Olete.in – MCQs, Mock Tests & Government Job Prep | MBA MBA Accounting MCQ Question Set 1

Creating Provision against fluctuation in the price of investment is an example of which accounting convention

1. Convention of conservatism
2. Convention of full disclosure
3. Convention of materiality
4. Convention of consistency

✅ Correct Answer: 1

Return of goods by a customer should be debited to

1. Customers account
2. Sales return account
3. Goods account
4. Purchase account

✅ Correct Answer: 2

Cash discount allowed to a debtor should be credited to

1. Discount account
2. Customer’s account
3. Sales account
4. Cash account

✅ Correct Answer: 2

The concept of separate entity is applicable to which of following types of businesses?

1. Sole proprietorship
2. Corporation
3. Partnership
4. All of them

✅ Correct Answer: 4

Accounting principles are generally based upon:

1. Practicability
2. Subjectivity
3. Convenience in recording
4. None of the above

✅ Correct Answer: 1

Debit the receiver credit the giver rule for

1. Real a/c
2. Personal a/c
3. Nominal a/c
4. None of these

✅ Correct Answer: 2

Managerial accounting information is generally prepared for

1. Shareholders
2. Creditors
3. Managers
4. Regulatory agencies

✅ Correct Answer: 3

True & fair profit and loss a/c of a company know by

1. Preparing trial balance
2. Preparing respective ledger of account
3. Preparing trading a/c
4. Preparing trading & profit & loss a/c

✅ Correct Answer: 4

Which one of the following items would fall under the definition of a liability

1. Cash
2. Debtor
3. Owner’s equity
4. None of these

✅ Correct Answer: 3

The basic sequence in the accounting process can best be described as:

1. Transaction, journal entry, source document, ledger account, trial balance.
2. Source document, transaction, ledger account, journal entry, trial balance.
3. Transaction, source document, journal entry, trial balance, ledger account.
4. Transaction, source document, journal entry, ledger account, trial balance.

✅ Correct Answer: 4

Amount brought in by proprietor should be credited to

1. cash account
2. capital account
3. drawings account
4. creditors account

✅ Correct Answer: 2

Which of the following is a real (permanent) account?

1. Goodwill
2. Sales
3. Accounts Receivable
4. Both Goodwill and Accounts Receivable

✅ Correct Answer: 4

Which of the following errors will be disclosed in the preparation of a trial balance?

1. Recording transactions in the wrong account.
2. Duplication of a transaction in the accounting records.
3. Posting only the debit portion of a particular journal entry.
4. Recording the wrong amount for a transaction to both the account debited and the account credited.

✅ Correct Answer: 3

Management Accounting provides invaluable services to management in performing

1. All management function
2. Interpret financial data
3. Controlling function
4. None of these

✅ Correct Answer: 1

If closing stock appears in the trial balance, it should be

1. Credited to the trading account
2. Credited to the profit and loss account
3. Deducted from the purchases in the trading account
4. Shown on the liability side of the Balance sheet

✅ Correct Answer: 1

Financial information should be neutral and bias free" is the dictation of which one of the following?

1. Completeness concept
2. Faithful representation Concept
3. Objectivity Concept
4. Duality Concept

✅ Correct Answer: 3

Which of the following statements is not an objective of financial reporting?

1. Provide information that is useful in investment and credit decisions.
2. Provide information regarding policy of organisation
3. Provide information that is useful in assessing cash flow prospective
4. None of theses

✅ Correct Answer: 2

A company's telephone bill consisting of a Rs.200 monthly base amount, plus long distance charges, would be classified as a:

1. Variable cost
2. Committed fixed cost
3. Direct cost
4. Semi variable cost

✅ Correct Answer: 4

A book containing a chronological record of business transaction & original record

1. Journal
2. Ledger
3. Trial balance
4. None of these

✅ Correct Answer: 1

Which of these items would be accounted for as an expense?

1. Repayment of bank Loan
2. Dividend to stock holders
3. The purchase of land
4. Payment of current period rent

✅ Correct Answer: 4

The amount of salary paid to Suresh should be debited to

1. The account of Suresh
2. Salaries a/c
3. Cash a/c
4. Bank a/c

✅ Correct Answer: 1

The cash discount allowed to a debtor should be credited to

1. Discount a/c
2. Customer a/c
3. Sales a/c
4. None of these

✅ Correct Answer: 2

Accounting does not record non-financial transactions because of:

1. Accrual concept
2. Cost concept
3. Continuity concept
4. Money measurement concept

✅ Correct Answer: 4

The concept of separate entity is applicable to which of following types of businesses?

1. Sole proprietorship
2. Corporation
3. Partnership
4. All of them

✅ Correct Answer: 4

Accounting is the process of matching

1. Benefits & Costs
2. Revenues & Costs
3. Cash Inflow & Cash Outflow
4. Potential & Real Performance

✅ Correct Answer: 2

The primary objective of cost accounting is

1. Ascertain the cost of goods and services
2. Ascertain the profit
3. Presentation of all data
4. None of these

✅ Correct Answer: 1

Of the following account types, which would be increased by a debit?

1. Liabilities and expenses.
2. Assets and equity.
3. Assets and expenses.
4. Equity and revenues.

✅ Correct Answer: 3

Which of the following statements about differences between financial and managerial accounting is incorrect?

1. Managerial accounting information is prepared primarily for external parties such as stockholders and creditors; financial accounting is directed at internal users.
2. Financial accounting is aggregated; managerial accounting is focused on products and departments.
3. Managerial accounting pertains to both past and future items; financial accounting focuses primarily on past transactions and events.
4. Financial accounting is based on generally accepted accounting practices; managerial accounting faces no similar constraining factors.

✅ Correct Answer: 1

Custom and traditions which guide the accountant while preparing the accounting statements

1. Accounting convention
2. Accounting concepts
3. Accounting principles
4. None of these

✅ Correct Answer: 3

Balance Sheet is a statement of

1. Assets
2. Liabilities
3. Capital
4. All of these

✅ Correct Answer: 4

The convention of disclosure implies that all material information should be

1. Disclosed in the account
2. Disclosed in the accounts which is required to owner
3. Not disclosed
4. None of these

✅ Correct Answer: 1

Outstanding salary is shown as:

1. An asset in the balance sheet
2. A liability
3. By adjusting it in the P & L a/c
4. Both b and c above

✅ Correct Answer: 4

Proprietor (owner) is treated as creditor of business due to:

1. Periodicity concept
2. Materiality Principle
3. Entity Concept
4. Consistency concept

✅ Correct Answer: 3

Which of the following is correct

1. Profit does not alter capital
2. Capital can only come from profit
3. Profit reduces capital
4. Profit increases capital

✅ Correct Answer: 4

Interest , rent, electricity bill are types of account

1. Personal a/c
2. Impersonal a/c
3. Real a/c
4. Nominal a/c

✅ Correct Answer: 4

Cost of asset should always be equal to the cost of the liabilities. This concept is

1. Double Entry Bookkeeping
2. Matching Concept
3. Consistency
4. Money measurement Concept

✅ Correct Answer: 2

P& l a/c is prepared for a period of one year by following:

1. Consistency concept
2. Conservatism concept
3. Accounting period concept
4. Cost Concept

✅ Correct Answer: 3

Prepaid expense is treated as

1. Current asset
2. Current liability
3. Short term liability
4. None of these

✅ Correct Answer: 1

Which of the following is a liability?

1. Loan from Mr.Y
2. loan to Mr.y
3. Both (a) (b)
4. None of these

✅ Correct Answer: 1

Advantages of cost accounting accrue:

1. Only to workers
2. Only to government
3. Only to consumers
4. To management, workers, consumers and government

✅ Correct Answer: 4

Marginal costing is concerned with:

1. Fixed cost
2. Variable cost
3. Semi variable cost
4. None of the above

✅ Correct Answer: 2

The books to be compulsorily maintained by a company are:

1. Cash book and ledger
2. Sales and purchase book
3. Journal
4. All of a, b, c above

✅ Correct Answer: 4

Which of the following best describes a trial balance?

1. It is a list of balances on the books
2. It is a special account
3. Shows the financial position of a business
4. Shows all the entries in the books

✅ Correct Answer: 1

Which of the following equation is related with Dual Aspect Concept ?

1. Total Assets = Total Liabilities
2. Total Assets = Capital + Outsider’s Liabilities
3. Capital = Total Assets - Outsider’s Liabilities
4. All of the above

✅ Correct Answer: 4

The prime function of accounting is to

1. To record economic data
2. Provide the information basis of action
3. Classifying and recording business transaction
4. Attainment of economic goal

✅ Correct Answer: 2

According to schedule VI Companies Act which item is not shown on Asset side of Balance sheet

1. Investment
2. Current Loan & Advances
3. Provision
4. Lease Holds

✅ Correct Answer: 3

Salary paid to factory manager is an item of:

1. Prime cost
2. Factory overhead
3. Selling overhead
4. Office overhead

✅ Correct Answer: 2

Carriage outward is charged to

1. Debit side Profit & Loss a/c
2. Debit side Trading a/c
3. Credit side of Profit & Loss a/c
4. Credit side of trading a/c

✅ Correct Answer: 1

Payment received from Debtor

1. Decreases the Total Assets
2. Increases the Total Assets
3. Results in no change in the Total Assets
4. Increases the Total Liabilities

✅ Correct Answer: 3

Accounting does not record non-financial transactions because of:

1. Accrual concept
2. Cost concept
3. Continuity concept
4. Money measurement concept

✅ Correct Answer: 4