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 97 of 99
- A. Suspense Account
- B. Trading Account
- C. Drawings Account
- D. Capital Account
Explanation: A suspense account may temporarily hold the difference when the trial balance fails to agree.
Correct answer: Suspense Account1922. Under the traditional rules of accounting, which entry is made for an increase in an asset account?
- A. Debit the asset account
- B. Credit the asset account
- C. Debit the capital account
- D. Credit the expense account
Explanation: Assets are real accounts, and the traditional rule is to debit what comes into the business.
Correct answer: Debit the asset account- A. An amount owed by the supplier to the business
- B. An amount owed by the business to the supplier
- C. An expense paid in advance by the business
- D. A loss transferred to the supplier
Explanation: A supplier normally has a credit balance because the supplier is a creditor of the business.
Correct answer: An amount owed by the business to the supplier- A. Left-hand side
- B. Right-hand side
- C. Upper section
- D. Lower section
Explanation: Debit entries are recorded on the left-hand side of a ledger account, while credit entries are recorded on the right-hand side.
Correct answer: Left-hand side- A. Debit Drawings, credit Bank
- B. Debit Bank, credit Drawings
- C. Debit Cash, credit Capital
- D. Debit Capital, credit Cash
Explanation: Personal withdrawals reduce the owner’s equity and are recorded in Drawings, which is debited.
Correct answer: Debit Drawings, credit Bank- A. Purchases Returns Account
- B. Purchases Account
- C. Supplier’s Account
- D. Cash Account
Explanation: Goods returned to a supplier are recorded in Purchases Returns Account, which is credited to reduce the net purchases.
Correct answer: Purchases Returns Account- A. A balance in an asset account
- B. A balance in a sales account
- C. A balance in an expense account
- D. A balance in a purchases account
Explanation: Asset accounts usually have continuing balances that are carried into the next period.
Correct answer: A balance in an asset account- A. Discount received
- B. Carriage inward
- C. Trade expenses
- D. Returns inward
Explanation: Discount received is an income, so it normally has a credit balance. Carriage inward, trade expenses and returns inward are generally…
Correct answer: Discount received- A. Arithmetical equality of postings
- B. Complete absence of all errors
- C. Correct valuation of every asset
- D. Accurate calculation of net profit
Explanation: Equal trial balance totals mainly show that the recorded debits and credits are arithmetically equal.
Correct answer: Arithmetical equality of postings- A. A bank overdraft
- B. Cash held in the office
- C. A deposit in transit
- D. A bank loan paid in advance
Explanation: A credit balance in the bank account normally represents an overdraft, because the business owes money to the bank.
Correct answer: A bank overdraft- A. A compound entry
- B. A closing entry
- C. A transfer entry
- D. A reversing entry
Explanation: An entry involving two or more debit or credit accounts is called a compound entry.
Correct answer: A compound entry- A. Posting a transaction to one side only
- B. Omitting a transaction completely
- C. Recording equal wrong amounts on both sides
- D. Using the wrong account of the same class
Explanation: If only one side of a double entry is posted, the debit and credit totals differ, so the trial balance will usually disagree.
Correct answer: Posting a transaction to one side only- A. Cash Account
- B. Capital Account
- C. Drawings Account
- D. Sales Account
Explanation: Cash increases when the owner introduces money into the business, so Cash Account is debited.
Correct answer: Cash Account- A. Debit Purchases Rs. 30,000; credit Cash Rs. 18,000 and Supplier Rs. 12,000
- B. Debit Purchases Rs. 18,000; credit Cash Rs. 18,000 and Supplier Rs. 12,000
- C. Debit Cash Rs. 18,000 and Purchases Rs. 12,000; credit Supplier Rs. 30,000
- D. Debit Supplier Rs. 12,000; credit Purchases Rs. 30,000 and Cash Rs. 18,000
Explanation: The full cost of goods purchased is debited to Purchases. Cash is credited for the amount paid immediately, while the supplier is credited…
Correct answer: Debit Purchases Rs. 30,000; credit Cash Rs. 18,000 and Supplier Rs. 12,000- A. Rs. 25,000 on the debit side
- B. Rs. 25,000 on the credit side
- C. Rs. 71,000 on the debit side
- D. Rs. 96,000 on the credit side
Explanation: The account has a debit balance of Rs. 25,000, calculated as Rs. 96,000 minus Rs. 71,000.
Correct answer: Rs. 25,000 on the debit side- A. Balance method
- B. Total method
- C. Adjusted balance method
- D. Closing entry method
Explanation: Under the total method, both sides of each ledger account are listed in the trial balance.
Correct answer: Total method1937. A credit balance brought forward in a ledger account is recorded on which side of the account?
- A. Debit side as balance b/d
- B. Credit side as balance b/d
- C. Debit side as balance c/d
- D. Credit side as balance c/d
Explanation: A credit balance brought forward is entered on the credit side as balance brought down.
Correct answer: Credit side as balance b/d- A. Rs. 36,000
- B. Rs. 54,000
- C. Rs. 60,000
- D. Rs. 84,000
Explanation: After deducting interest and salary of Rs. 30,000, the remaining profit is Rs. 90,000. A receives 3/5 of this amount, which is Rs. 54,000.
Correct answer: Rs. 54,000- A. Additional permanent capital
- B. Drawings and interest on drawings
- C. Original capital contribution
- D. Capital introduced at admission
Explanation: Under the fixed capital method, the capital account remains unchanged unless the agreed permanent capital changes.
Correct answer: Drawings and interest on drawings- A. 2:1:2
- B. 3:2:1
- C. 5:3:2
- D. 4:3:2
Explanation: C takes 1/10 from each existing partner. A's new share is 3/10 minus 1/10, or 2/10, while B's is 2/10 minus 1/10, or 1/10.
Correct answer: 2:1:2