All Free Accounting MCQs with Answers

• A. Provincial governments
• B. Federal government
• C. State Bank of Pakistan
• D. Local municipal bodies

Explanation: Agricultural income tax falls within the provincial tax framework in Pakistan.

• A. To prevent the same income being taxed twice
• B. To eliminate all taxes on foreign income
• C. To increase customs duties on imports
• D. To replace domestic tax legislation

Explanation: A double taxation agreement allocates taxing rights and provides relief when the same income could be taxed in both countries.

• A. Customs value of the goods
• B. Number of employees importing goods
• C. Profit earned by the importer
• D. Physical age of the shipment

Explanation: An ad valorem duty is based on the assessed value of imported goods. A duty charged at a fixed amount per kilogram or unit is a specific…

• A. To prevent repeated taxation of the same value
• B. To exempt every business from sales tax
• C. To tax only the importing business
• D. To convert sales tax into income tax

Explanation: Input tax credit allows tax paid on business purchases to be adjusted against tax charged on sales.

• A. A minimum payment based on a prescribed measure such as turnover
• B. Complete exemption because profit is low
• C. Payment based only on the owner's personal assets
• D. Payment of customs duty instead of income tax

Explanation: Minimum tax provisions can require a business to pay a prescribed minimum amount even when its normal income tax is low or nil.

• A. It may be refunded or adjusted against another liability
• B. It automatically becomes a deductible business expense
• C. It is converted into customs duty
• D. It is permanently forfeited in every case

Explanation: An excess payment may generally be claimed as a refund or adjusted against a later or other tax liability, subject to verification and…

• A. Taxable perquisite
• B. Capital contribution
• C. Sales tax refund
• D. Non-taxable business loan

Explanation: The private use of an employer-provided vehicle gives the employee an economic benefit, commonly treated as a taxable perquisite.

• A. Horizontal equity
• B. Vertical equity
• C. Tax neutrality
• D. Administrative convenience

Explanation: Horizontal equity means that taxpayers in similar economic circumstances should receive similar tax treatment.

• A. Specific duty
• B. Ad valorem duty
• C. Capital gains tax
• D. Withholding tax

Explanation: A specific duty is imposed as a fixed amount per physical unit, such as a kilogram, litre or item.

• A. Minimal distortion of economic decisions
• B. The highest possible tax rate on income
• C. Different tax rates for identical taxpayers
• D. Collection of tax only from imports

Explanation: Tax neutrality seeks to raise revenue without unnecessarily changing choices about production, consumption or investment.

• A. Depreciation
• B. Physical deterioration of the asset
• C. Decrease in market value of the asset
• D. Valuation of an asset at a point of time

Explanation: Depreciation systematically allocates the cost of a fixed asset, after any residual value, as an expense over its useful life.

• A. Discount
• B. Voucher
• C. Allowance
• D. Price

Explanation: A voucher is written documentary evidence supporting a transaction, such as an invoice, receipt, or payment slip.

• A. Discount
• B. Cash discount
• C. Allowance
• D. Trading discount

Explanation: An allowance is a reduction granted because goods are defective, damaged, or otherwise unsatisfactory while the buyer keeps them.

• A. Capital
• B. Loan
• C. Drawing
• D. None of these

Explanation: Cash introduced by the owner increases the owner's capital, which represents the owner's claim on the business.

• A. Paid price
• B. Invoice price
• C. Book price
• D. Discount

Explanation: A discount is a reduction from the stated or list price of goods or services.

• A. Return received
• B. Return Payed
• C. Return inward
• D. Return outward

Explanation: Goods sent back by customers are sales returns, also called returns inward because the goods come back into the seller's business.

• A. Purchases
• B. Return inward
• C. Sales
• D. Return outwards

Explanation: When a trading business sells the goods in which it deals, the transaction is recorded as sales.

• A. Merchandise return
• B. Purchase return
• C. Return inwards
• D. Sales return

Explanation: Goods returned to a supplier are purchase returns, also called returns outward from the buyer's business.

• A. Liabilities
• B. Revenues
• C. Expenses
• D. Assets

Explanation: A business obligation is an amount it must pay or settle in the future, such as a loan or amount owed to a supplier.

• A. Capital
• B. Business
• C. Drawings
• D. All of themSearch Public Records

Explanation: The proprietor’s initial investment creates the owner’s capital, which represents the owner’s claim on the business.