All Free Accounting MCQs with Answers

• A. The purchases account
• B. The sales account
• C. The creditors account
• D. The cash account

Explanation: The total of credit purchases of goods is posted to the debit of the purchases account.

• A. Bringing forward opening asset and liability balances
• B. Recording daily cash sales
• C. Recording routine credit purchases
• D. Entering cash received from a debtor

Explanation: An opening entry brings the balances of assets, liabilities and capital from the previous period into the new ledger.

• A. The debit of discount allowed account
• B. The credit of discount allowed account
• C. The debit of discount received account
• D. The credit of discount received account

Explanation: Discount allowed is an expense or loss to the business, so its account receives a debit entry.

• A. Bills accepted by customers in favour of the business
• B. Bills accepted by the business in favour of suppliers
• C. Cash purchases made from local suppliers
• D. Cheques issued to settle trade creditors

Explanation: The bills receivable book records bills received from debtors and accepted in favour of the business.

• A. The trial balance may still agree
• B. The trial balance must show a debit excess
• C. The trial balance must show a credit excess
• D. The cash account must become overdrawn

Explanation: Complete omission leaves both the debit and credit aspects unrecorded, so the two sides can still remain equal.

• A. Debit machinery and credit capital
• B. Debit capital and credit machinery
• C. Debit cash and credit capital
• D. Debit drawings and credit machinery

Explanation: The machinery is an asset received by the business, so machinery is debited.

• A. It is deducted before recording the net amount
• B. It is recorded separately as an expense
• C. It is credited to the trade discount account
• D. It is entered in the cash book when allowed

Explanation: Trade discount is deducted from the list price, and only the net invoice amount is recorded in the accounting books.

• A. Cash account
• B. Debtor's account
• C. Sales account
• D. Capital account

Explanation: The debtor's liability is reduced when payment is received, so the debtor's personal account is credited.

• A. Bank account
• B. Rent account
• C. Cash account
• D. Capital account

Explanation: Rent is an expense incurred by the business, so the rent account is debited. The bank account is credited because money leaves the bank.

• A. Purchases day book
• B. Sales day book
• C. Journal proper
• D. Cash book

Explanation: The purchases day book is restricted to credit purchases of goods for resale.

• A. Purchases account
• B. Hamid's account
• C. Cash account
• D. Sales account

Explanation: Hamid is the supplier and becomes a creditor, so his personal account is credited.

• A. Sales returns book
• B. Purchases returns book
• C. Journal proper
• D. Bills payable book

Explanation: A credit note received from a supplier usually confirms that goods have been returned to that supplier.

• A. Bills receivable book
• B. Bills payable book
• C. Purchases day book
• D. Journal proper

Explanation: An accepted bill creates an obligation for the business to pay later, making it a bill payable.

• A. Debit drawings and credit purchases
• B. Debit purchases and credit drawings
• C. Debit capital and credit sales
• D. Debit cash and credit drawings

Explanation: Goods taken for private use reduce the goods available for business, so purchases are credited.

• A. Customer's account
• B. Sales account
• C. Sales returns account
• D. Cash account

Explanation: A sales return reduces the business's sales revenue, so the sales returns account is debited.

• A. Payment to a supplier by cheque
• B. Cash received from a customer
• C. Discount allowed to a debtor
• D. Bank charges deducted by the bank

Explanation: Receipts of cash or bank funds are entered on the debit side of the cash book.

• A. To calculate gross profit
• B. To test arithmetical agreement of debits and credits
• C. To record daily transactions
• D. To prepare source documents

Explanation: A trial balance lists ledger balances to check whether total debits equal total credits.

• A. Purchases account
• B. Purchases returns account
• C. Suppliers account
• D. Sales returns account

Explanation: The purchases returns book records goods returned to suppliers, so its total is credited to the purchases returns account.

• A. Discount allowed account
• B. Discount received account
• C. Cash account
• D. Trade expenses account

Explanation: Discount received is an income or gain for the business, so the discount received account is credited with the total.

• A. A credit sale of trading goods
• B. A credit purchase of trading goods
• C. A transfer from one ledger account to another
• D. A return of goods to a supplier

Explanation: A transfer between ledger accounts does not represent a routine sale, purchase or return of goods, so it is recorded in the journal…