Free Incomplete Records MCQs with Answers
34 Incomplete Records MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Incomplete records require profit and financial position to be reconstructed when a complete double-entry system is unavailable. Methods include statements of affairs, capital comparisons, control accounts, cash summaries and margin calculations to find missing sales, purchases, expenses, assets, liabilities and drawings, while distinguishing business profit from changes in capital.
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- A. A cash budget for the period
- B. A bank reconciliation statement only
- C. A personal capital account only
- D. A complete set of double-entry accounts
Explanation: The conversion method converts available incomplete information into a complete double-entry framework.
Correct answer: A complete set of double-entry accounts- 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. 395,000
- B. Rs. 400,000
- 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 a trade creditor payment
- B. As a business electricity expense
- C. As drawings by the owner
- 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- A. The debtor’s account is debited by Rs. 30,000
- B. The debtor’s account is credited by Rs. 30,000
- C. Sales are credited by Rs. 30,000
- D. Drawings are debited by Rs. 30,000
Explanation: Acceptance of a bill replaces the debtor’s ordinary receivable with a bills receivable asset.
Correct answer: The debtor’s account is credited by Rs. 30,00027. In a statement of affairs, an omitted business liability will usually cause closing capital to be:
- A. Unaffected
- B. Understated
- C. Overstated
- D. Converted into revenue
Explanation: Capital is calculated as assets minus liabilities. If a liability is omitted, total liabilities appear lower and calculated capital…
Correct answer: Overstated- A. A balance sheet excludes all liabilities
- B. A statement of affairs always includes a trial balance
- C. A statement of affairs may include estimated figures
- D. A balance sheet records only cash transactions
Explanation: A statement of affairs is prepared from incomplete information and may contain estimates of assets and liabilities.
Correct answer: A statement of affairs may include estimated figures- A. Rs. 475,000
- B. Rs. 400,000
- C. Rs. 125,000
- D. Rs. 375,000
Explanation: Gross profit is 25% of Rs. 500,000, giving Rs. 125,000. Cost of goods sold is sales minus gross profit, so it is Rs. 375,000.
Correct answer: Rs. 375,000- A. Opening and closing net capital
- B. Only the closing cash balance
- C. Only the year’s credit purchases
- D. Only the owner’s personal expenses
Explanation: The capital comparison method begins with opening capital and compares it with closing capital after adjusting for drawings and additional…
Correct answer: Opening and closing net capital- A. Credit sales
- B. Returns inward
- C. Cash sales
- D. Bad debts
Explanation: A total debtors account records transactions involving credit customers, including credit sales, returns, receipts and bad debts.
Correct answer: Cash sales- A. Liability increases and sales increase
- B. Asset increases and sales increase
- C. Expense increases and capital decreases
- D. Asset increases and capital increases
Explanation: An asset brought into the business by the owner is treated as additional capital.
Correct answer: Asset increases and capital increases- A. Gross profit is overstated
- B. Gross profit is understated
- C. Net profit remains unchanged
- D. Closing capital is overstated only
Explanation: Opening stock is included in the cost of goods sold calculation. If it is understated, cost of goods sold is understated and the resulting…
Correct answer: Gross profit is overstated- A. Adding it to trade debtors
- B. Deducting it from trade debtors
- C. Adding it to trade creditors
- D. Deducting it from business liabilities
Explanation: A provision for doubtful debts reduces the estimated recoverable value of trade debtors.
Correct answer: Deducting it from trade debtors