All Free Accounting MCQs with Answers

• A. Credit balance
• B. Debit and credit balance
• C. Cash balance
• D. Debit balance

Explanation: An account's balance is determined by subtracting the smaller side from the larger side and naming the larger side.

• A. Journal
• B. Cash account
• C. Ledger account
• D. Balance sheet

Explanation: The ledger collects the debit and credit balances of all individual accounts, and these balances are used to prepare the trial balance.

• A. Cash
• B. Charity
• C. Purchases
• D. SalesBanking

Explanation: When goods are donated, the charity or donation account is debited as an expense, while Purchases is credited to remove the goods from the…

• A. Cash at bank
• B. Bank understatement
• C. Bank overdraft
• D. Balance overstatementCredit & Lending

Explanation: A debit balance in a bank account means deposits and other debit entries exceed withdrawals and credits, leaving cash available at the…

• A. Bank overdraft
• B. Cash at bank
• C. Bank balance
• D. Current Asset

Explanation: When the credit side exceeds the debit side, withdrawals have exceeded available bank funds, producing a credit balance called a bank…

• A. Increase
• B. Decrease
• C. Increase or decrease
• D. Appreciation

Explanation: An account is maintained to record both increases and decreases in the balance of an item, such as cash, capital, or a liability.

• A. Recording
• B. Transferring
• C. Posting
• D. Entry making

Explanation: Posting is the process of transferring debit and credit entries from the journal to their respective ledger accounts.

• A. Rent expenses account
• B. Rent income account
• C. insurance expenses account
• D. Cash account Accounting & Auditing

Explanation: Cash is a real account because it represents a tangible asset owned by the business.

• A. Machinery account
• B. Building account
• C. Creditors account
• D. Rent expenses account

Explanation: Rent expense is a nominal account because it records an expense and is closed to the income statement at the end of the accounting period.

• A. Recording entries in journal
• B. Recording entries in Ledger account
• C. Recording two aspects of every transaction
• D. Recording every transaction in books

Explanation: Double entry means every transaction is recorded through two equal aspects, such as a debit and a credit.

• A. Depreciation
• B. Drawings
• C. Outflow of cash
• D. Appreciation Hire Grant Writers

Explanation: Drawings are cash, goods, or other assets withdrawn by the owner for personal use, reducing the owner's capital.

• A. Cash and cash equivalent
• B. Creditors
• C. Notes payable
• D. Bank loan

Explanation: Cash and cash equivalents are current assets because they are cash or highly liquid investments readily convertible into cash.

• A. Cash from the business
• B. liability of a business
• C. Owner's claim on total assets
• D. Owner's claim on total liabilities

Explanation: Equity is the owner's residual claim after liabilities are deducted from total assets, expressed as Assets − Liabilities.

• A. Cash
• B. Equipment
• C. Debtors
• D. Creditors

Explanation: Creditors are amounts owed to suppliers and therefore represent a liability.

• A. Capital+Liabilities=Assets
• B. Assets+ liabilities =Capital
• C. Capital+assets=liabilities
• D. Liabilities+Capital Compare Credit Cards

Explanation: The accounting equation is Assets = Capital + Liabilities, showing that business resources are financed by the owner and outsiders.

• A. Long life of assets
• B. Value of assets
• C. Intangible nature of assets
• D. Future economic benefits

Explanation: An asset is recognised because it is expected to provide future economic benefits controlled by the business.

• A. Present event
• B. Future event
• C. Past event
• D. None of them

Explanation: A liability results from a past transaction or event that creates a present obligation, such as purchasing goods on credit.

• A. Possessed
• B. Owned
• C. Controlled
• D. Used

Explanation: Accounting recognises an asset when the business controls the resource and can obtain its future economic benefits, even if it does not…

• A. Expenses
• B. Obligations
• C. Creditors
• D. Income or gain

Explanation: Expenses are gross decreases in economic benefits during an accounting period, such as through using assets or incurring liabilities.

• A. Assets
• B. Liabilities
• C. Income
• D. Expenses Government & Public Sector Jobs

Explanation: Income is the gross inflow or increase in economic benefits from activities such as sales or service revenue.