All Free Accounting MCQs with Answers

• A. Discounting of the bill with the bank
• B. Payment of the bill on due date
• C. Remitting or receiving the amount
• D. Sending the bill to bank for collection

Explanation: An accommodation bill has no underlying trade transaction, so the party receiving the accommodation must remit funds or receive the…

• A. The drawer of the bill
• B. The person responsible for dishonour
• C. The holder of the bill
• D. The endorser of the bill

Explanation: Noting charges are ultimately recoverable from the party responsible for the dishonour, normally the acceptor or drawee.

• A. Acceptor's Account is debited in the books of drawer
• B. Bills Receivable Account is credited in the books of drawer
• C. Bank Account is debited in the books of drawer
• D. Bills Payable Account is debited in the books of drawer

Explanation: On dishonour, the drawer reverses the bank discounting transaction by debiting the acceptor and crediting the bank.

• A. 30th June,2018
• B. 1st July,2018
• C. 4th July,2018
• D. 4th August,2018Government Agencies

Explanation: Three calendar months from 1 April end on 1 July, and three days of grace are added to a bill payable after a period.

• A. 6441
• B. 5431
• C. 7150
• D. 5876

Explanation: Because the commission is calculated before charging commission, it is simply 11% of 65,000: 65,000 × 11% = 7,150.

• A. 6441
• B. 5431
• C. 7654
• D. 9876

Explanation: When commission is calculated after charging commission, the base amount is 111% of the commission, so commission = 65,000 × 11/111 =…

• A. Profit and Loss A/c
• B. Capitalized with work in progress
• C. Trading A/c
• D. Shown in Balance SheetAccounting & Auditing

Explanation: Carriage on purchases is carriage inward, a direct expense incurred to bring goods to the business.

• A. At the time of opening new books of account
• B. At the time of closing the accounts
• C. During the course of accounting period any time
• D. After certification of accounts

Explanation: Closing entries transfer revenue and expense balances to the Profit and Loss Account and ultimately to capital or retained earnings.

• A. Debts included in Sundry Debtors which are doubtful in nature
• B. Uncalled liability on partly paid shares
• C. Claims against the company not acknowledged as debts
• D. Arrears of fixed cumulative dividend

Explanation: Doubtful debts are an estimated loss or provision relating to receivables, not a contingent liability.

• A. Business entity concept
• B. Money measurement concept
• C. Going concern concept
• D. Matching concept

Explanation: The business entity concept treats the company as separate from its owners, so share capital represents the owners' claim against the…

• A. Prepaid expenses
• B. Trademark
• C. Discount on issue of shares
• D. Outstanding Salaries

Explanation: Outstanding salaries are expenses incurred but not yet paid, creating a short-term obligation and therefore a current liability.

• A. Current assets
• B. Intangible assets
• C. Deferred revenue expenditure
• D. Not an asset

Explanation: A computer merely taken on hire is normally treated as a hired service or lease expense rather than an owned asset in traditional…

• A. Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock
• B. Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock
• C. Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales
• D. Gross Profit - Opening Stock + Direct expenses + Purchases +Closing stock = Sales

Explanation: From the trading equation, Sales = Opening Stock + Purchases + Direct Expenses - Closing Stock + Gross Profit.

• A. Loss on sale of undertaking
• B. Debts considered bad and written off
• C. Liability arising from a breach of contract
• D. Director's remuneration

Explanation: Director's remuneration is deducted when arriving at net profit for calculating managerial remuneration.

• A. Sales - Cost of goods sold
• B. Sales - Closing Stock + Purchases
• C. Opening Stock + Purchases - Closing Stock
• D. None of the above

Explanation: Gross profit is the excess of sales over the cost of goods sold. Therefore, Gross Profit = Sales - Cost of Goods Sold; the other formula…

• A. Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and
• B. Profit and Loss Account respectively
• C. Deduct the 800 from closing stock in the Trading Account
• D. Credit insurance company for 600
• E. Debit of 600 and 200 to insurance company and Profit and Loss Account respectively and
• F. credit of 800 to Trading Account

Explanation: The full loss of goods costing 800 is removed from the Trading Account, while the accepted insurance claim of 600 is recovered from the…

• A. Adding 2,200 to closing stock
• B. Deducting 1,800 from closing stock and deducting 2,200 each from debtors and sales
• C. Adding 1,800 to closing stock and deducting 2,200 each from debtors and sales
• D. Deducting 1,800 from debtors

Explanation: Goods sent on approval remain inventory until approval, so stock must increase by their cost of 1,800.

• A. Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c
• B. Debit Accounts Payable A/c and Credit P&L A/c
• C. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c
• D. Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c

Explanation: Expected discount on accounts payable is an anticipated gain, so the reserve is debited and Profit and Loss Account is credited.

• A. Credited to P&L A/c
• B. Debited to P&L A/c
• C. Reduced from debtors in Balance Sheet
• D. Added to debtors in Balance Sheet

Explanation: Bad debts recovered are a recovery of an amount previously written off, so they are treated as income and credited to Profit and Loss…

• A. P&L A/C is debited with 1,400
• B. P&L A/C is debited with 1,200
• C. 200 is shown as current asset
• D. Both B. and C. above

Explanation: Only the amount relating to the current period is an expense: 1,400 minus the 200 prepaid equals 1,200 debited to P&L.