Principals of Accounting MCQs Chapter 3

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


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


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


Specific donations received by a non-trading concern are usually _______.

A. revenue receipt.
B. capital receipt.
C. capital expenditure
D. revenue expenditure.

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


Income and expenditure account reveals ________.

A. cash in hand.
B. surplus or deficiency.
C. capital account
D. a. 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


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


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


The prime function of accounting is to ______________

A. record economic data.
B. provide the informational basis for action.
C. classifying and recording business transactions.
D. attain non-economic goals. ANSWER: C


The basic function of financial accounting is to:

A. record all business transactions.
B. interpret the financial data.
C. assist the management in performing functions effectively.

D. information to management.
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


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


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


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


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


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


Revenue receipts are ________ in the business.

A. non-recurring.
B. Recurring.
C. Accumulating.
D. non-accumulating.

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: A


Bills payable book is a ________.

A. subsidiary book.
B. principal book.
C. ledger.
D. memorandum book.

ANSWER: B


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


Preliminary expenses are an example of :

A. deferred Revenue Expenditure.
B. revenue Expenditure.
C. capital Expenditure.
D. common expenditure.

ANSWER: B


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


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


A bill of exchange payable after a certain period is known as _____ bill.

A. Time.
B. accommodation .

C. revenue.
D. Dishonored.
ANSWER: A


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 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


A bill drawn and accepted for providing funds to a friend in need is known as:

A. Cheque.
B. promissory note.
C. accommodation bill.

D. demand bill.

ANSWER: C


Donations received for a special purpose will be taken to:

A. income and expenditure account.
B. asset side of the balance sheet.
C. liabilities side of the balance sheet.
D. debit side of the ledger.

ANSWER: C


 

Scroll to Top