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 24 of 99
- A. Increase
- B. Reduce
- C. apportion
- D. Overstate
Explanation: Paying an expense usually involves paying cash, so assets decrease. The expense also reduces profit and therefore equity, but the question…
Correct answer: Reduce- A. Increase assets and decrease assets
- B. Increase assets and decrease liabilities
- C. Increase assets and increase capital
- D. Increase assets and increase cash
Explanation: Collecting a receivable changes one asset into another: cash increases while accounts receivable decreases.
Correct answer: Increase assets and decrease assets- A. Gains
- B. Depreciation
- C. Expenses
- D. Capital expenditures
Explanation: Net income is calculated as revenues minus expenses, with gains and losses treated separately where applicable.
Correct answer: Expenses464. If the business's owner withdraws cash for his/her personal use what will be the effect on capital?
- A. Increase in capital
- B. Remain the same
- C. Decrease in capital
- D. No effect on capital
Explanation: Owner withdrawals are drawings, not business expenses, but they reduce the owner's claim on the business.
Correct answer: Decrease in capital- A. Drawings
- B. Income
- C. Gains
- D. Fresh capital
Explanation: Drawings are withdrawals by the owner and reduce the owner's equity. Income and gains increase capital, while fresh capital directly…
Correct answer: Drawings- A. $4000
- B. $6000
- C. $7000
- D. $3000
Explanation: Using Assets = Liabilities + Capital, assets equal $5,000 + $1,000 = $6,000.
Correct answer: $6000- A. Asset=Expense +Income
- B. Assets=Cash+Capital
- C. Assets=Capital+Liabilities
- D. Assets=Expenses+Capital
Explanation: The basic accounting equation states that the resources of a business, or assets, are financed by liabilities and the owner's capital.
Correct answer: Assets=Capital+Liabilities- A. Balance c/d
- B. Balance b/d
- C. Balance e/d
- D. Balance f/c
Explanation: Balance c/d means balance carried down and represents the balance determined at the end of the accounting period.
Correct answer: Balance c/d- A. Nominal accounts
- B. Balance sheet accounts
- C. Real accounts
- D. None of them
Explanation: Nominal accounts record temporary items such as revenues, expenses, gains and losses, so they are closed into the profit and loss account…
Correct answer: Nominal accounts- A. Office equipment
- B. Rent expenses
- C. Rent income
- D. Insurance expense
Explanation: Office equipment is a tangible asset, so it is classified as a real account.
Correct answer: Office equipment- A. General journal
- B. Real accounts
- C. Ledger accounts
- D. Cash accounts
Explanation: The ledger groups transactions into individual accounts, allowing similar transactions to be classified and summarized according to their…
Correct answer: Ledger accounts- A. Nominal
- B. Real
- C. Cash
- D. Capital
Explanation: Office equipment represents a tangible business asset, so its account is a real account.
Correct answer: Real- A. Nominal
- B. Real
- C. Cash
- D. Capital
Explanation: A building is a tangible fixed asset owned by the business, so the building account is classified as a real account.
Correct answer: Real- A. Expenses
- B. Revenues
- C. Capital
- D. Drawing
Explanation: In the broad balance-sheet classification used in basic accounting, real accounts include assets, liabilities, and capital, all of which…
Correct answer: Capital- A. Nominal accounts
- B. Real account
- C. Cash accounts
- D. Banks accountHire An Accountant
Explanation: Revenue and expense accounts are nominal accounts because they record income and costs for a particular accounting period and are then…
Correct answer: Nominal accounts- A. Credit balance
- B. Cash balance
- C. Overdraft
- D. Debit balanceCompare Personal Loans
Explanation: Rent is an expense, and expenses normally increase on the debit side under the rules of double-entry bookkeeping.
Correct answer: Debit balanceCompare Personal Loans- A. Debit increases the capital account balance
- B. Credit increases the capital account balance
- C. Fresh capital increases the capital account balance
- D. Net income increases the capital account balance
Explanation: Capital normally has a credit balance, so a credit, fresh investment, or net income increases it.
Correct answer: Debit increases the capital account balance- A. Debit balance
- B. Credit balance
- C. Cash balance
- D. Neither debit nor credit balance
Explanation: Liabilities represent claims against the business and increase when credited, so their normal balance is credit.
Correct answer: Credit balance- A. Credit balance
- B. Debit balance
- C. Cash balance
- D. Neither debit nor credit balance
Explanation: Assets increase on the debit side and decrease on the credit side, giving asset accounts a normal debit balance.
Correct answer: Debit balance- A. Credit balance
- B. Debit balance
- C. Cash balance
- D. Neither debit nor credit balanceCompare Personal Loans
Explanation: Capital is the owner's claim on the business and normally increases through credits, including additional investment and profit.
Correct answer: Credit balance