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 17 of 18
- A. Purchase journal
- B. Sales journal
- C. Purchases return journal
- D. Sales return journal
Explanation: Goods returned by the business are goods returned to its supplier, so they are entered in the purchases return journal.
Correct answer: Purchases return journal- A. Specialized journal
- B. Day book
- C. Cash book
- D. Record book
Explanation: A journal is also called a day book because transactions are entered in it in chronological order as they occur.
Correct answer: Day book- A. Cash payments journal
- B. Cash receipts journal
- C. Purchases return journal
- D. General journal
Explanation: The general journal records transactions that do not fit a specialised journal, such as adjusting entries, opening entries, and asset…
Correct answer: General journal- A. Purchase journal
- B. Sales journal
- C. Purchases return journal
- D. Sales return journal
Explanation: The sales journal records credit sales of goods for resale. Cash sales go to the cash book, while sales returns are recorded separately in…
Correct answer: Sales journal- A. Purchase journal
- B. Sales journal
- C. Purchases return journal
- D. Sales return journal
Explanation: Goods returned by customers are sales returns, so they are recorded in the sales return journal.
Correct answer: Sales return journal326. Which of the following account with normal balance is shown at the credit side of a trial balance?
- A. Cash account
- B. Bank account
- C. Equipment account
- D. Accrued expenses accountAccounting & Auditing
Explanation: Accrued expenses are liabilities because they represent amounts owed but not yet paid, and liabilities normally have credit balances.
Correct answer: Accrued expenses accountAccounting & Auditing327. Which of the following account with normal balance is shown at the debit side of a trial balance?
- A. Rent income account
- B. Creditors account
- C. Unearned income account
- D. Cash account
Explanation: Cash is an asset, and assets normally carry debit balances in the trial balance.
Correct answer: Cash account- A. Arithmetic accuracy
- B. Errors of commission
- C. Omissions of economic events
- D. Understatements of balances
Explanation: Equal debit and credit totals test the arithmetic accuracy of ledger balancing and posting.
Correct answer: Arithmetic accuracy- A. Complete omission of a transaction
- B. Partial omission of a transaction
- C. Error of principle
- D. Compensating errors
Explanation: A partial omission records only one side of a transaction, so debit and credit totals will differ and the trial balance will disagree.
Correct answer: Partial omission of a transaction- A. Frequently during the year
- B. At the end of an accounting period
- C. At the end of a month
- D. At the end of a yearAccounting & Auditing
Explanation: A trial balance is commonly prepared at the end of an accounting period to verify that ledger debit and credit balances agree before…
Correct answer: At the end of an accounting period- A. No error in recording transactions
- B. No error in posting entries to ledger accounts
- C. Account balances are correct
- D. Mathematically Capital+Liabilities=Assets
Explanation: Equal debit and credit totals show the mathematical equality underlying the accounting equation: Assets equal Capital plus Liabilities.
Correct answer: Mathematically Capital+Liabilities=Assets- A. It lists down the balances of accounts
- B. It lists down the balances of a balance sheet
- C. It is a kind of financial statement
- D. It is not a part of accounting cycle
Explanation: A trial balance lists the debit and credit balances of ledger accounts on a particular date.
Correct answer: It lists down the balances of accounts- A. Ledger accounts
- B. General Journal
- C. Specialized journals
- D. Balance sheet
Explanation: The trial balance is prepared from the closing balances of ledger accounts, which provide its debit and credit columns.
Correct answer: Ledger accounts- A. Yes
- B. No
- C. Transactions can't be omitted
- D. none of these
Explanation: A completely omitted transaction leaves both its debit and credit sides unrecorded, so the trial balance totals remain equal.
Correct answer: No- A. Ledger accounts balances
- B. Balance sheet balances
- C. Income statement balances
- D. Cash flow statement balances
Explanation: A trial balance lists the debit and credit balances extracted from ledger accounts, so it checks their arithmetical agreement.
Correct answer: Ledger accounts balances- A. 1949
- B. 1956
- C. 1961
- D. 1972
Explanation: The Institute of Chartered Accountants of Pakistan was established under the Chartered Accountants Ordinance, 1961.
Correct answer: 1961- A. Error of principle
- B. Error of commission
- C. Error of omission
- D. Error of duplication
Explanation: Goods sent on approval remain the seller’s inventory until the customer approves them, so treating them as credit sales applies the wrong…
Correct answer: Error of principle- A. Error of omission
- B. Error of commission
- C. Compensating error
- D. Error of principle
Explanation: The transaction was recorded in the correct type of account but in the wrong customer’s account, A being replaced by B.
Correct answer: Error of commission- A. Two
- B. Three
- C. Five
- D. Six
Explanation: The two traditional systems are single-entry and double-entry bookkeeping.
Correct answer: Two- A. External liabilities
- B. Fixed liabilities
- C. Current liabilities
- D. Liquid Liabilities
Explanation: Amounts payable within the normal short-term operating period, such as within a month, are current liabilities.
Correct answer: Current liabilities