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 Principles of Accounting Mcqs
1. The assets that can be easily converted into cash within a short period, i.e., 1
year or less are known as
A. Current assets

B. Fixed assets

C. Intangible assets

D. Investments

Answer:
A. Current assets

2. According to which principle the same accounting methods should be used

each year:
A. Prudence

B. Full disclosure

C. Materiality

D. Consistency

Answer:
D. Consistency

3. The elements of the accounting equation are

A. Assets, Liabilities,Capital

B. Liabilities,Capital

C. Liabilities

D. Capital

Answer:
A.Assets, Liabilities,Capital

4. Arun is a Book-seller, which item will be goods for his business ?

A. Purchase of Computer
B. Purchase of Fan

C. Purchase of Furniture

D. Purchase of Stationery

Answer:
D. Purchase of Stationery

5. The expenses due but not paid is known as –

A. Prepaid Expenses

B. Debtors

C. Outstanding Expense

D. Bills Receivable

Answer:
C. Outstanding Expense

6. Which is correct.I)Dr. the receiver,Cr. the Giver II)Dr. what goes out,Cr. what
comes in III)Dr. all Expenses,Cr.All Losses
A. Only I

B. Only II and III

C. ALL I,II and III

D. Only I and II

Answer:
A. Only I

7. Goods destroyed by fire should be credited to

A. Puchases A/c

B. Sales A/c

C. Loss by fire A/c

D. InsuranceA/c
Answer:
A. Puchases A/c

8. In the books of account if a transaction is completely deleted, will it affect the

trial balance?
A. No

B. Yes

C. A transaction cannot be omitted

D. May be

Answer:
A. No

9. The respective normal account balances of Sales, Sales Returns , and

Discounts allowed are?
A. Credit, Credit, Credit

B. Debit, credit,debit

C. Credit, Debit,Debit

D. Credit, Debit,Credit

Answer:
C. Credit, Debit,Debit

10. Trial balance is not a conclusive proof of accuracy due to which

errors.I)Error of omission II)Error of Principle III)Error of Commission
IV)Compensatory Errors
A. All I,II,III and IV

B. Only I,II and III

C. Only I,II and IV

D. Only II and III

Answer:
A. All I,II,III and IV
11. Which of the following is not the external user ofaccounting information?
A. Government

B. Shareholders

C. Tax Authorities

D. Financial institutions

Answer:
B. Shareholders

12.——— refers to the order in which the various assets and liabilities are shown
in the Balance Sheet.
A. Grouping

B. Order of permanence

C. Marshaling

D. Order of liquidity

Answer:
C. Marshaling

13. If closing stock is mentioned in trial balance,Where is it shown in Final

Accounts?
A. Credit side of TradingA/c

B. Asset side of Balance Sheet

C. Both A and B

D. Not shown anywhere

Answer:
B. Asset side of Balance Sheet

14. Which one is false. I)Capital Expenditure is non recurring in nature and
shown in P&L account. II)Revenue expenditure is incurred to conduct day today
activities
A. Both I and II
B. Only I

C. Only II

D. None is false

Answer:
B. Only I

15. Where do we show Provision of bad debts in final accounts if given in

adjustments? I)Debit side of P&L II)Credit side of P&L III)Deduct from
Debtors in BalanceSheet IV)Add to Debtors in Balance Sheet
A. I and III

B. II and IV

C. II and III

D. I and IV

Answer:
A. I and III

16. Which is true. I)Fixed installation method is recognised by income tax

department. II)The amount of depreciation in WDV method remains same.
A. Both I and II

B. None is true

C. Only II

D. Only I

Answer:
B. None is true

17. Cost of machine=1,90,000 Installation=10,000 Scrap=50,000 Life=6 yrs

Calculate depreciation as per SLM method
A. 25,000

B. 23,333

C. 33,333
D. 21,666

Answer:
A.25,000

18. Machinery purchased on 1 Oct,2016 for 40,000.This machinery was sold on

Dec 2017.Calculate the total depreciation charged on machinery till date if co
charges 10% as per WDV method if accounts are closed on 31st March every
year.
A. 6700

B. 8000

C. 5000

D. 4850

Answer:
D. 4850

19. 1 oct Opening balance=400 units @Rs 20 each, 3 Oct:Purchase=300 units

@Rs 10 ,5 Oct Sales=500 units.What will be total Sales value(in Rs) as per
FIFOMethod?
A. Rs 9000

B. Rs 15000

C. Rs 10000

D. Rs 7500

Answer:
A.Rs 9000

20. 2 oct Opening balance=200 units @Rs 15 each, 4 Oct:Purchase=500 units

@Rs 10 ,5 Oct Sales=600 units.What will be Closing Inventory value (in Rs)
asper LIFO Method?
A. Rs 1000

B. Rs 500

C. Rs 8000
D. Rs 1500

Answer:
D.Rs 1500

21. Business enterprise is separate from its owner according to concept.

A. Money measurement

B. Cost

C. business entityconcept

D. Dual aspect

Answer:
C. business entityconcept

22. When proprietor withdrew cash from business for personal use , it is known
as –
A. Drawings

B. Investment

C. Furniture

D. BillsReceivable

Answer:
A. Drawings

23. In trial balance, which accounts with is/are recorded at the credit side?
I)Sales II)Sales return III)Cash IV)Loan
A. Only I and II

B. All of these

C. Only I,II and IV

D. Only I and IV

Answer:
D. Only I and IV
24. When Salary is paid by cheque, which account iscredited.
A. Cash A/c

B. Bank A/c

C. Salary A/c

D. Personal A/c

Answer:
B. Bank A/c

25. The process of transferring the debit and credit items from a journal to their
respective account in the ledgeris termed as?
A. Balancing

B. Posting

C. Arithmetic

D. Entry

Answer:
B. Posting

26. What are the two statements prepared for summarising the
transactions?I)Balance SheetII)Journal III)P&L IV)Cash Book
A. Only I and II

B. Only I,II and III

C. Only I,II and IV

D. Only I and III

Answer:
D. Only I and III

27. Where do we show Gas and Fuel in final accounts?

A. Trading A/c

B. P&L Account
C. Balance Sheet

D. Not shownanywhere

Answer:
A. Trading A/c

28. What are the causes of depreciation?

A. Wear and Tear

B. Obsolescence

C. Expiration oflegal rights

D. All of theabove

Answer:
D. All of theabove

29. What is the formula for calculating depreciation in SLMMethod?

A. Cost+Scrap/No of Yrs

B. Scrap-Cost/No ofyrs

C. Cost -Scrap/Useful Life

D. None ofthese

Answer:
C. Cost -Scrap/Useful Life

30. 4 oct Opening balance=500 units @Rs 20 each, 5 Oct:Purchase=1000 units

@Rs 15 ,6 Oct Sales=500 units.What will be rate at which the sales unit will
bevalued as per weighted avg method?
A. Rs20

B. Rs 15

C. Rs 16.66

D. 17.5
Answer:
C. Rs 16.66
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