction includes:

(a) A credit to the cash received account of ~ 50,000.

(b) A credit to Accounts receivable Account of t 50,000.

(c) A debit to cash account of ~ 20,000.

(d) A debit to Accounts receivable of ~ 20,000

ANSWER-(b)

 

[47] Consider the following statements and identify the wrong statement:

(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.

ANSWER-(d)

 

[48] Mr. X a dealer in electronic goods (such as refrigerators, air conditioners, washing machines, televisions, etc.). He purchased two air conditioners and installed in his showrooms. In the books of 'X', the cost of these 'two air conditioners will be debited to:

  (a) Purchases Nc

(b) Fixed Asset Alc

(c) Drawing Alc

(d) Capital Alc

ANSWER-(b)

 

[49] Decrease in amount of trade receivables results in

(a) increase in cash

(b) increase in liabilities

(c) increase in capital

(d) increase in loan.

ANSWER-(a)


[50] Goods of worth ~ 4,000 was purchased from Mr. Jalan. He allowed 5% trade discount. Cash discount of ~ 100 was also allowed for quick payment. Purchases Alc will be debited by _________ '

 (a) ~ 4,000

(b) ~ 3,800

(c) ~3,700

(d) ~ 3,900

ANSWER-(b)

 

[51] Pre-paid Insurance Premium Account is a ________ .

 (a) Real Account

(b) Nominal Account

(c) Representative Personal Account

(d) Artificial Personal Account

ANSWER-(c)

 

[52] If during the year, the assets are increased by ~ 1,00,000 and liabilities are decreased by '~ 50,000. Owner's equity will be

 (a) Increased by ~ 1,50,000

(b) Increased by ~ 50,000

(c) Decreased by ~ 1,50,000

(d) Decreased by ~ 50,000

ANSWER-(b)

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