Basics Of Accounting Mcq

School of distance education

CALICUT UNIVERSITY SCHOOL OF DISTANCE EDUCATION BASIC ACCOUNTING OPEN COURSE

(For the UG Candidates with core course other than BCom) CUCBCSS-2014 Admission Onwards Question Bank

Prepared By:

Sreekumar P G Assistant professor in Commerce N S S College Nemmara

Objective type questions: 1. Accounting principles are generally based on: (a) Objectivity (c) Subjectivity (b) Convenience (d) Convenience in Recording 2. The policy ‘Anticipate the profit and provide for all possible losses’ arises due to: (a) Convention of consistency (c) Convention of conservatism (b) Convention of full disclosure (d) Convention of Materiality 3. According to which of the following accounting concept even the proprietor of business treated as the creditor of the business to the extent of his capital: (a) Money measurement concept (c) Accounting period concept (b) Going concern concept (d) Business entity concept 4. Outstanding expenditure is a ___________ account (a) Real Account (c) Personal Account (b) Nominal Account (d) Impersonal Account 5. The basic concept relating to balance sheet are: (a) Cost Concept (c) Business entity Concept (b) Accounting period Concept (d) All of the above. 6. Income received in advance is a: (a) An asset (c) an income (b) A liability (d) a loss 7. The balance sheet gives information regarding: (a) Financial position during a particular firm (b) Result of operation for a particular period (c) The operating efficiency of the firm (d) Financial position on a particular date. 8. Outstanding salaries are shown as Basic Accounting

Page

1

School of distance education

(a) An asset (c) an income (b) A liability (d) an expense 9. Which of the following is not a fixed asset? (a) Motor Vehicle (c) Furniture (b) Inventory (d) Freehold Property 10. From income statement we can find out: (a) Gross profit (c) Financial position (b) Net profit (d) All of the above 11. Which of the following is not an intangible asset: (a) Stock (c) Goodwill (b) Patent (d) Trademark 12. Which of the following is a fictitious asset? (a) Goodwill (c) Discount on issue of securities (b) Copyright (d) Patent 13. Returns outward appearing in trial balance is to be deducted from: (a) Sales (c) Purchases (b) Returns inward (d) Closing stock 14. Returns inwards appearing in trial balance is to be deducted from: (a) Sales (c) Purchases (b) Returns Outward (d) Closing stock 15. Carriage outward is shown on the: (a) Debit side of Trading A/c (c) Debit side of P & L A/c (b) Credit side of P & L A/c (d) Liability Side of Balance Sheet 16. Contingent Liability is shown: (a) Liability Side of Balance Sheet (c) Asset Side of Balance Sheet (b) In Profit and Loss A/c (d) Below the Balance Sheet as a foot note 17. Receipt and Payment account is (a) Real Account (c) Personal Account (b) Nominal Account (d) Special Journal 18. Income and Expenditure account is: (a) Real Account (c) Personal Account (b) Nominal Account (d) Special Journal 19. Non-profit organizations prepare: (a) Profit and Loss A/c (c) Income and Expenditure A/c (b) Trading A/c (d) None of these. 20. Which item enters in the Income and Expenditure account? (a) Sale of old newspaper (c) Closing balance of Cash (b) Tournament Fund (d) None of these. 21. Donation received for a special purpose will be taken to: (a) Income and Expenditure A/c (c) Asset Side of Balance Sheet (b) Liability Side of Balance Sheet (d) None of these. 22. In case a sports fund is kept, expenses in connection with sports events should be: (a) Charged to sports fund (c) Charged to Income and Expenditure A/c (b) Liability Side of Balance Sheet (d) Asset Side of Balance Sheet Basic Accounting

Page

2

School of distance education

23. Subscription received in advance is: (a) An asset (c) an income (b) A liability (d) an expense 24. Admission fee should be: (a) Capitalized (c) Treated as revenue (b) Treated as Liability (d) treated as revenue unless the amount is pretty large. 25. Receipts and payment account is prepared for: (a) Non Profit organization (c) trading organizations (b) Joint Stock Company (d) None of these. 26. Excess of income over expenditure is called: (a) Revenue (c) Surplus (b) Commission (d) Discount 27. Income and expenditure account is a type of: (a) Balance sheet (c) Trading A/c (b) P& L A/c (d) Manufacturing A/c 28. Subscription outstanding of previous year should be ___________ in income and expenditure Account. a) Added (c) Cancelled b) Deducted (d) None of these. 29. _____________ is a gift or donation received by a non-trading concern as per the will of a deceased person. (a) Legacy (c) Honorarium (b) Endowment Fund (d) Entrance fee 30. Generally entrance fees are treated as: (a) Revenue Receipt (c) Capital Receipt (b) Revenue expenditure (d) None of these. 31. Sale of old newspaper is _______________(a) Revenue Receipt (c) Capital Receipt (b) Revenue expenditure (d) None of these. 32. Which Statement gives a concise idea about the profitability and financial position of the business? (a) Final Accounts (c) Journal (b) Subsidiary Books (d) Ledger 33. The amount of money owned by a business to outsider is called: (a) Assets (c) Liability (b) Expense (d) Income 34. The expenses and incomes in the business can be classified into: (a) Assets and Liabilities (c) Capital and revenue (b) Debit and Credit (d) None of the above 35. Expenses paid in advance is: (a) Liability (c) Assets (b) Expense (d) Income 36. Excess of Debit over Credit means: (a) Gross Profit (c) Gross Loss Basic Accounting

Page

3

School of distance education

(c) Net Profit (d) Net Loss 37. Outstanding expenses is (a) Assets (c) Liability (b) Expense (d) Income 38. __________ is an expenditure which is incurred to meet the day- to-day expenses of the business. (a) Revenue Receipt (c) Capital Receipt (b) Capital expenditure (d) Revenue expenditure 39. __________ Wages incurred for the current period are shown as a liability in the balance sheet unless it is paid. (a) Prepaid (c) Outstanding (b) Deferred (d) None of these. 40. Accrued income is : (a) Assets (c) Liability (b) Expense (d) Income 41. Debit balances of all personal accounts are collectively called as: (a) Sundry Creditors (c) Sundry Debtors (b) Personal account Balance (d) Total of personal accounts 42. In accounting only _______ discount is recorded (a) Trade (b) Cash (c) Real (d) None of these 43. An expenditure incurred to derive long term advantage is: (a) Revenue Expenditure (c) Capital Expenditure (b) Deferred revenue expenditure (d) Expense 44. Accounting records transactions in term of: (a) Commodity units (c) Production units (b) Monetary units (d) Expense units 45. The process of recording transactions in a journal is known as: (a) Journalizing (b) Balancing (b) Posting (d) Tallying. 46. Trial balance is a: (a) Statement (c) Account (b) Journal (d) None of these 47. Which of the following is a direct expense? (a) Rent (c) Salary (b) Wages (d) Interest 48. The process of recording transactions in a ledger is known as: (a) Journalizing (c) Tallying (b) Posting (d) Balancing 49. In sole traders balance sheet assets are arranged in the order of: (a) Permanency (c) Liquidity (b) Single entry (d) Double account 50. Excess of closing capital over opening capital denotes: (a) Profit (c) Loss (b) Additional capital (d) Lesser capital Basic Accounting

Page

4

School of distance education

51. The properties owned by a business enterprise are called: (a) Assets (c) Liabilities (b) Capital (d) Owner’s equity 52. Debit may signify: (a) An increase in assets account (c) A decrease in asset account (b) An increase in liability account (d) An increase in capital stock account 53. The determination of the expenses for an accounting period is based largely on the application of : (a) Cost Concept (c) Consistency Principle (b) Matching concept (d) Principle of time perspective 54. Capital is shown under liability because of: (a) Cost Concept (c) Business entity Concept (b) Accounting period Concept (d) Going concern. 55. According to going concern concept a business is viewed as having (a) Limited life (c) Going to liquidated after 100 years (b) An indefinite life (d) None of these. 56. According to concept of conservatism stock in trade is valued at: (a) Cost price or Market price whichever is high (c) Market price (b) Cost price or Market price whichever is less (d) Cost price 57. Fixed assets and current assets are categorized as per the concept of: (a) Going concern (c) Business entity Concept (b) Time period Concept (d). Cost Concept 58. Accounting does not record non-financial transactions because of the concept of: (a) Money measurement concept (c) Business entity Concept (b) Time period Concept (d) Cost Concept 59. Accounting is the process of matching: (a) Benefits and cost (c) Revenues and cost (b) Cash inflows and outflows (d) potential and real performance 60. Which of the following event is the subject matter of accounting? (a) Death of key executive of the business (b) Strike of the workers (c) Payment of Rs. 10,000 to bank in discharge of outstanding loan (d) Marriage of the daughter of the MD. 61. Which of the following is not available in the fianancial statement? (a) Total Sales (c) Total Profit & Loss A/c (b) Loss from fire (d) None of these. 62. Financial accounting looks for the interest of: (a) Investors (c) Employees (b) Suppliers (d) Both investors and suppliers 63. Financial statement prepared by the organization comprises of: (a) Profitability Statement (c) balance sheet (b) Both Profitability Statement & balance sheet (d) None of these 64. Financial statement of business at any target time in terms of assets and liabilities: (a) Book Keeping (c) Profitability statement Basic Accounting

Page

5

School of distance education

(b) Audit (d) Balance sheet 65. Financial accounting considers the transaction: (a) In terms of money (c) Important from business point of view (b) Not in terms of money (d) All of the above 66. Which type of expenditure in an organization receives return during the same period they are paid for? (a) Revenue (c) Capital (b) Deferred Revenue (d) All of the above 67. Which of the following is a personal account? (a) Account of the customer (c) Salary account (b) Telephone expenses Account (d) Trade mark Account 68. Accounting system used for the organization not earning any profit is: (a) Accrual system (c) Cash System (b) Mercantile system (d) Non- profit system 69. The reduction in the value of fixed assets which can arise due to time factor is: (a) Discount (c) Depreciation (b) Reduction (d) None of these 70. Which type of expenditure of an organization affects the profitability statement? (a) Revenue (c) Capital (c) Deferred Revenue (d) All of the above 71. Which type of expenditure is done for making assets: (a) Revenue (c) Capital (b) Deferred Revenue (d) All of the above 72. Accounting policies and procedures once decided should not be changed till any sound reason is there. This is known as: (a) Accrual Concept (c) conservatism (b) Business Entity (d) Consistency 73. Comparing the cost of the entities and then deciding expenditures for which entity should be written in financial record is a concept of: (a) Money measurement concept (c) Materiality (b) Matching concept (d) Cost concept 74. The financial record should always be published in a definite time period. This concept is: (a) Accounting period concept (c) Money measurement concept (b) Cost concept (d) Consistency 75. In financial accounting records the entities whose monitory value is not known are not entered. This concept is (a) Double entry concept (c) Objectivity (b) Cost concept (d) Money measurement concept 76. Financial accounting looks for the interest of: (a) Investors (c) Employees (b) Suppliers (d) Both Suppliers and investors 77. Financial Statement prepared by the organisation comprises of: (a) Balance sheet (c) Income statement Basic Accounting

Page

6

School of distance education

(b) None of the above (d) Both income statement and Balance sheet 78. Which of them have some similarities? (a) Financial Accounting & Management Accounting (b) Cost Accounting and Management Accounting (c) Financial Accounting and Management Accounting (d) None of these. 79. Financial Statement of business at any targeted time in terms of assets and liabilities is: (a) Audit Report (c) Balance Sheet (b) Book Keeping (d) Profitability statement 80. Financial Accounting considers the transactions: (a) In terms of money (c) Not in terms of money (b) Important from the point of business (d) All of the above 81. Systematic recording of business transactions in books of account is (a) Financial Accounting (c) Book Keeping (b) Auditing (d) Balance Sheet 82. When an owner credits or debits any amount, he cannot put that transaction in financial account records of organization. This is known as: (a) Accrual Concept (c) conservatism (b) Business Entity (d) Consistency 83. In financial accounting records the entities whose monetary value is not known are not entered. This concept is: (a) Accounting period concept (c) Money measurement concept (b) Cost concept (d) Consistency 84. Businessman always see business running for an indefinite period. This concept is (a) Going concern (c) Business entity Concept (b) Time period Concept (d). Cost Concept 85. The Financial record should always be published in a definite time period according to (a) Accounting period concept (c) Cost concept (b) Money measurement concept (d) Consistency 86. Accounting Policies and Procedures once decided should not be changed till any sound reason is there. This is known as (a) Accounting period concept (c) Money measurement concept (b) Cost concept (d) Consistency 87. Which type of expenditure is shown in asset side of Balance sheets? (a) Capital Expenditure (c) Revenue Expenditure (b) Deferred Revenue Expenditure (d) None of these. 88. Which type of expenditure affects the Profitability Statement? (a) Capital Expenditure (c) Revenue Expenditure (b) Deferred Revenue Expenditure (d) None of these. 89. Which is a Real Account? (a) Land and building (c) Furniture and Fixtures (b) All of the above (d) None of these. 90. Which of the following is a nominal account? Basic Accounting

Page

7

School of distance education

(a) Depreciation Account (c) Furniture and Fixtures (b) Discount Account (d) Both (a) and (b) 91. Imprest system of maintain records applies to the preparation of: (a) Petty cash book (c) Purchase Book (b) Sales Book (d) Double column cash book 92. Cash sales will be first recorded in : (a) Sales Book (c) Cash book (b) Profit & Loss A/c (d) Credit Note 93. Entries for rare transactions will be recorded in: (a) Sales Book (c) Journal Proper (b) Purchase Book (d) Bills Payable Book 94. Loan granted by the business should be shown on: (a) Balance sheet Liability (c) Balance sheet Asset (b) Profit & Loss A/c (d) Below the Balance sheet 95. While making an entry, the wrong amount is written either in the subsidiary book or in the ledger or the entry is made on the wrong side of the account (a) Error of omission (c) Error of Commission (b) Error of Principle (d) Compensating Error 96. Stores Consumed can be shown on : (a) Trading account (c) Purchases A/c (b) P&L A/c (d) Balance sheet 97. Prepaid expenses given in the adjustment should be: (a) Added along with expense (c) Deducted from the expense (b) Shown on balance sheet Liability (d) Shown as a foot note in balance sheet 98. Receipt and Payment A/c is prepared by: (a) Sole Trader (c) Joint Stock Company (b) Partnership Firms (d) Non Profit Organization. 99. Life Membership fees collected by a non-profit organization can be treated as: (a) Revenue (c) Capital (b) Deferred Revenue (d) Expenditure 100. Receipt and Payment Account is a: (a) Real Account (c) Nominal Account (b) Personal Account (d) None of these Answers: 1. (d) Convenience in Recording 2. (c) Convention of conservatism 3. (d) Business entity concept 4. (c) Personal Account 5. (d) All of the above. 6. (b) A liability 7. (d) Financial position on a particular date. Basic Accounting

8. 9. 10. 11. 12. 13. 14. 15.

(b) A liability (b) Inventory (b) Net profit (a) Stock (c) Discount on issue of securities (c) Purchases (a) Sales (c) Debit side of P & L A/c Page

8

School of distance education

16. (d) Below the Balance Sheet as a

foot note (a) Real Account (b)Nominal Account (c) Income and Expenditure A/c (a) Sale of old newspaper (b)Liability Side of Balance Sheet (a) Charged to sports fund (b) A liability (d) Treated as revenue unless the amount is pretty large. 25. (a)Non Profit organization 26. (c) Surplus 27. (b) P& L A/c 28. (b) Deducted 29. (a) Legacy 30. (a) Revenue Receipt 31. (a) Revenue Receipt 32. (a) Final Accounts 33. (c) Liability 34. (c) Capital and revenue 35. (c) Assets 36. (c) Gross Loss 37. (c) Liability 38. (d) Revenue expenditure 39. (c) Outstanding 40. (a) Asser 41. (c) Sundry Debtors 42. (b) Cash 43. (b) Deferred revenue expenditure 17. 18. 19. 20. 21. 22. 23. 24.

44. (b) Monetary units 45. (a) Journalizing 46. (a) Statement 47. (b) Wages 48. (b) Posting 49. (c) Liquidity 50. (a) Profit 51. (a) Assets 52. (a) An increase in assets account 53. (d) Principle of time perspective 54. (c) Business entity Concept 55. (b) An indefinite life 56. (b) Cost price or Market price whichever is less 57. (b) Time period Concept 58. (a) Money measurement concept Basic Accounting

59. (c) Revenues and cost 60. (c) Payment of Rs. 10,000 to bank in discharge of outstanding loan 61. (d) None of these. 62. (d) Both investors and suppliers 63. (b) Both Profitability Statement & balance sheet 64. (d) Balance sheet 65. (d) All of the above 66. (a) Revenue 67. (a) Account of the customer 68. (c) Cash System 69. (b) Reduction 70. (a) Revenue 71. (c) Capital 72. (d) Consistency 73. (c) Materiality 74. (a) Accounting period concept 75. (d) Money measurement concept 76. (d) Both Suppliers and investors 77. (d) Both income statement and Balance sheet 78. (d) None of these 79. (c) Balance Sheet 80. (a) In terms of money 81. (c) Book Keeping 82. (a) Business Entity 83. (c) Money measurement concept 84. (a) Going concern 85. (a) Accounting period concept 86. (d) Consistency 87. (b) Deferred Revenue Expenditure 88. (c) Revenue Expenditure 89. (b) All of the above 90. (d) Both (a) and (b) 91. (a) Petty cash book 92. (c) Cash book 93. (c) Journal Proper 94. (c) Balance sheet Asset 95. (c) Error of Commission 96. (a) Trading account 97. (c) Deducted from the expense 98. (d) Non Profit Organization 99. (a) Revenue 100. (a) Real Account

Page

9