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 4 of 18
- A. Asset
- B. Expense
- C. Liability
- D. Revenue
Explanation: Discount received reduces the cost of purchases or the amount payable and is treated as an income or gain for the business.
Correct answer: Revenue- A. Entry in two sets of books
- B. Entry at two ends
- C. Entry at two dates
- D. Entry for two aspects of the transaction
Explanation: Double-entry bookkeeping records both aspects of every transaction, with equal debit and credit effects.
Correct answer: Entry for two aspects of the transaction- A. Buyer
- B. Seller
- C. Debtor
- D. Creditor
Explanation: A person who buys goods on credit owes payment to the business, so that person is recorded as a debtor.
Correct answer: Debtor- A. Double entry system
- B. American system
- C. Single entry system
- D. Italic system
Explanation: The double-entry system is regarded as the modern system of bookkeeping because it records both sides of each transaction and helps…
Correct answer: Double entry system- A. Purchase return
- B. Customer return
- C. Sales return
- D. Inventory return
Explanation: When a customer returns goods previously sold by the business, the transaction is called a sales return or returns inward.
Correct answer: Sales return- A. Accounting
- B. Reading
- C. Book Keeping
- D. Auditing
Explanation: Bookkeeping is the systematic recording and maintenance of a business’s financial transactions.
Correct answer: Book Keeping67. An Art of reading, classifying & Summarizing of accounts in a systematic way is called__________?
- A. Accounting
- B. Accountancy
- C. Auditing
- D. Book Keeping
Explanation: Accounting involves recording, classifying, summarizing, and interpreting financial transactions in a systematic manner.
Correct answer: Accounting- A. Accountancy
- B. Economics
- C. Book Keeping
- D. Auditing
Explanation: Bookkeeping is the systematic process of maintaining the books of account by recording business transactions.
Correct answer: Book Keeping- A. Lots in , Few out
- B. Link input, Format Output
- C. Last input, First Output
- D. Last in, First Out
Explanation: LIFO means Last in, First Out, so the most recently purchased inventory is assumed to be sold first.
Correct answer: Last in, First Out- A. Purchases
- B. Prompt payment
- C. Sales
- D. Sales return
Explanation: A cash discount is offered to encourage prompt payment within a specified period, such as “2/10, net 30.” It may arise on either purchases…
Correct answer: Prompt payment- A. interactive control system
- B. belief systems
- C. boundary systems
- D. diagnostic control systems
Explanation: Interactive control systems use formal information systems to draw management attention to strategic uncertainties and encourage…
Correct answer: interactive control system72. A desire of an individual to give good performance for self-satisfaction is known as ___________?
- A. intrinsic motivation
- B. extrinsic motivation
- C. monetary motivation
- D. bounded motivation
Explanation: Intrinsic motivation comes from the activity itself, such as the satisfaction of performing well or mastering a task.
Correct answer: intrinsic motivation- A. decentralization
- B. centralization
- C. autonomy
- D. congruency
Explanation: Autonomy refers to the degree of freedom lower-level managers have in making decisions.
Correct answer: autonomy- A. total autonomy
- B. total centralization
- C. total decentralization
- D. total congruency
Explanation: Total centralization leaves decision-making authority at the top, giving lower-level managers little freedom and imposing maximum…
Correct answer: total centralization- A. customer control system
- B. business control system
- C. financial control system
- D. management control systems
Explanation: A management control system collects and uses information to coordinate planning, decisions, and activities across an organization.
Correct answer: management control systems- A. motivation
- B. goal congruence
- C. effort
- D. autonomy
Explanation: Motivation is the desire or internal drive to achieve a goal, together with the effort directed toward that goal.
Correct answer: motivation77. An implementation of planning decisions and evaluating performance is classified as ___________?
- A. control
- B. evaluation
- C. deciding
- D. performing
Explanation: Control involves putting plans into action, comparing actual performance with planned results, and taking corrective measures when…
Correct answer: control- A. marketing management
- B. production management
- C. staff management
- D. line management
Explanation: Human resources, information technology, and management accounting support the operating departments rather than directly producing or…
Correct answer: staff management- A. financial accounting
- B. management accounting
- C. cost accounting
- D. decision accounting
Explanation: Management accounting measures and analyzes both financial and non-financial information for internal planning, control, and…
Correct answer: management accounting- A. proprietorship
- B. functional line
- C. treasury
- D. controllership
Explanation: Treasury manages cash, investments, and short- and long-term financing, so it focuses on liquidity and funding decisions.
Correct answer: treasury