Free Accounting Principles MCQs with Answers
351 Accounting Principles MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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351 questions · page 10 of 18
- A. Unknown Liabilities
- B. Known Liabilities
- C. Creation of Secret Reserves
- D. All the Three
Explanation: A provision is made for a known liability or loss whose exact amount or timing may be uncertain.
Correct answer: Known Liabilities- A. Errors in cash book
- B. Errors in pass book
- C. Cheques deposited and cleared
- D. Cheques issued but not presented for payment
Explanation: A cheque deposited and cleared is credited by the bank and recorded in the Cash Book, so it normally creates no difference between the two…
Correct answer: Cheques deposited and cleared- A. Surplus cash
- B. Bank Overdraft
- C. Terms deposits with bank
- D. None of theseOpen Savings Account
Explanation: A debit balance in the bank's pass book means the bank has debited the customer's account because withdrawals exceed the available…
Correct answer: Bank Overdraft- A. It bring out any errors committed in preparation of Cash book / Bank Pass Book
- B. Highlights under delay in clearance of cheques deposited but not credited
- C. Help know actual bank balance
- D. All the three
Explanation: Bank reconciliation can reveal errors in either book, identify cheques deposited but not yet credited, and establish the actual bank…
Correct answer: All the three- A. Trial balance
- B. Cash book
- C. Bank A/c
- D. Cash as per cash book with bank balance as per bank pass book
Explanation: Bank reconciliation compares the cash balance recorded by the business with the corresponding bank balance shown in the pass book or bank…
Correct answer: Cash as per cash book with bank balance as per bank pass book- A. To rectify the mistakes in the Cash Book
- B. To arrive at the Bank Balance
- C. To arrive at the Cash Balance
- D. To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement
Explanation: The statement explains why the balance in the cash book differs from the balance in the bank statement.
Correct answer: To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement187. Difference in Bank Balance as per Pass Book and Cash Book may arise on account of_____________?
- A. Cheque issued but not presented
- B. Cheque issued but dishonoured
- C. Cheque deposited and credited by bank
- D. Both A and B
Explanation: An issued cheque not yet presented remains recorded in the cash book but is not yet recorded by the bank, creating a difference.
Correct answer: Both A and B- A. Credit side of Cash Book
- B. Debit side of Cash Book
- C. Debit side of Trial Balance
- D. Credit side of Balance Sheet
Explanation: The bank’s records are the reverse of the customer’s cash-book entries: money deposited is a credit in the cash book but a credit or…
Correct answer: Credit side of Cash Book- A. Surplus cash
- B. Bank overdraft
- C. Terms deposits with bank
- D. None of these
Explanation: A credit balance in the bank column of the cash book means payments or withdrawals exceed the available bank balance.
Correct answer: Bank overdraft- A. Mistake in Cash Book
- B. Mistake in Pass Book
- C. Cheque issued but not presented for payment
- D. Cheques deposited but not cleared
Explanation: The adjusted cash book is corrected for entries or errors that should appear in the business’s own records, such as a cash-book mistake.
Correct answer: Mistake in Cash Book- A. Bank column of Cash Book
- B. Bank Pass Book
- C. Bank Statement
- D. Trial Balance
Explanation: Bank reconciliation requires the bank column of the cash book and the bank pass book or statement for comparison.
Correct answer: Trial Balance- A. Expenses for day to day running of the business
- B. Putting the new asset in working condition
- C. Depreciation
- D. Purchase of raw material
Explanation: Putting a newly acquired asset into working condition is necessary to bring it to its usable state, so it is added to the asset's cost as…
Correct answer: Putting the new asset in working condition- A. Acquisition of an Asset
- B. Extension of an Asset
- C. Improvement of the existing Asset
- D. Maintenance of the Asset
Explanation: Maintenance merely preserves an existing asset's operating condition and does not increase its life, capacity, or efficiency, so it is…
Correct answer: Maintenance of the Asset- A. Repair of plant and machinery
- B. Salary paid to workers
- C. Cost of stand by equipment
- D. Annual whitewash of the office building
Explanation: Standby equipment is acquired for long-term use in the business and is recorded as a fixed asset, making its cost capital expenditure.
Correct answer: Cost of stand by equipment- A. Raw material consumed
- B. Plant purchased
- C. Long term loan raised from bank
- D. Share Capital
Explanation: Raw material consumed is used in producing goods during the current accounting period, so its cost is a revenue expense.
Correct answer: Raw material consumed- A. sale is effected
- B. cash is received
- C. production is completed
- D. debts are collected
Explanation: Under the traditional realization principle, revenue is recognized when the sale is made and the earning process is substantially…
Correct answer: sale is effected- A. Purchase register
- B. Purchase A/c
- C. Cash purchase A/c
- D. Credit purchase A/c
Explanation: The Purchase Day Book records credit purchases, and its periodic total is posted as one debit to Purchase Account.
Correct answer: Purchase A/c- A. Sales A/c
- B. Cash sales A/c
- C. Sales return A/c
- D. Credit sales A/c
Explanation: The Sales Day Book records credit sales, and its periodic total is posted as one credit to Sales Account.
Correct answer: Sales A/c- A. Cash journal
- B. Purchase journal
- C. Debtors journal
- D. Sales journal
Explanation: Purchase, sales, and cash journals are standard special-purpose books for recording recurring classes of transactions.
Correct answer: Debtors journal- A. Subsidiary books
- B. Journal
- C. Ledger
- D. Trial Balance
Explanation: A ledger is the principal book in which separate accounts for assets, liabilities, income, expenses and capital are opened and maintained.
Correct answer: Ledger