Principles of Accounting Solved MCQs


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

According to which principle the same accounting methods should be used each year:

A. Prudence
B. Full disclosure
C. Materiality
D. Consisten cy
Answer» D. Consisten cy

The elements of the accounting equation are

A. Assets, Liabilities,Capital
B. Liabilities,Capital
C. Liabilities
D. Capital
Answer» A. Assets, Liabilities,Capital

Arun is a Book-seller, which item will be goods for his business ?

A. Purchase of Computer
B. Purchase of Fan
C. Purchase of Furniture
D. Purchase of Stationery
Answer» D. Purchase of Stationery

The expenses due but not paid is known as -

A. Prepaid Expenses
B. Debtors
C. Outstanding Expense
D. Bills Receivable
Answer» C. Outstanding Expense

Which is correct.
I)Dr. the receiver,Cr. the Giver
II)Dr. what goes out,Cr. what comes in
III)Dr. all Expenses,Cr.All Losses

A. Only I
B. Only II and III
D. Only I and II
Answer» A. Only I

Goods destroyed by fire should be credited to

A. Puchases A/c
B. Sales A/c
C. Loss by fire A/c
D. Insurance A/c
Answer» A. Puchases A/c

In the books of account if a transaction is completely deleted, will it affect the trial balance?

A. No
B. Yes
C. A transaction cannot be omitted
D. May be
Answer» A. No

The respective normal account balances of Sales, Sales Returns , and Discounts allowed are?

A. Credit, Credit, Credit
B. Debit, credit, debit
C. Credit, Debit, Debit
D. Credit, Debit, Credit
Answer» C. Credit, Debit, Debit

Trial balance is not a conclusive proof of accuracy due to which errors.
I)Error of omission
II)Error of Principle
III)Error of Commission
IV)Compensatory Errors

A. All I,II,III and IV
B. Only I,II and III
C. Only I,II and IV
D. Only II and III
Answer» A. All I,II,III and IV

Which of the following is not the external user of accounting information?

A. Government
B. Shareholders
C. Tax Authorities
D. Financial institutions
Answer» B. Shareholders

                        refers to the order in which the various assets and liabilities are shown in the Balance Sheet.

A. Grouping
B. Order of permanence
C. Marshalling
D. Order of liquidity
Answer» C. Marshalling

If closing stock is mentioned in trial balance,Where is it shown in Final Accounts?

A. Credit side of Trading A/c
B. Asset side of Balance Sheet
C. Both A and B
D. Not shown anywhere
Answer» B. Asset side of Balance Sheet

Which one is false. I)Capital Expenditure is non recurring in nature and shown in P&L account. II)Revenue expenditure is incurred to conduct day to day activities

A. Both I and II
B. Only I
C. Only II
D. None is false
Answer» B. Only I

Where do we show Provision of bad debts in final accounts if given in adjustments?
I)Debit side of P&L
II)Credit side of P&L
III)Deduct from Debtors in Balance Sheet
IV)Add to Debtors in Balance Sheet

A. I and III
B. II and IV
C. II and III
D. I and IV
Answer» A. I and III

Which is true. I)Fixed installation method is recognised by income tax department. II)The amount of depreciation in WDV method remains same.

A. Both I and II
B. None is true
C. Only II
D. Only I
Answer» B. None is true

Cost of machine=1,90,000 Installation=10,000 Scrap=50,000 Life=6 yrs Calculate depreciation as per SLM method

A. 25,000
B. 23,333
C. 33,333
D. 21,666
Answer» A. 25,000

Machinery purchased on 1 Oct,2016 for 40,000.This machinery was sold on Dec 2017.Calculate the total depreciation charged on machinery till date if co charges 10% as per WDV method if accounts are closed on 31st March every year.

A. 6700
B. 8000
C. 5000
D. 4850
Answer» D. 4850

1 oct Opening balance=400 units @Rs 20 each, 3 Oct:Purchase=300 units @Rs 10 ,5 Oct Sales=500 units.What will be total Sales value(in Rs) as per FIFO Method?

A. Rs 9000
B. Rs 15000
C. Rs 10000
D. Rs 7500
Answer» A. Rs 9000

2 oct Opening balance=200 units @Rs 15 each, 4 Oct:Purchase=500 units @Rs 10 ,5 Oct Sales=600 units.What will be Closing Inventory value (in Rs) as per LIFO Method?

A. Rs 1000
B. Rs 500
C. Rs 8000
D. Rs 1500
Answer» D. Rs 1500

Business enterprise is separate from its owner according to concept.

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

When proprietor withdrew cash from business for personal use , it is known as -

A. Drawings
B. Investment
C. Furniture
D. Bills Receivable
Answer» A. Drawings

In trial balance, which accounts with is/are recorded at the credit side?
II)Sales return

A. Only I and II
B. All of these
C. Only I,II and IV
D. Only I and IV
Answer» D. Only I and IV

When Salary is paid by cheque, which account is credited.

A. Cash A/c
B. Bank A/c
C. Salary A/c
D. Personal A/c
Answer» B. Bank A/c

The process of transferring the debit and credit items from a journal to their respective account in the ledger is termed as?

A. Balancing
B. Posting
C. Arithmetic
D. Entry
Answer» B. Posting

What are the two statements prepared for summarising the transactions? I)Balance Sheet II)Journal III)P&L IV)Cash Book

A. Only I and II
B. Only I,II and III
C. Only I,II and IV
D. Only I and III
Answer» D. Only I and III

Where do we show Gas and Fuel in final accounts?

A. Trading A/c
B. P&L Account
C. Balance Sheet
D. Not shown anywhere
Answer» A. Trading A/c

What are the causes of depreciation?

A. Wear and Tear
B. Obsolescence
C. Expiration of legal rights
D. All of the above
Answer» D. All of the above

What is the formula for calculating depreciation in SLM Method?

A. Cost+Scrap/No of Yrs
B. Scrap-Cost/No of yrs
C. Cost - Scrap/Useful Life
D. None of these
Answer» C. Cost - Scrap/Useful Life

4 oct Opening balance=500 units @Rs 20 each, 5 Oct:Purchase=1000 units @Rs 15 ,6 Oct Sales=500 units.What will be rate at which the sales unit will be valued as per weighted avg method?

A. Rs20
B. Rs 15
C. Rs 16.66
D. 17.5
Answer» C. Rs 16.66
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