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.
Last updated
351 questions · page 5 of 18
- A. manager ship
- B. controllership
- C. proprietorship
- D. functional lineGet Executive Coaching
Explanation: Controllership provides financial information and oversees accounting systems, records, reporting, and internal control.
Correct answer: controllership- A. chief financial officer
- B. chief manager
- C. chief line function
- D. chief staff functionCompare Credit Cards
Explanation: The chief financial officer is the senior officer responsible for an organization’s financial operations, including finance, reporting…
Correct answer: chief financial officer- A. external accounting
- B. internal accounting
- C. business accounting
- D. financial accounting
Explanation: Financial accounting records business transactions and prepares reports under generally accepted accounting principles for users such as…
Correct answer: financial accounting- A. cost accounting
- B. decision accounting
- C. financial accounting
- D. management accounting
Explanation: Financial accounting produces general-purpose reports for external users, including shareholders, lenders and government agencies.
Correct answer: financial accounting- A. organization
- B. alternation
- C. planning
- D. valuing
Explanation: Planning involves setting organizational goals, forecasting alternatives, and communicating the chosen objectives.
Correct answer: planning- A. asset function
- B. investment function
- C. line function
- D. staff function
Explanation: A management accountant usually advises and supports managers rather than directly commanding operating activities, so the role is a staff…
Correct answer: staff function- A. benefit approach
- B. cost approach
- C. cost-benefit approach
- D. accounting approachHire An Accountant
Explanation: A cost-benefit approach compares the expected benefits of an accounting system or decision with its expected costs, and is acceptable when…
Correct answer: cost-benefit approach88. In an accounting system, the document which supports journal entries is classified as _____________?
- A. cost document
- B. priced document
- C. source document
- D. direct document
Explanation: A source document provides the original evidence for a transaction, such as an invoice, receipt, or voucher, and supports the related…
Correct answer: source document- A. lead value of money
- B. storage value of money
- C. time value of money
- D. cash value of money
Explanation: The time value of money means a sum available today is worth more than the same sum received later because today’s money can earn a…
Correct answer: time value of money- A. 27.28%
- B. 25.28%
- C. 22.28
- D. 21.28
Explanation: The nominal rate combines the real rate and inflation: (1.16 × 1.08) − 1 = 25.28%.
Correct answer: 25.28%- A. real rate of return
- B. required rate of return
- C. nominal rate of return
- D. none of above
Explanation: The real rate of return excludes the effect of inflation and reflects the underlying return required for the investment’s risk and use of…
Correct answer: real rate of return- A. net investment parity
- B. inflation
- C. purchasing parity
- D. buying parity
Explanation: Inflation is a general rise in prices that reduces the purchasing power of money.
Correct answer: inflation- A. company structure
- B. organization structure
- C. line of authority
- D. line of responsibility
Explanation: An organization structure sets out authority, reporting relationships, and lines of responsibility within a company.
Correct answer: organization structure- A. Sinking Fund Method
- B. Annuity Method
- C. Sum of Year Digits Method
- D. None of these
Explanation: Under the depreciation fund method, equal annual amounts are invested to accumulate funds for replacing the asset, so it is also called…
Correct answer: Sinking Fund Method- A. Amortization
- B. Loan Payment
- C. Liability
- D. Securitization
Explanation: Amortization is the systematic repayment of a loan through regular installments containing both interest and principal.
Correct answer: Amortization- A. I
- B. T
- C. H
- D. None
Explanation: An account is commonly illustrated as a capital T, with the account title at the top and debit and credit sides on the left and right.
Correct answer: T- A. Petty cash
- B. Cash book
- C. Cash receipt
- D. Discount
Explanation: The petty cash system is the most common imprest system because a fixed amount is advanced for small expenses and restored periodically to…
Correct answer: Petty cash- A. Cash book
- B. Two columns cash book
- C. Three columns cash book
- D. Petty cash book
Explanation: A cash book containing cash, bank and discount columns has three principal columns, so it is called a three-column cash book.
Correct answer: Three columns cash book- A. Receipts
- B. Payments
- C. Incomes
- D. Expenditures
Explanation: Capital introduced by the owner increases the business's cash, so it is entered on the receipts side of the cash book.
Correct answer: Receipts- A. Lump sum
- B. Prompt
- C. Actual
- D. None of them
Explanation: Cash discount is offered to encourage prompt repayment of a debt, usually within a specified credit period.
Correct answer: Prompt