ACCOUNTING MCQs

Which one is fixed assets?
A. land
B. stock
C. cash
D. bank
ANSWER: A


Bank account is
A. personal
B. real
C. nominal
D. none of these above
ANSWER: A


Drawings account is related to:
A. Nominal Account.
B. Personal Account.
C. Real Account.
D. Company drawings account.
ANSWER: B


Goodwill account is related to:
A. Nominal account.
B. Personal account.
C. Real account .
D. Tangible account.
ANSWER: C


According to the going concern concept, a business entity is assumed to have:
A. a long life.
B. a very short life.
C. an indefinite life.
D. a medium life.
ANSWER: A


Contingent liability is shown in the balance sheet because of:
A. Convention of consistency.
B. Convention of materiality.
C. Convention of disclosure.
D. Convention of adventure.
ANSWER: C


According to which of the following concepts even the owner of the business who provides capital
treated as a creditor of the business?
A. Entity concept.
B. Cost concept.
C. Money measurement concept.
D. Convention of disclosure.
ANSWER: A


In book-keeping posting means:
A. to record the transactions from the journal to ledger.
B. to record the transactions in the journal.
C. to record the transactions in the subsidiary books.
D. to record the transactions in the cash book.
ANSWER: A


Goods of the value of Rs. 1500 taken by the proprietor for his personal use should be debited to:
A. drawing account.
B. sales account.
C. purchases account.
D. stock account.
ANSWER: A


Goods destroyed by fire should be credited to:
A. purchases account.
B. sales account.
C. loss of goods by fire account.
D. insurance account.
ANSWER: A


Which of the following accounts will invariably have a debit balance?
A. Bank account.
B. Accounts Receivable account
C. Accounts payable account.
D. Loan account.
ANSWER: B


Which of the following accounts is increased by debit entries?

A. Machinery account.

B. Purchases return account.

C. Discount Received account.

D. Commission received account.
ANSWER: A


Returns outward book makes a record of:
A. goods returned to the suppliers.
B. goods returned to customers.
C. goods returned to proprietor.
D. goods returned to neighbors.
ANSWER: A


Cash book prepared on imprest system is:
A. two column cash book.
B. cash book.
C. petty cash book
D. purchase book.
ANSWER: C


The statement sent along with purchase return is:
A. credit note.
B. bills payable book.
C. debit note.
D. purchases return book.
ANSWER: A


A bank reconciliation statement is prepared by ____.
A. customer of the bank.
B. bank
C. neither of the above two.
D. reserve bank of India.
ANSWER: A


Errors which affect one account can be:
A. errors of omission.
B. errors of principle.
C. errors of posting.
D. error of commission.
ANSWER: C


Errors of carry forward from one year to another year affect:
A. personal account
B. real account.
C. nominal account.
D. both personal and real account.
ANSWER: A


Which of the following errors is an error of omission?
A. Sale of Rs. 800 was written in the purchase journal
B. Wages paid to Sohan have been debited to his account

C. The total of sales journal has not posted to the sales account.
D. The total of sales journal has posted to the sales account.
ANSWER: C


Which of the following errors in an error of principle?
A. Rs. 1000 received from Ganesh has been debited to his account.
B. Purchase of Rs. 3000 has been entered in the sales journal.
C. Repairs to machinery have been debited to machinery account.
D. Repairs to scooter have been debited to repairs account.
ANSWER: C


Error of commission do not allow:
A. correct totaling of the balance sheet.
B. correct totaling of the trial balance.
C. the trail balance to agree.
D. correct totaling of the day book.
ANSWER: C


Assets are held for the purpose of:
A. earning revenue.
B. Resale.
C. conversion into cash.
D. Stock is valued at:
ANSWER: A


Unearned income account is:
A. asset.
B. Liability.
C. Expense.
D. income received in advance.
ANSWER: B


Depreciation is provided on:
A. fixed assets.
B. outward charges.
C. current assets.
D. intangible assets.
ANSWER: A


Accounts receivable includes
A. sundry debtors.
B. bill receivable.
C. promissory note.
D. all of the above.
ANSWER: D


Provision for bad debts is calculated on:
A. creditors.

B. Sales.

C. Purchases.

D. Debtors.

ANSWER: D


An example of revenue expenditure is:
A. Purchase of land.
B. Salaries.
C. Lease.
D. Purchase of buildings.
ANSWER: B


When a bill is drawn by A on B, it is debited in the books of A to:
A. Cash account.
B. Bs account
C. Bills Receivable account.
D. Bills Payable account
ANSWER: C


When a bill drawn by A and B endorsed to C is dishonored on the due date, it is credited in the books
of A to:
A. Bank account.
B. Bills Receivable account.
C. Bank for collection of bills account.
D. Cash Account.
ANSWER: B


When a bill is drawn by A on B and before the date of maturity, B becomes insolvent then in the books
of A it is debited to:
A. Bills Receivable account.
B. Bank Account.
C. Bs account
D. Bank for collection of bills.
ANSWER: D


Bills are drawn by:
A. Creditors.
B. Debtors.
C. Agent.
D. Brokers.
ANSWER: C


Noting charges account is debited by ________.
A. the presenter of bill.
B. the discounting banker.
C. the acceptor.
D. the endorser.
ANSWER: A


While discounting the bill, debit should be given to:
A. bank account.
B. bill receivable account.
C. acceptors account.
D. cash account.
ANSWER: A


Cancelling the original bill and drawing a fresh acceptance is known as ________.
A. retiring under rebate.
B. Discounting.
C. Renewal.
D. bill sent to bank for collection .
ANSWER: C


At the time of endorsement of a bill, the drawer credits:
A. the .drawee.
B. endorsees personal account.
C. bills receivable account.
D. bills for collection account.
ANSWER: C


Average due dare can be called as:
A. mean due date.
B. median due date.
C. mode due date.
D. zero date.
ANSWER: A


When goods are sent on consignment the account to be debited is:
A. Consignees personal account.
B. Consignment account.
C. Consignors account.
D. Goods sent on consignment account.
ANSWER: B


When goods consigned are sold by the consignee, the account to be debited is:
A. Cash account.
B. Bank account.
C. Consignment account .
D. Consignors personal account.
ANSWER: A


The relationship between a consignor and consignee is that between _____.
A. a principal and an agent.
B. a creditor and a debtor.
C. Consignees account is a :
D. a seller and a purchaser.

ANSWER: A


When Del credere commission is involved, the consignee will in his books, transfer bad debts to
______ account.
A. del credere account.
B. ordinary account.
C. special commission.
D. brokerage .
ANSWER: A


When Del Credere commission is involved, loss on account of bad debts from credit sale of consigned
goods will generally fall on ________.
A. Consignee.
B. Consignor.
C. both consignor and consignee equally.
D. Endorser.
ANSWER: B


Goods sent on consignment account is of the nature of _______.
A. personal account.
B. nominal account.
C. real account.
D. representative account.
ANSWER: B


Del Credere commission is allowed to cover
A. normal loss.
B. abnormal loss.
C. loss due to bad debts.
D. business loss.
ANSWER: C


Joint venture relationship resembles closely:
A. a consignment.
B. a partnership.
C. the company
D. sole trading concern.
ANSWER: B


Joint bank account is opened, when the system adopted for joint venture transaction is _________.
A. complete record in existing books.
B. partial record in existing books.
C. separate set of the books.
D. no separate set of the books.
ANSWER: C


Joint venture account is in the nature of:
A. Personal account.

B. Nominal account.
C. Real account .
D. Venture account.
ANSWER: B


Memorandum joint venture account is _______.
A. Personal account.
B. Real account.
C. Nominal account.
D. Representative account.
ANSWER: C


Which is the accounting concept that requires the practice of crediting closing stock to the trading
account?
A. Going concern.
B. Cost.
C. Realization.
D. Matching.
ANSWER: D


Assets in the balance sheet are shown at cost less depreciation rather than their replacement cost
because of the accounting convention ___________.
A. going concern.
B. Matching.
C. Realization.
D. money measurement.
ANSWER: A


According to money measurement concept, which one the following will be recorded in the books of
accounts_______.
A. excellent morale of workers.
B. quality control in the business.
C. managing ability of the manager.
D. cost of machinery
ANSWER: D


Contingent liability appears as a footnote in the balance sheet. This is in accordance with the
accounting principle of _________.
A. Disclosure.
B. Materiality.
C. Conservatism.
D. Consistency.
ANSWER: B


The policy of anticipate no profit and provide for all possible losses arises due to convention of
____________.
A. Consistency.
B. Disclosure.

C. Matching.
D. Conservatism.
ANSWER: D


Revenue is generally recognised being earned at the point of time when:
A. sale is effected.
B. cash is received.
C. production is completed.
D. goods are delivered.
ANSWER: A


Balance sheet is prepared primarily with the following group in view:
A. Owners.
B. Creditors.
C. Government.
D. Management.
ANSWER: A


Which one the following is an example of an intangible asset?
A. Preliminary expenses.
B. Discount on issue of debentures.
C. Investments.
D. Copyrights.
ANSWER: D


Both assets and owners equity would be increased by _______.
A. capital brought in.
B. purchase of an asset on credit.
C. payment of creditors.
D. proprietors drawings.
ANSWER: A


The excess of current assets over current liabilities is called ________.
A. Net tangible worth.
B. Networth.
C. Gross working capital.
D. Net working capital.
ANSWER: C


The discount column of a triple column cash book records _______.
A. trade discount.
B. cash discount.
C. quantity discount.
D. seasonal discount.
ANSWER: B


Journal proper issued to record ________.
A. all purchases of goods.

B. all sales of goods.
C. all business expenses paid in cash.
D. all adjusting and rectification entries.
ANSWER: D


When furniture is sold for cash, the entry should be made in __________.
A. sales book .
B. cash book.
C. Journal.
D. petty cash book..
ANSWER: B


Which one of the following is an example of personal account?
A. Capital account.
B. Building account.
C. Cash account.
D. Investment account.
ANSWER: A


The appropriate book to record credit purchase of machinery is ________.
A. purchases book.
B. journal .
C. cash book.
D. petty cash book
ANSWER: B


Bills payable book is a ________.
A. subsidiary
B. a. principal book.
C. a. ledger.
D. a. memorandum book.
ANSWER: A


The balance of the petty cash book is _________.
A. an asset.
B. a liability.
C. an income .
D. an expenditure.
ANSWER: A


The balance of cash account indicates __________.
A. net income for the period.
B. net loss for the period.
C. net cash on hand.
D. net worth of the business.
ANSWER: C


The process of transferring the credit and debit items form a journal to their respective accounts in the ledger is termed as ___________.
A. Balancing .
B. Invoicing.
C. Double entry.
D. Posting.
ANSWER: D


Which account is generally used for rectification of errors?
A. Memorandum account.
B. Suspense account.
C. Rectification account.
D. Adjustment account .
ANSWER: B


Which one the following errors is an error of principle?
A. Debiting repairs account instead of furniture account.
B. Sale of Rs. 200 entered in the books as Rs. 2000.
C. Cash sale of Rs. 500 wrongly entered in sales book.
D. Purchase transaction entered in purchases return book.
ANSWER: A


Errors of principle arise when b.
A. a. proper distinction is not made between capital and revenue.
B. a. there is an omission of transaction.
C. a. wrong amounts are entered in the subsidiary books.
D. a. transactions are entered in the wrong subsidiary books.
ANSWER: A


Goods worth Rs. 200 returned by Mohan were taken into stock, but no entry was passed, is an error of:
A. commission.
B. Principle.
C. Omission.
D. Compensatory.
ANSWER: C


The main purpose of preparing a bank reconciliation statement is:
A. to know the bank balance.
B. to compare the entries in the cash and pass books.
C. to correct the cash after comparing with pass books.
D. to reconcile cash balance as per pass book with the balance in the pass book.
ANSWER: D


Bank Reconciliation statement is
A. ledger account.
B. part of the cash book.
C. separate statement.
D. a sub division of the journal.
ANSWER: C


A Cheque received and paid into the bank on the same day id recorded in the ________.
A. a. cash column of the cash book.
B. a. bank column of the cash book.
C. a. both the cash and bank columns of the book.
D. a. the credit balance as per pass book.
ANSWER: B


The payment side of the cash book is undercast by Rs. 200.When overdraft as per pass book is the
starting point, to get the overdraft as per cash book___________.
A. Rs. 200 will be deducted.
B. Rs. 200 will be added.
C. Rs. 400 will be added.
D. Rs. 400 will be deducted.
ANSWER: A


Which one of the following is not taken into account in adjusting the cash balance?
A. Mistakes in the cash book.
B. Mistakes in the pass book.
C. Bank charges debited in pass book.
D. Interest and dividend credited in pass book.
ANSWER: B


Amount of Rs. 1000 is debited twice in the pass book. When overdraft as per the cash book is the
starting point ___________.
A. An Rs. 1000 will be deducted.
B. Rs. 1000 will be added.
C. Rs. 2000 will be deducted.
D. Rs. 2000 will be added.
ANSWER: B


Amount spent on advertisement campaign, the benefit of which is likely to last for three years, is
__________.
A. capital expenditure.
B. deferred revenue expenditure.
C. revenue expenditure.
D. deferred capital expenditure
ANSWER: B


Any expenditure incurred in order to reduce the operating expenses is ________.
A. capital expenditure.
B. revenue expenditure.
C. deferred revenue expenditure.
D. promotional expenditure.
ANSWER: A


Wages paid for erection of machinery are debited to __________.
A. Wages account.

B. Machinery account.
C. Profit and loss account.
D. Deferred wages account.
ANSWER: B


Amount paid for acquiring goodwill is __________.
A. revenue expenditure.
B. deferred revenue expenditure.
C. capital expenditure.
D. deferred capital expenditure.
ANSWER: D


When A advances money to B in the course of joint venture then A debits such money to __________.
A. Joint bank account.
B. Joint venture account.
C. Bs personal account.
D. Expenses account
ANSWER: B


If payment is made on the average due date it results in:
A. loss of interest to the creditor.
B. loss of interest to the debtor.
C. no loss of interest to either of them.
D. loss of interest to both the creditor and debtor.
ANSWER: C


Overcasting of purchases journal would affect __________.
A. Sales account.
B. Purchase account.
C. Suppliers account.
D. Sales returns account.
ANSWER: B


Sales to Benson Rs. 500 posted to his account as Rs. 50 would affect ________.
A. Sales account.
B. Bensons account.
C. Cash account.
D. Purchases account
ANSWER: B


Sales to Mr. Gill recorded in purchase journal would affect _________.
A. Sales account.
B. a. Purchases account and sales account.
C. Journal proper.
D. Sales account, purchases account and Mr. Gills account.
ANSWER: B


Purchases made on credit not recorded at all would affect ___________.A. Purchases account.
B. Suppliers account.
C. Purchases account and suppliers account.
D. Wages account.
ANSWER: C


Purchase journal is kept to record ________.
A. cash sales.
B. credit sales of assets.
C. credit sales of goods.
D. credit purchases
ANSWER: C


A credit sale of goods to Shiva should be debited to _________.
A. Sales account.
B. Goods account.
C. Shiva account
D. Purchase account.
ANSWER: C


A sale of goods to vidhya for cash should be debited to _________.
A. Vidhya account.
B. Cash account.
C. Sale of goods account
D. Purchases account.
ANSWER: B


The preparation of a Trial balance helps in ____________.
A. locating errors in principle.
B. locating errors of omission.
C. locating clerical errors.
D. locating compensatory errors.
ANSWER: C


A Cheque received and deposited in the bank on the same day is recorded in the _______.
A. cash column of the cash book.
B. bank column of the cash book.
C. credited in the cash book.
D. debited in the cash book
ANSWER: B


Insurance unexposed account is a _________.
A. Real account.
B. Personal account.
C. Nominal account.
D. Representative account.
ANSWER: B


Petty cash may be used to pay _________.
A. the expenses relating to postage and conveyance.
B. salaries and wages to the final staff.
C. for the purchase of furniture and fittings.
D. other recurring expenses
ANSWER: A


Which item is shown on the debit side of a trial balance?
A. Rent outstanding.
B. Prepaid expenses.
C. Purchases returns.
D. Excess of income over expenses by the firm.
ANSWER: B


Purchases for office furniture on account is recorded in _________.
A. general journal.
B. cash book.
C. purchases book.
D. sales book.
ANSWER: B


Any donation received for a specific purpose is a ________.
A. Liability.
B. Assets.
C. revenue receipts
D. capital receipts.
ANSWER: D


Expenditure incurred by a publisher for acquiring copyrights is a _________.
A. capital expenditure.
B. reserve expenditure.
C. deferred reserve expenditure
D. capital receipts.
ANSWER: A


Which one of the following is capital expenditure?
A. Cost of advertisement.
B. Purchase of a delivery van.
C. Purchase of raw material.
D. Purchase of machine oil.
ANSWER: B


Expenditure incurred on research is an example of _______.
A. capital expenditure.
B. revenue expenditure.
C. deferred revenue expenditure.
D. partly capital expenditure
ANSWER: C


Which English alphabet is similar to the shape of an account?
A. I.
B. T.
C. H.
D. Y.
ANSWER: B


How many sides does an account have?
A. One .
B. Two.
C. Three.
D. Four.
ANSWER: B


The _________ in a ledger helps in locating the accounts contained in it.
A. Folio.
B. Pages.
C. serial numbers
D. part numbers
ANSWER: A


Ledger is also called ________.
A. principal book of accounts.
B. cash books
C. subsidiary books.
D. petty cash book
ANSWER: A


The assets of a business can be classified as _______.
A. only fixed assets.
B. only current assets.
C. fixed and current assets.
D. fictitious assets.
ANSWER: C


If the rate of gross profit is 25% on cost by goods sold and the sales are Rs. 200000, the amount of
profit will be _______.
A. Rs. 50000.
B. Rs. 40000.
C. Rs. 45000.
D. Rs. 65000.
ANSWER: B


A gross profit is transferred to the __________side of the profit and loss account.
A. Debit.
B. Credit.
C. Current.

D. Asset.
ANSWER: B


Rs. 500 spent on servicing office typewriter should be debited to _________.
A. Miscellaneous expenses account.
B. Typewriter account.
C. Repairs account.
D. Services account.
ANSWER: C


Wages paid to workers must be debited to _________ account
A. Wages .
B. Machinery.
C. Factory expenses.
D. Offices expenses.
ANSWER: A


Interest on capital is credited to __________ account.
A. Expenses account.
B. Income account.
C. Capital account.
D. Asset account.
ANSWER: C


The main purpose of this _______ accounting is to ascertain profit or loss during a specific period, to
show financial position of the business.
A. financial accounting .
B. cost accounting.
C. management account.
D. human resource accounting.
ANSWER: A


Which of the following accounts have only credit balance?
A. Accounts payable account.
B. Salaries outstanding account.
C. Reserve fund account.
D. All of the above accounts.
ANSWER: D


Which of the following accounts may have a debit or credit balance?
A. Discount Received account.
B. Sales account.
C. Trade expenses account.
D. Loan account.
ANSWER: D


Which of the following books should be used to record purchase of furniture on credit?
A. Cash book.
B. Journal proper.
C. Purchases book.
D. Sales book.
ANSWER: B


Which of the following accounts is increased by debit entries?
A. Machinery account.
B. Purchases return account.
C. Discount Received account.
D. Commission received account.
ANSWER: A


The credit balance in the bank account is :
A. an asset.
B. a liability.
C. an expense.
D. contingent liability.
ANSWER: B


Returns outward book makes a record of:
A. goods returned to the suppliers.
B. goods returned to customers.
C. goods returned to proprietor.
D. goods returned to neighbors.
ANSWER: A


Cash book prepared on imprest system is:
A. Two column cash book.
B. cash book.
C. petty cash book.
D. purchase book.
ANSWER: C


The statement sent along with purchase return is:
A. credit note.
B. bills payable book.
C. debit note.
D. purchase return book.
ANSWER: A


A bank reconciliation statement is prepared by ____.
A. customer of the bank.
B. bank .
C. neither of the above two.
D. Reserve Bank of India.
ANSWER: A


Which of the following errors is an error of omission?
A. Sale of Rs. 800 was written in the purchase journal.
B. Wages paid to Sohan have been debited to his account.
C. The total of sales journal has not posted to the sales account.
D. The total of sales journal has posted to the sales account.
ANSWER: C


Which of the following errors in an error of principle?
A. Rs. 1000 received from Ganesh has been debited to his account.
B. Purchase of Rs. 3000 has been entered in the sales journal.
C. Repairs to machinery have been debited to machinery account.
D. Repairs to scooter have been debited to repairs account.
ANSWER: C


Assets are held for the purpose of:
A. earning revenue.
B. Resale.
C. conversion into cash.
D. personal purpose.
ANSWER: A


Stock is valued at:
A. cost price.
B. market price.
C. cost of market price whichever is lower.
D. odd price.
ANSWER: C


Unearned income account is:
A. asset.
B. Liability.
C. Expense.
D. income received in advance.
ANSWER: B


Depreciation is provided on:
A. fixed assets.
B. outward charges.
C. current assets.
D. intangible assets.
ANSWER: A


Provision for bad debts is calculated on:
A. creditors.
B. Sales.
C. Purchases.
D. Debtors.
ANSWER: D


Noting charges account is debited by ________.
A. the presenter of bill.
B. the discounting banker.
C. the acceptor.
D. the endorser.
ANSWER: A


At the time of endorsement of a bill, the drawer credits:
A. the drawer.
B. endorsees personal account.
C. bills receivable account.
D. bills for collection account.
ANSWER: C


When a bill is discharged, the acceptor debits
A. Creditors account.
B. Cash account.
C. Bills payable account.
D. Bills receivable account.
ANSWER: C


Base date is otherwise called as _______.
A. zero date.
B. leave date.
C. working days.
D. grace days.
ANSWER: A


Average due dare can be called as:
A. mean due date.
B. median due date.
C. mode due date.
D. zero date.
ANSWER: A


When goods are sent on consignment the account to be debited is:
A. Consignees personal account.
B. Consignment account.
C. Consignors account.
D. Goods sent on consignment account.
ANSWER: B


When goods consigned are sold by the consignee, the account to be debited is:
A. Cash account.
B. Bank account.
C. Consignment account .
D. Consignors personal account.
ANSWER: A


The relationship between a consignor and consignee is that between _____.
A. a principal and an agent.
B. a creditor and a debtor.
C. a seller and a purchaser.
D. partner and co-partner.
ANSWER: A


Consignees account is a :
A. Nominal account.
B. Personal account.
C. Real account.
D. Representative account.
ANSWER: B


Goods sent on consignment account is of the nature of _______.
A. personal account.
B. nominal account.
C. real account.
D. representative account.
ANSWER: B


Joint bank account is opened, when the system adopted for joint venture transaction is _________.
A. complete record in existing books.
B. partial record in existing books.
C. separate set of the books.
D. no separate set of the books.
ANSWER: C


Joint venture account is in the nature of:
A. Personal account.
B. Nominal account.
C. Real account .
D. Venture account.
ANSWER: B


Memorandum joint venture account is _______.
A. Personal account.
B. Real account.
C. Nominal account.
D. Representative account.
ANSWER: C


Which is the accounting concept that requires the practice of crediting closing stock to the trading
account?
A. Going concern.
B. Cost.
C. Realization.
D. Matching.
ANSWER: D


Contingent liability appears as a footnote in the balance sheet. This is in accordance with the
accounting principle of _________.
A. Consistency.
B. Disclosure.
C. Materiality.
D. Conservatism.
ANSWER: B


The policy of anticipate no profit and provide for all possible losses arises due to convention of
____________.
A. Consistency.
B. Disclosure.
C. Matching.
D. Conservatism.
ANSWER: D


Revenue is generally recognized being earned at the point of time when:
A. sale is effected.
B. cash is received.
C. production is completed.
D. goods are delivered.
ANSWER: A


Which one of the following arrangements represents the order of liquidity?
A. Cash, Bills Receivable, Stock, Debtors.
B. Cash, Bills Receivable, Debtors, cash, Stock.
C. Cash, Bills Receivable, Debtors, Stock.
D. Cash, Debtors, Bills Receivable, Stock.
ANSWER: B


Balance sheet is prepared primarily with the following group in view:
A. Owners.
B. Creditors.
C. Government.
D. Management.
ANSWER: A


Which one the following is an example of an intangible asset?
A. Preliminary expenses.
B. Discount on issue of debentures.
C. Investments.
D. Copyrights.
ANSWER: D


Both assets and owners equity would be increased by _______.
A. capital brought in.
B. purchase of an asset on credit.
C. payment of creditors.
D. proprietors drawings.
ANSWER: A


The networth of a limited company equal to __________.
A. Current assets current liabilities.
B. Fixed assets long term liabilities.
C. Fixed assets current liabilities.
D. The total of shareholders / proprietors funds.
ANSWER: D


If a company’s tangible net worth is a positive amount, it indicates:
A. the probability of the company.
B. the liquidity of the company.
C. the solvency of the company.
D. both (a) and (b).
ANSWER: C


The excess of current assets over current liabilities is called ________.
A. Net tangible worth.
B. Net worth.
C. Gross working capital.
D. Net working capital.
ANSWER: C


The discount column of a triple column cash book records _______.
A. trade discount.
B. cash discount.
C. quantity discount.
D. seasonal discount.
ANSWER: B


Journal proper issued to record ________.
A. all purchases of goods.
B. all sales of goods.
C. all business expenses paid in cash.
D. all adjusting and rectification entries.
ANSWER: D


Which one the following entry is not recorded in the residuary journal?
A. Opening entry.
B. Closing entry.
C. Adjustment entry.
D. Credit sales.
ANSWER: D


When furniture is sold for cash, the entry should be made in __________.
A. sales book .
B. cash book.
C. Journal.
D. petty cash book.
ANSWER: B


The appropriate book to record credit purchase of machinery is ________.
A. purchases book.
B. journal .
C. cash book.
D. petty cash book
ANSWER: B


Bills payable book is a ________.
A. subsidiary book.
B. principal book.
C. ledger.
D. memorandum book.
ANSWER: A


The balance of the petty cash book is _________.
A. an asset.
B. a liability.
C. an income .
D. an expenditure.
ANSWER: A


The balance of cash account indicates __________.
A. net income for the period.
B. net loss for the period.
C. net cash on hand.
D. net worth of the business.
ANSWER: C


Which account is generally used for rectification of errors?
A. Memorandum account.
B. Suspense account.
C. Rectification account.
D. Adjustment account .
ANSWER: B


Which one the following error will affect the agreement of the trial balance?
A. A sale of Rs. 20 to Ram entered in the sales book as Rs. 200.
B. Purchase of Rs. 500 credited to Ram instead of Shyam.
C. Sale returns of Rs. 1000 correctly entered in the sales returns book but posted to the debit of Sundar.
D. Cash sale of furniture credited to sales account.
ANSWER: C


Errors of principle arise when
A. proper distinction is not made between capital and revenue.
B. there is an omission of transaction.
C. wrong amounts are entered in the subsidiary books.
D. transactions are entered in the wrong subsidiary books.
ANSWER: A


The main purpose of preparing a bank reconciliation statement is:
A. to know the bank balance.
B. to compare the entries in the cash and pass books.
C. to correct the cash after comparing with pass books.
D. to reconcile cash balance as per pass book with the balance in the pass book.
ANSWER: D


Bank Reconciliation statement is
A. ledger account.
B. part of the cash book.
C. a separate statement.
D. a sub division of the journal.
ANSWER: C


A Cheque received and paid into the bank on the same day id recorded in the ________.
A. cash column of the cash book.
B. bank column of the cash book.
C. both the cash and bank columns of the book.
D. the credit balance as per pass book.
ANSWER: B


Which one of the following is not taken into account in adjusting the cash balance?
A. Mistakes in the cash book.
B. Mistakes in the pass book.
C. Bank charges debited in pass book.
D. Interest and dividend credited in pass book.
ANSWER: B


Revenue expenditure is intended to benefit _________.
A. current period.
B. future period.
C. past period.
D. both (a) and (b).
ANSWER: A


The distinction between capital and revenue is necessary for the preparation of ______.
A. fund flow statement.
B. receipts and payment account
C. final accounts.
D. cash flow statement.
ANSWER: B


Any expenditure incurred in order to reduce the operating expenses is ________.
A. capital expenditure.
B. revenue expenditure.
C. deferred revenue expenditure.
D. promotional expenditure.
ANSWER: A


Wages paid for erection of machinery are debited to __________.
A. Wages account.
B. Machinery account.
C. Profit and loss account.
D. Deferred wages account.
ANSWER: B


Premium received on issue of shares is a ____________.
A. capital receipt.
B. revenue receipt.
C. deferred capital receipt.
D. deferred revenue receipt.
ANSWER: A


Amount paid for acquiring goodwill is __________.
A. revenue expenditure.
B. deferred revenue expenditure.
C. capital expenditure.
D. deferred capital expenditure.
ANSWER: C


Where separate set of books are maintained, the ledger accounts required are:
A. Memorandum joint venture and joint venture account with the other party.
B. Joint venture account and the personal account of the other party.
C. Joint bank account, co-venture capital accounts and joint bank account.
D. Joint bank account and joint venture account with the other party.
ANSWER: C


When A advances money to B in the course of joint venture then A debits such money to __________.
A. Joint bank account.
B. Joint venture account.
C. Bs personal account.
D. Expenses account
ANSWER: B


The account current method in which the days are calculated from the date of transaction to the
commencement date is known as _________.
A. Forward method.
B. Epoch method.
C. Daily balance method
D. Backward method
ANSWER: B


The method of account current usually employed by the banker is known as _________.
A. Daily balance method.
B. Red ink interest.
C. Current account.
D. Product method.
ANSWER: A


If payment is made on the average due date it results in:
A. loss of interest to the creditor.
B. loss of interest to the debtor.
C. no loss of interest to either of them.
D. loss of interest to both the creditor and debtor.
ANSWER: C


Sales to Mr. Gill recorded in purchase journal would affect _________.
A. Sales account.
B. Sales account, purchases account and Mr. Gills account.
C. Purchases account and sales account.
D. Journal proper.
ANSWER: B


Purchases made on credit not recorded at all would affect ___________.
A. Purchases account.
B. Suppliers account.
C. Purchases account and suppliers account.
D. Wages account.
ANSWER: C


Purchase journal is kept to record ________.
A. cash sales.
B. credit sales of assets.
C. credit sales of goods.
D. credit purchases
ANSWER: C


A credit sale of goods to Shiva should be debited to _________.
A. Sales account.
B. Goods account.
C. Shiva account
D. Purchase account.
ANSWER: C


A sale of goods to vidhya for cash should be debited to _________.
A. Vidhya account.
B. Cash account.
C. Sale of goods account
D. Purchases account.
ANSWER: B


A Cheque received and deposited in the bank on the same day is recorded in the _______.
A. cash column of the cash book.
B. bank column of the cash book.
C. credited in the cash book.
D. debited in the cash book
ANSWER: B


Petty cash may be used to pay _________.
A. the expenses relating to postage and conveyance.
B. salaries and wages to the final staff.
C. for the purchase of furniture and fittings.
D. other recurring expenses
ANSWER: A


Which item is shown on the debit side of a trial balance?
A. Rent outstanding.
B. Prepaid expenses.
C. Purchases returns.
D. Excess of income over expenses by the firm.
ANSWER: B


Purchases for office furniture on account is recorded in _________.
A. general journal.
B. cash book.
C. purchases book.
D. sales book.
ANSWER: A


What does GAAP represents?
A. Generally Accepted Audit Procedure.
B. Generally Accepted Accounting Principles.
C. General Agreement on Audit Principles.
D. General Agreement on Accounting Principles.
ANSWER: B


Expenditure incurred by a publisher for acquiring copyrights is a _________.
A. capital expenditure.
B. reserve expenditure.
C. deferred reserve expenditure
D. capital receipts.
ANSWER: A


Which one of the following should be considered revenue expenditure?
A. Rs. 1000 paid for the execution of a new plant.
B. Loss of Rs. 10000 incurred in increasing the sitting accommodation of hotel.
C. Damage paid on account of breach of a contract to supply certain goods.
D. Repairs to machinery purchased
ANSWER: C


Which one of the following is capital expenditure?
A. Cost of advertisement.
B. Purchase of a delivery van.
C. Purchase of raw material.
D. Purchase of machine oil.
ANSWER: B


Expenditure incurred on research is an example of _______.
A. capital expenditure.
B. revenue expenditure.
C. deferred revenue expenditure.
D. partly capital expenditure
ANSWER: C


Payment of compensation to a worker who has been discharged from service is a ____.
A. capital expenditure.
B. revenue expenditure.
C. deferred revenue expenditure.
D. partly capital expenditure.
ANSWER: B


Which English alphabet is similar to the shape of an account?
A. I.
B. T.
C. H.
D. Y.
ANSWER: B


How many sides does an account have?
A. One .
B. Two.
C. Three.
D. Four.
ANSWER: B


The _________ in a ledger helps in locating the accounts contained in it.
A. Folio.
B. Pages.
C. serial numbers
D. part numbers
ANSWER: A


Ledger is also called ________.
A. principal book of accounts.
B. cash books
C. subsidiary books.
D. petty cash book
ANSWER: A


Purchase of Typewriter would result in __________ of fund.
A. Change.
B. application.
C. Service.
D. no flow.
ANSWER: C


The balance sheet is a ________ of the assets, liabilities and capital of a concern as on particular date.
A. Statement.
B. Document.
C. Picture.
D. balance.
ANSWER: A


A gross profit is transferred to the __________side of the profit and loss account.
A. Debit.
B. Credit.
C. Current.
D. Asset.
ANSWER: B


Rs. 500 spent on servicing office typewriter should be debited to _________.
A. Miscellaneous expenses account.
B. Typewriter account.
C. Repairs account.
D. Services account.
ANSWER: C


Wages paid to workers must be debited to _________ account
A. Wages .
B. Machinery.
C. Factory expenses.
D. Offices expenses.
ANSWER: A


Interest on capital is credited to __________ account.
A. Expenses account.
B. Income account.
C. Capital account.
D. Asset account.
ANSWER: C


Depreciation deducted from the concerned _________.
A. Liability.
B. Asset.
C. Expenses.
D. Incomes.
ANSWER: B


Receipts and payments account is a ______________.
A. Personal account.
B. Nominal account.
C. Real account.
D. Representative account.
ANSWER: B


Receipts and payment account record receipt and payments of ___________.
A. revenue nature only.
B. capital nature only.
C. both revenue and capital nature.
D. capital receipts.
ANSWER: C


The receipts and payments account begins with ________.
A. debit balance.
B. credit balance.
C. no balance.
D. normal balance.
ANSWER: A


Subscription received in advance by a club is shown on the _____ side of the balance sheet.
A. Liabilities.
B. Assets.
C. credit .
D. debit.
ANSWER: A


Excess of income over expenditure in shown on the ______ side of income and expenditure account.
A. Credit.
B. Debit.
C. Upper.
D. Lower.
ANSWER: B


Income and expenditure account is prepared by ______concerns.
A. non-trading.
B. trading .
C. partnership .
D. sole proprietor.
ANSWER: A


In a receipts and payments account the payments are recorded on the ____ side.
A. credit .
B. debit.
C. Upper.
D. Lower.
ANSWER: A


The closing debit balance in the receipts and payments account indicates the _______ balance at the
end of the year.
A. Opening.
B. Closing.
C. Trading.
D. Cash.
ANSWER: D


The income and expenditure account is prepared on the basis of _____ system of accounting.
A. Basic.
B. Main.
C. Cash.
D. Mercantile.
ANSWER: A


A debit balance in the income and expenditure account denotes excess of _____over______.
A. income, expenditure.
B. assets, liabilities.
C. liabilities, assets.
D. expenditure, incomes
ANSWER: D


Income and expenditure matches all _______ receipts against _______ payments pertaining to the
relevant accounting years.
A. revenue, revenue.
B. cash, cash.
C. cash, credits.
D. credit, cash.
ANSWER: A


Any amount received towards endowment fund is a ______receipt.
A. Ordinary.
B. Special.
C. Revenue.
D. Capital.
ANSWER: D


Interest received on special fund investments will be added to ______ fund in the balance sheet.
A. investment fund.
B. bank fund.
C. General.
D. special
ANSWER: D


Any revenue expenditure relating to special fund must be deducted from _________.
A. last fund.
B. special fund.
C. annual fund.
D. entrance fee.
ANSWER: B


Any revenue expense for when a separate fund is available will be ________.
A. debited to the separate fund.
B. debited to income and expenditure account.
C. capital issued and shown in the balance sheet.
D. credited to the separate fund.
ANSWER: A


Sales of old material must be shown on the credit side of _______.
A. cash book.
B. income and expenditure account.
C. balance sheet .
D. trading account.
ANSWER: B


The information for the preparation of receipt and payments account is taken from___.
A. cash book.
B. income and expenditure.
C. cash book and balance sheet.
D. revenue account.
ANSWER: A


Which of the following items should not be entered in receipts and payments account of a club?
A. Sale of old newspaper.
B. Loss on sale of old furniture.
C. Subscriptions received in advance.
D. Expenses for previous year.
ANSWER: B


Donations received by a non-profit organisation are usually a ______.
A. revenue receipt.
B. capital receipt.
C. capital expenditure.
D. revenue expenditure
ANSWER: A


Specific donations received by a non-trading concern are usually _______.
A. revenue receipt.
B. capital receipt.
C. capital expenditure
D. revenue expenditure.
ANSWER: B


Receipts and payment account shows ________.
A. income and expenditure.
B. cash receipts and payments.
C. assets and liabilities.
D. profit on sale.
ANSWER: B


Income and expenditure account reveals ________.
A. cash in hand.
B. surplus or deficiency.
C. capital account.
D. revenue account.
ANSWER: B


Subscription received in advance is _________.
A. an income.
B. an asset .
C. a liability.
D. an expense.
ANSWER: C


The main purpose of this _______ accounting is to ascertain profit or loss during a specific period, to
show financial position of the business.
A. financial accounting .
B. cost accounting
C. management account.
D. human resource accounting.
ANSWER: A


The main aim of ______ accounting is to ascertain cost relating to the various activities of the business
and to have cost control.
A. financial accounting .
B. cost accounting.
C. management account.
D. human resource accounting.
ANSWER: B


________ supplies the management significant information in order to assist the management to
discharge its various functions such as planning, control and decision making
A. Financial accounting .
B. Cost accounting.
C. Management account.
D. Human resource accounting.
ANSWER: C


Any written document in support of a business transaction is called a _____________.
A. Voucher.
B. Bill.
C. Carbon copy.
D. Expense bill.
ANSWER: A


If some goods from business are given away as charity to a particular person or institution, it should be
___________.
A. debited to charity account.
B. credited to charity account.
C. debit sales account.
D. debit to donation account.
ANSWER: A


______ is allowed to encourage early cash payment.
A. Cash discount.
B. Trade discount.
C. Quantity discount.
D. Price discount.
ANSWER: A


The process of recording financial transactions in the journal is called ______
A. Journalizing.
B. Utilizing.
C. Posting.
D. Balancing.
ANSWER: A


Bills Receivable book is to keep record of __________.
A. bills received from customers.
B. bills received from supplier.
C. credit purchases.
D. credit sales.
ANSWER: A


Bills payable book is to keep a record of ________.
A. bills payable to creditors.
B. bills received from supplier.
C. credit purchases.
D. credit sales.
ANSWER: A


Book-keeping is mainly concerned with:
A. recording of financial data relating to business operations.
B. designing the system in recording, classifying, summarizing the recorded data.
C. interpreting the data for internal and external end users.
D. only for internal purposes.
ANSWER: A


The system of recording transactions based on dual aspect concept is called:
A. double account system.
B. double entry system.
C. single entry system.
D. single account system.
ANSWER: B


The amount brought in by the proprietor in the business should be credited to:
A. cash account.
B. capital account.
C. drawing account.
D. bank account.
ANSWER: B


Ledger is a book of :
A. original entry.
B. final entry.
C. all cash entry.
D. all credit entry.
ANSWER: B


Purchase of machinery is recorded in:
A. sales book.
B. journal proper.
C. purchases book.
D. sales returns book.
ANSWER: B


In triple column cash book, cash withdrawn from bank for office use will appear in:
A. debit side of the cash book only.
B. both sides of the cash book.
C. credit side of the cash book only.
D. credit side of the bank account.
ANSWER: B


 

Errors which affect one side of an account are called:
A. single sided errors.
B. double sided errors.
C. triple sided errors.
D. compensation errors.
ANSWER: A


A Purchases returns of Rs.200 to Mr. P if entered in the sales book would affect:
A. Ps account.
B. purchases returns account.
C. sales account.
D. purchases returns account and sales account.
ANSWER: D


Sales to Ram Rs. 336 posted to his account as Rs. 363 would effect:
A. sales account.
B. rams account.
C. cash account.
D. bank account.
ANSWER: B


State which of the following errors will not be revealed by the trial balance:
A. errors of complete omission.
B. errors of carrying forward.
C. wrong totaling of the purchases book.
D. error of partial omission.
ANSWER: A


Trading account is prepared to find out:
A. gross profit or loss.
B. net profit or loss .
C. financial position.
D. position of the partners.
ANSWER: A


Outstanding salaries are shown as:
A. an expense.
B. a liability.
C. an asset.
D. an income.
ANSWER: B


A bill drawn and accepted for a genuine trade transaction is termed as a ______ bill.
A. Trade.
B. Time.
C. Inland.
D. Personal.
ANSWER: A


A person named in the negotiable instrument to whom or to whose order the money in the instrument
is directed to be paid is called as the:
A. Payer.
B. Payee.
C. consignor .
D. consignee.
ANSWER: B


Noting charges are paid in the event of ____ of a bill.
A. Withdrawal.
B. Payment.
C. Dishonour.
D. Deposit.
ANSWER: C


A person who sending goods to another person is called______________.
A. Consigner
B. Consignee
C. Seller
D. Buyer
ANSWER: A


Which is correct?
A. Capital= Assets + Liabilities.
B. Liabilities=Capital – Assets.
C. Capital =Net assets.
D. Net assets= Assets+ Liabilities.
ANSWER: C


Which of the following is related to nominal account?
A. Bank
B. commission
C. furniture
D. Interest Received
ANSWER: B


In each of the following cases indicate the alternative which you consider to be correct: The liabilities of
a firm are Rs. 3000; the capital of the proprietor is Rs. 7000. The total assets are
A. Rs. 7000
B. Rs. 10000.
C. Rs. 4000.
D. Rs. 15000.
ANSWER: B


Business Entity is assumed to have
A. a long life
B. a very short life
C. an indefinite life
D. a medium life
ANSWER: A


Debit Means _________.
A. Decrease in asset.
B. Increase in liability.
C. An entry on the left hand side of an account.
D. Moderate increase in liability.
ANSWER: C


Drawings account is related to_____.
A. Nominal Account.
B. Personal Account.
C. Real Account.
D. Company drawings account.
ANSWER: B


The Credit balance of bank account indicates
A. amount payable by the bank
B. amount payable to the Bank
C. cash at bank
D. loan from bank
ANSWER: B


Goodwill account is related to_______.
A. Nominal account.
B. Personal account.
C. Real account.
D. Tangible account.
ANSWER: C


Prepaid insurance is _______.
A. Nominal account.
B. Personal account.
C. Real account.
D. Prepaid account.
ANSWER: A


When goods are purchased for the joint venture, the amount is debited to________
A. Purchases account
B. joint venture
C. venture account
D. goods account
ANSWER: B


Receipts and payment account begins with_______
A. Debit balance
B. Credit balance
C. No balance
D. Normal balance
ANSWER: A


Revenue is considered as being earned when _____.
A. cash is received.
B. production is done.
C. sale is effected.
D. purchase is done.
ANSWER: C


In book-keeping posting means _______.
A. to record the transactions from the journal to ledger.
B. to record the transactions in the journal.
C. to record the transactions in the subsidiary books.
D. to record the transactions in the cash book.
ANSWER: A


The basic rule of book keeping,debit the receiver and credit the giver is applicable to _____.
A. nominal account.
B. real account.
C. personal account.
D. drawing account.
ANSWER: C


Goods of the value of Rs. 1500 taken by the proprietor for his personal use should be debited to _____.
A. drawing account.
B. sales account.
C. purchases account.
D. stock account.
ANSWER: A


Goods destroyed by fire should be credited to ______.
A. purchases account.
B. sales account.
C. loss of goods by fire account.
D. insurance account.
ANSWER: A


Which of the following accounts may have a debit or credit balance?
A. Discount Received account.
B. Sales account.
C. Trade expenses account.
D. Loan account.
ANSWER: D


Which of the following books should be used to record purchase of furniture on credit?
A. Cash book.
B. Journal proper.
C. Purchases book.
D. Sales book.
ANSWER: B


The credit balance in the bank account is ________.
A. an asset.
B. a liability.
C. an expense.
D. contingent liability.
ANSWER: B


Cash book prepared on imprest system is _______.
A. two column cash book.
B. cash book.
C. petty cash book.
D. purchase book.
ANSWER: C


The statement sent along with purchase return is _______.
A. credit note.
B. bills payable book.
C. debit note.
D. purchases return book.
ANSWER: A


Errors which affect one account can be _________.
A. errors of omission.
B. errors of principle.
C. errors of posting.
D. error of commission.
ANSWER: C


Which of the following errors is an error of omission?
A. Sale of Rs. 800 was written in the purchase journal.
B. Wages paid to Sohan have been debited to his account.
C. The total of sales journal has not posted to the sales account.
D. The total of sales journal has posted to the sales account.
ANSWER: C


Which of the following errors in an error of principle?
A. Rs. 1000 received from Ganesh has been debited to his account.
B. Purchase of Rs. 3000 has been entered in the sales journal.
C. Repairs to machinery have been debited to machinery account.
D. Repairs to scooter have been debited to repairs account.
ANSWER: C


Error of commission do not allow _______.
A. correct totalling of the balance sheet.
B. correct totaling of the trial balance.
C. the trail balance to agree.
D. correct totaling of the day book.
ANSWER: C


Assets are held for the purpose of _______.
A. earning revenue.
B. Resale.
C. conversion into cash.
D. personal purpose.
ANSWER: A


Stock is valued at ____.
A. cost price.
B. market price.
C. cost of market price whichever is lower.
D. odd price.
ANSWER: C


Depreciation is provided on _______.
A. fixed assets.
B. outward charges.
C. current assets.
D. intangible assets.
ANSWER: A


Heavy advertising to launch a new product is a _______.
A. Capital expenditure.
B. revenue expenditure .
C. deferred revenue expenditure.
D. other expenditure.
ANSWER: C


Accounts receivable includes ________.
A. sundry debtors.
B. bill receivable.
C. promissory note.
D. all of the above.
ANSWER: D


Provision for bad debts is calculated on _______.
A. creditors.
B. Sales.
C. Purchases.
D. Debtors.
ANSWER: D


An example of revenue expenditure is _______.
A. Purchase of land.
B. Salaries.
C. Lease.
D. Purchase of buildings.
ANSWER: B


When a bill is drawn by A on B, it is debited in the books of A to ______.
A. Cash account.
B. B account.
C. Bills Receivable account.
D. Bills Payable account.
ANSWER: C


Bills are drawn by_______.
A. Creditors.
B. Debtors.
C. Agent.
D. Brokers.
ANSWER: A


Noting charges account is debited by ________.
A. the presenter of bill.
B. the discounting banker.
C. the acceptor.
D. the endorser.
ANSWER: A


While discounting the bill, debit should be given to_______.
A. bank account.
B. bill receivable account.
C. acceptors account.
D. cash account.
ANSWER: A


Cancelling the original bill and drawing a fresh acceptance is known as ________.
A. retiring under rebate.
B. Discounting.
C. Renewal.
D. bill sent to bank for collection .
ANSWER: C


At the time of endorsement of a bill, the drawer credits________.
A. the drawee.
B. endorsees personal account
C. bills receivable account.
D. bills for collection account.
ANSWER: C


When a bill is discharged, the acceptor debits _______.
A. Creditor account.
B. Cash account.
C. Bills payable account.
D. Bills receivable account.
ANSWER: C


Base date is otherwise called as _______.
A. zero date.
B. leave date.
C. working days.
D. grace days.
ANSWER: A


Average due dare can be called as______.
A. mean due date.
B. median due date.
C. mode due date.
D. zero date.
ANSWER: A


Account current is a journal ________.
A. True.
B. False.
C. Partly true.
D. Partly false.
ANSWER: B


When goods are sent on consignment the account to be debited is________.
A. Consignees personal account.
B. Consignment account.
C. Consignors account.
D. Goods sent on consignment account.
ANSWER: B


Consignees account is a _____.
A. Nominal account.
B. Personal account.
C. Real account.
D. Representative account.
ANSWER: B


When Del credere commission is involved, the consignee will in his books, transfer bad debts to
_______ account.
A. del credere account.
B. ordinary account.
C. special commission.
D. brokerage .
ANSWER: A


Goods sent on consignment account is of the nature of _______.
A. personal account.
B. nominal account.
C. real account.
D. representative account.
ANSWER: B


The unsold stock is to be valued at ________ .
A. original cost of the goods.
B. original cost of the goods plus direct expenses incurred by both consignor and consignee.
C. original cost plus direct expenses incurred by the consignor.
D. original cost plus direct expenses incurred by the consignee.
ANSWER: B


Joint venture relationship resembles closely _________.
A. a consignment.
B. a partnership.
C. the company.
D. a sole trading concern.
ANSWER: B


Joint venture account is in the nature of _______.
A. Personal account.
B. Nominal account.
C. Real account.
D. Venture account.
ANSWER: B


Memorandum joint venture account is _______.
A. Personal account.
B. Real account.
C. Nominal account.
D. Representative account.
ANSWER: C


Which is the accounting concept that requires the practice of crediting closing stock to the trading
account?
A. Going concern.
B. Cost.
C. Realization.
D. Matching.
ANSWER: D


Assets in the balance sheet are shown at cost less depreciation rather than their replacement cost
because of the accounting convention ___________.
A. going concern.
B. Matching.
C. Realization.
D. money measurement.
ANSWER: A


According to money measurement concept, which one the following will be recorded in the books of
accounts_______.
A. excellent morale of workers.
B. quality control in the business.
C. managing ability of the manager.
D. cost of machinery.
ANSWER: D


Contingent liability appears as a footnote in the balance sheet. This is in accordance with the
accounting principle of _________.
A. Consistency.
B. Disclosure.
C. Materiality.
D. Conservatism.
ANSWER: B


The policy of anticipate no profit and provide for all possible losses arises due to convention of
____________.
A. Consistency.
B. Disclosure.
C. Matching.
D. Conservatism.
ANSWER: D


Revenue is generally recognised being earned at the point of time when _______.
A. sale is effected.
B. cash is received.
C. production is completed.
D. goods are delivered.
ANSWER: A


Balance sheet is prepared primarily with the following group in view ______.
A. Owners.
B. Creditors.
C. Government.
D. Management.
ANSWER: A


Which one the following is an example of an intangible asset?
A. Preliminary expenses.
B. Discount on issue of debentures.
C. Investments.
D. Copyrights.
ANSWER: D


Both assets and owners equity would be increased by _______.
A. capital brought in.
B. purchase of an asset on credit.
C. payment of creditors.
D. proprietors drawings.
ANSWER: A


The networth of a limited company equal to __________.
A. Current assets – current liabilities.
B. Fixed assets – long term liabilities.
C. Fixed assets – current liabilities.
D. The total asset of shareholders funds.
ANSWER: D


If a company tangible networth is a positive amount, it indicates _______.
A. the probability of the company.
B. the liquidity of the company.
C. the solvency of the company.
D. both (1) and (2).
ANSWER: C


The excess of current assets over current liabilities is called ________.
A. Net tangible worth.
B. Networth.
C. Gross working capital.
D. Net working capital.
ANSWER: C


The discount column of a triple column cash book records _______.
A. trade discount.
B. cash discount.
C. quantity discount.
D. seasonal discount.
ANSWER: B


Journal proper issued to record ________.
A. all purchases of goods.
B. all sales of goods.
C. all business expenses paid in cash.
D. all adjusting and rectification entries.
ANSWER: D


Which one the following entry is not recorded in the residuary journal?
A. Opening entry.
B. Closing entry.
C. Adjustment entry.
D. Credit sales.
ANSWER: D


When furniture is sold for cash, the entry should be made in __________.
A. sales book .
B. cash book.
C. Journal.
D. petty cash book..
ANSWER: B


Which one of the following is an example of personal account?
A. Capital account.
B. Building account.
C. Cash account.
D. Investment account.
ANSWER: A


The appropriate book to record credit purchase of machinery is ________.
A. purchases book.
B. journal .
C. cash book.
D. petty cash book
ANSWER: B


Bills payable book is a ________.
A. subsidiary book.
B. principal book.
C. ledger.
D. memorandum book.
ANSWER: A


The balance of the petty cash book is _________.
A. an asset.
B. a liability.
C. an income .
D. an expenditure.
ANSWER: A


The balance of cash account indicates __________.
A. net income for the period.
B. net loss for the period.
C. net cash on hand.
D. net worth of the business.
ANSWER: C


Which account is generally used for rectification of errors?
A. Memorandum account.
B. Suspense account.
C. Rectification account.
D. Adjustment account .
ANSWER: B


Preparation of trial balance helps deduction of ________.
A. error of principle.
B. compensating errors.
C. errors of whole omission.
D. clerical errors.
ANSWER: D


Bank Reconciliation statement is ______.
A. ledger account.
B. part of the cash book.
C. a separate statement.
D. a sub division of the journal.
ANSWER: C


A Cheque received and paid into the bank on the same day id recorded in the ________.
A. cash column of the cash book.
B. bank column of the cash book.
C. both the cash and bank columns of the book.
D. the credit balance as per pass book.
ANSWER: B


Which one of the following is not taken into account in adjusting the cash balance?
A. Mistakes in the cash book.
B. Mistakes in the pass book.
C. Bank charges debited in pass book.
D. Interest and dividend credited in pass book.
ANSWER: B


An amount of Rs. 1000 is debited twice in the pass book when overdraft as per the cash book is the
starting point, ___________.
A. Rs. 1000 will be deducted.
B. Rs. 1000 will be added.
C. Rs. 2000 will be deducted.
D. Rs. 2000 will be added.
ANSWER: B


Amount spent on advertisement campaign, the benefit of which is likely to last for three years, is
__________.
A. capital expenditure.
B. deferred revenue expenditure.
C. revenue expenditure.
D. deferred capital expenditure
ANSWER: B


Revenue expenditure is intended to benefit _________.
A. current period.
B. future period.
C. past period.
D. both (1) and (2).
ANSWER: A


Any expenditure incurred in order to reduce the operating expenses is ________.
A. capital expenditure.
B. revenue expenditure.
C. deferred revenue expenditure.
D. promotional expenditure.
ANSWER: A


Wages paid for erection of machinery are debited to __________.
A. Wages account.
B. Machinery account.
C. Profit and loss account.
D. Deferred wages account.
ANSWER: B


Premium received on issue of shares is a ____________.
A. capital receipt.
B. revenue receipt.
C. deferred capital receipt.
D. deferred revenue receipt.
ANSWER: A


Amount paid for acquiring goodwill is __________.
A. revenue expenditure.
B. deferred revenue expenditure.
C. capital expenditure.
D. deferred capital expenditure.
ANSWER: C


When A advances money to B in the course of joint venture then A debits such money to __________.
A. Joint bank account.
B. Joint venture account.
C. B personal account.
D. Expenses account
ANSWER: B


The account current method in which the days are calculated from the date of transaction to the
commencement date is known as _________.
A. Forward method.
B. Epoch method.
C. Daily balance method
D. Backward method
ANSWER: B


The method of account current usually employed by the banker is known as _________.
A. Daily balance method.
B. Red ink interest.
C. Current account.
D. Product method.
ANSWER: A


If payment is made on the average due date it results in ______.
A. loss of interest to the creditor.
B. loss of interest to the debtor.
C. no loss of interest to either of them.
D. loss of interest to both the creditor and debtor.
ANSWER: C


Overcasting of purchases journal would affect __________.
A. Sales account.
B. Purchase account.
C. Suppliers account.
D. Sales returns account.
ANSWER: B


Sales to Benson Rs. 500 posted to his account as Rs. 50 would affect ________.
A. Sales account.
B. Bensons account.
C. Cash account.
D. Purchases account
ANSWER: B


Sales to Mr. Gill recorded in purchase journal would affect _________.
A. Sales account.
B. Sales account, purchases account and Mr. Gills account.
C. Purchases account and sales account.
D. Journal proper.
ANSWER: B


Purchases made on credit not recorded at all would affect ___________.
A. Purchases account.
B. Suppliers account.
C. Purchases account and suppliers account.
D. Wages account.
ANSWER: C


Purchase journal is kept to record ________.
A. cash sales.
B. credit sales of assets.
C. credit sales of goods.
D. credit purchases
ANSWER: C


A credit sale of goods to Shiva should be debited to _________.
A. Sales account.
B. Goods account.
C. Shiva account
D. Purchase account.
ANSWER: C


A sale of goods to vidhya for cash should be debited to _________.
A. Vidhya account.
B. Cash account.
C. Sale of goods account
D. Purchases account.
ANSWER: B


The preparation of a Trial balance helps in ____________.
A. locating errors in principle.
B. locating errors of omission.
C. locating clerical errors.
D. locating compensatory errors.
ANSWER: C


Insurance unexposed account is a _________.
A. Real account.
B. Personal account.
C. Nominal account.
D. Representative account.
ANSWER: B


Petty cash may be used to pay _________.
A. the expenses relating to postage and conveyance.
B. salaries and wages to the final staff.
C. for the purchase of furniture and fittings.
D. other recurring expenses
ANSWER: A


Which item is shown on the debit side of a trial balance?
A. Rent outstanding.
B. Prepaid expenses.
C. Purchases returns.
D. Excess of income over expenses by the firm.
ANSWER: B


Purchases for office furniture on account is recorded in _________.
A. general journal.
B. cash book.
C. purchases book.
D. sales book.
ANSWER: A


What does GAAP represents?
A. Generally Accepted Audit Procedure.
B. Generally Accepted Accounting Principles.
C. General Agreement on Audit Principles.
D. General Agreement on Accounting Principles.
ANSWER: B


Expenditure incurred by a publisher for acquiring copyrights is a _________.
A. capital expenditure.
B. reserve expenditure.
C. deferred reserve expenditure
D. capital receipts.
ANSWER: A


Which one of the following is capital expenditure?
A. Cost of advertisement.
B. Purchase of a delivery van.
C. Purchase of raw material.
D. Purchase of machine oil.
ANSWER: B


Expenditure incurred on research is an example of _______.
A. capital expenditure.
B. revenue expenditure.
C. deferred revenue expenditure.
D. partly capital expenditure
ANSWER: C


Payment of compensation to a worker who has been discharged from service is a ____.
A. capital expenditure.
B. revenue expenditure.
C. deferred revenue expenditure.
D. partly capital expenditure.
ANSWER: B


How many sides does an account have?
A. One .
B. Two.
C. Three.
D. Four.
ANSWER: B


Ledger is also called ________.
A. principal book of accounts.
B. cash books
C. subsidiary books.
D. petty cash book
ANSWER: A


The assets of a business can be classified as _______.
A. only fixed assets.
B. only current assets.
C. fixed and current assets.
D. fictitious assets.
ANSWER: C


The balance sheet is a ________ of the assets, liabilities and capital of a concern as on particular date.
A. Statement.
B. Document.
C. Picture.
D. balance.
ANSWER: A


A gross profit is transferred to the __________side of the profit and loss account.
A. Debit.
B. Credit.
C. Current.
D. Asset.
ANSWER: B


Rs. 500 spent on servicing office typewriter should be debited to _________.
A. Miscellaneous expenses account.
B. Typewriter account.
C. Repairs account.
D. Services account.
ANSWER: C


Interest on capital is credited to __________ account.
A. Expenses account.
B. Income account.
C. Capital account.
D. Asset account.
ANSWER: C


Depreciation deducted from the concerned _________.
A. Liability.
B. Asset.
C. Expenses.
D. Incomes.
ANSWER: B


Receipts and payments account is a ______________.
A. Personal account.
B. Nominal account.
C. Real account.
D. Representative account.
ANSWER: B


Receipts and payment account record receipt and payments of ___________.
A. revenue nature only.
B. capital nature only.
C. both revenue and capital nature.
D. capital receipts.
ANSWER: C


Non-trading institutions prepare __________.
A. Income and expenditure account.
B. Trading and profit and loss account.
C. Only trading account.
D. Only revenue account
ANSWER: A


Excess of income over expenditure in shown on the ______ side of income and expenditure account.
A. Credit.
B. Debit.
C. Upper.
D. Lower.
ANSWER: B


Income and expenditure account is prepared by ______concerns.
A. non-trading.
B. trading .
C. partnership .
D. sole proprietor.
ANSWER: A


Life membership fee received by a club are shown in _________.
A. balance sheet.
B. profit and loss account.
C. income and expenditure account.
D. revenue account.
ANSWER: A


In a receipts and payments account the payments are recorded on the ____ side.
A. credit .
B. debit.
C. Upper.
D. Lower.
ANSWER: A


The income and expenditure account is prepared on the basis of _____ system of accounting.
A. Basic.
B. Main.
C. Cash.
D. Mercantile.
ANSWER: A


Any written document in support of a business transaction is called a _____________.
A. Voucher.
B. Bill.
C. Carbon copy.
D. Expense bill.
ANSWER: A


______ is given to promote sales.
A. Cash discount.
B. Trade discount.
C. Quantity discount.
D. Price discount.
ANSWER: B


The process of recording financial transactions in the journal is called ______
A. Journalizing.

B. Utilizing.
C. Posting.
D. Balancing.
ANSWER: A


Bills Receivable book is to keep record of __________.
A. a. bills received from customers.
B. a. bills received from supplier.
C. a. credit purchases.
D. a. credit sales.
ANSWER: A


Bills payable book is to keep a record of ________.
A. bills payable to creditors.
B. bills received from supplier.
C. credit purchases.
D. credit sales.
ANSWER: A


Accounting principles are generally based on:
A. practicability.
B. Subjectivity.
C. convenience in recording.
D. Applicability.
ANSWER: A


The system of recording transactions based on dual aspect concept is called:
A. double account system.
B. double entry system.
C. single entry system.
D. single account system.
ANSWER: B


The amount brought in by the proprietor in the business should be credited to:
A. cash account.
B. capital account.
C. drawing account.
D. bank account.
ANSWER: B


Purchase of machinery is recorded in:
A. sales book.
B. journal proper.
C. purchases book.
D. sales returns book.
ANSWER: B


Credit sales are recorded in:A. sales book.
B. cash book.
C. journal proper.
D. purchases book.
ANSWER: A


The cash book records:
A. all cash payments.
B. all cash receipts.
C. all cash receipts and payments.
D. only credit payments.
ANSWER: C

If a cheque sent for collection is dishonoured, the debit is given to:
A. suppliers account.
B. bank account.
C. customers account.
D. cash account.
ANSWER: C

In triple column cash book, cash withdrawn from bank for office use will appear in:
A. debit side of the cash book only.
B. both sides of the cash book.
C. credit side of the cash book only.
D. credit side of the bank account
ANSWER: B


Bank reconciliation statement is prepared by the:
A. bank.
B. creditors of a business.
C. customer of a bank.
D. Suppliers.
ANSWER: C


Debit balance in cash book means:
A. overdraft as per pass book.
B. overdraft as per cash book.
C. credit balance as per pass book.
D. debit balance as per day book.
ANSWER: C


A bank pass book is a copy of :
A. the cash column of a customers cash book.
B. the bank column of a customers cash book.
C. the customers account in the banks ledger.
D. the customer account in the suppliers ledger.
ANSWER: C

127. Errors which affect one side of an account are called:
A. single sided errors.
B. double sided errors.
C. triple sided errors.
D. a. compensation errors.
ANSWER: A


128. Sales to Ram Rs. 336 posted to his account as Rs. 363 would effect:
A. sales account.
B. rams account.
C. cash account.
D. bank account.
ANSWER: B


129. State which of the following errors will not be revealed by the trial balance:
A. errors of complete omission.
B. errors of carrying forward.
C. wrong totaling of the purchases book.
D. error of partial omission.
ANSWER: A


130. Which one of the following is an example of personal account?
A. . Capital account.
B. Building account.
C. Cash account.
D. Investment account.
ANSWER: A


131. The appropriate book to record credit purchase of machinery is ________.
A. purchases book.
B. journal .
C. cash book.
D. petty cash book
ANSWER: A


132. Bills payable book is a ________.
A. subsidiary book.
B. principal book.
C. ledger.
D. memorandum book.
ANSWER: B


133. The balance of the petty cash book is _________.
A. an asset.
B. a liability.
C. an income .
D. an expenditure.
ANSWER: A


134. The balance of cash account indicates __________.
A. . net income for the period.
B. net loss for the period.
C. net cash on hand.
D. net worth of the business.
ANSWER: C


135. Which account is generally used for rectification of errors?
A. Memorandum account.
B. Suspense account.
C. Rectification account.
D. Adjustment account .
ANSWER: B


136. Preliminary expenses are an example of :
A. deferred Revenue Expenditure.
B. revenue Expenditure.
C. capital Expenditure.
D. common expenditure.

ANSWER: B


137. Outstanding salaries are shown as:
A. an expense.
B. a liability.
C. an asset.
D. an income.
ANSWER: B


138. A bill of exchange payable after a certain period is known as _____ bill.
A. Time.
B. accommodation .
C. revenue.
D. Dishonored.
ANSWER: A


139. A bill drawn and accepted for a genuine trade transaction is termed as a ______ bill.
A. Trade.
B. Time.
C. Inland.
D. Personal.
ANSWER: A


140. A bill which is not an inland bill is a _____ bill.
A. Outward.
B. inward.
C. Foreign.
D. New.

ANSWER: C


A person who draws a bill of exchange is known as the:
A. Drawee.
B. Drawer.
C. Payer.
D. Payee.
ANSWER: B


Noting charges are paid in the event of ____ of a bill.
A. Withdrawal.
B. Payment.
C. Dishonour.
D. Deposit.
ANSWER: C


In case of accommodation bills, if one party becomes insolvent then that party credits
A. the short remittance to:
B. deficiency account.
C. cash account.
D. loan account.
ANSWER: B


At the time of the renewal of a bill, interest account is _____ in the books of the drawee.
A. Credited.
B. Totaled.
C. Debited.
D. Posted.
ANSWER: C


______ days of grace are allowed in case of time bills for calculation date of maturity.
A. Five.
B. Seven.
C. Three.
D. Two.
ANSWER: C


Consignment account is of the nature of a:
A. real account.
B. nominal account.
C. personal account.
D. trading account.
ANSWER: D


Del Credere commission is allowed to the consignee to bear:
A. normal loss.
B. abnormal loss.
C. loss on account of bad debts.

D. profit on account of sender.
ANSWER: C


The abnormal loss on consignment is credited to:
A. consignees account
B. consignors account.
C. consignment account.
D. personal account
ANSWER: C


When goods are purchased for the joint venture, the amount is debited to:
A. purchases account.
B. joint venture account.
C. venturers account.
D. goods account.
ANSWER: B


Joint venture account is :
A. a nominal account.
B. a personal account.
C. a real account.
D. a trading account.
ANSWER: A


Double entry book-keeping was fathered by

(a) F.W.Taylor

(b) Henry Fayol

(c) Lucas Pacioli.


Funds Flow Statement and sources and application statement are:’

(a) Synonymous

(b) Antagonistic

(c) None of these.


(3) Depreciation in spirit is similar to:

(a) Depletion

(b) Amortization

(c) Depression.


4) Balance Sheet is always prepared:

(a) for the year ended.

(b) As on a specified date.

(c) None of these.


In Insurance, the following Profit and Loss Accounts are prepared:

(a) Separate for Fire, Marine, and Accidents etc.

(b) Consolidated for Fire, Marine, and Accidents etc.

(c) None of these.


Partners in Pakistan can today be fixed at the following numbers

(a) 20

(b) 50

(c) 75.


Flexible budget is a budget with the following features:

(a) Changes with volume of production.

(b) Changes with variable expenses

(c) Changes in Direct material.


Break Even can be calculated as under

(a) ______VC_______ FC- TR TC

(b) FC I- VC TR

(c) None of these.

 


Quick Ratio can be computed as under

(a) Quick . Assets/Quick Liabilities

(b) Quick . Liabilities Current Assets

(c) Current Assets/ Current Liabilities


In straight line method of depreciation, the written down value of a fixed asset will be at the end of the life of the asset as under:

(a) Rupee one

(b) Rupee zero

(c) None of these.


Sales budget must be prepared:

(a) Independently

(b) Depending on production capacity

(c) Based on Sales forecasts of market.


Consolidation of subsidiary accounts in the balance sheet of a unlisted Holding company is at present in Pakistan:

(a) Compulsory

(b) Voluntary

(c) Required.


Retained earning is synonymous to:

(a) Accumulated profit and loss account

(b) Profit for the year

(c) None of these.


The requirements of an audit report for a Banking Company in Pakistan is under:

(a) Under the Banking Companies Ordinance, 1962.

(b) Under the Companies Ordinance, 1984.

(c) Under (a) and (b) above.


Deferred Taxation is:

(a) Fixed asset

(b) Fixed liabilities

(c) Part of Owners Equity.


Investment Corporation of Pakistan follows:

(a) Open-end mutual funds

(b) Closed-end mutual funds

(c) None of these.


Directors Report is —- in respect of financial report constituent.

(a) Mandatory for a limited Company

(b) Voluntary for a limited Company

(c) None of these.


Every limited Company in Pakistan is required by law to include the following along with financial reports:

(a) Ratio Analysis

(b) Chairman’s Review

(c) None of these.

 


Debit Means:
A. Decrease in asset.
B. Increase in liability.
C. An entry on the left hand side of an account.
D. Moderate increase in liability.
ANSWER: C


Drawings account is related to:
A. Nominal Account.
B. Personal Account.
C. Real Account.
D. Company drawings account.
ANSWER: B


Which of the following is related to nominal account?
A. Bank account.
B. Commission account.
C. Furniture account.
D. Interest received account
ANSWER: B


According to the going concern concept, a business entity is assumed to have:
A. long life.
B. a very short life.
C. an indefinite life.
D. a medium life.
ANSWER: A


Revenue is considered as being earned when:
A. cash is received.
B. production is done.
C. sale is effected.
D. purchase is done.
ANSWER: C


In book-keeping posting means:
A. to record the transactions from the journal to ledger.
B. to record the transactions in the journal.
C. to record the transactions in the subsidiary books.
D. to record the transactions in the cash book.
ANSWER: A


The basic rule of book keeping, debit the receiver and credit the giver is applicable to:
A. nominal account.
B. real account.
C. personal account.
D. drawing account.
ANSWER: C


The credit balance of bank account indicates:
A. amount payable by the bank.
B. amount payable to the bank
C. cash at bank.
D. loan from bank.
ANSWER: B


Which of the following accounts will invariably have a debit balance?
A. Bank account.
B. Accounts Receivable account.
C. Accounts payable account.
D. Loan account.
ANSWER: B


Which of the following accounts will invariably have a credit balance?
A. Discount account.
B. Account payable account.
C. Cash account.
D. Purchases account.
ANSWER: B


Any amount received towards endowment fund is a ______receipt.
A. Ordinary.
B. Special.
C. Revenue.
D. Capital.
ANSWER: D


Interest received on special fund investments will be added to ______ fund in the balance sheet.
A. investment fund.
B. bank fund.
C. General.
D. special
ANSWER: D


Any revenue expenditure relating to special fund must be deducted from _________.
A. last fund.
B. special fund.
C. annual fund.
D. entrance fee.
ANSWER: B


Any revenue expense for when a separate fund is available will be ________.
A. debited to the separate fund.
B. debited to income and expenditure account.
C. capital issued and shown in the balance sheet.
D. credited to the separate fund.
ANSWER: A


Sales of old material must be shown on the credit side of _______.
A. cash book.
B. income and expenditure account.
C. balance sheet .
D. trading account.
ANSWER: B


The information for the preparation of receipt and payments account is taken from___.
A. cash book.
B. income and expenditure.
C. cash book and balance sheet.
D. revenue account.
ANSWER: A


Income and expenditure account is a ________.
A. Real account.
B. Nominal account.
C. Personal account.
D. Representative account.
ANSWER: B


Sale of old newspaper is to be shown on the credit side of the________.
A. cash book.
B. income and expenditure.
C. balance sheet.
D. trading account.
ANSWER: B


Any profit on the sale of furniture of a cricket club will be taken to _________.
A. income and expenditure account.
B. cash account.
C. profit and loss account.
D. furniture account.
ANSWER: A


Non-trading institutions prepare ___________.
A. profit and loss account.
B. trading account.
C. manufacturing account
D. income and expenditure account.
ANSWER: D


Receipts and payment account shows ________.
A. income and expenditure.
B. cash receipts and payments
C. assets and liabilities.
D. profit on sale.
ANSWER: B


Income and expenditure account reveals ________.
A. cash in hand.
B. surplus or deficiency.
C. capital account.
D. revenue account.
ANSWER: B


Income and expenditure account records transaction of _________.
A. revenue nature only.
B. capital nature only
C. both capital and revenue nature.
D. personal nature.
ANSWER: A


Subscription received in advance is _________.
A. an income.
B. an asset .
C. a liability.
D. an expense.
ANSWER: C


Admission fee income should be ________.
A. Capitalized.
B. treated as a revenue.
C. treated as revenue unless the amount is pretty large.
D. treated as a liability.
ANSWER: C


Any written document in support of a business transaction is called a _____________.
A. Voucher.
B. Bill.
C. Carbon copy.
D. Expense bill.
ANSWER: A


______ is given to promote sales.
A. Cash discount.
B. Trade discount.
C. Quantity discount.
D. Price discount.
ANSWER: B


______ is allowed to encourage early cash payment.
A. Cash discount.
B. Trade discount.
C. Quantity discount.
D. Price discount.
ANSWER: A


Bills Receivable book is to keep record of __________.
A. bills received from customers.
B. bills received from supplier.
C. credit purchases.
D. credit sales.
ANSWER: A


Bills payable book is to keep a record of ________.
A. bills payable to creditors.
B. bills received from supplier.
C. credit purchases.
D. credit sales.
ANSWER: A


Ledger is a book of _______.
A. original entry.
B. final entry.
C. all cash entry.
D. all credit entry.
ANSWER: B


Purchase of machinery is recorded in_______.
A. sales book.
B. journal proper.
C. purchases book.
D. sales returns book.
ANSWER: B


Credit sales are recorded in________.
A. sales book.
B. cash book.
C. journal proper.
D. purchases book.
ANSWER: A


Outstanding salaries are shown as _______.
A. an expense.
B. a liability.
C. an asset.
D. an income.
ANSWER: B


Interest on drawings is _______.
A. expenditure for the business.
B. expense for the business.
C. gain for the business.
D. loss for the business.
ANSWER: C


Balance sheet is a _______.
A. statement.
B. Account.
C. Ledger.
D. Book.
ANSWER: A


Wages is an example of _______.
A. capital expenses.
B. indirect expenses.
C. direct expenses.
D. revenue expenses.
ANSWER: C


Joint venture account is _______.
A. a nominal account.
B. a personal account.
C. a real account.
D. a trading account.
ANSWER: A


Legacies are generally_______.
A. capitalized and taken to balance sheet.
B. treated as income.
C. treated as expenditure.
D. treated as other incomes.
ANSWER: A


Income and expenditure account is _______.
A. a real account.
B. a nominal account.
C. a personal account
D. cash account.
ANSWER: B

   
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