All Free Accounting MCQs with Answers
Every Accounting question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
1,971 questions · page 16 of 99
- A. Receipts
- B. Payments
- C. Income
- D. Expense
Explanation: Rent paid causes cash to leave the business, so it is recorded on the payments side of the cash book.
Correct answer: Payments302. Drawings by owner of business are generally recorded on which of the following side of a cash book?
- A. Receipts
- B. Payments
- C. Incomes
- D. Expenditures
Explanation: Drawings made in cash reduce the business's cash balance, so they are entered on the payments side of the cash book.
Correct answer: Payments303. A cash book that is used to record the small payments of cash is generally referred as_________?
- A. Simple cash book
- B. Two column cash book
- C. Three column cash book
- D. Petty cash book
Explanation: A petty cash book is specifically maintained for recording small, frequent cash payments such as postage, stationery and local travel.
Correct answer: Petty cash book- A. Bank
- B. Prepaid expenses
- C. Accounts receivable
- D. Creditor
Explanation: Unused postage stamps represent a future service already paid for, so they are treated as prepaid expenses until used.
Correct answer: Prepaid expenses- A. Receipts
- B. Payments
- C. Incomes
- D. Expenditures
Explanation: Buying office equipment for cash decreases cash, so the transaction is entered on the payments side of the cash book.
Correct answer: Payments- A. Bank
- B. Payments
- C. Discount
- D. Cash
Explanation: A simple or one-column cash book has only one amount column, the cash column.
Correct answer: Cash- A. Simple cash book
- B. Two column cash book
- C. Three column cash book
- D. Petty cash book
Explanation: A cash book containing cash and discount columns has two columns, so it is called a two-column cash book.
Correct answer: Two column cash book- A. Payee
- B. Payer
- C. Bank
- D. Seller
Explanation: The usual parties to a cheque are the drawer or payer, the drawee bank, and the payee.
Correct answer: Seller- A. Cash
- B. Bank balance
- C. Accounts receivable
- D. Cash reserve
Explanation: A postdated cheque cannot be encashed until its stated future date, so it is not treated as cash immediately.
Correct answer: Accounts receivable- A. Every day
- B. Every half year
- C. Every year
- D. At the end of every accounting period
Explanation: Under the imprest system, petty cash is restored to its fixed amount at the end of the accounting period, or when replenishment is…
Correct answer: At the end of every accounting period- A. Bank balance
- B. Cash at bank
- C. Bank overdraft
- D. Bank underdraft
Explanation: A credit balance in the bank column of the cash book means payments or withdrawals exceed the available bank balance.
Correct answer: Bank overdraft- A. Liability
- B. Asset
- C. Expenses
- D. Income
Explanation: The petty cash balance represents cash still held by the business, so it is a current asset.
Correct answer: Asset- A. Bank
- B. Accountant of business
- C. Manager of a company
- D. Bank's cashier
Explanation: The cash book is a book of original entry maintained for the business, normally by its accountant or accounting staff.
Correct answer: Accountant of business- A. Cash payments
- B. Cash receipts
- C. Cash payments and cash receipts
- D. Neither cash payments nor cash receipts
Explanation: A cash book records both cash received and cash paid, and may also include bank and discount columns.
Correct answer: Cash payments and cash receipts- A. Cash entry
- B. Contra entry
- C. Payment entry
- D. Compound entry
Explanation: A transaction recorded on both sides of the same cash book is a contra entry, such as cash deposited into the bank or cash withdrawn from…
Correct answer: Contra entry- A. $5000 will be credited
- B. $5000 will be debited
- C. $10,000 will be credited
- D. $10,000 will be debited
Explanation: The deposit has increased the bank column twice, so the duplicate $5,000 debit must be reversed by crediting $5,000 in the cash book.
Correct answer: $5000 will be credited- A. $1000 will be added to cash book balance
- B. $2000 will be deducted from cash book balance
- C. $3000 will be added to cash book balance
- D. $3000 will be subtracted from cash book balance
Explanation: Three bank payments of $1,000 each were omitted, so the cash book balance is overstated by $3,000 and must be reduced by crediting that…
Correct answer: $3000 will be subtracted from cash book balance- A. Credit balance
- B. Debit balance
- C. Bank overdraft
- D. Adjusted balance
Explanation: A favorable bank-statement balance is a credit balance from the bank's perspective, because the bank owes that amount to the account…
Correct answer: Credit balance- A. Unpresented checks
- B. Uncredited checks
- C. Outstanding checks
- D. Bounced checks
Explanation: A check that has reached the bank but has not yet been credited is an uncredited check.
Correct answer: Uncredited checks- A. $500 will be debited
- B. $500 will be credited
- C. Non-adjustable
- D. $1000 will be subtracted
Explanation: A bank debit advice means the bank has reduced the company's account, so the same reduction must be recorded by crediting the bank column…
Correct answer: $500 will be credited