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 93 of 99
- A. Rs. 70,000
- B. Rs. 75,000
- C. Rs. 80,000
- D. Rs. 85,000
Explanation: Credit sales are found by adding closing debtors, cash received, returns inward, and bad debts, then subtracting opening debtors.
Correct answer: Rs. 80,000- A. Rs. 62,000
- B. Rs. 66,000
- C. Rs. 70,000
- D. Rs. 76,000
Explanation: Credit purchases are calculated as closing creditors plus cash paid and returns outward, minus opening creditors. Therefore, Rs.
Correct answer: Rs. 70,000- A. Cash balance
- B. Credit sales
- C. Gross profit
- D. Closing inventory
Explanation: A complete cash book provides a record of cash receipts, cash payments, and the resulting cash balance.
Correct answer: Cash balance- A. Profit of Rs. 30,000
- B. Profit of Rs. 90,000
- C. Loss of Rs. 30,000
- D. Loss of Rs. 90,000
Explanation: The result is calculated as closing capital plus drawings minus additional capital minus opening capital. Thus, Rs. 360,000 + Rs.
Correct answer: Profit of Rs. 90,000- A. It always excludes cash transactions
- B. It cannot use any information about assets
- C. It may be affected by inaccurate asset and liability values
- D. It automatically records every business expense
Explanation: Profit under incomplete records depends on the accuracy of opening and closing assets and liabilities.
Correct answer: It may be affected by inaccurate asset and liability values- A. Rs. 20,000
- B. Rs. 25,000
- C. Rs. 30,000
- D. Rs. 35,000
Explanation: Cash sales are found by deducting other identified receipts from total cash receipts. Thus, Rs. 260,000 minus Rs. 190,000, Rs.
Correct answer: Rs. 30,000- A. Rs. 320,000
- B. Rs. 350,000
- C. Rs. 375,000
- D. Rs. 400,000
Explanation: If gross profit is 20% of sales, cost of goods sold represents 80% of sales. Therefore, sales equal Rs. 280,000 divided by 0.80, or Rs.
Correct answer: Rs. 350,000- A. Rs. 84,000
- B. Rs. 90,000
- C. Rs. 96,000
- D. Rs. 120,000
Explanation: Expense incurred equals cash paid plus closing outstanding expense minus opening outstanding expense. The calculation is Rs.
Correct answer: Rs. 96,000- A. Outstanding rent
- B. Bank loan
- C. Trade creditors
- D. Prepaid insurance
Explanation: Prepaid insurance represents a future economic benefit and is therefore treated as an asset.
Correct answer: Prepaid insurance- A. As a fixed asset
- B. As a current asset
- C. As a current liability
- D. As a capital receipt
Explanation: A bank overdraft is an amount owed by the business to the bank, so it is a liability.
Correct answer: As a current liability- A. A business expense
- B. A personal drawing
- C. An increase in capital
- D. A cash receipt
Explanation: Depreciation represents the use of an asset during the accounting period and reduces business profit.
Correct answer: A business expense- A. Profit is overstated
- B. Profit is understated
- C. Profit is unchanged
- D. Capital is overstated
Explanation: A machine is a capital asset, so its full cost should not normally be charged as a current expense.
Correct answer: Profit is understated- A. Add them to sales
- B. Treat them as drawings
- C. Add them to creditors
- D. Treat them as an expense
Explanation: Goods taken by the owner are not business sales and represent drawings in kind.
Correct answer: Treat them as drawings- A. Rs. 90,000
- B. Rs. 100,000
- C. Rs. 110,000
- D. Rs. 130,000
Explanation: Total purchases are Rs. 400,000, and cost of goods sold is Rs. 40,000 plus Rs. 400,000 minus Rs. 50,000, or Rs. 390,000.
Correct answer: Rs. 110,000- A. Gross profit is overstated
- B. Gross profit is understated
- C. Liabilities are overstated
- D. Sales are understated
Explanation: Closing stock is deducted when calculating cost of goods sold. If it is omitted, cost of goods sold is overstated and the resulting gross…
Correct answer: Gross profit is understated- A. A complete set of double-entry accounts
- B. A bank reconciliation statement only
- C. A personal capital account only
- D. A cash budget for the period
Explanation: The conversion method converts available incomplete information into a complete double-entry framework.
Correct answer: A complete set of double-entry accounts1857. What is the primary purpose of preparing a memorandum trading account under incomplete records?
- A. To determine gross profit or gross loss
- B. To calculate the owner’s drawings
- C. To calculate the closing bank balance
- D. To determine the amount of trade creditors
Explanation: A memorandum trading account uses available stock, purchases, sales, and gross profit information to find gross profit or gross loss.
Correct answer: To determine gross profit or gross loss- A. Rs. 400,000
- B. Rs. 395,000
- C. Rs. 405,000
- D. Rs. 420,000
Explanation: Gross profit is 25% of Rs. 320,000, which is Rs. 80,000. Therefore, sales equal cost of goods sold plus gross profit, or Rs. 400,000.
Correct answer: Rs. 400,000- A. As drawings by the owner
- B. As a business electricity expense
- C. As a trade creditor payment
- D. As an addition to business capital
Explanation: A personal bill paid from business funds reduces the owner’s interest in the business, so it is treated as drawings.
Correct answer: As drawings by the owner- A. Rs. 69,000
- B. Rs. 75,000
- C. Rs. 83,000
- D. Rs. 91,000
Explanation: Rent expense equals cash paid plus opening prepaid rent minus closing prepaid rent. Thus, Rs. 72,000 + Rs. 8,000 - Rs. 11,000 equals Rs.
Correct answer: Rs. 69,000