FA MCQs for Class Practice PDF

1 Subject - Fundamentals of Accounting Topic - MCQ Questions on Basics of Accounting, Journal, Ledger, Trial Balance, Final Account, Depreciation, Valuation of Invetory. Class - Foundation, Intermediate, Graduation, Masters and all other prof...

1 Subject - Fundamentals of Accounting Topic - MCQ Questions on Basics of Accounting, Journal, Ledger, Trial Balance, Final Account, Depreciation, Valuation of Invetory. Class - Foundation, Intermediate, Graduation, Masters and all other professionals degrees. 1) Which of the Following is known as the “Original Book of Entry” ? [A].Ledger [B].Balance Sheet [C].Journal [D].None of the above Correct Answer : C 2) Choose the correct Accounting as per Balance Sheet. [A].Assets = Liabilities [B].Liabilities = Owner’s Equity [C].Assets = Liabilities + Owner’s Equity [D].Liabilities = Assets + Owner’s Equity Correct Answer : C. 3) As per Traditional Approach, Plant and Machinery falls under which type of Account? [A].Personal Account [B].Real Account [C].Nominal Account [D].None of the above Correct Answer : B. 4) Under the Modern Accounting Approach, accounts are classified under how many groups? [A].Five [B].Three [C].Four  2 [D].Two Correct Answer : A. 5) Which of the following is a characteristic of accounting information? [A].Incomplete [B].Reliable [C].Incomparability [D].Inconsistent Correct Answer : B. 6) Which of the following two are the basis of accounting? [A].Income Basis and Gain Basis [B].Profit Basis and Loss Basis [C].Cash Basis and Accrual Basis [D].Revenue Basis and Expense Basis Correct Answer : C. 7) Ledger is also known as the book of ? [A].Primary Entry [B].Original Entry [C].Secondary Entry [D].None of the above Correct Answer : C. 8) Which of the following is the system where both aspects of a transaction are recorded? [A].Double Entry system of Accounting [B].Single Entry System of Accounting [C].Both of the Above [D].None of the above Correct Answer : A. 9) Which of the following is not shown in Ledger ? [A].Cash Discount  3 [B].Debtors [C].Creditors [D].Trade Discount Correct Answer : D. 10) What is the time period of financial year? [A].1st January – 31st December [B].31st April – 1st March [C].1st April – 31st March [D].None of the Above Correct Answer : C. 11) Which accounting concept states that – “A business should only record transactions that can be stated in terms of a unit of currency”? [A].Going Concern Concept [B].Monetary Unit Concept [C].Materiality Concept [D].Reliability Concept Correct Answer : B. 12) Which of the following is a merit of Double Entry system ? [A].Incomplete Record [B].Only one aspect of transaction recorded [C].Only used in manual accounting methods [D].Lesser possibility of fraud Correct Answer : D. 13) Goods returned by customer will be debited to which account ? [A].Sales Return Account [B].Purchase Account [C].Sales Account [D].Creditors Account Correct Answer : A.  4 14) Which type of accounting is concerned with Cost of production? [A].Financial Accounting [B].Management Accounting [C].Cost Accounting [D].Fund Accounting Correct Answer : C. 15) Dividend Income falls under which type of account? [A].Real Account [B].Nominal Account [C].Personal Account [D].All three Correct Answer : B. 16) What is the first step in the Book-keeping / Accounting process ? [A].Measuring identified transactions & events [B].Recording the identified transactions/events [C].Creating Final Accounts [D].Identifying transactions and events Correct Answer : D. 17) Who of the following is an internal user of Accounting Information? [A].Employee [B].Creditors [C].Customer [D].Government Correct Answer : A. 18) Under the Traditional Approach of accounting, accounts are classified into: [A].Personal, Real and Nominal Accounts [B].Assets, Liabilities, Revenue, Expense and Capital Accounts [C].None of the Above [D].Both A & B Correct Answer : A  5. Analyze business transactions and will be able to prepare the Financial Statements 19) The left hand side of the ledger account is referred to as ? [A].Ledger Folio [B].Debit side [C].Credit side [D].Footing Correct Answer : B. 20) Owner’s Capital will be classified under which account as per traditional/British approach of accounting? [A].Real Account [B].Nominal Account [C].Personal Account [D].None of the above Correct Answer : C. 21) Among these, which item is used as the base for preparing trial balance? [A].Cash Flow Statement [B].Cash account [C].Balance sheet [D].Ledger Correct Answer : D. 22) Salary account falls under which type of account? [A].Real Account [B].Personal Account [C].Nominal Account [D].All of the Above Correct Answer : C. 23) Which Basis of Accounting states the following: “All the transactions are recorded as and when the amount is actually received or paid” [A].Accrual Basis  6 [B].Cash Basis [C].Both A & B [D].None of the Above Correct Answer : B. 24) Any withdrawal made by the owner for their personal use is known as ? [A].Capital [B].Sales [C].Purchases [D].Drawings Correct Answer : D. 25) Which of the following type of discount is recorded in books of Journal Entry? [A].Trade Discount [B].Cash Discount [C].Both A & B [D].None of the Above Correct Answer : B. 26) “Debit all expenses and losses and credit all incomes and gains” is the rule of which account under traditional accounting approach? [A].Personal Account [B].Nominal Account [C].Real Account [D].None of the Above Correct Answer : B. 27) Depreciation is defined as ? [A].destruction of a plant in a fire accident [B].loss of equipment over time due to wear and tear [C].closure of a plant due to labour trouble [D].closure of a plant due to lockout Correct Answer : B.  7 28) The main objective of providing depreciation is ____ [A].to calculate true profit [B].to calculate financial position. [C].to reduce tax burden [D].to reduce profit. Correct Answer : A. 29) Depreciation is provided on ____ [A].Current Asset [B].Fixed Asset [C].Fictious Asset [D].Investment Correct Answer : B. 30) The permanent, continuing and gradual shrinkage in the book value of a fixed asset is called ____ [A].depreciation. [B].appreciation. [C].reduction [D].computation Correct Answer : A. 31) Under the diminishing balance method depreciation is calculated on___ [A].original value [B].written down value. [C].scrap value. [D].market value. Correct Answer : B. 32) Orignal cost =120000 Salvage Value =20000 No of useful life is 5 Years.Depriciation for the first year under straight line method is [A].20000  8 [B].21000 [C].28000 [D].26000 Correct Answer : A. 33) Which of the followings is Depriciation method? [A].FIFO [B].LIFO [C].Weighted Average [D].Written Down Method Correct Answer : D. 34) According to straight line method of providing depreciation, the depreciation [A].Remains constant [B].Increase each year. [C].Decrease each year [D].None of them. Correct Answer : A. 35) In accounting, becoming out of date or obsolete is known as [A].Amortization [B].Obsolescence [C].Depletion [D].Physical deterioration Correct Answer : B. 36) Which of the following is not a method of Depreciation? [A].Written Down Value Method [B].Straight Line Method [C].First In First Out (FIFO) Method [D].Both A and B Correct Answer : C. 37) The estimated value of depreciable assets after its useful life is called  9 [A].Actual value [B].Replacement value [C].Disposal (Residual) value [D].Current value. Correct Answer : C. 38) Depreciation starts on a machine from the Date: [A].It is purchased. [B].It is put to use [C].It is installed. [D].Any of the above. Correct Answer : B. 39) Depreciation is primarily provided due to: [A].Reduce tax burden. [B].Replacement of fixed asset in future. [C].Comply with legal requirements. [D].All of the above. Correct Answer : B. 40) The term ______ is generally used for the depreciation of natural resources [A].Amortization [B].Depletion [C].Appreciation [D].Disposal Value Correct Answer : B. 41) Which of the following most closely defines amortization [A].Depreciation of Tangible Assets [B].Depreciation of Intangible Assets [C].Depreciation of Current Assets [D].The revaluation of Land and Building Correct Answer : B  10. 42) In the format of Journal Entry, LF stands for [A].Ledger Folio [B].Ledger File [C].List Folio [D].List File Correct Answer : A. 43) CGST stands for [A].Centralised Goods and Service Tax [B].Central Goods and Service Tax [C].Centre Goods and Service Tax [D].None of the Above Correct Answer : B. 44) SGST stands for [A].State Goods and Service Tax [B].Standard Goods and Service Tax [C].Static Goods and Service Tax [D].None of the Above Correct Answer : A. 45) CGST will be charged when there is [A].Interstate Supply [B].Intrastate Supply [C].Interflow Supply [D].None of the Above Correct Answer : B. 46) SGST will be charged when there is [A].Interstate Supply [B].Intrastate Supply [C].Interflow Supply [D].None of the Above  11 Correct Answer : B. 47) IGST will be charged when there is [A].Interstate Supply [B].Intrastate Supply [C].Interflow Supply [D].None of the Above Correct Answer : A. 48) What you mean by intra state supply [A].between the states [B].Within the state [C].between the country [D].None of the Above Correct Answer : B. 49) What you mean by inter state supply [A].between the states [B].Within the state [C].between the country [D].None of the Above Correct Answer : A. 50) Trial Balance is a [A].Account [B].Ledger [C].Book [D].Statement Correct Answer : D. 51) Posting to Ledger can be done from [A].Ledger Book  12 [B].Trial balance [C].Journal book [D].Final accounts Correct Answer : C. 52) Posting to Final accounts can be done from [A].Ledger Book [B].Trial balance [C].Journal book [D].Final accounts Correct Answer : B. 53) Total of Trial Balance on both the side will be always equal [A].Statement is True [B].Statement is False [C].Statement is partly True [D].None of the Above Correct Answer : A. 54) Objective of Preparing the Trial Balance is [A].Artihmetical Accuracy [B].Locating error [C].Preparation of Final Accounts [D].All of the above Correct Answer : D. 55) The error that arises because of difference between Capital and Revenue Expenditure is called [A].Error of Principle [B].Error of Ommision [C].Error of Commision [D].Compensating Errors Correct Answer : A.  13 56) The error that arises because of difference between Capital and Revenue Receipts is called [A].Error of Principle [B].Error of Ommision [C].Error of Commision [D].Compensating Errors Correct Answer : A. 57) The error of debiting purchase of Furniture to Office Expenses Account is [A].Error of Principle [B].Error of Ommision [C].Error of Commision [D].Compensating Errors Correct Answer : A. 58) The error whose effect is not reflected in the Trial Balance _ [A].Error of Principle [B].Error of Ommision [C].A & C both [D].None of the Above Correct Answer : C. 59) "Forgot to post to the ledger from the book of journal entry", which type of error ? [A].Error of Principle [B].Error of Ommision [C].Error of Commision [D].Compensating Errors Correct Answer : B. 60) Which Discount is allowed for Prompt payment [A].Cash Discount [B].Trade Discount [C].Instant Discount [D].None of the Above  14 Correct Answer : A. 61) Which Discount will be given on list price [A].Cash Discount [B].Trade Discount [C].Instant Discount [D].None of the Above Correct Answer : A. 62) Which Discount will be given on Invoice price [A].Cash Discount [B].Trade Discount [C].Instant Discount [D].None of the Above Correct Answer : B. 63) Which Discount is allowed for Promotion of Sale [A].Cash Discount [B].Trade Discount [C].Instant Discount [D].None of the Above Correct Answer : B. 64) Which Discount Account is to be opened in the ledger [A].Cash Discount [B].Trade Discount [C].Instant Discount [D].None of the Above Correct Answer : A. 65) Which Discount Account is to not be opened in the ledger [A].Cash Discount [B].Trade Discount [C].Instant Discount  15 [D].None of the Above Correct Answer : B. 66) Which Discount is allowed on Payment of Money [A].Cash Discount [B].Trade Discount [C].Instant Discount [D].None of the Above Correct Answer : A. 67) Which Discount is allowed on Purchase of Goods [A].Cash Discount [B].Trade Discount [C].Instant Disc [D].None of the Above Correct Answer : B. 68) Which Discount varies as per quantity of goods [A].Cash Discount [B].Trade Discount [C].Instant Discount [D].None of the Above Correct Answer : B. 69) Which Discount vary as per time period of making payment [A].Cash Discount [B].Trade Discount [C].Instant Discount [D].None of the Above Correct Answer : A. 70) The other name of list price is [A].Catalogue Price  16 [B].Cash Price [C].Invoice Price [D].None of the Above Correct Answer : A. 71) Capital Accounts is always [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : B. 72) Drawings Accounts is always [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : A. 73) Machinery Puchased, Machinery Account will be [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : A. 74) Sales Account is always [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : B. 75) Purchase Account is always  17 [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : A. 76) Purchase Return Acount is always [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : B. 77) Sales Return Acount is always [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : A. 78) Debtors Account will be [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : A. 79) Creditors Account will be [A].Debited [B].Credited [C].A & B both [D].None of the Above Correct Answer : B  18. 80) Direct expenses which are incurred to bring the goods into saleable condition are charged to …................. [A].Trading Account [B].Profit & Loss Account [C].Balance Sheet [D].All of the Above Correct Answer : A. 81) Indirect expenses and income or gains are recoreded in which statement [A].Trading Account [B].Profit & Loss Account [C].Balance Sheet [D].All of the Above Correct Answer : B. 82) The profit kept aside for known Liabilities is called as _________ [A].Provision [B].Reserves [C].Current Assets [D].Current Liabilities Correct Answer : A. 83) The profit kept aside for Unknown Liabilities is known as _________ [A].Provision [B].Reserves [C].Current Assets [D].Current Liabilities Correct Answer : B. 84) The presence of profit is necessary to create ….............. [A].Provision [B].Reserves [C].Current Assets  19 [D].Current Liabilities Correct Answer : B. 85) …................. is a charge against profit of the business [A].Provision [B].Reserves [C].Current Assets [D].Current Liabilities Correct Answer : A. 86) State the nature of the given transaction: Paid Telephone bill Rs. 1,000 [A].Capital Expenditure [B].Revenue Expenditure [C].Capital Receipts [D].Revenue Receipts Correct Answer : B. 87) The expense incurred in the current year but the benefit may extend over a number of years, is called ….................. [A].Capital Expenditure [B].Revenue Expenditure [C].Deferred Revenue Expenditure [D].None of the Above Correct Answer : C. 88) Any receipt from the sale of fixed assets is known as ________ [A].Capital Expenditure [B].Revenue Expenditure [C].Capital Receipts [D].Revenue Receipts Correct Answer : C. 89) Trading Account is prepared to ascertain __________for a given accounting period.  20 [A].Gross Profit/Gross Loss [B].Net Profit/Net Loss [C].Divisible Profit/Divisible Loss [D].All of the Above Correct Answer : A. 90) Fuel and Power should be debited in ________________ [A].Trading Account [B].Profit & Loss Account [C].Balance Sheet [D].Financial Statement Correct Answer : A. 91) From the following information calculate Gross Profit/Gross Loss : Adjusted Purchases Rs. 6,60,000; Sales Rs. 7,44,000; Closing Stock Rs. 50,400; Freight and Carriage 3,600; Wages Rs. 6,000. [A].Rs. 80,000 [B].Rs. 74,400 [C].Rs. 70,000 [D].Rs. 85,000 Correct Answer : B. 92) All indirect expenses recorded in _________ [A].Trading Account [B].Profit & Loss Account [C].Balance Sheet [D].Financial Statement Correct Answer : B. 93) Which of the following statement is known as the income statement of the company [A].Income and Expenditure Account [B].Profit & Loss Account [C].Balance Sheet  21 [D].Cash Flow Statement Correct Answer : B. 94) Which of the following is not an intangible asset ? [A].Furniture [B].Goodwill [C].Patents [D].Franchise rights Correct Answer : A. 95) How many components do the final accounts have? [A].2 [B].3 [C].4 [D].5 Correct Answer : B. 96) A balance sheet [A].Tabulates the assets and liabilities of the company [B].indicates the growth rate [C].shows financial position of the company [D].Both A & C Correct Answer : D. 97) A Profit & Loss is prepared [A].After Trading Account [B].After Balance Sheet [C].Before Trading Account [D].At anytime Correct Answer : A. 98) Closing Stock is recorded in the: [A].Trading Account [B].Balance sheet  22 [C].Profit & Loss Account [D].Both A & B Correct Answer : D. 99) Carriage Outward is an example of : [A].Direct Expenses [B].Indirect Expenses [C].Indirect Income [D].Direct Income Correct Answer : B. 100) The Balance sheet is a statement of: [A].Assets [B].Capital [C].Liabilities [D].All of the Above Correct Answer : D. 101) Which of the options is an example of business liability? [A].Creditors [B].Land [C].Cash [D].Stock Correct Answer : A. 102) Any physical item with monetary value is : [A].An intangible asset [B].Goodwill [C].An Asset [D].A Fictitious Asset Correct Answer : C. 103) Which of the following is/are indirect expenses? [A].Salary  23 [B].Rent [C].Insurance [D].All of the Above Correct Answer : D. 104) Propertise and receivables with certain value that are owned by a business is/are called? [A].Assets [B].Liabilities [C].Goodwill [D].None of the Above Correct Answer : A. 105) Physically exist Assets are known as [A].Intangible Assets [B].Tangible Assets [C].Contigent Assets [D].Fictitious Assets Correct Answer : B. 106) Which of the Following are included in Intangible Assets [A].Goodwill [B].Patents [C].Trademark [D].All of the Above Correct Answer : D. 107) Which of the following assets could be described as Current Assets? [A].Building [B].Machinery [C].Sundry debtors [D].Land Correct Answer : C.  24 108) Profit and Loss Account would not include? [A].Rent Received [B].Drawings [C].Salaries [D].Electricity Correct Answer : B. 109) Net Sales = __________ [A].Sales - Return Outward [B].Sales + Return Outward [C].Sales - Return Inward [D].Sales + Return Inward Correct Answer : C. 110) The rate of Gross Profit on sales is 30% and the cost of good sold is Rs. 70,000, what is the amount of sales? [A].Rs. 1,00,000 [B].Rs. 21,000 [C].Rs. 49,000 [D].Rs. 2,33,333 Correct Answer : A. 111) Another Effect of Income received in advance - [A].To be recorded in the Asset side of the Balance Sheet [B].To be recorded in the Liability side of the balance sheet [C].Debit Side of the Trading Account [D].Debit Side of the Profit and Loss A/c Correct Answer : B. 112) What is the treatment given to drawings in final accounts [A].To be recorded in the Asset side of the Balance Sheet [B].to deduct it from the capital in liability side of balance sheet [C].to add it from the capital in the liability side of balance sheet [D].None of the Above  25 Correct Answer : B. 113) Prepaid/ Unexpired expense is a…...................... [A].Asset [B].Liability [C].Current Asset [D].Current Liability Correct Answer : C. 114) Closing stock appearing inside the trial balance will be shown at…....... [A].Credit side of trading account [B].Asset side of balance sheet [C].Both a and b [D].None of the Above Correct Answer : B. 115) Bad debts appearing inside the trial balance will be shown at…....... [A].Debit side of P/L account [B].Asset side of balance sheet, deducting from debtors [C].Both a and b [D].None of the Above Correct Answer : A. 116) Bad debts appearing outside the trial balance will be shown at…....... [A].Debit side of P/L account [B].Asset side of balance sheet, deducting from debtors [C].Both a and b [D].None of the Above Correct Answer : C. 117) Provision for doubtful debts is maintained at a certain percentage of…........ [A].Debtors [B].Good debtors [C].Creditors  26 [D].good creditors Correct Answer : B. 118) Net profit is transferred to…............ [A].Capital account [B].Asset account [C].Liabilities [D].None of the Above Correct Answer : A. 119) Provision for discount on debtors is a…............ [A].appropriation of profit [B].charge against the profit [C].Either A or B [D].None of the Above Correct Answer : B. 120) Gross loss is carried forward to …................... P/L account [A].Credit side of P/L account [B].Debit side of P/L account [C].Either A or B [D].None of the Above Correct Answer : B. 121) Net loss is shown as [A].Credit side of P/L account [B].Debit side of P/L account [C].Credit side of P/L account and deducted from capital in B/s [D].Debit side of P/L account and deducted from capital in B/s Correct Answer : C. 122) Profit and Loss Account includes [A].both capital and revenue nature items [B].only capital nature items  27 [C].only revenue nature items [D].All of the above Correct Answer : C. 123) All the accounts pertaining to revenue and expenditure belongs to [A].Real account [B].Nominal account [C].Personal account [D].All of the above Correct Answer : B. 124) Amount received from sale of goods is an example of [A].Capital receipt [B].Revenue Expenditure [C].Revenue receipt [D].Non recurring receipt Correct Answer : C. 125) Outstanding expenses is a [A].Current liability [B].Non- current liability [C].Current Assets [D].Non-current assets Correct Answer : A. 126) Wages and salaries is shown in [A].Debit side of P/L account [B].Debit side of Trading account [C].Credit side of P/L account [D].Credit side of Trading account Correct Answer : B. 127) The other name of SLM method is  28 [A].Original Cost method [B].Fixed Installment method [C].Diminishing Value method [D].Both A and B Correct Answer : D. 128) Depreciation is not charged on ______ fixed asset [A].Building [B].Machinery [C].Land [D].All the above Correct Answer : C. 129) The value of assets at the end under WDV method remains [A].zero [B].above zero [C].below zero [D].None of these Correct Answer : B. 130) "Anticipate No profit but provide for losses" is a term in ___ principle [A].Materiality [B].Full Disclose [C].Consistency [D].Conservatism Correct Answer : D. 131) Prepared Petty cash book based on _____ principle [A].Materiality [B].Full Disclose  29 [C].Consistency [D].Conservatism Correct Answer : A. 132) to disclose all facts and figures without hiding anything is based on ____ principle [A].Materiality [B].Full Disclose [C].Consistency [D].Conservatism Correct Answer : B. 133) "1st January to 31st December is considered to be a accounting year [A].based on Accrual Concept [B].based on cost Concept [C].based on Accounting period Concept [D].based on business entity Concept Correct Answer : C. 134) Inventory Valuation is coming under which branch of accounting [A].Financial Accounting [B].Cost Accounting [C].Management Accounting [D].Social Responsibility Accounting Correct Answer : B. 135) CSR Corporate Social Responsibility is coming under [A].Financial Accounting [B].Cost Accounting [C].Management Accounting [D].Social Responsibility Accounting  30 Correct Answer : D. 136) which of the following branch of accounting is optional to follow for business units [A].Management Accounting [B].Cost Accounting [C].Both Cost and Management Accounting [D].Financial Accounting Correct Answer : C. 137) which of the following branch of accounting is compulsory to follow for business units [A].Financial Accounting [B].Cost Accounting [C].Management Accounting [D].Social Responsibility Accounting Correct Answer : A. 138) LIFO stands for [A].Last inn Fast Out [B].Last In First Our [C].Last In First Out [D].Last Inwards First Outwards Correct Answer : C. 139) FIFO stands for [A].Fast inn Fast Out [B].Fast In First Our [C].First In First Out [D].First Inwards First Outwards  31 Correct Answer : C. 140) Sales Return otherwise known as [A].Return Inwards [B].Return Outwards [C].Return in [D].Return Out Correct Answer : A. 141) Traditional Approach is also known as ___ of Accounting. [A].Golden Style [B].Golden Principle [C].Golden Concept [D].Golden Rule Correct Answer : D. 142) GAAP stands for [A].Generally Accepted Accounting Principlals [B].Generally Accepted Accounting Principles [C].Generally Accepted Accountancy Principlals [D].Generally Accepted Accountancy Principles Correct Answer : B. 143) JF in ledger format stands for [A].Journal Foil [B].Journal Folic [C].Journal Folio [D].Journal Follows Correct Answer : C  32. 144) Book-Keeping, Accounting and Accountancy. what will be order on the basis of scope of use? arrange in low to high [A].Book-Keeping-Accountancy-Accounting [B].Accounting-Book-Keeping-Accountancy [C].Accounting-Accountancy-Book-Keeping [D].Book-Keeping-Accounting-Accountancy Correct Answer : D. 145) Inventory includes: [A].Finished goods only [B].Finished goods, Raw material only [C].Raw material, Work in progress and finished goods [D].None of the above Correct Answer : C. 146) Balance sheet also known as [A].Income statement [B].Position statement [C].Settlement statement [D].property statement Correct Answer : B. 147) The right hand side of the ledger account is referred to as ? [A].Debit side [B].Credit side [C].Asset side [D].Liability side  33 Correct Answer : B. 148) Depreciation is charged on assets [A].Monthly [B].Quarterly [C].Half yearly [D].Annually Correct Answer : D. 149) Depreciation is charged on assets at [A].The begining of period [B].The middle of period [C].The end of period [D].Anytime Correct Answer : C. 150) Which of the following is not a method of inventory valuation? [A].FIFO [B].LIFO [C].WDV [D].Weighted Average method Correct Answer : C. 151) Inventory include [A].Only Raw material [B].only work in progress [C].only finished goods [D].Raw material, WIP and finished goods Correct Answer : D.  34 152) AS stands for [A].Accounting status [B].Accounting strategies [C].Accounting standards [D].None of the above Correct Answer : C. 153) Inventory includes [A].Only Raw material [B].only work in progress [C].only finished goods [D].Raw material, WIP and finished goods Correct Answer : D 154) Which of the following is NOT a branch of accounting? [A].Financial Accounting [B].Cost Accounting [C].Management Accounting [D].Legal Accounting Correct Answer : D 155) Users of accounting information include: [A].Employee [B].Investor [C].Creditor [D].All the above Correct Answer : D 156) Which of the following is an asset? [A].Bills Payable [B].Debtors [C].Creditor [D].All the above Correct Answer : B  35 157) Amortization applies to: [A].Tangible assets [B].Intangible assets [C].Natural resources [D].Artificial assets Correct Answer : B 158) Depletion applies to: [A].Tangible assets [B].Intangible assets [C].Natural resources [D].Artificial assets Correct Answer : C 159) Which of the following systems of accounting records only cash transactions? A. Accrual System B. Cash System C. Single-Entry System D. Double-Entry System Answer: B. Cash System 160) What is the main objective of bookkeeping? A. Preparing financial statements B. Recording financial transactions C. Evaluating profitability D. Making managerial decisions Answer: B. Recording financial transactions 161) The basis of accounting that recognizes revenue and expenses only when cash is received or paid is called: A. Accrual Basis B. Cash Basis  36 C. Modified Basis D. Hybrid Basis Answer: B. Cash Basis 162) Which of the following is a characteristic of accounting information? A. Reliability B. Irrelevance C. Inaccuracy D. Subjectivity Answer: A. Reliability 163) What is the fundamental accounting assumption that assumes a business will continue indefinitely? A. Consistency B. Going Concern C. Accrual D. Periodicity Answer: B. Going Concern 164) Which user of accounting information would be most interested in a company’s financial stability to decide on investment? A. Employees B. Management C. Investors D. Creditors Answer: C. Investors 165) What is the accounting equation? A. Assets + Liabilities = Capital B. Assets = Liabilities - Capital C. Assets = Liabilities + Capital D. Assets - Liabilities = Capital Answer: C. Assets = Liabilities + Capital  37 166) Which accounting concept ensures that revenue and expenses are recognized in the same accounting period? A. Accrual Concept B. Matching Concept C. Consistency Concept D. Periodicity Concept Answer: B. Matching Concept 167) Which of the following is a characteristic of Ind AS? A. Mandatory for all businesses B. Harmonized with global standards (IFRS) C. Applicable only for public sector entities D. Does not require disclosure of financial information Answer: B. Harmonized with global standards (IFRS) 168) Which type of account is "Bank" classified under in the classification of accounts? A. Personal Account B. Real Account C. Nominal Account D. Contingent Account Answer: A. Personal Account 169) Which accounting convention emphasizes the practice of recording expenses or losses when they are probable but not recording revenues until they are realized? A. Conservatism B. Materiality C. Consistency D. Full Disclosure Answer: A. Conservatism 170) Which of the following is the first step in the accounting process? A. Preparation of Ledger B. Preparation of Trial Balance  38 C. Journalizing D. Finalizing Accounts Answer: C. Journalizing 171) Books of original entry are also known as: A. Ledgers B. Journals C. Trial Balances D. Cash Books Answer: B. Journals 172) Which of the following is NOT recorded in a journal? A. Debit and Credit amounts B. Narration of transactions C. Account balances D. Date of transactions Answer: C. Account balances 173) GST is applied on: A. All types of transactions B. Supply of goods and services C. Interest on loans D. Salary payments Answer: B. Supply of goods and services 174) The main difference between a trade discount and a cash discount is that a trade discount: A. Is allowed for bulk purchases B. Is offered for immediate payment C. Appears in the ledger accounts D. Is recorded in the books Answer: A. Is allowed for bulk purchases  39 175) In which book is the cash discount recorded? A. Journal B. Ledger C. Cash Book D. Purchase Book Answer: C. Cash Book 176) Posting is the process of transferring information from the journal to: A. Trial Balance B. Ledger C. Profit and Loss Statement D. Cash Flow Statement Answer: B. Ledger 177) Which side of the ledger account is used to record debits? A. Left B. Right C. Both sides D. None of these Answer: A. Left 178) The primary purpose of preparing a trial balance is to: A. Calculate net profit B. Check the arithmetical accuracy of accounts C. Identify errors of omission D. Record adjusting entries Answer: B. Check the arithmetical accuracy of accounts 179) Which of the following errors is NOT disclosed by a trial balance? A. Errors of omission B. Errors of commission C. Errors of principle D. Errors of posting Answer: C. Errors of principle  40 180) If the trial balance does not tally, the difference is temporarily recorded in: A. Suspense Account B. Cash Account C. Capital Account D. Adjustment Account Answer: A. Suspense Account 181) Redrafting a trial balance is necessary when: A. Closing stock is recorded twice B. The trial balance matches C. Errors are rectified after the trial balance is prepared D. Ledger balances are accurate Answer: C. Errors are rectified after the trial balance is prepared 182) Which of the following is an example of an error of omission? A. Recording a wrong amount in the journal B. Forgetting to record a transaction C. Posting to the wrong account D. Incorrect total in the trial balance Answer: B. Forgetting to record a transaction 183) The rectification of an error where a sales transaction is wrongly credited to a purchases account requires: A. Credit to Sales Account and debit to Purchases Account B. Credit to Purchases Account and debit to Sales Account C. Debit to Purchases Account only D. No rectification needed Answer: B. Credit to Purchases Account and debit to Sales Account 184) What is the effect of posting a debit entry as a credit entry in the ledger? A. The trial balance will tally B. The trial balance will show a double difference  41 C. The accounts will remain unaffected D. Errors will automatically correct Answer: B. The trial balance will show a double difference 185) Which of the following is an example of capital expenditure? A. Payment of salaries B. Purchase of machinery C. Electricity expenses D. Advertising expenses Answer: B. Purchase of machinery 186) Which type of income is derived from the regular operations of a business? A. Revenue Income B. Capital Income C. Deferred Income D. Contingent Income Answer: A. Revenue Income 187) Deferred revenue expenditure is: A. A capital expenditure B. An expense with benefits spread over multiple years C. Fully written off in the year it is incurred D. Recorded as a liability Answer: B. An expense with benefits spread over multiple years 188) Which of the following is NOT classified as a current asset? A. Cash B. Inventory C. Debtors D. Land Answer: D. Land 189) Liabilities that are dependent on a future event are called: A. Current Liabilities B. Non-current Liabilities  42 C. Contingent Liabilities D. Long-term Liabilities Answer: C. Contingent Liabilities 190) Which of the following is an example of a contingent asset? A. Advance tax paid B. Expected compensation from a lawsuit C. Fixed deposits in the bank D. Interest accrued Answer: B. Expected compensation from a lawsuit 191) Provisions are created to: A. Meet known liabilities B. Cover unexpected losses C. Increase profits D. Improve liquidity Answer: A. Meet known liabilities 192) Reserves created out of profits for future contingencies are called: A. Revenue Reserves B. General Reserves C. Specific Reserves D. Capital Reserves Answer: B. General Reserves 193) What is the key difference between a provision and a reserve? A. Provisions are created from profits, reserves are not B. Provisions are for known liabilities, reserves are for future needs C. Reserves are mandatory, provisions are optional D. Reserves appear in the trial balance, provisions do not Answer: B. Provisions are for known liabilities, reserves are for future needs 194) Which of the following is a type of reserve? A. Depreciation Reserve  43 B. Capital Reserve C. Profit and Loss Account Reserve D. Revenue Reserve Answer: D. Revenue Reserve 195) The financial statement that shows the financial position of a sole proprietorship is called: A. Income Statement B. Balance Sheet C. Cash Flow Statement D. Statement of Changes in Equity Answer: B. Balance Sheet 196) Under the Companies Act, 2013, which financial statement provides information about a company's cash inflows and outflows? A. Balance Sheet B. Cash Flow Statement C. Profit and Loss Statement D. Notes to Accounts Answer: B. Cash Flow Statement 197) The format of financial statements for companies as per the Companies Act, 2013, is prescribed in: A. Schedule I B. Schedule II C. Schedule III D. Schedule IV Answer: C. Schedule III 198) Which of the following is NOT part of the financial statements prepared under the Companies Act, 2013? A. Statement of Profit and Loss B. Balance Sheet  44 C. Notes to Accounts D. Trial Balance Answer: D. Trial Balance 199) The classification of liabilities into current and non-current is based on: A. Their nature B. Their payment period C. Their legal status D. Their association with specific assets Answer: B. Their payment period 200) Which term refers to the reduction in value of a natural resource due to extraction? A. Depreciation B. Amortization C. Depletion D. Impairment Answer: C. Depletion 201) Amortization is applied to which type of assets? A. Tangible fixed assets B. Natural resources C. Intangible assets D. Current assets Answer: C. Intangible assets 202) Which of the following is NOT a reason for depreciation? A. Wear and tear B. Obsolescence C. Market demand fluctuations D. Passage of time Answer: C. Market demand fluctuations 203) Which depreciation method allocates an equal amount of depreciation every year? A. Written Down Value Method  45 B. Straight Line Method C. Sum of the Years’ Digits Method D. Declining Balance Method Answer: B. Straight Line Method 204) In the Written Down Value (WDV) method, depreciation is calculated on: A. The original cost of the asset B. The net realizable value C. The reduced book value of the asset D. The total accumulated depreciation Answer: C. The reduced book value of the asset 205) Which of the following methods results in higher depreciation expenses in the earlier years of an asset’s life? A. Straight Line Method B. Written Down Value Method C. Units of Production Method D. Revaluation Method Answer: B. Written Down Value Method 206) The method of recording depreciation by reducing the asset's book value directly is called: A. Charging to Asset Account B. Creating a Provision for Depreciation C. Accumulated Depreciation D. Revaluation Answer: A. Charging to Asset Account 207) What is the purpose of creating a provision for depreciation? A. To reduce profit artificially B. To set aside funds for asset replacement C. To charge depreciation directly to the Profit and Loss Account D. To increase the value of the asset Answer: B. To set aside funds for asset replacement  46 208) Which of the following accounts is credited when creating a provision for depreciation? A. Asset Account B. Depreciation Account C. Provision for Depreciation Account D. Profit and Loss Account Answer: C. Provision for Depreciation Account 209) Disposal of fixed assets generally involves transferring the asset's book value to: A. Profit and Loss Account B. Depreciation Account C. Asset Disposal Account D. Accumulated Depreciation Account Answer: C. Asset Disposal Account 210) If an asset is sold for more than its book value, the difference is recorded as: A. Profit on Sale of Asset B. Depreciation Recovered C. Capital Gain D. Loss on Sale of Asset Answer: A. Profit on Sale of Asset 211) Under which depreciation method is the amount of depreciation constant throughout the useful life of an asset? A. Straight Line Method B. Written Down Value Method C. Units of Production Method D. Double Declining Balance Method Answer: A. Straight Line Method 212) Direct expenses which are incurred to bring the goods into saleable condition are charged to …................. [A].Trading Account  47 [B].Profit & Loss Account [C].Balance Sheet [D].All of the Above Correct Answer : A. 213) Indirect expenses and income or gains are recoreded in which statement [A].Trading Account [B].Profit & Loss Account [C].Balance Sheet [D].All of the Above Correct Answer : B. 214) The profit kept aside for known Liabilities is called as _________ [A].Provision [B].Reserves [C].Current Assets [D].Current Liabilities Correct Answer : A. 215) The profit kept aside for Unknown Liabilities is known as _________ [A].Provision [B].Reserves [C].Current Assets [D].Current Liabilities Correct Answer : B. 216) The presence of profit is necessary to create ….............. [A].Provision [B].Reserves [C].Current Assets [D].Current Liabilities Correct Answer : B. 217) …................. is a charge against profit of the business  48 [A].Provision [B].Reserves [C].Current Assets [D].Current Liabilities Correct Answer : A. 218) State the nature of the given transaction: Paid Telephone bill Rs. 1,000 [A].Capital Expenditure [B].Revenue Expenditure [C].Capital Receipts [D].Revenue Receipts Correct Answer : B. 219) The expense incurred in the current year but the benefit may extend over a number of years, is called ….................. [A].Capital Expenditure [B].Revenue Expenditure [C].Deferred Revenue Expenditure [D].None of the Above Correct Answer : C 220) Any receipt from the sale of fixed assets is known as ________ [A].Capital Expenditure [B].Revenue Expenditure [C].Capital Receipts [D].Revenue Receipts Correct Answer : C. 221) Trading Account is prepared to ascertain __________for a given accounting period. [A].Gross Profit/Gross Loss [B].Net Profit/Net Loss [C].Divisible Profit/Divisible Loss [D].All of the Above Correct Answer : A  49. 222) Fuel and Power should be debited in ________________ [A].Trading Account [B].Profit & Loss Account [C].Balance Sheet [D].Financial Statement Correct Answer : A. 223) From the following information calculate Gross Profit/Gross Loss : Adjusted Purchases Rs. 6,60,000; Sales Rs. 7,44,000; Closing Stock Rs. 50,400; Freight and Carriage 3,600; Wages Rs. 6,000. [A].Rs. 80,000 [B].Rs. 74,400 [C].Rs. 70,000 [D].Rs. 85,000 Correct Answer : B. 224) All indirect expenses recorded in _________ [A].Trading Account [B].Profit & Loss Account [C].Balance Sheet [D].Financial Statement Correct Answer : B. 225) Which of the following statement is known as the income statement of the company [A].Income and Expenditure Account [B].Profit & Loss Account [C].Balance Sheet [D].Cash Flow Statement Correct Answer : B. 226) Which of the following is not an intangible asset ? [A].Furniture [B].Goodwill  50 [C].Patents [D].Franchise rights Correct Answer : A. 227) How many components do the final accounts have? [A].2 [B].3 [C].4 [D].5 Correct Answer : B. 228) A balance sheet [A].Tabulates the assets and liabilities of the company [B].indicates the growth rate [C].shows financial position of the company [D].Both A & C Correct Answer : D. 229) A Profit & Loss is prepared [A].After Trading Account [B].After Balance Sheet [C].Before Trading Account [D].At anytime Correct Answer : A. 230) Closing Stock is recorded in the: [A].Trading Account [B].Balance sheet [C].Profit & Loss Account [D].Both A & B Correct Answer : D. 231) Carriage Outward is an example of : [A].Direct Expenses  51 [B].Indirect Expenses [C].Indirect Income [D].Direct Income Correct Answer : B. 232) The Balance sheet is a statement of: [A].Assets [B].Capital [C].Liabilities [D].All of the Above Correct Answer : D