ACCOUNTING MULTIPLE CHOICE QUESTIONS

Module - I

1. Which financial statement displays the revenues and expenses of a

company for a period of time?
a) Income statement
b) Balance sheet
c) Cash flow statement
d) Statement of stock holders equity
2. What is the main purpose of financial accounting?
a) Organise financial information
b) Provide useful financial information to outsiders
c) Keep track of company expenses
d) Minimise company taxes
3. The long term assets that have no physical existence but are rights that
have value is known as
a) Current assets
b) Fixed Assets
c) Intangible Assets
d) Investments
4. Which of these is not included as a separate item in the basic accounting
equation?
a) Asset
b) Revenues
c) Liabilities
d) Stock holders equity

5. Patents, Copyrights and Trademarks are

a) Current assets
b) Fixed assets
 c) Intangible assets
d) Investments

6. Which financial statement uses the expanded accounting equation?

a) Income statement
b) Balance sheet
c) Cash flow statement
d) Statement of stock holders equity

7. Any written evidence in support of a business transaction is called

a) Journal
b) Ledger
c) Ledger posting
d) Voucher
Module - II

8. The accrual basis of accounting records revenues when they are ;

a) Collected
b) Earned
c) Contracted
d) Readily available
9. The account format that displays debit, credit, balances and heading.
a) General journal
b) General ledger
c) T account
d) Ledger account

10.Assets accounts have what type of balance?

a) Debit
b) Credit
c) Contra
 d) All of the above

11. The accounts that records expenses, gains and losses are
a) Personal accounts
b) Real accounts
c) Nominal accounts
d) None of the above

12. Which account is not a liability account?

a) Account payable
b) Accrued expenses
c) Cash
d) Notes payable
13.Which account is not a liability account?
a) Expenses
b) Withdrawals
c) Treasury stock
d) Revenues
14. A contra asset account has what types of balance?
a) Debit
b) Credit
c) Contra
d) All of the above
Module - III

15. Which of the following shows summary of a companys financial

position at a specific date?
a) Profit and loss account
b) Cash flow statement
 c) Balance sheet
d) Income and expenditure

12 .Which of the following event is subject matter of accounting?

a) Death, if key executive of the business/company

b) Strike of workers
c) Payment of Rs: 1000/- to the bank in discharge of outstanding loan
d) Marriage of the daughter of the MD of the company

13. Management accounting

a) Is a clerical work
b) Is accounting for future
c) Is a recording technique of the management related transactions
d) Is an analysis of the past business activities

14. Which of the following is not available in the financial statements of a

company?

a) Total sales
b) Total profit and loss
c) Loss from fire
d) None of them

15. Accounting is also defined as and information system, because?

a) The function of accounting is to provide quantitive information

primarily financial in nature about economic entities
b) It is the system which provides information
c) Accounting provides required information for anyone seeking it
d) All of the above

16. Accounting is modern age is regarded as

 a) The art of recording, classifying and summarizing the business
transactions in monetary units
b) Language of business
c) The source of business information
d) All of the above

17. Accounting is the process of matching

a) Benefits and costs

b) Revenue and costs
c) Cash inflow and outflows
d) Potential and real performance

18. Choose the incorrect statement

a) Accounting is the language of business

b) Transactions are recorded in quantitive terms only
c) Accounting is the art of recording, summarizing and classifying
d) Transactions and events of financial characters are subject matter of
accounting

19. Accounting provide information on

A) Cost and income for managers

B) Company stacks liability for a particular year
C) Financial conditions of an institution
D) All of above

20. The long term assets that have no physical existence but are rights that
have value is known as

A) Current assets
B) Fixed assets
 C) Intangible assets
D) Investments

21. Patents copyrights and trademarks are

A) Current assets
B) Fixed assets
C) Intangible assets
D) Investments
E) Module - IV

21. The following is not a type of liability

a) Short term
b) Current
c) Fixed
d) Consignment

22. Liabilities that are payable in more than a year that are not liquidated in
current assets

A) Current liabilities
B) Fixed liabilities
C) Contingent liabilities
D) All above

23. Debts which are to be repaid within a short period

A) Current liabilities
B) Fixed liabilities
C) Contingnt liabilities
D) All above
 24. The sales income (Credit and cash) of a business during a given period is
known

A) Transactions
B) Sales returns
C) Turnover
D) Purchase returns

24. Any written evidence in support of a business transaction is called

A) Journal
B) Ledger
C) Ledger posting
D) Voucher

25. What is the method of summarising and classifying the record of

financial transaction in monetary terms?

A) Book keeping

B) Auditing

C) Accountancy

D) Cost accounting

26. The person who sends the goods to the agent to be sold by him on
commission is called
(a) Consignor

(b) Consignee

(c) Merchant

(d) None of these

27. The person to whom the goods are sent for sale on commission basis is
called
a) Merchant
b) Consignor
c) Consignee
d) None of these.
Module - V

28. The commission given by consignor to the consignee for taking additional
risks of recovery of debts on account of sales made on credit is known as
a) Over riding commission
b) Delcredre commission
c) Normal commission
d) None of these

29..is the statement sent by the consignee to the

consignor regarding the sale of goods consigned.
a) Invoice
b) Bill
c) Account sales
d) None of these
30. When goods are sent to the consignee, the journal entry passed is
a) Consignment to a/c Dr.
To goods sent on consignment

b) Goods a/c Dr.

To consignment
c) Consignment a/c Dr.
To cash
 d) None of these.
31. A shipment of goods by a manufacturer to an agent to be sold by him on
commission basis on the risk and account of the former called
a) Consigning
b) Consignment
c) Agreement
d) None of these
32. What are the two types of losses of goods?

a) Normal and abnormal losses

b) Simple loss and pure loss
c)Executive and execute loss
d)None of these

33. Abnormal loss account should be transferred to

a) Profit and loss a/c

b) Trading a/c
c) Abnormal a/c
d) None of these.
34. It is a system of finding out the profit made by a head office at a branch by
preparing an account called
a)Profit &loss a/c
b) Trading a/c
c) Branch a/c
d) None of these.
35. Which of these is accounting equation?
a) Liability = Asset + Capital
b) Asset = Liability Capital
c) Capital = Asset + Liability
d)Asset = Liability +Capital