Free Double Entry and Books of Prime Entry MCQs with Answers

• A. Every transaction has equal debit and credit effects
• B. Every transaction affects one account only
• C. Every transaction is recorded only in the cash book
• D. Every transaction must involve a cash payment

Explanation: Double entry records the two-sided effect of each financial transaction.

• A. Cash sale of goods
• B. Credit sale of goods
• C. Credit purchase of machinery
• D. Return of goods to a supplier

Explanation: The sales day book records credit sales of goods dealt in by the business.

• A. Cash purchases of office furniture
• B. Credit sales of goods to customers
• C. Credit purchases of goods for resale
• D. Cash payments made to suppliers

Explanation: The purchases day book records credit purchases of goods bought for resale.

• A. Goods returned by a customer
• B. Discount allowed to a customer
• C. Cash received from a customer
• D. Goods returned to a supplier

Explanation: The purchases returns book records goods sent back to suppliers after credit purchases.

• A. Both a book of prime entry and a ledger
• B. Only a ledger function
• C. Only a journal function
• D. Both a trial balance and a balance sheet

Explanation: The cash book is a book of prime entry because cash and bank transactions are first recorded in it.

• A. A closing entry
• B. An opening entry
• C. A contra entry
• D. A rectifying entry

Explanation: The transaction affects two columns of the same cash book: cash decreases and bank increases.

• A. Purchases day book
• B. Purchases returns book
• C. Cash book
• D. Sales day book

Explanation: A credit sale of goods is first entered in the sales day book. Ali's personal account is later debited and the sales account is credited…

• A. Credit side
• B. Debit side
• C. Both sides equally
• D. It is not posted to the sales account

Explanation: Sales represent income, so the sales account normally has a credit balance.

• A. Credit sale of trading goods
• B. Transfer of an amount from one account to another
• C. Credit purchase of trading goods
• D. Credit sale of goods to a regular customer

Explanation: The journal proper is used for entries that do not fit the specialised subsidiary books, including transfer and adjustment entries.

• A. The opening petty cash balance
• B. The total cash sales of the period
• C. The amount spent during the period
• D. The closing bank balance

Explanation: Under the imprest system, the petty cashier receives enough money to restore the float to its fixed amount.

• A. To show the financial position at year-end
• B. To summarise balances after ledger posting
• C. To calculate the final profit or loss
• D. To record transactions first in chronological order

Explanation: A book of prime entry is the first formal accounting record of a transaction, usually based on a source document.

• A. A customer's receipt
• B. A supplier's invoice
• C. A bank pay-in slip
• D. A petty cash voucher

Explanation: A supplier sends an invoice to record goods supplied on credit, and the buyer uses it as evidence of the purchase.

• A. Goods bought for immediate cash payment
• B. Goods returned to credit suppliers
• C. Goods returned by credit customers
• D. Assets sold for more than their book value

Explanation: The sales returns book records goods sent back by customers from earlier credit sales.

• A. The cash account
• B. The sales account
• C. The creditors account
• D. The purchases 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 the business in favour of suppliers
• B. Bills accepted by customers in favour of the business
• 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 cash account must become overdrawn
• B. The trial balance must show a debit excess
• C. The trial balance must show a credit excess
• D. The trial balance may still agree

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 recorded separately as an expense
• B. It is deducted before recording the net amount
• 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.