1. Accounting is the_______ of monetary transactions.
(a) recording
(b) verification
(c) tallying
(d) all of them
Ans. d
2. Accounting is concerned with transactions involving________.
(a) money
(b) no money
(c) movement of humans
(d) none of them
Ans. a
3. Accounting transactions relate to_______.
(a) income/expense
(b) asset/liability
(c) inventory
(d) all of them
Ans. d
4. Form used to record accounting transactions contains _______columns.
(a) 3
(b) 5
(c) 8
(d) 11
Ans. c
5. First 4 columns of account sheet are used for recording ______.
(a) credit
(b) debit
(c) income
(d) expense
Ans. b
6. Columns 5 to 8 of account sheet are used for recording_______ .
(a) credit
(b) debit
(c) income
(d) expense
Ans. a
7. First column of debit/ credit form is used to record______ of transaction.
(a) date
(b) particulars
(c) Journal Folio
(d) amount
Ans. a
8. Second column of debit/ credit transaction is used to record _____of transaction.
(a) date
(b) particulars
(c) Journal Folio
(d) amount
Ans. b
9. Third column of debit/ credit form is used to record_____ of transaction.
(a) date
(b) particulars
(c) Journal Folio
(d) amount
Ans. c
10. Fourth column of debit/ credit form is used to record______ of transaction.
(a) date
(b) particulars
(c) Journal Folio
(d) amount
Ans. d
11. The method of recording debit and credit sides separated by a line is nicknamed _________ accounting.
(a) T
(b) U
(c) V
(d) W
Ans. a
12. Accounting system which considers assets, liabilities, revenue and expense is called______ method of accounting.
(a) British
(b) American
(c) Indian
(d) none of them
Ans. b
13. Accounting system which considers personal account, real account and nominal account is called _______ method of accounting.
(a) British
(b) American
(c) Indian
(d) none of them
Ans. a
14. Recording of debits and credits of individuals, bank accounts or other business sources is called ________ account.
(a) real
(b) nominal
(c) personal
(d) none of them
Ans. c
15. Recording of debits and credits related to movable assets, immovable assets, inventory (stock needed for production) is called _______account.
(a) real
(b) nominal
(c) personal
(d) none of them
Ans. a
16. Recording of debits and credits related to income, expense, Inflow of money and outflow of money is called _______ account.
(a) real
(b) nominal
(c) personal
(d) none of them
Ans. b
17. _______ concept in accounting considers the business and its owner are different entities.
(a) Business entity
(b) Money measurement
(c) Going concern
(d) Dual aspect
Ans. a
18 . ___concept in accounting considers that only transactions involving money should be recorded.
(a) Business entity
(b) Money measurement
(c) Going concern
(d) Dual aspect
Ans. b
19. ______ concept in accounting considers that the business is a perpetual entity.
(a) Business entity
(b) Money measurement
(c) Going concern
(d) Dual aspect
Ans. c
20. ______concept in accounting considers that each debit has a corresponding credit.
(a) Business entity
(b) Money measurement
(c) Going concern
(d) Dual aspect
Ans. d
21. ______concept in accounting considers that only the actual cost of transaction should be recorded (not the market value of the transaction).
(a) Cost
(b) Accounting period
(c) Matching cost
(d) Accrual
Ans. a
22._______ concept in accounting considers that cost of manufacture should be matched against the proceeds of sales.
(a) Cost
(b) Accounting period
(c) Matching cost
(d) Accrual
Ans. c
23. _______ concept in accounting considers that an account should be closed on a periodic basis and reopened .
(a) Cost
(b) Accounting period
(c) Matching cost
(d) Accrual
Ans. b
24. ______ concept in accounting considers that revenue is recorded on the date of transaction itself but expenditure is recorded only on the date of outlow of money (not the date of transaction, like encashing a cheque).
(a) Cost
(b) Accounting period
(c) Matching cost
(d) Accrual
Ans. d
25. ______ concept in accounting considers that each transaction should be supported by evidence.
(a) Objective evidence
(b) Accounting period
(c) Matching cost
(d) Accrual
Ans. a
26. _______ account debits the receiver and credits the giver.
(a) personal
(b) real
(c) nominal
(d) none of them
Ans. a
27. ______account debits the incoming asset and credits the outgoing asset.
(a) personal
(b) real
(c) nominal
(d) none of them
Ans. b
28. ______ account debits expense and credits the income.
(a) personal
(b) real
(c) nominal
(d) none of them
Ans. c
29. _____ denotes increase in money.
(a) Accrual basis
(b) Asset
(c) Credit
(d) Debit
Ans. c
30. _____ considers incoming money to be instantly available and reduction of cash to occur only on the date of actual outflow of money (instead of the date of transaction).
(a) Accrual basis
(b) Asset
(c) Credit
(d) Debit
Ans. a
31. ______ denotes movable or immovable property and inventory.
(a) Accrual basis
(b) Asset
(c) Credit
(d) Debit
Ans. b
32. ______ considers that each debit has a corresponding credit.
(a) Double entry accounting
(b) Expense
(c) Income or revenue
(d) Debit
Ans. a
33. The evidence/ proof of a financial transaction is called _______.
(a) amount
(b) particulars
(c) date
(d) voucher
Ans. d
34. _______ is a format for recording financial transactions.
(a) amount
(b) particulars
(c) date
(d) voucher
Ans. d
35. Voucher has _____ sides.
(a) 2
(b) 3
(c) 5
(d) 7
Ans. a
36. The left side of a voucher is meant for _______ entries.
(a) rough
(b) unrelated
(c) credit
(d) debit
Ans. d
37. The right side of a voucher is meant for_______ entries.
(a) rough
(b) unrelated
(c) credit
(d) debit
Ans. c
38. ______ voucher changes inventory position.
(a) Accounting
(b) Inventory
(c) Cash
(d) Contra
Ans. b
39. ______ voucher changes monetary position.
(a) Accounting
(b) Inventory
(c) Contra
(d) none of them
Ans. a
40. ______ voucher transfers money from one deposit/loan account to another.
(a) Accounting
(b) Inventory
(c) Contra
(d) none of them
Ans. c
41. Vouchers are ______ before posting them in ledgers.
(a) torn off
(b) thrown aside
(c) discarded
(d) journalized
Ans. d
42. Transferring voucher entries to a ledger is called ______ in ledger.
(a) tearing
(b) posting
(c) erasing
(d) removing
Ans. b
43. Journal entries carry the name of ________ in which the transaction is to be posted.
(a) account
(b) voucher
(c) journal
(d) ledger
Ans. d
44. The process of entering finalized financial transaction in a ledger is called .
(a) posting
(b) tearing
(c) erasing
(d) removing
Ans. a
45. Each ledger belongs to a specific _______.
(a) voucher
(b) journal
(c) account group
(d) inventory
Ans. c
46. A journal entry from the debit side is entered in______ side of ledger.
(a) debit
(b) credit
(c) centre
(d) margin
Ans. a
47. A journal entry from the credit side is enteredin ______ side of ledger.
(a) debit
(b) credit
(c) centre
(d) margin
Ans. b
48. The statement which shows the total debits and liabilities on the left side and credits and assets on the right side is called______ .
(a) balance sheet
(b) trading account
(c) profit and loss account
(d) cash account
Ans. a
49. To finalize a balance sheet _______ is prepared with the aim of making corrections.
(a) profit and loss account
(b) Stock & Inventory
(c) trial balance
(d) cash flow account
Ans. c
50. Balance sheet and profit & loss accounts are prepared according to schedule ________ of Companies Act.
(a) I
(b) III
(c) IV
(d) VI
Ans. d
51. Bank withdrawal, receipt of cash from investor, proceeds of sale, etc. are entered in_______ side of cash book.
(a) top
(b) margin
(c) debit
(d) credit
Ans. c
52. Salary payment, rent payment, phone bill, electricity bill, etc. are entered in _______ side of cash book.
(a) top
(b) margin
(c) debit
(d) credit
Ans. d
53. The reduction in value of an asset with passage of time is called________ .
(a) appreciation
(b) depreciation
(c) escalation
(d) inflation
Ans. b
54. The initial cost of an asset is called________.
(a) asset value
(b) book value
(c) salvage value
(d) lifespan
Ans. a
55. The present cost of an asset after allowing for depreciation is called________ .
(a) asset value
(b) book value
(c) salvage value
(d) lifespan
Ans. b
56. The amount of money obtainable through the disposal of an asset after useful lifespan is called________.
(a) asset value
(b) book value
(c) salvage value
(d) lifespan
Ans. c
57. The duration of useful service period of an asset is called______.
(a) asset value
(b) book value
(c) salvage value
(d) lifespan
Ans. d
58. At the end of every year, the book value of an asset is recorded after allowing reduction for___.
(a) asset value
(b) book value
(c) salvage value
(d) depreciation
Ans. d
59. The safe stock level at which placing fresh order will just allow fresh stock to reach before old stock depletes is called______ level.
(a) stock
(b) cash
(c) account
(d) reorder
Ans. d
60. Storing more stock than necessary for production/ sale, thus reducing cash availability is called________ level.
(a) stock
(b) overstocking
(c) understocking
(d) reorder
Ans. b
61. Storing very low reserve stock resulting in disruption of production/sale is called ______level.
(a) stock
(b) overstocking
(c) understocking
(d) reorder
Ans. c
62. The difference between sales value and purchase value of a product is called______.
(a) value addition
(b) rate
(c) cost
(d) sales
Ans. a
63. Inflow and outflow of money in a business is called_____ flow.
(a) stock
(b) cash
(c) rate
(d) VAT
Ans. b
64. Which of the following does not describe accounting?
a) Language of business
b) Useful for decision making
c) Is an end rather than a mean to an end?
d) financial accounting and accounting systems
Ans. c
65. The two most common specialized fields of accounting in practice are?
a) Environmental accounting and financial accounting
b) Managerial accounting and financial accounting
c) Managerial accounting and tax accounting
d) Financial accounting and accounting systems
Ans. b
66. Which of the following user groups required the most detailed financial information?
a) Lenders
b) Investor and potential investors
c) Government agencies
d) The management
Ans. d
67. Which one of the following statement completely and correctly describes accounting?
a) Recording, classifying and summarizing economic activities in systematic way
b) Recording, classifying and summarizing all activities in useful manner
c) Accounting is the systematic process of recording social activities only
d) Recording, classifying and summarizing economic activities in informal manner
Ans. a
68. Which of the following provides information about the financial information‟s, obligations and activities on the economic entity that is intended for use primarily by external decision makers?
a) Management accounting
b) Financial accounting
c) Tax accounting
d) Environmental accounting
Ans. b
69. Which of the following statement is true about purpose of accounting?
a) The purpose of accounting provide information to manager
b) Accounting purpose gives quantitative information to economic decision makers
c) Provision of base for decision making is purpose of accounting
d) All of the above statement are true regarding purpose of accounting
Ans. d
70. External reporting is the result of?
a) Financial accounting
b) Management accounting
c) Cost accounting
d) Social accounting
Ans. a
71. How many approaches accounting has?
a) One
b) Two
c) Three
d) None
Ans. b
72. To understand and use accounting information in making economic decisions, you must understand? a) The nature of economic activities that accounting information describes
b) The assumptions and measurement techniques involved in developing accounting information
c) Which information is relevant for a particular type of decision that is being made?
d) All of Above
Ans. d
73. The controller‟s responsibilities are primarily in nature, while the treasurer‟s responsibilities are primarily related to?
a) Operational; Financial accounting
b) Accounting: Financial management
c) Financial management; Operations
d) Financial management; Accounting
Ans. b
74. The outcome of financial accounting is to?
a) Record all transactions in the books of accounts
b) Provide management with detailed analyses of costs
c) Present the financial results to the organization by means of recognized financial statements
d) Calculate profit
Ans. c
75. Internal users of accounting information include all of the following except?
a) store manager
b) Creditor
c) Chief executive officer
d) Chief financial officer
Ans. b
76. Accounting is an information and measurement system that does all of the following except?
a) Analyze transactions
b) Handle routine book –keeping tasks
c) Structure information
d) Recording social activities
Ans. d
77. External users of accounting information include all of the following except?
a) Investors
b) Labor union
c) Line manager
d) General Public
Ans. c
78. Which of the following groups use financial accounting information?
a) Management, employees, shareholders and lenders
b) Suppliers, customers and competitors
c) Tax authorities, government and general public
d) All of the above
Ans. d
79. Which of the following persons are most likely to use accounting information?
a) Business owners
b) Lending institutions
c) All of the above
d) None of the above
Ans. c
80. Someone who uses accounting information is?
a) A user
b) An external user
c) An internal user
d) A manager
Ans. a
81. External users include all of the following except?
a) Lenders
b) Customers
c) Employees
d) Officers
Ans. d
82. Which of the following statement is incorrect?
a) Liabilities + Assets = Capital
b) Assets – Liabilities = Capital
c) Liabilities + Capital = Assets
d) Assets – Capital = Liabilities
Ans. a
83. On January 1st, 2009 an entity‟s balance sheet showed total assets of Rs. 750 and liabilities of Rs. 250. Owners‟ equity at January 1st was?
a) Rs. 750
b) Rs. 1,000
c) Rs. 500
d) Rs. 250
Ans. c
84. If the assets of a business are Rs. 100,000 and equity is Rs. 20,000, the value of liability will be?
a) Rs. 100,000
b) Rs. 80,000
c) Rs. 120,000
d) Rs. 20,000
Ans. b
85. Which of the following is not a correct form of the Accounting Equation?
a) Assets = claims
b) Assets = Liabilities + Owner Equity
c) Assets – Liabilities = Owner‟s Equity
d) Assets + Owner‟s Equity = Liabilities
Ans. d
86. Find out value of receivable from following Cash Rs. 48,000 account payable Rs. 33,000 office equipment Rs. 21,000 owner equity Rs. 77,000?
a) Rs. 21,000
b) Rs. 41,000
c) Rs. 110,000
d) Rs. 15,000
Ans. b
87. During a reporting period, a company‟s assets increase by Rs. 80,000,000. Liabilities decrease by Rs. 20,000,000. Equity must therefore?
a) Decrease by Rs. 100,000,000
b) Increase by Rs. 100,000,000
c) Decrease by Rs. 60,00,000
d) Increase by Rs. 60,000,000
Ans. b
89. Which one of the following equations correctly expresses the relationship between assets
(A), liabilities (L), revenues (R), expenses (E), and capital (C), ?
a) A= L+ R+E + C
b) A = C + L + (R-E)
c) A = C – (R-E) + L
d) A = (L –C) + (R – E)
Ans. b
90. The liabilities of a business are Rs. 30,000; the capital of the proprietor is Rs. 70,000. The total assets are?
a) Rs. 70,000
b) Rs. 30,000
c) Rs. 40,000
d) None
Ans. d
91. Which of the following account is affected from the drawings of cash in sole- proprietorship business?
a) Shareholder
b) Capital account
c) Liability account
d) Expense account
Ans. b
92. Mr. “A” borrowed money from bank; this transaction involves which one of the following accounts? a) Cash & Bank Loan
b) Bank & Debtors
c) Drawing & Cash
d) Cash & Bank
Ans. a
93. Which of the following accounts will be used in equation, if the goods are sold on credit to Mr. Mahmood?
a) Cash account and Owner‟s equity
b) Account Receivable and owner‟s equity
c) Cash and account receivable
d) Account Payable and owner‟s Equity
Ans. b
94. The favorable balance of profit and loss account shouldbe?
a) Added in liabilities
b) Subtracted from current assets
c) Subtracted from liabilities
d) Added in capital
Ans. d
95. Double entry bookkeeping means that?
a) Entry in two sets of accounting books
b) Entry at two dates
c) Entry for two aspects of transaction
d) All of these
Ans. c
96. 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, ledger account, trial balance
d) Transaction, source document, trial balance, ledger account
Ans. c
97. Revenue is generally recognized being earned at the point of time when?
a) Cash is received
b) Billed to customers
c) Production is completed
d) Goods are delivered
Ans. b
99. The accounting system, in which accounting entries are made on the basis of amount having become due for payment or receipt, is known as?
a) Cash system of accounting
b) Current accounting period
c) Accrual system of accounting
d) None of the given option
Ans. c
100. Bookkeeping is mainly concerned with?
a) Recording the Economic Activities
b) Interpreting the data
c) Designing the systems for recording, classifying and summarizing
d) All of Above
Ans. a
101. The document relating to purchase of asset must be authorized by?
a) Senior management
b) Middle management
c) Lower level management
d) None
Ans. a
102. Accrual basis of accounting?
a) Result in higher income than Cash-basis of accounting?
b) Is not acceptable under GAAP
c) Leads to the reporting of more complete information than does cash- basis
d) None of the Above
Ans. c
103. Bill payable book is a ?
a) journal
b) Principle book
c) Ledger
d) Memorandum book
Ans. a
104. The return of goods by a customer should be debited to?
a) return outward
b) Return inward account
c) Goods account
d) Accounts receivable
Ans. b
105. An alternative name for a sales journal is?
a) Sales invoice
b) Sales ledger
c) Daily sales
d) sales day book
Ans. d
106. Which of the following is not a book of prime or original entry?
a) Sales daybook
b) Purchase daybook
c) Debtor‟s account
d) Cashbook
Ans. c
107. There are two books of account they are ?
a) journal& ledger
b) Journal & trial balance
c) Trial balance & ledger
d) none of these
Ans. a
108. X sends back Rs. 80 of faulty goods to Y. In which book of prime entry would Y record this transaction?
a) General journal
b) Purchase Return journal
c) Sales Journal
d) Sales Return Journal
Ans. d
109. A bookkeeper discovers that an amount paid to a supplier has been wrongly entered in another supplier‟s account. Which book of original entry will the bookkeeper use when correcting this error?
a) Cash book
b) General Journal
c) Purchase day book
d) Sales day book
Ans. b
110. Which of the followings are books of prime entry?
a) Sales day book and trial balance
b) Petty cash book and accounts receivable ledger
c) Petty cash book and journal
d) Cash book and assets register
Ans. c
111. Corrected the balance in the prepaid insurance at the end of the month in?
a) Cash payments journal
b) General journal
c) Cash Receipts journal
d) Purchases journal
Ans. b
112. Record goods return inward?
a) Debit sale account and credit payable account
b) Debit returns inward account and credit payable account
c) Debit returns inward account and credit receivable account
d) Debit Receivables account and credit return inward account
Ans. c
113. If a company used special
journals, purchase of supplies on account should be recorded in which journal?
a) Cash receipts journal
b) Purchases journal
c) cash disbursements journal
d) General journal
114. Which of the following is the correct journal entry to record a credit note issued to a customer for goods returned?
a) Debit sales returns and credit cash
b) Debit cash and credit sales returns
c) Debit Trade receivable and credit sales returns
d) Debit sales returns and credit trade receivables
Ans. d
115. Adjustment is to record depreciation at the end of the month in?
a) Cash Payments journal
b) Cash Receipts Journal
c) General Journal
d) Purchase journal
Ans. c
116. Mr. Ali buys goods on credit from star Co. but finds that some of them are faulty. What document would Mr. Ali return to star co. with the faulty goods?
a) Statement
b) Debit note
c) Sales Invoice
d) Purchase invoice
Ans. b
117. Which of the following book (s) is (are) a part of journal?
a) cash book
b) Purchase return book
c) Purchase Book
d) All of the given option
Ans. d
118. If a company uses special journals, credit sales should be recorded in which journal?
a) General journal
b) Purchases journal
c) Sales journal
d) Cash receipts journal
Ans. c
119. If a company uses special journals, purchase of a building financed by a mortgage payable should be recorded in which journal?
a) sales journal
b) general journal
c) Cash receipts journal
d) purchases journal
Ans. b
120. Cash book is a?
a) voucher
b) general journal
c) general ledger
d) dual book
Ans. d
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