Principals of Accounting MCQs Chapter 1

Book Keeping means ___________________

A. Classifying

B. Recording
C. Summarising
D. None of these

ANSWER: B


Which one is current assets

A. building
B. furniture
C. stock
D. investment

ANSWER: C


Bank account is _________

A. Nominal
B. Real
C. Personal
D. none of these above

ANSWER: C


Drawings account is related to ___________

A. Nominal Account.
B. Personal Account.
C. Real Account.
D. None of the above

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


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: B


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


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


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


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


Depreciation is provided on ________

A. working capital
B. current assets
C. fixed assets
D. intangible assets.

ANSWER: C


Heavy advertising to launch a new product is a:

A. capital expenditure.
B. deferred revenue expenditure
C. other expenditure.
D. revenue expendture

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


Bills are drawn by:

A. Creditors.
B. Debtors.
C. Agent.
D. Brokers.

ANSWER: C


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. Creditors account.
B. Cash account.

C. Bills payable account.
D. Bills receivable account.

ANSWER: C


Average due date 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


The Letter “c” is shown in the Cash book which means

A. consignment
B. Commitment
C. Contra Entry
D. Cash entry

ANSWER: C


In accounting the benefit receiving aspect is said to be

A. Debit
B. Credit
C. Debit and Credit

D. none of these
ANSWER: A


In accounting, the benefit giving aspect is said to b A. Debit
B. Credit
C. Debit and Credit

D. None of these
ANSWER: B


Capital =

A. Asset – Liabilities

B. Asset

C. Liabilities
D. All the above
ANSWER: A


Drawings account is ___________

A. Real account

B. Personal account

C. Nominal account

D. None of these
ANSWER: B


Daily Record of Transaction means

A. Ledger
B. Journal
C. Trial Balance
D. None of these

ANSWER: B


Summary of all balances is known as A. Ledger
B. Journal
C. Subsidiary books
D. Trial Balance

ANSWER: D


The person who writes out the bill of exchange is known as

A. Payee
B. Drawee

C. Drawe

D. Acceptor
ANSWER: C


The person upon whom the bill of exchange is drawn is called __________ A. Drawee
B. Drawer
C. Payee
D. Maker

ANSWER: A


The person to whom the amount has to be paid is known as

A. Drawee
B. Drawer
C. Acceptor
D. Payee

ANSWER: D


The holder of a bill who endorses it is called

A. Endorser
B. Endorsee
C. Acceptor
D. Payee

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


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


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


Which account is generally used for rectification of errors

A. Memorandum account.
B. Suspense account.
C. Rectification account.
D. Adjustment account .

ANSWER: B

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