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 22 of 99
- A. Interest on loans and debentures
- B. Annual fire insurance premiums on Plant and Equipment
- C. Sales tax paid in connection with the purchase of office equipment
- D. Small expenditures on long- lived assets, such as ` 20 for a paper weight.
Explanation: Sales tax paid to acquire office equipment is directly attributable to its purchase and forms part of the equipment's capital cost.
Correct answer: Sales tax paid in connection with the purchase of office equipment- A. Mistake in balancing an account
- B. Omitting to record a transaction entirely in the subsidiary books
- C. Recording of a wrong entry in the subsidiary books
- D. Posting an entry on the correct side but in the wrong account
Explanation: An error in balancing an account can place an incorrect balance in the Trial Balance and make its totals disagree.
Correct answer: Mistake in balancing an account- A. The Trial Balance will not agree
- B. The balance of creditors is understated
- C. The purchases are understated
- D. The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book
Explanation: The cash book records a payment that is 1,800 lower than the amount actually debited by the bank, so the pass-book balance is 1,800 less…
Correct answer: The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book- A. All purchases of goods
- B. All credit purchases of goods
- C. All credit purchases
- D. None of these
Explanation: The purchase journal records credit purchases of goods purchased for resale.
Correct answer: All credit purchases of goods- A. Credit to wage expense for ` 64,000
- B. Debit to wage expense for ` 64,000
- C. Debit to wage expense for ` 51,000
- D. Debit to wage expense for ` 13,000
Explanation: The current year’s omitted accrual is 64,000, but the prior year’s omitted accrual of 51,000 must be adjusted through the previous-period…
Correct answer: Debit to wage expense for ` 13,000426. If goods worth 1,750 returned to a supplier is wrongly entered in sales return book as 1,570, then
- A. Net Profit will decrease by 3,140
- B. Gross Profit will increase by 3,320
- C. Gross Profit will decrease by 3,500
- D. Gross Profit will decrease by 3,320
Explanation: The incorrect entry reduces sales by 1,570, whereas the correct purchase return should reduce purchases by 1,750.
Correct answer: Gross Profit will decrease by 3,320- A. Errors which affect one account can be errors of posting
- B. Errors of omission arise when any transaction is left to be recorded
- C. Errors of carry forward from one year to another year affect both Personal and Real A/c
- D. Errors of commission arise when any transaction is recorded in a fundamentally incorrect manner
Explanation: An error of commission is a clerical mistake such as posting to the wrong account or entering the wrong amount; a fundamentally incorrect…
Correct answer: Errors of commission arise when any transaction is recorded in a fundamentally incorrect manner- A. The Trial Balance is prepared after preparing the Profit and Loss Account
- B. The Trial Balance shows only balances of Assets and Liabilities
- C. The Trial Balance shows only nominal account balances
- D. The Trial Balance has no statutory importance from the point of view of law
Explanation: A trial balance is an internal check of debit and credit equality, not a statement with independent statutory authority under company law.
Correct answer: The Trial Balance has no statutory importance from the point of view of law- A. It is already adjusted in the opening stock
- B. It is adjusted in the Purchase A/c
- C. It is adjusted in the Cost of Sale A/c
- D. It is adjusted in the Profit &Loss A/c
Explanation: When closing stock is included in the trial balance, it has already been adjusted through the Purchases Account, usually by crediting…
Correct answer: It is adjusted in the Purchase A/c- A. Credit purchase of fixed assets
- B. Return of goods
- C. All such transactions for which no special journal has been kept by the business
- D. None of these
Explanation: Journal proper records transactions for which no specialised book, such as the purchases, sales, or returns journal, has been maintained.
Correct answer: All such transactions for which no special journal has been kept by the business- A. Sale of ` 100 was recorded in the Purchases Journal
- B. Wages paid to Mohan have been debited to his account
- C. The total of the sales journal has not been posted to the Sales Account
- D. Repairs to buildings have been debited to buildings account
Explanation: Failing to post the sales journal total to the Sales Account omits the credit entry, so it is an error of omission.
Correct answer: The total of the sales journal has not been posted to the Sales Account- A. Error of commission
- B. Error of principle
- C. Error of omission
- D. Compensating error
Explanation: Repairs are revenue expenditure and should be debited to Repairs Expense, not to the Buildings Account, which represents capital…
Correct answer: Error of principle- A. Dividend
- B. Royalty
- C. Purchase consideration
- D. Installment
Explanation: Royalty is the consideration paid for using rights owned by another person, such as copyright, patents, or mineral rights.
Correct answer: Royalty- A. They must be followed by reversing entries
- B. They transfer the balances in all of the Nominal Accounts to the Trading and Profit and Loss Account
- C. They must be made after the reversing entries but before the adjusting entries
- D. They must be made after the adjusting entries but before the reversing entries
Explanation: Closing entries transfer nominal account balances to Trading and Profit and Loss Account after adjustments have been recorded.
Correct answer: They must be made after the adjusting entries but before the reversing entries- A. Masood's account
- B. Cash account
- C. Cash account and Gagan's account
- D. None of these
Explanation: Posting an amount to the credit side of Masood's personal account directly changes Masood's account, regardless of whether that posting is…
Correct answer: Masood's account- A. Scrap value
- B. Residual value
- C. Market value
- D. Depreciable value
Explanation: Depreciable value is the asset's cost less its residual value, and this is the maximum amount that can be depreciated.
Correct answer: Depreciable value- A. Assets accounts
- B. liability accounts
- C. Cash accounts
- D. Revenue accounts
Explanation: A chart of accounts commonly begins with assets, followed by liabilities, equity, revenue and expenses.
Correct answer: Assets accounts- A. Recording the transaction
- B. Identifying the transaction
- C. Posting the transaction
- D. Preparing the source documents
Explanation: Accounting begins by identifying an event as a transaction that affects the business financially; only then is it recorded from the…
Correct answer: Identifying the transaction- A. Capital account
- B. Fixed assets account
- C. Building account
- D. Cash account
Explanation: Purchasing a building for cash increases the Building account and decreases Cash.
Correct answer: Cash account- A. Alphabetical order
- B. Numeric order
- C. Bullets order
- D. Chronological order
Explanation: Journal entries are recorded in chronological order, meaning transactions are entered according to the dates on which they occur.
Correct answer: Chronological order