Business Accounting Solved MCQs


Accounting furnishes data on

A. Income and cost for the managers
B. Financial conditions of the institutions
C. Company’s tax liability for a particular year
D. All the above
Answer» D. All the above

Long term assets having no physical existence but, possessing a value are called

A. Intangible assets
B. Fixed assets
C. Current assets
D. Investments
Answer» A. Intangible assets

The assets that can be easily converted into cash within a short period, i.e., 1 year or less are known as

A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Answer» A. Current assets

The debts which are to be repaid within a short period (a year or less) are referred to as,

A. Current Liabilities
B. Fixed liabilities
C. Contingent liabilities
D. All the above
Answer» A. Current Liabilities

The following is not a type of liability

A. Short term
B. Current
C. Fixed
D. Contingent
Answer» A. Short term

Any written evidence in support of a business transaction is called

A. Journal
B. Ledger
C. Ledger posting
D. Voucher
Answer» D. Voucher

The accounts that records expenses, gains and losses are

A. Personal accounts
B. Real accounts
C. Nominal accounts
D. None of the above
Answer» C. Nominal accounts

Real accounts records

A. Dealings with creditors or debtors
B. Dealings in commodities
C. Gains and losses
D. All of the above
Answer» B. Dealings in commodities

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.
Answer» A. Going concern, Realisation, Cost

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

A. Going concern
B. Cost
C. Accrual
D. Money measurement
Answer» C. Accrual

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
Answer» B. Conservatism

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
Answer» C. Entity

Fixed assets are held by business for _____.

A. Converting into cash
B. Generating revenue
C. Resale
D. None of the above
Answer» B. Generating revenue

Small items like, pencils, pens, files, etc. are written off within a year according to _____ concept.

A. Materiality
B. consistency
C. Conservatism
D. Realisation
Answer» A. Materiality

Business enterprise is separate from its owner according to _____ concept.

A. Money measurement concept
B. Matching concept
C. Entity concept
D. Dual aspect concept
Answer» C. Entity concept

Debit the receiver & credit the giver is _____ account.

A. Personal
B. Real
C. Nominal
D. All the above
Answer» A. Personal

Cash a/c is a ______.

A. Real a/c
B. Nominal
C. Personal
D. None
Answer» A. Real a/c

As per the Matching concept, Revenue – ? = Profit

A. Expenses
B. Liabilities
C. Losses
D. Assets
Answer» A. Expenses

Which of the following is not a nominal Account?

A. Outstanding salaries Account
B. Salaries account
C. Interest paid
D. Commission received
Answer» A. Outstanding salaries Account

Historical cost concept requires the valuation of an asset at

A. Original cost
B. Replacement value
C. Net realizable value
D. Market value
Answer» A. Original cost

Profit and loss is calculated at the stage of

A. Recording
B. Posting
C. Classifying
D. Summarising
Answer» D. Summarising

The rule debit all expenses and losses and credit all income and gains relates to

A. Personal account
B. Real account
C. Nominal accounts
D. All
Answer» C. Nominal accounts

The comparison of financial statement of one year with that of another is possible only when ------------- ---concept is followed

A. Going concern
B. Accrual
C. Consistency
D. Materiality
Answer» C. Consistency

For every debit there will be an equal credit according to

A. Matching concept
B. Cost concept
C. Money measurement concept
D. Dual aspect concept
Answer» D. Dual aspect concept

A trader calculated his profit as Rs.150000 on 31/03/2014. It is an

A. Transaction
B. Event
C. Transaction as well as event
D. Neither transaction nor event
Answer» B. Event

Which of the following is a Real A/c?

A. Building A/c
B. Capital A/c
C. Shyam A/c
D. Rent A/c
Answer» A. Building A/c

Cost concept basically recognises ____.

A. Fair Market value
B. Historical cost
C. Realisable value
D. Replacement cost
Answer» B. Historical cost

Which of the following is not an internal user of management information?

A. Creditor
B. Department manager
C. Controller
D. Treasurer
Answer» A. Creditor

Double entry system is used in which type of accounting?

A. Cost
B. Financial
C. Management
D. All
Answer» B. Financial

An accounting that deals with the accounting and reporting of information to management regarding the detail information is

A. Financial accounting
B. Management accounting
C. Cost accounting
D. Real Accounting
Answer» B. Management accounting

Identify which is wrong rule

A. Nominal account- debit all expenses & losses
B. Real account- credit what comes in
C. Nominal account- credit all incomes & gains
D. Personal account- debit the receiver
Answer» B. Real account- credit what comes in

The nature of financial accounting is:

A. Historical
B. Forward looking
C. Analytical
D. Social
Answer» A. Historical

The main object of cost accounting is:

A. To record day to day transactions of the business
B. To reveal managerial efficiency
C. To ascertain true cost of products and services
D. To determine tender price
Answer» C. To ascertain true cost of products and services

Accounting principles are generally based upon:

A. Practicability
B. Subjectivity
C. Convenience in recording
D. None of the above
Answer» A. Practicability

The system of recording based on dual aspect concept is called:

A. Double account system
B. Double entry system
C. Single entry system
D. All the above
Answer» B. Double entry system

P & L a/c is prepared for a period of one year by following:

A. Consistency concept
B. Conservatism concept
C. Accounting period concept
D. Cost Concept
Answer» C. Accounting period concept

All those to whom business owes money are:

A. Debtors
B. Investors
C. Creditors
D. Shareholders concept
Answer» C. Creditors

Bookkeeping is a/an……………………of correctly recording of business transition.

A. Art and Science
B. Art
C. Science
D. Art or Science
Answer» B. Art

The purpose of financial accounts is reporting to

A. Management only
B. Government only
C. Investor only
D. All of these
Answer» D. All of these

Accounting principles are divided into two types. These are ---

A. Accounting Concepts
B. Accounting Conventions
C. Accounting Standards
D. Accounting Concepts & Accounting Conventions
Answer» D. Accounting Concepts & Accounting Conventions

A statement containing the various ledgers balances on particular date

A. Compound Journal
B. Ledger
C. Trial balance
D. None of the above
Answer» C. Trial balance

The transferring of debit and credit items from journal to the respective accounts in the ledger is called as

A. Ledger
B. Posting
C. Forward journal
D. None of these one of these
Answer» B. Posting

The basic sequence in the accounting process can best be described as:

A. Transaction, journal entry, source document, ledger account, trial balance.
B. Source document, transaction, ledger account, journal entry, trial balance.
C. Transaction, source document, journal entry, trial balance, ledger account.
D. Transaction, source document, journal entry, ledger account, trial balance.
Answer» D. Transaction, source document, journal entry, ledger account, trial balance.

Debit the receiver credit the giver rule for

A. Real a/c
B. Personal a/c
C. Nominal a/c
D. None of these
Answer» B. Personal a/c

What comes in is to be debited, what goes out is to be credited.

A. Rules of Personal
B. Rules of Real
C. Rules of Nominal
D. All of these
Answer» B. Rules of Real
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