1.

The accounts that records expenses, gains and losses are

A. Personal accounts
B. Real accounts
C. Nominal accounts
D. None of the above
ANSWER: C
2. Accounting is
A. A Science
B. An Art
C. An Art and Science both
D. None of these
ANSWER: C
3. Real accounts records
A. Dealings with creditors or debtors
B. Dealings in commodities
C. Gains and losses
D. All of the above
ANSWER: B
4. Which of the following is not a Real Account?
A. Cash A/c
B. Investments A/c
C. Outstanding rent A/c
D. Purchases A/c
ANSWER: C
5. The rule debit all expenses and losses and credit all income and gains relates
to
A. Personal account
B. Real account
C. Nominal accounts
D. All
ANSWER: C
6. Which of the following is not the main objective of accounting?
A. Systematic recording of transactions
B. Ascertaining profit or loss
C. Ascertainment of financial position
D. Solving tax disputes with tax authorities
ANSWER: D
7. For every debit there will be an equal credit according to
A. Matching concept
B. Cost concept
C. Money measurement concept
D. Dual aspect concept
ANSWER: D
8. Which of the following is a Real A/c?
A. Building A/c
B. Capital A/c
C. Shyam A/c
D. Rent A/c
ANSWER: A
9. Capital A/c is a _______ A/c.
A. Personal
B. Real
C. Nominal
D. None
ANSWER: A
10. Cash A/c is a ________ A/c.
A. Personal
B. Real
C. Nominal
D. None
ANSWER: B
11. The principle �Debit the receiver and credit the giver� is related to_____
A. Personal a/c
B. Real a/c
C. Nominal a/c
D. None
ANSWER:A
12. In journal, the business transaction is recorded
A. Same day
B. Next day
C. Once in a week
D. Once in a month
ANSWER: A
13. Goods returned of Rs. 500/- by Anil will be entered in-
A. Purchases Book
B. Purchases Returns A/c
C. Sales Book
D. Sales Returns Book 1
ANSWER: B
14. Which of the following is not a tangible asset ?
A. Motor Car
B. Goodwill
C. Stock
D. Building
ANSWER: B
15. Purpose of Sales Book is-
A. To record all sales made by the firm
B. To record payment due to creditors
C. To record all credit sales made by the firm
D. To record credit sales of goods made by the firm
ANSWER: A
16.Salaries paid to staff will be debited to which A/c?
A. Salary A/c
B. Cash A/c
C. Staff A/c
D. Expense A/c
ANSWER: A
17. A ledger is called a book of
A. Primary entry
B. Secondary entry
C. Final entry
D. All the above
ANSWER: A
18. A Ledger Account is prepared from:-
A. Events
B. Transactions
C. Journal
D. None of the above
ANSWER: C
19. Sales invoices are first entered in,
A. The Cash Book
B. The Purchases Journal
C. The Sales Journal
D. The Sales Account
ANSWER: C
20. Entered in the Purchases Journal are,
A. Discounts received
B. Purchases invoices
C. Payments to suppliers
D. Trade discounts
ANSWER: B
21. Copyrights, Patents and Trademarks are,
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
ANSWER: C
22. Accounting furnishes data on,
A. Income and cost for the managers
B. Financial conditions of the institutions
C. Company�s tax liability for a particular year
D. All of the above
ANSWER: D
23. A Trial Balance is a List of _______ accounts.
A. Personal
B. Real
C. Nominal
D. Ledger
ANSWER: D
24. The Trial Balance shows only _______ accuracy.
A. Arithmetical
B. Accounting
C. Historical
D. Financial
ANSWER: A
25. A Trial Balance is a _______.
A. Ledger
B. Journal
C. Subsidiary
D. Statement
ANSWER: A
26. A Trial Balance provides the base for preparation of ________.
A. Final accounts
B. Voucher
C. Debit note
D. Credit note
ANSWER: A
27. Sales account always shows ________ balance.
A. Debit
B. Credit
C. Adverse
D. Specific
ANSWER: B
28. A Trial Balance is generally prepared at the end of each _______.
A. Month
B. Half year
C. Financial year
D. Specific
ANSWER: C
29. If a trial balance totals do not agree, the difference must be entered in:
A. The Profit and Loss Account
B. A Nominal Account
C. The Capital Account
D. A Suspense Account
ANSWER: D
30. Sales invoices are first entered in,
A. The Cash Book
B. The Purchases Journal
C. The Sales Journal
D. The Sales Account
ANSWER: C
31. Entered in the Purchases Journal are,
A. Discounts received
B. Purchases invoices
C. Payments to suppliers
D. Trade discounts
ANSWER: B
32. At the balance sheet date, the balance on the Accumulated Provision for
Depreciation Account is,
A. Transferred to Depreciation Account
B. Transferred to the Asset Account
C. Transferred to Profit and Loss Account
D. Simply deducted from the asset in the Balance Sheet
ANSWER: D
33. The process of entering all transactions from the journal to ledger is called
A. Posting
B. Entry
C. Accounting
D. None of the above
ANSWER: A
34. The following is a statement showing the financial status of the company at any
given time
A. Trading account
B. Profit and Loss statements
C. Balance sheet
D. Cash book
ANSWER: C
35. The following is a statement of revenues and expenses for a specific period of
time
A. Trading account
B. Trial balance
C. Profit and loss statements
D. Balance sheet
ANSWER: C
36. Return of goods by a customer should be debited to___________
A. Customers account
B. Sales return account
C. Goods account
D. Purchase account
ANSWER: B
37. Identify which is wrong rule
A. Nominal account- debit all expenses & losses 3
B. Real account- credit what comes in
C. Nominal account- credit all incomes & gains
D. Personal account- debit the receiver
ANSWER: B
38. Rent paid to landlord should be credited to
A. Landlords account
B. Rent account
C. Cash account
D. Expense account
ANSWER: C
39. Net profit is computed in the
A. Profit and loss account
B. Balance sheet
C. Trial balance
D. Trading account
ANSWER: A
40. Balance sheet is a statement of
A. Assets
B. Liability
C. Capital
D. All of the above
ANSWER: D
41. Balance sheets are prepared
A. Daily
B. Weekly
C. Monthly
D. Annually
ANSWER: D
42. Account which shows Gross Profit or Gross Loss of the business is called:
A. Profit and Loss Account
B. Balance sheet
C. Trial balance
D. Trading A/c
ANSWER: D
43. Trading Account is prepared to know
A. Net Profit or Loss of business
B. Gross Profit or Loss of business
C. Both (1) or (2)
D. Financial Position of business
ANSWER: B
44. Closing stock is recorded in
A. Profit and Loss Account
B. Trading Account and Balance Sheet
C. Balance Sheet only
D. None of these
ANSWER: B
45. Balance Sheet is a statement of
A. Assets
B. Capital
C. Liabilities
D. All of these
ANSWER: D
46. Discount received is an example of
A. Indirect income
B. Net Income
C. Direct Income
D. General Income
ANSWER: C
47. Which is indirect expense of the followings?
A. Salaries Expenses
B. Rent Income
C. Insurance Expenses
D. All of these
ANSWER: B
48. Carriage outwards is an example of
A. Direct Expenses
B. Indirect Expenses
C. Indirect Income
D. Direct Income
ANSWER: A
49. Outstanding salaries are shown as:
A. Added to Salaries while preparing P & La/c
B. Shown in liability side of Balance sheet under current Liability
C. (A. &(B. above
D. None of the above
ANSWER: C
50. All direct & indirect expenses related to business are charged:
A. Profit and loss account
B. Trading account
C. Trading account Profit and Loss account
D. Directly to Balance sheet
ANSWER: C
51. Sales are equal to:
A. Cost of goods sold + gross profit
B. Cost of goods sold - gross profit
C. Gross profit- Cost of goods sold
D. None of the above
ANSWER: A
52. Outstanding salaries are shown as:
A. Added to Salaries while preparing P & La/c
B. Shown in liability side of Balance sheet under current Liability
C. (A. &(B. above
D. None of the above
ANSWER: C
53. Which of the following is not a fixed asset?
A. Building
B. Bank Balance
C. Plant Patents
D. Goodwill
ANSWER:B
54. The basic concepts related to p& l a/c are:
A. Realization Concept
B. Matching Concept
C. Cost Concept
D. Both a and b above
ANSWER: D
55. P& l a/c is prepared for a period of one year by following:
A. Consistency concept
B. Conservatism concept
C. Accounting period concept
D. Cost Concept
ANSWER: C
56. Credit balance of profit & loss a/c shown on
A. Asset side of balance sheet
B. Liability side of balance sheet
C. Not shown in balance sheet
D. Half on asset side and half on liability side
ANSWER: B
57. Insurance prepaid is shown as:
A. Current assets
B. Current liabilities
C. Fixed asset
D. Fixed liability
ANSWER: A
58. Outstanding salary is shown as:
A. An asset in the balance sheet
B. A liability
C. By adjusting it in the P & L a/c
D. Both b and c above
ANSWER: D
59. True & fair profit and loss a/c of a company know by
A. Preparing trial balance
B. Preparing respective ledger of account
C. Preparing trading a/c
D. Preparing trading & profit & loss a/c
ANSWER: D
60. Credit balance of profit & loss a/c shown on
A. Asset side of balance sheet
B. Liability side of balance sheet
C. Not shown in balance sheet
D. Half on asset side and half on liability side
ANSWER:B
61. Carriage outward is charged to
A. Debit side Profit & Loss a/c
B. Debit side Trading a/c
C. Credit side of Profit & Loss a/c
D. Credit side of trading a/c
ANSWER:A
62. Trade Payables are recorded in�����.
A. Asset side of B/S
B. Liability side of B/S
C. P & L a/c
D. None of the above
ANSWER: B
63. Investment of X company profit in shares of other company PQR Pvt. ltd are
recorded in������.
A. Asset side of Balance Sheet
B. Liability side of Balance Sheet
C. Profit & Loss a/c
D. Not recorded in Balance Sheet
ANSWER: A
64. Trial balance is
A. A subsidiary book
B. A principle book
C. An account
D. A statement
ANSWER: A
65. A trial balance is prepared
A. After preparation of financial statement
B. After recording transactions in subsidiary books
C. After posting to ledger is
D. After posting to ledger is complete and accounts have been balanced
ANSWER: D
66. If suspense account does balance even after rectification of error it implies
that
A. There are no more errors to be located
B. There are some two side errors only in the books yet to be located
C. There are some one side errors only in the books yet to be located
D. There are both one side and two sided errors in the books yet to be located
ANSWER:C
67. If an error is not detected in spite of all efforts and trial balance does not
agree then what measure will be taken for the agreement of a trial balance
A. Should opened a rectification account
B. Should opened an error account
C. Should opened a compensation account
D. Should opened a suspense account
ANSWER: D
68. If some credit sale to customer is correctly recorded in Sale book but is
omitted to be recorded to Customer�s account then what type of error will it be
A. Error of totallingB. Error of casting
C. Error of posting
D. Error of recording
ANSWER: C
69. Rs.4,200 paid for conveyancing has been written off instead of capitalizing.
This is an error of
A. Commission
B. Principle
C. Compensating
D. Omission
ANSWER:B
70. A bank reconciliation is prepared by the
A. Bank
B. Creditors
C. Business
D. Supplier
ANSWER: C
71. Which one of these prepare bank reconciliation statement
A. Business enterprises
B. Statutory Auditor
C. Customers
D. Reserve Bank of India
ANSWER: B
72. Credit balance in bank pass Book means
A. Bank overdraft
B. Bank balance
C. Balance as per cash book
D. Total of bank A/c
ANSWER: A
73. Debit balance in bank pass book means
A. Bank overdraft
B. Bank balance
C. Balance as per cash book
D. Total of bank A/c
ANSWER: B
74. Bank Reconciliation statement is prepared by the
A. Bank
B. Credit for business
C. Customer of a bank
D. None of these
ANSWER: C
75. Debit balance in the Cash book means
A. Overdraft as per pass book
B. Credit balance as per pass book
C. Overdraft as per Cash book
D. Credit balance as per Cash book
ANSWER: B
76. The closing balance of petty cash book is considered as
A. Liability
B. Asset
C. Expenses
D. Income
ANSWER: B
77. Payment of rent expenses is recorded on which side of cash book?
A. Receipts
B. Payments
C. Income
D. Expense
ANSWER: B
78. An entry which is made on both sides of a cash book is called
A. Cash entry
B. Contra entry
C. Payment entry
D. Compound entry
ANSWER: B
79. A cash book with cash, bank and discount column is commonly referred as
A. Cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book
ANSWER: C
80. Cash book records
A. Cash payments
B. Cash receipts
C. Cash payments and cash receipts
D. Neither cash payments nor cash receipts
ANSWER: C
81. Cash discount is allowed on _______ repayment of debt
A. Lump sum
B. Prompt
C. Actual
D. None of them
ANSWER: B
82. Cash book is prepared by
A. Bank
B. Accountant of business
C. Manager of a company
D. Bank's cashier
ANSWER: B
83.The most common imprest system is the ________ system
A. Petty cash
B. Cash book
C. Cash receipt
D. Discount
ANSWER: A
84. Discount received is recorded on which of the following side of a cash book?
A. Receipts
B. Payments
C. Incomes
D. Expenditures
ANSWER: B
85) Drawings by owner of business are generally recorded on which of the following
side of a cash book?
A. Receipts
B. Payments
C. Incomes
D. Expenditures
ANSWER: B
86. Suspense account is opened when ____ does not tally
A. Balance sheet
B. Trial balance
C. Profit and loss
D. Trading account
Answer : D
87. Which of the following is not an error of principle
A. Repair or the over hauling of machinery purchased debited to repairs account
B. Cash paid to Karan posted to salary
C. Sale of old car credited to sales account
D. Purchase of furniture debited to purchase account
Answer : B
88. Which of the following is not an error of commission
A. Wrong balancing of machinery account
B. Credit sales to Pawan Rs.5000 credited to his account
C. Cash sales not recorded in cash book
D. Overcasting of sales book
Answer : C
89. Which of the following error will be rectified through suspense account
A. Purchase return to Vishal Rs.1000 not recorded
B. Purchase return to Vishal Rs.1000 recorded through Sales return book
C. Purchase return book under cast by 1000
D. Purchase return to Vishal Rs.1000 recorded as Rs.100
Answer : C
90. Trial balance is equal from both sides but still there is some error. It
indicate that:
A. There may be one sided error in the book
B. There is no error in the book
C. There may be two sided error in the book
D. There may be two sided and one sided error in the book
Answer : C
91. If wages paid for construction of building are debited to wages account. It is
A. An error of Omission
B. An error of compensation
C. An error of commission
D. An error of principle
Answer : D
92. Trial balance is
A. A subsidiary book
B. A principle book
C. An account
D. A statement
Answer : D
93. A trial balance is prepared
A. After preparation of financial statement
B. After recording transactions in subsidiary books
C. After posting to ledger is
D. After posting to ledger is complete and accounts have been balanced
Answer : D
94. If suspense account does balance even after rectification of error it implies
that
A. There are no more errors to be located
B. There are some two side errors only in the books yet to be located
C. There are some one side errors only in the books yet to be located
D. There are both one side and two sided errors in the books yet to be located
Answer : B
95. If an error is not detected in spite of all efforts and trial balance does not
agree then what measure will be taken for the agreement of a trial balance
A. Should opened a rectification account
B. Should opened an error account
C. Should opened a compensation account
D. Should opened a suspense account
Answer : D
96. Why the error of casing of subsidiary books affect the agreement of trial
balance
A. It is one side and two side errors only
B. It is one side errors only
C. It is two sided errors only
D. None
Answer : B
97. A trial balance is prepared to locate
A. None of these
B. Error of commission
C. Error of Omission
D. Error of principle
Answer : A
98. if some credit sale to customer is correctly recorded in Sale book but is
omitted to be recorded to Customer�s account then what type of error will it be
A. Error of totaling
B. Error of casting
C. Error of posting
D. Error of recording
Answer : C
99. Which of the following error would be disclosed by the Trial Balance
A. Selling expenses have debited to Sale account
B. Credit sales of Rs.2500 entered in both the account Rs.250
C. Cheque Rs.5000 from Ram entered in Shyam account
D. A purchase of Rs.3500 was omitted entirely from the books
Answer : C
100. Rs.4,200 paid for conveyancing has been written off instead of capitalizing.
This is an error of
A. Commission
B. Principle
C. Compensating
D. Omission
Answer : B