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1 CHAPTER 1 THEORETICAL FRAMEWORK THIS CHAPTER COVERS MCQs ON: Accounting Book keeping Syems of accounting Account ting as information syem Role of accountant Accounting Principle Accounting concepts Accounting Conventions Accounting Standards Accounting policies Accounting- A Measurement Discipline Accounts and its Classification Double Entry syem Rules of Debit and Credit Accounting Equation MCQ ON THEORY DEFINITION ON ACCOUNTING 1... is used by business entitles for keeping records of their monetary or financial transactions. a. Accounting b. Co accounting c. Coing d. None of above 2. Accounting is the art of recording, classifying and summarizing in significant manner and in terms of money, transactions and events which are, in part at lea, of a financial character and interpreting the results thereof. This definition is given by a. The Initute of Chartered Accountants of India (ICAI) b. The Initute of Chartered Accountants of England c. American Initute of Certified Public Accountants d. The Initute of Chartered Accountants of Pakian 3. Which of the following is attribute/s of accounting? a. Accounting is social science. b. It involves recording, classifying and summarizing c. It records transaction of qualitative nature d. All of the above 4. is the language of business and used to communicate financial and other information to different intereed parties like creditors, inveors, researchers, governments etc. a. Accounting b. Co accounting c. Coing d. Management Accounting 5. Accounting is a. An art b. A science c. Partly and partly science d. None of above STAGES OF ACCOUNTING 6. Accounting involves.. a. Recoding b. Classifying c. Summarizing d. All of the above 7... Means syematically writing down the transactions and events in account books soon after their occurrence. a. Classifying b. Recording c. Summarizing d. All of the above 8. is the process of grouping transactions or entries of the same type at one place. a. Classifying b. Recording c. Summarizing d. All of the above 9. involves the preparation of reports and atements from the classified data (ledger) under andable and useful to management and other intereed parties. a. Classifying b. Recording c. Summarizing d. All of the above 10. Accounting records only those transactions and events which are of.. a. Social character b. Financial character 1

2 c. Both (a) & (b) d. None of above 11. The atements prepared by the summarizing process is known as which will show the profit or loss made by the business over a period of time and the total capital employed in the business. a. Financial atements b. Budgeted atements c. Standard co atements d. All of the above 12. Which of the following is/ are the branch of accounting? a. Financial Accounting b. Co Accounting c. Management Accounting d. All of the above 13. Which of the following is/ are not the branch of accounting? a. Co Accounting b. Financial accounting c. Human Resources Accounting d. All of the above 14. Which of the following is the branch of accounting a. Human Resources Accounting b. Social accounting c. Security Accounting d. None of the above 15. Which of the following is/are the main functions of accounting? a. Keeping syematic records b. Protecting and controlling business properties c. Ascertaining the operation al profit/loss d. All of the above 16. Which of the following is /are the main functions of accounting? a. Allowing credit to cuomers b. Ascertaining the operational profit/loss c. Providing leadership to accounting aff d. All of the above ADVANTAGES & LIMITATIONS OF ACCOUNTING 17. Which of the following is/are the advantages of accounting? a. Maintenance of legal records b. Preparation of financial atements c. Comparison of results d. (b) & (c) Which of the following is/are the advantages of accounting? a. Decision making relating to financial aspect b. Evidence in legal matters relating to accounting c. Provides information to intereed parties d. All of the above Which of the following is/are NOT the advantages of accounting? a. Helps in taxation matters b. Valuation of business c. Accounting information is based on eimates d. All of the above Which of the following is/are NOT the advantages of accounting? a. Protecting and controlling rategic policy for mutation b. Preparation of financial atements c. Comparison of results d. All of the above Which of the following is/are the limitations of accounting? a. Accounting information is expressed in terms of money b. Accounting information is based on eimated c. Accounting information may be based d. All of the above Which of the following is/are the limitations of accounting? a. Accounting can be manipulated b. Money as a measurement unit changes in value c. Accounting information is based on eimates d. All of the above Which of the following is/are the NOT limitations of accounting? a. Provides information to Intereed Parties b. Accounting information is based on eimates. 2

3 c. All of the above BOOK KEEPING & ACCOUNTING 24. is mainly concerned with recording of financial data relating to the business operations in a significant and orderly manner. a. Accounting b. Book-keeping c. Poing d. Journalizing 25. covers procedural aspects of accounting work and includes record keeping function. a. Accounting b. Book-Keeping c. Poing d. Journalizing 26. Book-keeping is concerned with the.. of transactions while accounting is concerned with the of the recorded transactions. a. Recording, summarizing b. Summarizing recording c. Poing recoding d. Summarizing poing 27.. Conitutes the base for accounting. a. Book keeping b. Poing c. Analyzing d. None of above 28. Financial atement do not form part of book keeping. a. True b. False c. partly true d. None of above 29. Financial position of the business is ascertained on the basis of a. Book keeping b. Accounting reports c. Either (a) & (b) d. None of above SYSTEM OF ACCOUNTING 30. it is a syem in which accounting entries are made when cash is received or paid. a. Accrual syem of accounting b. Cash syem of accounting c. Hybrid syem of accounting d. Mercantile syem of accounting is a syem in which transactions are recorded on the basis of amounts having become due for payment or receipt a. Accrual syem of accounting b. Cash syem of accounting c. Hybrid syem of accounting d. None of the above 32. Which of the following has no relevance whether the receipts pertain to previous period or future period? a. Accrual syem of accounting b. Cash syem of accounting c. Hybrid syem of accounting d. None of the above is incompatible with the matching principle of income determination. a. Accrual syem of accounting b. Cash syem of accounting c. Hybrid syem of accounting d. None of the above Attempt to record the financial effects of the transaction, events and circumances of an enterprise in the period in which they occur rather than recording them in period (s) in which cash is received or paid by the enterprise. a. Accrual syem of accounting b. Cash syem of accounting c. Hybrid syem of accounting d. None of the above 35. Cash syem of accounting is suitable in which of the following cases? a. Where the organization is very small or in the case of individuals b. Where credit transactions are almo negligible and collections are uncertain c. Both (a) & (b) d. Neither (a) nor (b) 36. Doctors, lawyers, firms of chartered accountants company secretaries generally follows.. of accounting a. Accrual syem of accounting b. Cash syem of accounting c. Hybrid syem of accounting d. None of the above 37. Which of the following is/are the essential features of accrual basis of accounting? 3

4 a. Revenue is recognized when cash is received b. Cos are matched again revenues on the basis of relevant time period to determine periodic income c. Cos which are not charged to income are carried forward and are kept under continuous review d. Both (b) (c) USERS OF ACCOUNTING INFORMATION 38. Accounting is of primary importance to the.. a. Proprietors and the managers b. Creditors and workers c. Debtors & government d. Bankers & creditors 39. Financial atements can be sued by a. Owners b. Creditors c. Inveors d. All of the above. 40. Which of the following are internal users of accounting information s? a. Board of directors b. Partners c. Managers d. All of the above 41. Which of the following is/ are external users of accounting information s? a. Shareholders/inveors b. Creditors c. Government agencies d. All of the above 42. Which of the following would be considered as external users of accounting information s? a. Board of directors b. Shareholders c. Finance manager d. Sales manager 43. Select the odd one in relation to users of accounting information s a. Officers b. Managers c. Debtors d. Board of directors 44. Regulatory agencies intereed as users of accounting information s includes a. Various government departments b. Agencies such as company law board CLB c. Regirar of companies (ROC) d. All of the above CHARACTERISTICS OF ACCOUNTING IN FORMATION 45. Which of the following is / are characteriics of accounting information? a. Relevance b. Reliability c. Comparability d. All of the above 46. Which of the following is/are characteriics of accounting information? a. Underandability b. Timeliness c. Co-benefit d. All of the above 47. Which of the following is/are NOT characteriics of accounting information? a. Underandability b. Relevance c. Future transactions d. Completeness 48. Which of the following is/are characteriics of accounting information? a. Verifiability b. Neutrality c. Completeness d. All of the above ROLE OF ACCOUNTANT 49. Which of the following is/are can be treated as role of accountant? a. Personnel management b. Innovations& environmental scanning c. Advisory role in taxation d. All of the above 50. Which of the following is/are cannot be treated as role of accountant? a. Strategy formulation b. Internal audit c. Statutory Audit d. Maintenance of books of account 51. Which of the following is/are can be treated as role of accountant? a. Maintenance of books of account b. Taxation services 4

5 c. Inveigation of accountants d. All of the above. Are defined as basic assumptions on the basis of which financial atement of a business entity are prepared. a. Accounting concepts b. Accounting methods c. Both(a) and (b) d. None of above Which of the following is/are the common accounting concepts? a. Business entity concept b. Money measurement concept c. Going concern concept d. All of the above Which of the following is/are the common accounting concepts? a. Dual policy b. Periodicity audit concept c. Co concept d. All of the above Which of the following is/are the common accounting concepts? a. Accrual concept matching concept b. Matching concept c. Evidence concept d. (a) and (b) According to business is treated as an entity separate from its owners, creditors, managers and others. a. Money Measurement b. Business entity concept c. Going concern concept d. Dual aspect concept According to the various assets acquired by a concern or firm should be recorded on the basis of the actual amounts involved or spent a. Money Measurement b. Co concept c. Going concern concept d. Dual aspect Concept holds that accounting is a measurement and communication process of the activities of the firm that tare measurable in monetary terms. a. Money Measurement b. Co concept c. Going concern concept d. Dual aspect Concept As per. Business transactions are recorded on the assumption that the business will continue for a long-time. a. Money measurement b. Co concept c. Dual aspect concept d. Going concern concept If the assumption of the going concern is not valid the financial atement should. a. Not be necessary to clearly ate this fact b. Clearly ate this fact c. Clearly ate this fact is if suggeed by audition d. Clearly ate this fact if it suggeed by internal On the basis of. Concept, a clear diinction is made between assets and expenses. a. Money Measurement b. Co concept c. Dual aspect concept d. Going concern concept Non-monetary events like, death, dispute, sentiments, efficiency etc. are in the books, even though these may have a great effect. a. Not recorded b. Recorded c. Recorded if suggeed by external auditors d. Recorded if suggeed by internal auditors According to Business entity concept business is treated as separate from its.. a. Owners b. Creditors c. Managers d. None of the above form of business organization is the exception to the going concern concept a. Consignment b. Partnership c. Joint venture 5

6 d. Limited liability partnership concept is based on double entry book-keeping which means that accounting syem is set up in such a way that a record is made of the two aspect of each transaction that affects the records. a. Money measurement b. Co concept c. Dual aspect concept d. Going concern concept e. The transactions recorded through accounting equation are based on. a. Money measurement b. Co concept c. Dual aspect concept d. Going concern concept According to.. revenue is recognized only when a sale is made a. Accrual concept b. Realization concept c. Accounting period concept d. Revenue match concept Which financial atement represents the accounting equation, assets=liabilities + Owner s Equity. a. Income atement b. Statement of cash flows c. Balance sheet d. None of the above..period is normally adopted for accounting purpose. a. 6 months b. 12 months c. 9 months d. 24 months As per..concepts in order to determine the profit earned or loss suffered by the business in a particular defined accounting period, it is necessary that expenses of the period should be matched with the revenues of that period. a. Accrual concept b. Realization concept c. Accounting period concept d. Revenues match concept 71. Going concern concept is not followed by a. Banks b. Partnership c. Companies d. Joint ventures ACCOUNTING CONVENTIONS 72. Which of the following is/ are accounting convention? a. Convention of consiency b. Convention of materiality c. Convention of disclosure d. All of the above 73. According to the.., accountant should report only what is material and ignore insignificant details while preparing the final accounts. a. Convention of disclosure b. Convention of materiality c. Convention of consiency d. All of the above 74. As per apart from atutory requirements good accounting practice also demands all significant information should be fully and fairly disclosed in the financial atements. a. Convention of disclosure b. Convention of materiality c. Convention of consiency d. Convention of conservatism 75. As per.the accountant should not anticipate income and should provide for all possible losses. a. Convention of disclosure b. Convention of materiality c. Convention of consiency d. Convention of conservatism 76. As per.. if the accountant is faced with the choice between two methods of vaulting and asset the accountant should choose a method which leads to the lesser value. a. Convention of disclosure b. Convention of conservatism c. Convention of materiality d. Convention of consiency 77. Provisions for bad debts in respect of doubtful debts are made due to a. Convention of conservatism 6

7 b. Convention of disclosure c. Convention of materiality d. Convention of consiency 78. Closing ock in hand valued at lower of co or market valuate due to.. a. Convention of conservatism b. Convention of disclosure c. Convention of materiality d. Convention of consiency 79. Which of the following is an accounting conversation? a. Consiency b. accrual c. Going concern d. Realization 80. As per convention of conservatism, if the accountant is faced with the choice between two methods of valuating.the accountant should choose a method which leads to the lesser value. a. An asset b. A liability c. Expenses d. Revenue 81. Closing ock in valued at market price or co price whichever is less as per a. Convention of disclosure b. Convention of materiality c. Convention of consiency d. Convention of conservatism 82...principle requires that the same accounting method should be used from one accounting period to the next. a. Conservatism b. Consiency c. Business entity d. Money measurement 83. Which of the following is not an accounting convention? a. Consiency b. Disclosure c. Going concern d. Conservatism ACCOUNTING STANDARDS 84. Accounting andards (ASs) are written policy documents may be issued by. a. Expert accounting body b. Government c. Other regulatory body d. Any of the above Accounting andards are.. a. Writte4n policy documents issued by expert accounting body b. Set of broad accounting policies to be followed by an entity c. Set in the form of general principles d. All of the above. Accounting andards cover the aspects of of accounting transactions in the financial atements. a. Recognition b. Measurements c. Presentation and disclosure d. Any of the above In India Accounting andard are issued by. a. ICSI b. ICAI c. ICWA d. RBI Accounting andards are issued for the purpose of.. a. Improving reliability of financial atements b. Harmonizing diverse accounting practices c. Elimination of non-comparability between financial atements d. All of the above The initute of Chartered Accountants of India (ICAI) conituted the. With a view to harmonizing the diverse accounting policies and practices in use in India. a. Standard Board of Accounting (SBA) b. Accounting andards board (ASB) c. Accounting andards committee (ASC) d. Accounting committee (AC) The Initute of Chartered accountants of India (ICAI) conituted the Accounting andards board (ASB)on. With a view to harmonizing the diverse accounting policies and practices in use in India. nd a. 2 Oct, 1977 b. 21 April,

8 th c. 15 Aug, 1977 d. 21 April 1977 ACCOUNTING POLICIES & ESTIMATES 91. The ICAI so far has issued. Accounting andards. a. 29 b. 30 c. 32 d refer to the specific accounting principles and the methods of applying those principles adopted by the enterprise in the preparation and presentation of financial atements. a. Accounting methods b. Accounting policies c. Accounting concepts d. Accounting assumptions 93. Accounting policies followed by organizations.. a. Can be changed every year. b. Should be consiently followed from year to year c. Can be changed after 5 years d. None of the above 94. A change in accounting policy is juified.. a. To comply with accounting andard b. To ensure more appropriate presentation of the financial atement of the enterprise 95. If is essential to andardize the accounting principles and policies in order to ensure.. a. Transparency b. Profitability c. Reputation d. All of the above 96. Different accounting policies can be adopted in following areas.. a. Stock valuation b. Invement valuation\ c. Charging depreciation d. All of the above 97. A specific accounting policy refers to.. a. Principles b. Methods of applying those principals c. Both (a) & (b) d. None of the above 98. The determination of the amount of bad debts is an accounting.. a. Policy b. Eimate c. Parameter d. None of the above ACCOUNTING IS A MEASUREMENT DISCIPLINE 99. Generally, which of the following measurement base are usually accepted in accounting parlance? a. Hiorical Co b. Current co c. Realizable Value d. Any of the above 100. According to Dictionary for accountants and accounting has been deafened as formal record of a particular type of transactions expressed in money. a. Kohler s b. Oxfords c. Chate d. Taxmann 101. All accounts are classifieds into.. a. Personal accounts b. Real accounts c. Nominal; accounts d. Any of the above 102. Accounts recording transactions with a person or group of person are known.. a. Personal account b. Real accounts c. Nominal accounts d. Impersonal accounts 103. Personal accounts is/are of the following types a. Natural persons b. Artificial or legal persons c. Representative personal accounts d. Any of the above 104. An account recording transactions with an individual human being is termed as a.. a. Artificial or legal persons account b. Natural persons personal account c. Representative personal d. Any of the above 8

9 105. Accounts relating to properties or assets are known as. a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 106. An account recording financial transactions with an artificial person created by law or otherwise is termed as a. Artificial or legal persons account b. Natural persons personal account c. Representative personal account d. Any of the above 107. Real accounts can be further classified into a. Tangible b. Intangible c. (a) or (b) d. None of above 108. Accounts which represent a certain person or group of persona are termed as.. a. Artificial or legal persons account b. Natural persons personal account c. Representative personal d. Any of the above 109. accounts represent assets and properties which can be seen, touched, felt, measured purchased and sold. a. Tangible real accounts b. Intangible real accounts c. Representative personal accounts d. Artificial or legal person accounts 110. Accounts relating to income, revenue, gain expenses and losses are termed as a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 111. accounts represent assets and properties which cannot be seen, touched or felt but they can be measured in terms of money. a. Tangible real accounts b. Intangible real accounts c. Representative personal accounts d. Artificial or legal persons account 112. The rule for nominal account is. a. Debit the receiver, Credit the giver b. Debit what comes in, Credit what goes out c. Debit all expenses and losses, credit all incomes and gains. d. All of the above 113. The rule for personal account is a. Debit the receiver, Credit the giver b. Debit what comes in, Credit what goes out c. Debit all expenses and losses, credit all incomes and gains. d. All of the above 114. The rule for real accounts is a. Debit the receiver, Credit the giver b. Debit what comes in, Credit what goes out c. Debit all expenses and losses, credit all incomes and gains. d. All of the above 115. Kamal s account, mala s account, Sharma s accounts are example of.. a. Artificial or legal persons account b. Natural persons personal account c. Representative personal account d. Any of the above 116. Firm s accounts, limited companies accounts, educational initutions accounts, cooperative society account are example of. a. Artificial or legal persons account b. Natural persons personal account c. Representative personal account d. Any of the above 117. Prepaid insurance, outanding salaries are example of. a. Tangible real accounts b. Intangible real accounts c. Representative personal accounts d. Artificial or legal persons accounts 118. Wages account, rent account, commission account, intere received a. Real accounts b. Personal accounts 9

10 c. Nominal accounts d. None of above 119. Goodwill accounts, patents account, trademarks account, copyrights account are examples of a. Tangible real accounts b. Intangible real account c. Representative personal account d. Artificial or legal persons account 120. Provision fro doubtful debts account, ock reserve account etc are.. a. Valuation (Personal) Accounts b. Artificial or legal persons personal account c. Tangible real account d. Nominal accounts Is an intangible real account t a. Land b. Building c. Goodwill d. cash 122. Purchase is. a. Real accounts b. Personal, accounts c. Nominal accounts d. None of above 123. Sales is. a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 124. Discount allowed is.. a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 125. Drawing account is a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 126. Prepaid salary is a. Real accounts b. Personal accounts c. Nominal accounts d. None of above Bad debt recovered is.. a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 128. Patents account is a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 129. Bill payable account is. a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 130. Proprietor s account is.. a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 131. Rent account is a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 132. Trading account is a. a. Personal account b. Real account c. Nominal account d. Valuation account 133. Outanding wages is a a. Real accounts b. Personal accounts c. Nominal accounts d. None of above 134. Which of the following account is tangible real account? a. Patent b. Goodwill c. Machinery d. Creditors 135. Which of the following account is the artificial personal account? a. ICICI Bank A/c b. Neelam A/c c. Wages A/c

11 d. Machinery A/c 136. Which of the following account is odd one out? a. Salary A/c b. Wages A/c c. Rent A/c d. Outanding salary A/c 137. Which of the following account is the odd one out? a. Cash A/c b. Wages A/c c. Building A/c d. Machinery A/c 138. Which of the following account is the odd one out? a. Office furniture & equipment b. Freehold land & buildings c. Stock of material d. Plant & machinery CLASSIFICATION REVENUE, EXPENSE ASSET LIABILITY 139. Salary can be classified as a. Revenue b. Expense c. Asset d. Liability 140. Equipment can be classified as.. a. Revenue b. Expense c. Asset d. Liability 141. Accounts payable? Creditors can be classified as.. a. Revenue b. Expense c. Asset d. Liability 142. Stock can be classified be a. Revenue b. Expense c. Asset d. Liability 143. Profit can be classified be. a. Revenue b. Expense c. Asset d. Liability Building can be classified as. a. Revenue b. Expense c. Asset d. Liability 145. Accounts receivable? debtors can be classified as,,,,,,,,,,,,,,, a. Revenue b. Expense c. Asset d. Liability 146. Capital can be classified as a. Revenue b. Expense c. Asset d. Liability 147. Which of the following is a fictitious asset? a. Cash account b. Goodwill account c. Preliminary expenses d. Trademark account 148. Trademark is. a. Tangible account b. Intangible account c. Fictitious asset d. Nominal account SINGLE & DOUBLE ENTRY SYSTEM 149. There are syems of keeping records. a. Single entry syem b. Double entry syem c. Both (a) & (b) d. Duplicate account syem Syem recognizes the fact that every transaction has two aspects and records both aspects of each and every transaction. a. Single entry syem b. Double entry syem c. Double entry syem d. Duplicate account syem 151. In double entry syem of book-keeping every business transaction affects: a. Two account with equal but opposite affect. b. two sides of the same account

12 c. The same account on two different dates d. All the of the above 152. As per the provisions of the companies Act, 1956, companies mu maintain their accounts under a. Double account syem b. Single entry syem c. Double entry syem d. Duplicate account syem 153. Which of the following is/ are merit of double entry syem? a. It keeps a complete record of business transactions. b. It provides a check on the arithmetical accuracy of accounts c. The detailed profit and loss account can be prepared to show profits earned or loss suffered during any given period d. All of the above ACCOUNTING EQUATION 154. Which of the following accounting equation is correct? a. Assets + Capital = Liabilities b. Assets + liabilities= Capital c. Assets + Liabilities+ Capital = Nil d. None of the above 155. Which of the following equation is correct? a. Capital +Liabilities= Fixed Assets + Current Assets b. Capital +liabilities Current Assets= Fixed Assets c. Assets = Liabilities + Capital d. All of the above 156. Which of the financial atement represents the accounting equation? a. Manufacturing account b. Cash flow atement c. Balance sheet d. Profit and loss account 157. Difference between asset and outsiders liability is. a. Creditors b. Capital c. Drawings d. Bills payable PRACTICAL MCQ ACCOUNTING CONCEPTS & CONVENTIONS 158. Mr. N purchased a furniture coing Rs.13,000 on 1 October,2011. Transportation and inallation charges were incurred amounting Rs and Rs.520 respectively. Dismantling charges of the old furniture in place of which new furniture was put chased amounted RS. 1,300. Market value of the furniture was eimated at Rs. 1,300. Market value of the furniture was eimated at Rs. 15,600 on 31 March While finalizing the annual accounts, Mr. N values the furniture at Rs. 15,.600 in his books. Which of the following concepts was violated by Mr. N a. Realization concept b. Con concept c. Matching concept d. Periodicity concept 159. State the case where the going concern concept is applied? a. When an enterprise was set up for particular purpose, which has been achieved, or to be achieved shortly b. When a receiver or liquidator has been appointed in case of as company which is to be liquidated c. Fixed assets are acquired for use in the business for earning revenues and are not meant for resale d. When an enterprises is declared sick 160. R Ltd. Purchased equipment from P Ltd. For Rs. 50,000 on 1 April,2009. The freight and cartage of Rs. 2,000 is spent to bring the asset to the factory and Rs. 3,000 is uncured on inalling the equipment to make it possible for the intended use. The market and the accountant of the company wants to disclose the machinery at Rs. 60,000 in financial atement. However, the auditor emphasizes that the machinery should be valued at Rs. 55,000 (50,000+ 2,000+3,000) according to a. Money measurement principle b. Hiorical co concept c. Full disclosure principle d. Revenue recognition 12

13 161. The co of a small calculator is accounted as an expense and not shown as an asset in a financial atement of a business entity due to. a. Convention of materiality b. Matching concept c. Periodicity concept d. Convention of conservatism 162. A businessman purchased goods for Rs. 25,00,000 and sold 80% of such goods during the accounting year ended 31 march,2010. The market value of the remaining goods was Rs.4,00,000. He valued the closing ock at co. He violated the concept of.. a. Periodicity b. Conservatism, c. Money measurement d. Co 163. Assets should be valued at the price paid to acquire them is based on.. a. Realization concept b. Present value concept c. Co concept d. Money measurement concept 164. If a machinery is purchased for Rs. 1,00,000, the asset would be recorded in the books at Rs. 1,00,000 even if its market value at that time happens to be Rs. 1,40,000. In case a year after, the market value of this asset cones down to Rs. 90,000 it will ordinarily continue to be shown at Rs 1,00,000 and not at Rs. 90,000 due to. a. Realization concept b. Present value concept c. Co concept d. Money measurement concept 165. According to which concept, the owner of an enterprise pays the intere on drawings? a. Conservatism concept b. Dual aspect concept c. Entity concept d. Accrual concept 166. Mr. Ashok buys clothing or Rs. 50,000 paying cash Rs. 20,000. What is the amount of expenses as per the accrual concept? a. Rs. 30,000 b. Rs. 20,000 c. Rs. 50,000 d. Nil ACCOUNTING EQUATION 167. Capital kl-rs.1,00,00, Outsider liability Rs. 2,50,000 Total assets =? a. 3,50,000 b. 1,50,000 c. 2,00,000 d. 1,75, Fixed assets- Rs. 5,50,00 Current assets- Rs. 2,25,000 Current Liabilities Rs. 1,50,000 Bank Loan Rs.1,75,000. Capital=? a. 3,50,000 b. 5,50,000 c. 4,50,000 d. 6,50, Current Assets- Current Liabilities=? a. Working capital b. Capital c. Debtors d. Owners equity 13

14 CHAPTER 2 ACCOUNTS PROGRESS-I THESE CHAPTER COVERS MCQs ON: Accounting Cycle Journal Procedure of Journalizing Compound Journal Entry Ledger Features of Ledger Entry Different between journal and Ledger Ledger Poing Balancing Ledger Accounts Subsidiary Books of Account Purchases Book Sales Book Purchases Returns book Sales Returns Book Bills Receivable Book Bills Payable Book Cash Book Petty Cash Book General Journal Trial Balance Features of Trial Balance Objectives of trail Balance Methods of Preparing of Trial Balance ACCOUNTING CYCLE 1. Accounting cycle or accounting process includes.. (a) Journalizing (Recording) (b) Poing to ledger (Classifying) (c) Final account (Summarizing) (d) All of above 2.. Includes identifying recording classifying and summarizing the transactions (a) Accounting poing (b) Accounting cycle (c) Tally of accounts 3. In which order the accounting transactions and events are recorded in the books? (a) Journal, subsidiary, books, Ledger and Trial Balance (b) Ledger, Journal, Ledger, and Trial Balance (c) Subsidiary books, ledger and trial Balance and Journal. (d) Profit and loss account, ledger and trial Balance sheet Journal. Journal is the book of.. in which every transaction is recorded before being poed into the ledger (a) Primary entry (b) Secondary entry (c) Third entry.. is a book in which all the business transactions are originally recorded in chronological order and form which they are poed to the ledger accounts at any convenient time. (a) Ledger (b) Journal (c) Purchases returns books (d) Sales book Journal has.. columns (a) 4 (b) 5 (c) 3 (d) 6 Transactions which are inter-connected and have taken place simultaneously are recorded by means of a (a) Adjument entry (b) Combined journal entry (c) Either (a) or (b) (d) Closing entry.. is the principle books of account where similar transaction relating to a particular person or property or revenue or expense are recorded. (a) Ledger (b) Journal (c) Purchases returns books (d) Sales book Ledger is the.. of accounts where similar transactions relating to a particular person or property or revenue or expense are recorded (a) Principle book (b) Primary entry book (c) Third entry book 14

15 10. is a book of account; in which all types of accounts relating to assets, liabilities, capital, expenses and revenues are maintained (a) Ledger (b) Journal (c) Primary entry book 11. The process of recording transactions in journal is termed as (a) Balancing (b) Poing (c) Journalizing 12. Process of recording transaction is ledger is known as. (a) Balancing (b) Poing (c) Journalizing 13. Journal is book of (a) Analytical record (b) Chronological record (c) Alphabetical record 14. Ledger is book for (a) Analytical record (b) Chronological record (c) Alphabetical record 15. The process of equalizing the two sides of an account by putting the difference on the side where amount is short is known as (a) Balancing (b) Poing (c) Journalizing 16. Journal and ledger records transactions in (a) A chronological order and analytical order respectively (b) An analytical order and chorological order respectively (c) A chronological order account (d) An analytical order only. 17. Ledger book is popularly known as (a) Secondary books of account (b) Principle books of account (c) Subsidiary books of account 18. At the end if the accounting year all the nominal accounts of the ledger book are.. (a) Balanced but not transferred to profit and loss account (b) Not balanced and also the balances is not transferred to the profit and loss account (c) Balanced and the balance is transferred to the balance sheet (d) Not balanced and their balance is transferred to the profit and loss account 19. The sub-division of journal into various subsidiary journals in which transactions of similar nature are recorded are called (a) Subsidiary books. (b) Ledger (c) Journal (d) Analytical record 20. Which of the following is / are the subsidiary books? (a) Primary Books (b) Bills Payable Book (c) Purchases Book (d) (b) & (c) 21. Which of the following is / are the subsidiary books? (a) Purchases Book (b) Sales Book (c) Bills Receivable book 22. Which of the following is / are the subsidiary books/? (a) Purchases Returns Book (b) Sales Returns Book (c) Cash Book 23. Which of the following is / are not subsidiary books? (a) Purchases Returns Book (b) Cash Book (c) Journal proper 24. Purchases book is meant for recording the. Of goods (a) Credit purchase (b) Cash purchase (c) Budgeted purchase 15

16 25. Cash purchases are recorded in (a) Purchases Book (b) Cash Book (c) Purchases Returns Book (d) Journal proper 26. Purchases day book record. (a) All cash purchase (b) All credit purchase (c) Credit purchases of trading goods 27. The total of the purchases day book is poed periodically to the debit of. (a) Purchases account (b) Cash book (c) Journal proper (d) None of these 28. In the sales Book. Of goods are recorded (a) Cash sale (b) Credit sale (c) Budgeted sales 29. Cash sales are recorded in (a) Journal proper (b) Sales book (c) Cash book 30. Credit sale of various assets or invements will be recorded in (a) General journal (b) Sales Book (c) Cash book (d) Purchases book records the details of goods returned by the business organization to the supplier(s) (a) Sales Returns Book (b) Purchases returns books (c) Journal proper 32. When the goods are returned to the supplier, a is sent to him (a) Credit note (b) Debit note (c) Thank you note 33. The total amount column of the sales return book is (a) Credited to purchases returns account (b) Debited to sales return account (c) Credited to sales return account (d) Debited to purchases returns account The total amount column of the sales return book is (a) Credited to purchases returns account (b) Credited to sales return account (c) Credited to sales return account (d) Debited to purchases returns account Goods Outward Journal is meant for recording of returns of goods (a) Purchased on credit (b) Purchased on cash (c) Sold on credit (d) Sold on cash The details of goods returned by the cuomers to the business organization are recorded in. (a) Sales Returns Book (b) Purchases returns books (c) Journal proper. Is used to record the details of bills receivable by the business organizations (a) Purchases Book (b) Bills Payable Book (c) Bills Receivable Book is used to record the particulars of all the bills payable accepted by the business organization for the purpose of paying amounts due to its creditors (a) Journal proper (b) Bills payable Book (c) Bills Receivable Book (d) Sales Book The total of the amount of the bills receivable book is poed to the. In the ledger (a) of bills payable account (b) Cr. Of bills receivable account (c) of bills receivable account (d) of bills receivable account The total of the amount of the bills payable book is poed to the in the ledger (a) of bills payable account (b) Cr. Of bills payable account 16

17 (c) of bills receivable account (d) of bills receivable account 41. When fixed assets or ationeries are purchased on credit, the entries are passed in the (a) General journal (b) Purchases day book (c) Purchases Account (d) Any of the above 42. Which of the following books is used to record purchase of machinery by cash? (a) Cash book (b) Purchases book (c) Journal book (d) Purchases returns book 43. When obsolete assets are sold on credit, these are originally recorded in the. (a) Sales day book (b) Sale account (c) General journal (d) Any of the above CASH BOOK is the book in which all transactions concerning cash receipts and cash payments are recorded (a) Journal proper (b) Cash book (c) Sales Book (d) Purchases Book 45. Cash book is in the form of. (a) Journal (b) An account (c) Statement (d) All of above 46. Balance if cash column in cash book has (a) balance (b) Cr. Balance (c) or Cr. Balance 47. Which of the following is / are features of cash book? (a) It performs the functions of both journal and ledger at the same time (b) Cash receipts are recorded in the credit side and cash payments are recorded in the debit side (c) It records two aspect of transaction i.e. cash & credit (d) All of above Which of the following is / are features of cash book? (a) All cash transactions are recorded chronologically in the cash book (b) It records only one aspect of transaction i.e. cash (c) It performs the functions of both journal and ledger at the same time (d) All of above Which of the following is type of cash book? (a) Single column cash book (b) Two columnar cash book (c) Three columnar Cash Book Which of the following is the kind of a cash book? (a) Single column cash book (b) Two Columnar Cash Book (c) Three-column cash book Cash book is a type of.. but treated as a of accounts (a) Principle book, subsidiary book (b) Subsidiary book, principle book (c) Principle book, principle book (d) Subsidiary book, subsidiary book Which of the following is not a column of a three column cash book? (a) Discount column (b) Petty cash column (c) Bank column (d) Cash column Rent due for the month of March will appear. (a) On the payment side of the cash book (b) On the receipt side of the cash book (c) Nowhere in the cash book (d) As a contra entry The cash book records (a) All cash payments (b) All cash receipts (c) All cash receipts and payments (d) Cash and credit sale of goods 17

18 55. Which of the column of the cash book can have credit opening or closing balance? (a) Cash column (b) Bank column (c) Discount column (d) (b) & (c) 56. Which of the column of the cash book is never balanced.. (a) Cash column (b) Bank column (c) Discount column 57. Cash account is. (a) Personal account (b) Real account (c) Nominal account (d) Valuation account 58. Total of debit side discount column of cash book is poed to.. (a) Cr. Of discount Received A/c (b) of Discount Received A/c (c) Cr. Of discount allowed A/c (d) of Discount Allowed A/c 59. The debit balance of a cash account shows (a) Amount receivable (b) Amount payable (c) Cash in hand (d) Liability 60. Contra entry appears in. (a) Purchases Returns Book (b) Cash book (c) Journal proper (d) All of above 61. Contra entries are passed only when.. (a) Simple cash book is prepared (b) Three-column cash book is prepared (c) Double-column book is prepared 62. If a transaction involves both cash and account, it is entered on both sides of the cash book, one in the cash column and second in the bank column, though on opposite sides. This is called (a) Journal entry (b) Adjument entry (c) Contra entry (d) Combined entry 63. Payments in cash of small amounts like travelling expenses, poage, carriage etc. are recorded in the.. (a) Main cash book (b) Petty cash book (c) Cash budget (d) Journal proper 64. The balance in the petty cash book is. (a) A liability (b) An asset (c) A profit (d) An expense 65. Which of the following is / are advantages of the impreed syem? (a) It saves the time of the chief cashier (b) It reduces the chances of misuse of cash by the petty cashier (c) It enables a great (d) All of above 66. The petty cashier generally works on.. syem (a) Balancing (b) Accrual (c) Matching (d) Impreed 67. Petty Cash Book may be treated as a. (a) Part of the double entry syem (b) Merely as a memoranda book (c) Either (a) or (b) OPENING, CLOSING & ADJUSTMENT ENTRIES are passed at the beginning of the financial year to open the books by recording the assets, liabilities and capital appearing in the balance sheet, of the previous year. (a) Transfer entries (b) Adjument Entries (c) Closing Entries (d) Opening Entries 69. are used at the end of the accounting year for closing of accounts relating to expenses and revenues (a) Transfer Entries (b) Adjument Entries (c) Closing entries (d) Opening Entries 18

19 70. Opening, closing and adjument entries are recorded in. (a) Purchase Book (b) Sales Book (c) Petty Cash Book (d) Journal Proper 71. At the end of the accounting year,. Are to be passed for outanding / prepaid expenses, accrued income / income received in advance etc. (a) Transfer Entries (b) Adjument Entries (c) Closing Entries (d) Opening Entries 72. are passed in the general journal for transferring an item entered in one account to another account (a) Transfer Entries (b) Adjument Entries (c) Closing Entries (d) Opening Entries are passed for rectifying errors which might have committed in the books of account (a) Transfer Entries (b) Adjument Entries (c) Rectification Entries (d) Opening Entries 74. A is a schedule or li of balances of both debit and credit extracted from various accounts. (a) Profit & Loss Account (b) Balance Sheet (c) Cash Flow Statement (d) Trial balance 75. It is a check on the accuracy of poing. If the trail balance agrees it proves that (a) The books are arithmetically accurate, (b) Both the aspects of the transactions have been correctly recorded in the books of original entry as well as in the ledger (c) Both (a) & (b) 76. At the end of the accounting period or at the end of each month, the balances of the ledger accounts are extracted and.. is prepared to te as to whether the total debits are equal to total credits (a) Profit & Loss Account (b) Balance Sheet (c) Cash Flow Statement (d) Trail balance Which of the following is / are method for preparation of trail balance? (a) Balances Method (b) Totals Method (c) Both (a) & (b) If the trial balance do not agree after transferring the balance of all ledger accounts including cash and bank balance and also errors are not located timely, then the trial balance is tallied by transferring the difference of debit and credit side to an account known as.. (a) Memorandum Account (b) Capital Account (c) Suspense Account (d) Drawing Account The balances of all assets accounts, expenses accounts, losses, drawings are placed in the. Of the trail balance. (a) Credit column (b) Debit column (c) Ledger folio The balances of all liabilities accounts, income accounts, profits, capital are placed in the.. of the trail balance (a) Credit column (b) Debit column (c) Ledger folio A trial balance will not balance if (a) Correct journal entry is poed twice (b) The purchase on credit basis is debited to purchases and credited to cash (c) Rs.500 cash payment to creditors is debited to creditors for Rs.50 and credited to cash as Rs.500 All expense and. Accounts appearing in the trial balance are transferred to the trading and profit and loss account (a) Loss (b) Asset (c) Liability 19

20 (d) Revenue 83. After the preparation of ledgers, the next ep is the preparation if. (a) Trading accounts (b) Trial balance (c) Profit and loss account 84. Difference of totals of both debit and credit side of the trail balance is transferred to (a) Miscellaneous account (b) Difference account (c) Trading account (d) Suspense account 85. Bank overdraft is shown on the.. (a) Credit (b) Debit (c) None (d) Both 86. After preparing the trial balance the accountant finds that the total of debit side is short by Rs.1, 500. The difference will be. (a) Credited to suspense account (b) Debited to suspense account (c) Adjued to any of the debit balance account (d) Adjued to any of the credit balance account PRACTICAL MCQ 87. Purchases of furniture on cash for Rs.1, 50,000 will be recorded in.. (a) Sales Book (b) Purchase Book (c) General Journal (d) Cash Book 88. Purchased goods for Rs.90, 0000 form Mr. N on credit will be recorded in. (a) Sales Book (b) Purchase Book (c) Journal proper (General Journal) (d) Cash Book 89. Rs.3, 50,000 cash paid to creditors for settlement of credit purchases will be recorded in. (a) Sales book (b) Purchases Book (c) Journal Proper (General Journal) (d) Cash Book e 90. Sold furniture on cash for Rs.1, 50,000 will be recorded in. (a) Sales Book (b) Purchase Book (c) Journal Proper (General Journal) (d) Cash Book 91. Sold goods for Rs.90,000 to Mr. Z on credit will recorded in.. (a) Sales Book (b) Purchase Book (c) Journal Proper (General Journal) (d) Cash book 92. Received of Rs.2, 00,000 from debtors for settlement of credit sales will be recorded in. (a) Sales Book (b) Purchase Book (c) Journal Proper (General Journal) (d) Cash book 93. Mr. N returns the goods of Rs.50, 000 purchased on credit to Mr. Z this ill recorded by Mr. N in And by Mr. Z in.. (a) Sales Return Book, Purchases Return Book (b) Purchases Return Book Sales Return Book (c) Sales return Book, Sales book (d) Purchases Return Book, Purchase Book 94. If Mr. Z draws the bill of exchange for Rs.75, 000 on Mr. N this transaction will be recorded by Mr. Z in and by Mr. N in (a) Bills Receivable Book, Bills payable Book (b) Bills Payable Book, Bills receivable Book (c) Bills receivable book, purchases book (d) Bills Payable book, sales Book 95. An allowance of Rs.50 was offered for an early payment of cash of Rs.1, 050. It will be recorded in.. (a) Sales Book (b) Purchase book (c) Journal Proper (general Journal) (d) Cash Book 96. A second hand motor car was purchased on credit from B & Co. for Rs.10, 000. It will be recorded in.. (a) Journal Proper (General Journal) (b) Cash Book (c) Purchase Book 20

21 (d) Sales book 97. Goods were sold on credit basis to Mr. Ram for Rs.10, 000. It will be recorded in (a) Journal Proper (General Journal) (b) Cash book (c) Purchase Book (d) Sales book 98. Accounting for recovery from Mr. C of an amount of Rs.2,000 earlier written off as bad debt will be recorded in. (a) Sales book (b) Purchase book (c) Journal Proper (general Journal) (d) Cash book 99. Credit purchase of ationery worth Rs.5, 000 by a ationery dealer will be recorded in.. (a) Journal Proper (General Journal) (b) Cash Book (c) Purchase book (d) Sales book 100. A bills receivable of Rs.10, 000, which was received from a debtor in full settlement for a claim of Rs.11, 000 dishonored will be recorded in.. (a) Bills receivable book (b) Journal proper (General Journal) (c) Purchases return Book (d) Purchase book 101. Purchased goods from Shyam worth Rs.50, 000 on credit basis will be recorded in.. (a) Purchase book (b) Bills payable book (c) Sales book (d) Purchase return book 102. Outanding salary rs.34, 000 to be provided in the accounts will be recorded in (a) Bills receivable book (b) Journal proper (General Journal) (c) Purchases Return Book (d) Purchase book 103. A debit note for Rs.20, 000 issued to Mr. Z for goods returned by us is to be accounted for in. (a) Bills receivable book (b) General journal (c) Purchases return book (d) Purchase book 104. Invement was sold in cash for Rs.1, 00,000 at par will be recorded in (a) Cash book (b) General journal (c) Purchases return book (d) Purchase book 105. Invement was sold on credit for Rs.1, 00, 000 at par will be recorded in (a) Cash book (b) General journal (c) Purchases return book (d) Purchases returns book 106. Salary paid in cash Rs.50, 000 will be recorded in (a) General journal (b) Cash book (c) Purcahses return book (d) Purchase book 107. Cash sales for Rs.5, 00,000 will be recorded in.. (a) General journal (b) Cash book (c) General journal (d) Sales book 21