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 13 of 18
- A. Assets column
- B. Date column
- C. Description column
- D. Amount column
Explanation: A standard journal normally contains date, particulars or description, ledger folio, and debit and credit amounts.
Correct answer: Assets column- A. Book of entries
- B. Book of original entries
- C. T account
- D. Books of economic event
Explanation: The journal is called the book of original entry because transactions are first recorded there before being posted to the ledger.
Correct answer: Book of original entries- A. Drawings
- B. Cash
- C. Business
- D. Stock
Explanation: Personal withdrawals are recorded by debiting Drawings, which reduces the owner's equity, and crediting Cash because cash leaves the…
Correct answer: Drawings- A. Cash
- B. Debtor
- C. Creditor
- D. Purchases
Explanation: A credit purchase increases purchases, so Purchases is debited, while the supplier or creditor is credited.
Correct answer: Purchases- A. Source documents
- B. Ledger
- C. Bonds
- D. Journals
Explanation: Source documents, such as invoices, receipts, and vouchers, provide evidence that a transaction occurred and support its journal entry.
Correct answer: Source documents- A. Expense of business
- B. Income of business
- C. Loss of business
- D. Abnormal loss of business
Explanation: Discount allowed is the reduction granted to a customer for prompt payment, so it is treated as an expense or financial loss of the…
Correct answer: Expense of business- A. Sales income account
- B. Sales account
- C. Return inward account
- D. Expenses account
Explanation: Goods returned by customers are sales returns, also called returns inward, and this account is debited because it reduces sales revenue.
Correct answer: Return inward account- A. 2,10
- B. 10,2
- C. 10,30
- D. 3,15
Explanation: The notation 2/10-n/30 means a 2% discount is allowed when payment is made within 10 days; otherwise the full amount is due within 30…
Correct answer: 2,10249. A journal entry in which two or more account is debited or credited is referred as____________?
- A. Journal entry
- B. Multi entry
- C. Additional entry
- D. Compound entry
Explanation: A compound entry involves two or more accounts on the debit side, the credit side, or both.
Correct answer: Compound entry- A. Ledger
- B. T account
- C. Day book
- D. Cash book
Explanation: The journal is also called the day book because transactions are recorded in it in chronological order as they occur.
Correct answer: Day book- A. Account payable
- B. Account receivable
- C. Cash account
- D. Discount accountAccounting & Auditing
Explanation: Discount allowed is given to a customer, so it reduces the amount receivable from that customer.
Correct answer: Account receivable- A. One
- B. Two
- C. Three
- D. Infinite
Explanation: The double-entry system requires every transaction to have equal debit and credit effects.
Correct answer: Two- A. Posting
- B. Entry making
- C. Adjusting
- D. Journalizing
Explanation: Journalizing means recording transactions in the appropriate journals in chronological order.
Correct answer: Journalizing- A. First
- B. Original
- C. Secondary
- D. Generic
Explanation: The general journal is a book of original entry because transactions are first recorded there before being posted to the ledger.
Correct answer: Original- A. Two times a year
- B. once a year
- C. Frequently during the accounting period
- D. At the end of a accounting periodAccounting & Auditing
Explanation: Transactions are recorded as they occur throughout the accounting period so that the records remain current and complete.
Correct answer: Frequently during the accounting period- A. Cash
- B. Equity
- C. Net income
- D. Net expenses
Explanation: The accounting equation is Assets = Liabilities + Equity, so rearranging it gives Assets − Liabilities = Equity.
Correct answer: Equity- A. Business operations
- B. cash outflows
- C. Inflows of cash
- D. Appropriation expenses
Explanation: An increase in equity normally provides additional resources to the business, allowing it to expand its operations.
Correct answer: Business operations- A. Increase cash and liability
- B. Increase equity and liability
- C. Increase fixed assets and cash
- D. Increase cash and equity
Explanation: When services are already rendered, the receipt is revenue, so cash increases and equity increases through profit.
Correct answer: Increase cash and equity- A. Assets and liabilities
- B. Assets and equity
- C. Liabilities and equity and bank balance
- D. Capital and liabilities
Explanation: Fresh capital is an owner contribution, which increases the business's assets and owner's equity by equal amounts.
Correct answer: Assets and equity- A. Cash+Other assets=Capital-Liabilities
- B. Capital+ Liabilities=Assets+Income
- C. Assets-Liabilities=Capital
- D. Assets+Capital=Liabilities
Explanation: Rearranging the basic equation Assets = Liabilities + Capital gives Assets − Liabilities = Capital.
Correct answer: Assets-Liabilities=Capital