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 92 of 99
- A. Rs. 630,000
- B. Rs. 900,000
- C. Rs. 270,000
- D. Rs. 1,170,000
Explanation: A non-current asset is reported at cost less accumulated depreciation. Therefore, the building's carrying amount is Rs. 900,000 minus Rs.
Correct answer: Rs. 630,000- A. Rs. 55,000
- B. Rs. 60,000
- C. Rs. 65,000
- D. Rs. 70,000
Explanation: Net profit is calculated by deducting all listed expenses from gross profit: Rs. 95,000 minus Rs. 35,000 equals Rs. 60,000.
Correct answer: Rs. 60,000- A. Trade receivables
- B. Bank overdraft
- C. Prepaid insurance
- D. Office equipment
Explanation: A bank overdraft is normally repayable on demand and is therefore shown as a current liability.
Correct answer: Bank overdraft- A. Drawings increase and purchases decrease
- B. Sales increase and drawings decrease
- C. Capital increases and purchases increase
- D. Expenses increase and sales decrease
Explanation: Goods taken by the owner are treated as drawings, not as business sales.
Correct answer: Drawings increase and purchases decrease- A. Rs. 3,000
- B. Rs. 12,000
- C. Rs. 15,000
- D. Rs. 18,000
Explanation: Under accrual accounting, income earned during the period is reported whether or not it has been received in cash. The full Rs.
Correct answer: Rs. 15,000- A. As a non-current asset
- B. As a current asset
- C. As a current liability
- D. As owner's capital
Explanation: A credit balance in the cash book generally represents a bank overdraft.
Correct answer: As a current liability- A. Purchases increase by Rs. 20,000
- B. Purchase returns increase by Rs. 20,000
- C. Sales returns increase by Rs. 20,000
- D. Trade receivables increase by Rs. 20,000
Explanation: Goods returned to a supplier are purchase returns, also called returns outward.
Correct answer: Purchase returns increase by Rs. 20,000- A. It is credited to bad debts expense
- B. It is debited to bad debts expense
- C. It is added to closing inventory
- D. It is treated as owner's drawings
Explanation: An irrecoverable customer balance is a bad debt and is charged as an expense in the income statement.
Correct answer: It is debited to bad debts expense- A. As a revenue expense
- B. As a capital expenditure
- C. As a selling expense
- D. As an accrued liability
Explanation: Expenditure that increases an asset's useful capacity provides benefits beyond the current accounting period, so it is capital…
Correct answer: As a selling expense- A. Other income
- B. A capital receipt
- C. A non-current liability
- D. An increase in trade receivables
Explanation: A discount received reduces the cost of settling a trade payable and is generally recognised as income or a reduction of purchase cost…
Correct answer: Other income- A. It reports only cash received from customers
- B. It reconciles opening and closing owner's capital
- C. It lists only non-current assets at cost
- D. It calculates the business's gross purchases
Explanation: The statement reconciles opening capital with closing capital by considering profit or loss, additional capital introduced and drawings.
Correct answer: It reconciles opening and closing owner's capital- A. As a selling and distribution expense
- B. As a deduction from sales revenue
- C. As an addition to closing inventory
- D. As a non-current business asset
Explanation: Carriage outward is the cost of delivering goods to customers, so it is normally included among selling and distribution expenses.
Correct answer: As a selling and distribution expense- A. Assets increase and liabilities increase
- B. Assets increase and revenue increases
- C. Expenses increase and liabilities decrease
- D. Capital increases and revenue decreases
Explanation: The bank balance increases by Rs. 200,000, while the amount owed to the bank creates a liability of the same amount.
Correct answer: Assets increase and liabilities increase- A. A gain of Rs. 10,000
- B. A loss of Rs. 10,000
- C. Revenue of Rs. 50,000
- D. No profit or loss is recognised
Explanation: The gain equals the sale proceeds less the machine's carrying amount, giving Rs. 50,000 minus Rs. 40,000, or Rs. 10,000.
Correct answer: A gain of Rs. 10,000- A. Cash increases and receivables decrease
- B. Cash increases and sales revenue increases
- C. Receivables increase and cash decreases
- D. Profit increases by Rs. 30,000
Explanation: The receipt converts an amount due from the customer into cash, so cash rises and trade receivables fall by Rs. 30,000.
Correct answer: Cash increases and receivables decrease- A. Only cash transactions are recorded
- B. Every transaction has two recorded entries
- C. Some transactions lack complete double entries
- D. Only credit transactions are recorded
Explanation: Incomplete records means that accounting information is maintained without recording every transaction according to the double-entry…
Correct answer: Some transactions lack complete double entries- A. Bank reconciliation statement
- B. Statement of affairs
- C. Manufacturing account
- D. Funds flow statement
Explanation: A statement of affairs lists assets and liabilities, and the difference is treated as capital.
Correct answer: Statement of affairs- A. Rs. 575,000
- B. Rs. 1,125,000
- C. Rs. 275,000
- D. Rs. 850,000
Explanation: Capital is calculated as assets minus liabilities. Therefore, Rs. 850,000 minus Rs. 275,000 equals Rs. 575,000.
Correct answer: Rs. 575,000- A. Closing capital minus opening capital plus drawings minus additional capital
- B. Opening capital plus closing capital minus drawings plus additional capital
- C. Closing capital plus opening capital minus drawings minus additional capital
- D. Opening capital minus closing capital plus drawings plus additional capital
Explanation: Profit equals closing capital plus drawings, less additional capital introduced, less opening capital.
Correct answer: Closing capital minus opening capital plus drawings minus additional capital- A. Rs. 50,000
- B. Rs. 70,000
- C. Rs. 90,000
- D. Rs. 110,000
Explanation: Profit equals closing capital plus drawings minus additional capital minus opening capital. Thus, Rs. 470,000 + Rs. 60,000 - Rs.
Correct answer: Rs. 70,000