All Free Accounting MCQs with Answers

• A. Unknown Liabilities
• B. Known Liabilities
• C. Creation of Secret Reserves
• D. All the Three

Explanation: A provision is made for a known liability or loss whose exact amount or timing may be uncertain.

• A. Errors in cash book
• B. Errors in pass book
• C. Cheques deposited and cleared
• D. Cheques issued but not presented for payment

Explanation: A cheque deposited and cleared is credited by the bank and recorded in the Cash Book, so it normally creates no difference between the two…

• A. Surplus cash
• B. Bank Overdraft
• C. Terms deposits with bank
• D. None of theseOpen Savings Account

Explanation: A debit balance in the bank's pass book means the bank has debited the customer's account because withdrawals exceed the available…

• A. It bring out any errors committed in preparation of Cash book / Bank Pass Book
• B. Highlights under delay in clearance of cheques deposited but not credited
• C. Help know actual bank balance
• D. All the three

Explanation: Bank reconciliation can reveal errors in either book, identify cheques deposited but not yet credited, and establish the actual bank…

• A. Trial balance
• B. Cash book
• C. Bank A/c
• D. Cash as per cash book with bank balance as per bank pass book

Explanation: Bank reconciliation compares the cash balance recorded by the business with the corresponding bank balance shown in the pass book or bank…

• A. To rectify the mistakes in the Cash Book
• B. To arrive at the Bank Balance
• C. To arrive at the Cash Balance
• D. To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement

Explanation: The statement explains why the balance in the cash book differs from the balance in the bank statement.

• A. Cheque issued but not presented
• B. Cheque issued but dishonoured
• C. Cheque deposited and credited by bank
• D. Both A and B

Explanation: An issued cheque not yet presented remains recorded in the cash book but is not yet recorded by the bank, creating a difference.

• A. Credit side of Cash Book
• B. Debit side of Cash Book
• C. Debit side of Trial Balance
• D. Credit side of Balance Sheet

Explanation: The bank’s records are the reverse of the customer’s cash-book entries: money deposited is a credit in the cash book but a credit or…

• A. Surplus cash
• B. Bank overdraft
• C. Terms deposits with bank
• D. None of these

Explanation: A credit balance in the bank column of the cash book means payments or withdrawals exceed the available bank balance.

• A. Mistake in Cash Book
• B. Mistake in Pass Book
• C. Cheque issued but not presented for payment
• D. Cheques deposited but not cleared

Explanation: The adjusted cash book is corrected for entries or errors that should appear in the business’s own records, such as a cash-book mistake.

• A. Bank column of Cash Book
• B. Bank Pass Book
• C. Bank Statement
• D. Trial Balance

Explanation: Bank reconciliation requires the bank column of the cash book and the bank pass book or statement for comparison.

• A. Expenses for day to day running of the business
• B. Putting the new asset in working condition
• C. Depreciation
• D. Purchase of raw material

Explanation: Putting a newly acquired asset into working condition is necessary to bring it to its usable state, so it is added to the asset's cost as…

• A. Acquisition of an Asset
• B. Extension of an Asset
• C. Improvement of the existing Asset
• D. Maintenance of the Asset

Explanation: Maintenance merely preserves an existing asset's operating condition and does not increase its life, capacity, or efficiency, so it is…

• A. Repair of plant and machinery
• B. Salary paid to workers
• C. Cost of stand by equipment
• D. Annual whitewash of the office building

Explanation: Standby equipment is acquired for long-term use in the business and is recorded as a fixed asset, making its cost capital expenditure.

• A. Raw material consumed
• B. Plant purchased
• C. Long term loan raised from bank
• D. Share Capital

Explanation: Raw material consumed is used in producing goods during the current accounting period, so its cost is a revenue expense.

• A. sale is effected
• B. cash is received
• C. production is completed
• D. debts are collected

Explanation: Under the traditional realization principle, revenue is recognized when the sale is made and the earning process is substantially…

• A. Purchase register
• B. Purchase A/c
• C. Cash purchase A/c
• D. Credit purchase A/c

Explanation: The Purchase Day Book records credit purchases, and its periodic total is posted as one debit to Purchase Account.

• A. Sales A/c
• B. Cash sales A/c
• C. Sales return A/c
• D. Credit sales A/c

Explanation: The Sales Day Book records credit sales, and its periodic total is posted as one credit to Sales Account.

• A. Cash journal
• B. Purchase journal
• C. Debtors journal
• D. Sales journal

Explanation: Purchase, sales, and cash journals are standard special-purpose books for recording recurring classes of transactions.

• A. Subsidiary books
• B. Journal
• C. Ledger
• D. Trial Balance

Explanation: A ledger is the principal book in which separate accounts for assets, liabilities, income, expenses and capital are opened and maintained.