All Free Accounting MCQs with Answers

• 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.

• 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.

• 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.

• 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…

• 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.

• A. Accounting
• B. Reading
• C. Book Keeping
• D. Auditing

Explanation: Bookkeeping is the systematic recording and maintenance of a business’s financial transactions.

• A. Accounting
• B. Accountancy
• C. Auditing
• D. Book Keeping

Explanation: Accounting involves recording, classifying, summarizing, and interpreting financial transactions in a systematic manner.

• 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.

• 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.

• 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…

• 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…

• 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.

• A. decentralization
• B. centralization
• C. autonomy
• D. congruency

Explanation: Autonomy refers to the degree of freedom lower-level managers have in making decisions.

• 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…

• 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.

• 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.

• 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…

• 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…

• 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…

• 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.