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 86 of 99
- A. It causes the debit total to exceed the credit total
- B. It causes the credit total to exceed the debit total
- C. It does not affect the agreement of the trial balance
- D. It creates a permanent debit balance in suspense
Explanation: A complete omission leaves both the debit and credit aspects unrecorded.
Correct answer: It does not affect the agreement of the trial balance- A. Complete omission of a business transaction
- B. Posting only one side of a double entry
- C. Recording a capital item as a revenue item
- D. Making two equal and opposite errors
Explanation: Posting only one side records an unequal amount in the ledger, so the trial balance fails to agree.
Correct answer: Posting only one side of a double entry- A. Debit Suspense Account Rs. 4,000
- B. Credit Suspense Account Rs. 4,000
- C. Debit Purchases Account Rs. 4,000
- D. Credit Purchases Account Rs. 4,000
Explanation: The purchases account has been debited by Rs. 4,000 less than required.
Correct answer: Debit Purchases Account Rs. 4,000- A. Error of complete omission
- B. Error of commission
- C. Error of principle
- D. Compensating error
Explanation: A machine is a capital asset, whereas purchases normally represent goods bought for resale.
Correct answer: Error of principle- A. Errors of original entry
- B. Errors of principle
- C. Compensating errors
- D. Errors of complete omission
Explanation: Compensating errors offset one another in amount and effect on the trial balance.
Correct answer: Compensating errors- A. A credit balance equal to the difference
- B. A debit balance equal to the difference
- C. A nil balance before rectification
- D. A balance equal to total capital
Explanation: When credits exceed debits, the debit side is short by the difference. Suspense is placed on the shorter debit side, so it shows a debit…
Correct answer: A debit balance equal to the difference- A. Debit Cash Rs. 7,500 and credit Suspense Rs. 7,500
- B. Debit Suspense Rs. 7,500 and credit Cash Rs. 7,500
- C. Debit Creditor Rs. 7,500 and credit Cash Rs. 7,500
- D. Debit Cash Rs. 7,500 and credit Creditor Rs. 7,500
Explanation: The creditor's account already contains the correct debit, but the credit to cash is missing.
Correct answer: Debit Suspense Rs. 7,500 and credit Cash Rs. 7,500- A. The debit total exceeds the credit total by Rs. 8,100
- B. The credit total exceeds the debit total by Rs. 8,100
- C. The trial balance remains in agreement
- D. The suspense account shows a debit of Rs. 9,000
Explanation: The incorrect amount is posted to both the customer's account and the Sales Account. Although both accounts are understated by Rs.
Correct answer: The trial balance remains in agreement- A. It is an error of principle that may not affect the trial balance
- B. It is an error of omission that always creates suspense
- C. It is an error of commission that makes debits exceed credits
- D. It is a compensating error that requires two wrong entries
Explanation: The transaction is recorded in the wrong type of account because disposal proceeds are not ordinary sales revenue.
Correct answer: It is an error of principle that may not affect the trial balance- A. It should retain a debit balance for future adjustments
- B. It should retain a credit balance as a control account
- C. It should have a nil balance after correction
- D. It should be transferred to the capital account
Explanation: A suspense account is temporary and holds the unexplained trial balance difference.
Correct answer: It should have a nil balance after correction- A. Debit Supplier Rs. 360 and credit Purchases Rs. 360
- B. Debit Purchases Rs. 360 and credit Supplier Rs. 360
- C. Debit Suspense Rs. 360 and credit Supplier Rs. 360
- D. Debit Supplier Rs. 8,040 and credit Purchases Rs. 8,040
Explanation: Both accounts are overstated by Rs. 360, so the supplier is debited and Purchases is credited to reduce them.
Correct answer: Debit Supplier Rs. 360 and credit Purchases Rs. 360- A. Debit Sales Rs. 2,700 and credit Suspense Rs. 2,700
- B. Debit Suspense Rs. 2,700 and credit Sales Rs. 2,700
- C. Debit Sales Rs. 2,700 and credit Cash Rs. 2,700
- D. Debit Suspense Rs. 5,400 and credit Sales Rs. 5,400
Explanation: An undercast sales book means Sales Account has been credited too little. Sales is credited with Rs.
Correct answer: Debit Suspense Rs. 2,700 and credit Sales Rs. 2,700- A. Debit Supplier Rs. 12,000 and credit Suspense Rs. 12,000
- B. Debit Suspense Rs. 12,000 and credit Supplier Rs. 12,000
- C. Debit Purchases Rs. 12,000 and credit Supplier Rs. 12,000
- D. Debit Supplier Rs. 12,000 and credit Purchases Rs. 12,000
Explanation: Purchases has already received its debit, but the supplier still needs a credit of Rs. 12,000.
Correct answer: Debit Suspense Rs. 12,000 and credit Supplier Rs. 12,000- A. Debit Suspense Rs. 5,000 and credit Debtor Rs. 5,000
- B. Debit Debtor Rs. 10,000 and credit Suspense Rs. 10,000
- C. Debit Suspense Rs. 10,000 and credit Debtor Rs. 10,000
- D. Debit Debtor Rs. 5,000 and credit Cash Rs. 5,000
Explanation: The debtor was wrongly debited by Rs. 5,000 and should instead be credited by Rs. 5,000. A credit of Rs.
Correct answer: Debit Suspense Rs. 10,000 and credit Debtor Rs. 10,000- A. Debit Rent Rs. 3,600 and credit Insurance Rs. 3,600
- B. Debit Insurance Rs. 3,600 and credit Rent Rs. 3,600
- C. Debit Suspense Rs. 3,600 and credit Insurance Rs. 3,600
- D. Debit Insurance Rs. 7,200 and credit Rent Rs. 7,200
Explanation: The amount is already recorded on the correct side, but in the wrong expense account.
Correct answer: Debit Insurance Rs. 3,600 and credit Rent Rs. 3,600- A. A debit balance of Rs. 4,500
- B. A credit balance of Rs. 4,500
- C. A debit balance of Rs. 183,500
- D. A credit balance of Rs. 183,500
Explanation: The debit total exceeds the credit total by Rs. 4,500. A credit balance in Suspense brings the credit side up to the debit total.
Correct answer: A credit balance of Rs. 4,500- A. Debit Returns Inward Rs. 3,000 and credit Sales Rs. 3,000
- B. Debit Sales Rs. 3,000 and credit Returns Inward Rs. 3,000
- C. Debit Returns Inward Rs. 3,000, debit Sales Rs. 3,000 and credit Suspense Rs. 6,000
- D. Debit Suspense Rs. 6,000 and credit Returns Inward Rs. 6,000
Explanation: Returns Inward needs a debit of Rs. 3,000, while the incorrect credit to Sales must be cancelled by a debit of Rs. 3,000.
Correct answer: Debit Returns Inward Rs. 3,000, debit Sales Rs. 3,000 and credit Suspense Rs. 6,000- A. Debit Supplier Rs. 2,200 and credit Suspense Rs. 2,200
- B. Debit Suspense Rs. 4,400 and credit Supplier Rs. 4,400
- C. Debit Supplier Rs. 4,400 and credit Suspense Rs. 4,400
- D. Debit Purchase Returns Rs. 2,200 and credit Supplier Rs. 2,200
Explanation: The supplier should have been debited by Rs. 2,200 but was credited by that amount. A debit of Rs.
Correct answer: Debit Supplier Rs. 4,400 and credit Suspense Rs. 4,400- A. Debit Wages Rs. 1,800 and credit Suspense Rs. 1,800
- B. Debit Suspense Rs. 1,800 and credit Wages Rs. 1,800
- C. Debit Wages Rs. 4,600 and credit Cash Rs. 4,600
- D. Debit Suspense Rs. 6,400 and credit Wages Rs. 6,400
Explanation: Wages is short-debited by Rs. 1,800, calculated as Rs. 6,400 less Rs. 4,600.
Correct answer: Debit Wages Rs. 1,800 and credit Suspense Rs. 1,800- A. Debit Purchases Rs. 11,000 and credit Supplier Rs. 11,000
- B. Debit Supplier Rs. 11,000 and credit Purchases Rs. 11,000
- C. Debit Suspense Rs. 11,000 and credit Purchases Rs. 11,000
- D. Debit Cash Rs. 11,000 and credit Supplier Rs. 11,000
Explanation: The duplicate entry has overstated both Purchases and the supplier's liability by Rs. 11,000.
Correct answer: Debit Supplier Rs. 11,000 and credit Purchases Rs. 11,000