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 87 of 99
- A. Debit Ahmed Rs. 5,400 and credit Suspense Rs. 5,400
- B. Debit Suspense Rs. 5,400 and credit Ahmed Rs. 5,400
- C. Debit Ahmed Rs. 6,000 and credit Sales Rs. 6,000
- D. Debit Sales Rs. 5,400 and credit Ahmed Rs. 5,400
Explanation: Ahmed's account is short-debited by Rs. 5,400, while the Sales Account is correct.
Correct answer: Debit Ahmed Rs. 5,400 and credit Suspense Rs. 5,400- A. Debit Customer Rs. 4,800 and credit Suspense Rs. 4,800
- B. Debit Suspense Rs. 4,800 and credit Customer Rs. 4,800
- C. Debit Cash Rs. 4,800 and credit Customer Rs. 4,800
- D. Debit Customer Rs. 4,800 and credit Cash Rs. 4,800
Explanation: The cash receipt has already increased Cash, but the customer's account still needs a credit.
Correct answer: Debit Suspense Rs. 4,800 and credit Customer Rs. 4,800- A. Debit Supplier Rs. 3,200 and credit Suspense Rs. 3,200
- B. Debit Suspense Rs. 3,200 and credit Supplier Rs. 3,200
- C. Debit Supplier Rs. 3,200 and credit Cash Rs. 3,200
- D. Debit Cash Rs. 3,200 and credit Supplier Rs. 3,200
Explanation: The Cash Book already contains the credit, but the supplier's account lacks the corresponding debit.
Correct answer: Debit Supplier Rs. 3,200 and credit Suspense Rs. 3,200- A. Debit Rent Rs. 2,700 and credit Suspense Rs. 2,700
- B. Debit Suspense Rs. 2,700 and credit Rent Rs. 2,700
- C. Debit Rent Rs. 5,200 and credit Cash Rs. 5,200
- D. Debit Cash Rs. 2,700 and credit Rent Rs. 2,700
Explanation: Rent is over-debited by Rs. 2,700, so it must be credited by that excess amount.
Correct answer: Debit Suspense Rs. 2,700 and credit Rent Rs. 2,700- A. The debit total exceeds the credit total by Rs. 13,500
- B. The credit total exceeds the debit total by Rs. 13,500
- C. The trial balance remains equal because both accounts are posted
- D. The debit total exceeds the credit total by Rs. 15,000
Explanation: The customer's debit is short by Rs. 13,500, while the Sales credit is correct. Therefore, total credits exceed total debits by Rs.
Correct answer: The credit total exceeds the debit total by Rs. 13,500- A. The trial balance disagrees by Rs. 18,000
- B. The trial balance agrees, but Furniture and the supplier are understated
- C. The trial balance agrees, but Furniture is overstated
- D. The trial balance disagrees by Rs. 20,000
Explanation: Both the debit and credit are understated by Rs. 18,000, so the trial balance still agrees.
Correct answer: The trial balance agrees, but Furniture and the supplier are understated- A. Debit Suspense Rs. 6,300 and credit Stationery Rs. 6,300
- B. Debit Stationery Rs. 6,300 and credit Suspense Rs. 6,300
- C. Debit Cash Rs. 6,300 and credit Stationery Rs. 6,300
- D. Debit Stationery Rs. 1,800 and credit Cash Rs. 1,800
Explanation: Stationery is over-debited by Rs. 6,300, so the excess debit is removed by crediting Stationery.
Correct answer: Debit Suspense Rs. 6,300 and credit Stationery Rs. 6,300- A. Error of complete omission
- B. Error of commission
- C. Error of principle
- D. Compensating error
Explanation: The transaction is recorded, but one ledger account is not posted, which is an error of commission in this classification.
Correct answer: Error of commission- A. The books must contain no further error
- B. A credit entry of Rs. 1,250 is still required in Suspense
- C. A debit entry of Rs. 1,250 is still required in Suspense
- D. The amount should be transferred to Capital Account
Explanation: A debit balance means Suspense still has more debits than credits by Rs. 1,250.
Correct answer: A credit entry of Rs. 1,250 is still required in Suspense- A. Debit Suspense Rs. 14,000 and credit Trial Balance Difference Rs. 14,000
- B. Debit Trial Balance Difference Rs. 7,000 and credit Suspense Rs. 7,000
- C. Debit Suspense Rs. 7,000 and credit Trial Balance Difference Rs. 7,000
- D. Debit the relevant account Rs. 7,000 and credit Suspense Rs. 7,000
Explanation: The debit balance should have increased the debit total by Rs. 7,000 but instead increased the credit total by Rs. 7,000.
Correct answer: Debit Suspense Rs. 14,000 and credit Trial Balance Difference Rs. 14,000- A. The trial balance does not agree
- B. Cash and sales are both understated
- C. Debtors and sales are both overstated
- D. The trial balance agrees, but cash is understated
Explanation: The Sales Book posting credits Sales and debits the debtors account, while the Cash Account receives no debit.
Correct answer: The trial balance agrees, but cash is understated- A. Debit Bank Charges, credit Bank Account
- B. Debit Bank Account, credit Bank Charges
- C. Debit Suspense, credit Bank Charges
- D. Debit Bank Charges, credit Suspense Account
Explanation: Bank charges are an expense, so Bank Charges Account is debited. The bank balance decreases, requiring a credit to Bank Account.
Correct answer: Debit Bank Charges, credit Bank Account- A. General Reserve Account
- B. Profit and Loss Adjustment Account
- C. Suspense Account
- D. Current Trading Account
Explanation: A prior-period error is normally corrected through the Profit and Loss Adjustment Account so that the current period's ordinary profit is…
Correct answer: Profit and Loss Adjustment Account- A. Debit Suspense Rs. 1,200, credit Discount Allowed Rs. 1,200
- B. Debit Discount Allowed Rs. 1,200, credit Suspense Rs. 1,200
- C. Debit Discount Received Rs. 1,200, credit Suspense Rs. 1,200
- D. Debit Discount Allowed Rs. 1,200, credit Cash Rs. 1,200
Explanation: Discount Allowed has a debit balance, so it must be debited to bring its omitted amount into the trial balance.
Correct answer: Debit Discount Allowed Rs. 1,200, credit Suspense Rs. 1,200- A. To allocate its depreciable amount over its useful life
- B. To record its replacement cost at each year-end
- C. To estimate its selling price at the reporting date
- D. To accumulate cash for purchasing a new asset
Explanation: Depreciation systematically allocates the asset's depreciable amount over the periods that receive its benefits.
Correct answer: To allocate its depreciable amount over its useful life- A. Rs. 560,000
- B. Rs. 640,000
- C. Rs. 1,040,000
- D. Rs. 240,000
Explanation: Carrying amount equals the asset's cost less accumulated depreciation and accumulated impairment losses. Thus, Rs. 800,000 minus Rs.
Correct answer: Rs. 560,000- A. Rs. 16,000
- B. Rs. 20,000
- C. Rs. 24,000
- D. Rs. 80,000
Explanation: The first-year depreciation is Rs. 20,000, leaving a carrying amount of Rs. 80,000. Second-year depreciation is 20% of Rs.
Correct answer: Rs. 16,000- A. It increases in every future period
- B. It decreases over the remaining useful life
- C. It remains unchanged until disposal
- D. It becomes an immediate capital gain
Explanation: Depreciation is based on cost less residual value. A higher residual value reduces the depreciable amount, so future depreciation expense…
Correct answer: It decreases over the remaining useful life1739. Which type of asset is generally not depreciated because it normally has an unlimited useful life?
- A. Leasehold building
- B. Office equipment
- C. Freehold land
- D. Delivery vehicle
Explanation: Freehold land generally has an unlimited useful life and is therefore not depreciated.
Correct answer: Freehold land- A. Rs. 20,000 gain
- B. Rs. 20,000 loss
- C. Rs. 40,000 gain
- D. Rs. 40,000 loss
Explanation: The asset's carrying amount is Rs. 120,000, calculated as Rs. 300,000 minus Rs. 180,000. Selling it for Rs. 140,000 produces a gain of Rs.
Correct answer: Rs. 20,000 gain