1.Which of the following is an example of an asset?
A. Accounts Payable
B. Capital
C. Cash
D. Sales
2.Which account is a personal account?
A. Debtors
B. Rent
C. Machinery
D. Wages
3.Which of the following is shown on the credit side of the trial balance?
A. Purchases
B. Drawings
C. Capital
D. Carriage Inward
4.Goods sold to Ram should be credited to:
A. Sales A/c
B. Ram’s A/c
C. Purchase A/c
D. Cash A/c
5.The rule for nominal accounts is:
A. Debit all expenses and losses, credit all incomes and gains
B. Debit what comes in, credit what goes out
C. Debit the receiver, credit the giver
D. None of the above
6.Outstanding rent is shown under:
A. Assets
B. Liabilities
C. Capital
D. Income
7.Which of these is not a current asset?
A. Cash
B. Debtors
C. Building
D. Stock
8.Depreciation is:
A. Decrease in the value of asset
B. Increase in asset
C. Profit
D. Reserve
9.Cash paid to creditors is recorded in:
A. Journal
B. Sales Book
C. Cash Book
D. Purchase Book
10.The balance of the Cash Book is always:
A. Debit
B. Credit
C. Zero
D. Negative
11.Purchase of machinery is recorded in:
A. Sales Book
B. Purchase Book
C. Journal Proper
D. Cash Book
12.Which of the following is real account?
A. Salaries A/c
B. Furniture A/c
C. Ram’s A/c
D. Commission A/c
13.Prepaid expenses are shown as:
A. Assets
B. Liabilities
C. Income
D. Capital
14.Drawings are deducted from:
A. Assets
B. Liabilities
C. Capital
D. Profit
15.Which of the following is not a nominal account?
A. Rent
B. Debtors
C. Salary
D. Commission
16.The trial balance is prepared to check:
A. Arithmetical accuracy
B. Financial position
C. Errors of principle
D. Fraud
17.Which book is used to record credit purchases of goods only?
A. Sales Book
B. Purchase Book
C. Journal
D. Ledger
18.Bank overdraft is a:
A. Asset
B. Liability
C. Income
D. Expense
19.Which account is affected when salary is paid in cash?
A. Salary A/c and Cash A/c
B. Capital A/c and Cash A/c
C. Wages A/c and Bank A/c
D. Rent A/c and Cash A/c
20.Wages paid for installation of machinery is:
A. Revenue Expense
B. Capital Expense
C. Operating Expense
D. Indirect Expense
21.Petty Cash is maintained under:
A. Single Entry
B. Imprest System
C. Journal Proper
D. None
22.Ledger is known as:
A. Journal
B. Principal Book of Accounts
C. Final Account
D. Trial Balance
23.Sales returns are recorded in:
A. Purchase Book
B. Sales Return Book
C. Journal
D. Cash Book
24.Which side of the Trial Balance will Capital appear?
A. Debit
B. Credit
C. Both
D. None
25.Goodwill is a:
A. Current Asset
B. Intangible Asset
C. Liability
D. Reserve
26.Amount received from debtors is recorded in:
A. Purchase Book
B. Cash Book
C. Journal
D. Ledger
27.Trade discount is shown in:
A. Cash Book
B. Invoice only
C. Journal
D. Trial Balance
28.The account which is prepared to know the net profit or loss is:
A. Balance Sheet
B. Profit & Loss A/c
C. Trading A/c
D. Journal
29.Rent received in advance is a:
A. Asset
B. Liability
C. Income
D. Expense
30.Capital introduced by the owner is credited to:
A. Capital A/c
B. Liability
C. Income
D. Expense
31.A cash sale of goods to Mohan should be recorded in:
A. Sales Book
B. Journal Proper
C. Cash Book
D. Purchase Book
32.Purchase of furniture for office use is recorded in:
A. Purchase Book
B. Sales Book
C. Journal Proper
D. Cash Book
33.Outstanding salary is classified as:
A. Asset
B. Liability
C. Income
D. Expense
34.Goodwill is classified as:
A. Tangible Asset
B. Intangible Asset
C. Current Asset
D. Liability
35.If purchase is made for cash, which account is credited?
A. Purchase A/c
B. Cash A/c
C. Sales A/c
D. Bank A/c
36.Which account is debited when furniture is purchased?
A. Purchase A/c
B. Furniture A/c
C. Cash A/c
D. Sales A/c
37.Return of goods purchased is recorded in:
A. Sales Book
B. Purchase Return Book
C. Journal Proper
D. Cash Book
38.The balance of a real account is carried to:
A. Trading A/c
B. Profit & Loss A/c
C. Balance Sheet
D. Journal
39.The discount allowed to debtors is recorded in:
A. Purchase Book
B. Sales Book
C. Journal Proper
D. Cash Book
40.Capital Expenditure is recorded in:
A. Balance Sheet
B. Trading A/c
C. Profit & Loss A/c
D. None of these
41.Which of the following is a revenue expenditure?
A. Repair to machinery
B. Purchase of building
C. Purchase of plant
D. Purchase of patent
42.The balance of the Sales A/c is transferred to:
A. Profit & Loss A/c
B. Trading A/c
C. Balance Sheet
D. Cash Book
43.Carriage inward is added to:
A. Purchases
B. Sales
C. Capital
D. Expenses
44.Which account is debited for commission paid?
A. Cash A/c
B. Commission A/c
C. Bank A/c
D. Capital A/c
45.Rent paid is an:
A. Asset
B. Income
C. Expense
D. Liability
46.Insurance premium paid is shown under:
A. Income
B. Expense
C. Liability
D. Asset
47.Carriage outward is a part of:
A. Purchases
B. Cost of Goods Sold
C. Trading A/c
D. Profit & Loss A/c
48.A machine was purchased for cash. Which accounts are affected?
A. Purchase A/c and Cash A/c
B. Machinery A/c and Cash A/c
C. Sales A/c and Bank A/c
D. Machinery A/c and Capital A/c
49.What is the nature of the Capital A/c?
A. Personal Account
B. Real Account
C. Nominal Account
D. Expense Account
50.Cash deposited into Bank is recorded in:
A. Purchase Book
B. Cash Book
C. Journal Proper
D. Sales Book
51.Bank charges are recorded on the:
A. Debit side of the Cash Book
B. Credit side of the Cash Book
C. Both sides
D. Not recorded
52.Goods withdrawn by the proprietor for personal use are debited to:
A. Drawings A/c
B. Purchases A/c
C. Capital A/c
D. Sales A/c
53.Commission received is considered as:
A. Expense
B. Income
C. Asset
D. Liability
54.Which of the following errors will affect the trial balance?
A. Posting an amount on the wrong side
B. Error of omission
C. Error of principle
D. Compensating error
55.Which of these appears in the Balance Sheet?
A. Sales
B. Creditors
C. Purchases
D. Rent
56.Bad debts are classified as:
A. Capital loss
B. Revenue loss
C. Liability
D. Reserve
57.A cheque received but not yet deposited is recorded in:
A. Cash Book
B. Journal
C. Sales Book
D. Petty Cash Book
58.Salaries account is a:
A. Real account
B. Personal account
C. Nominal account
D. Capital account
59.Which of these is a current liability?
A. Creditors
B. Land
C. Capital
D. Machinery
60.Sales made to Ram should be credited to:
A. Sales A/c
B. Ram’s A/c
C. Capital A/c
D. Cash A/c
61.Bank Reconciliation Statement is prepared by:
A. Business
B. Bank
C. Auditor
D. Government
62.Credit note is issued when:
A. Goods are returned by customer
B. Goods are returned to supplier
C. Payment made
D. Discount allowed
63.Which of the following is a liability?
A. Bills Payable
B. Bills Receivable
C. Stock
D. Cash
64.Accounting year is usually for:
A. 3 months
B. 6 months
C. 12 months
D. 24 months
65.The double entry system was developed by:
A. Luca Pacioli
B. Adam Smith
C. John Maynard Keynes
D. Mahatma Gandhi
66.A credit balance in Pass Book means:
A. Overdraft
B. Favourable balance
C. Error
D. Shortage
67.Which of the following is indirect income?
A. Interest received
B. Sales
C. Commission allowed
D. Discount received
68.Rent paid in advance is shown as:
A. Current Asset
B. Fixed Asset
C. Expense
D. Income
69.Purchase of goods is always recorded at:
A. Cost price
B. Market price
C. Selling price
D. Invoice value
70.Income received in advance is a:
A. Current Liability
B. Current Asset
C. Expense
D. Income
71.Which of these errors does not affect the trial balance?
A. Error of omission
B. Error in totaling
C. Posting on wrong side
D. Partial entry
72.Which account is prepared to find out gross profit?
A. Trading Account
B. Profit & Loss A/c
C. Balance Sheet
D. Journal
73.The balance of Suspense A/c is shown in:
A. Trial Balance
B. Balance Sheet
C. Cash Book
D. Journal
74.Debentures are:
A. Asset
B. Liability
C. Income
D. Expense
75.Goodwill is shown in the Balance Sheet under:
A. Current Assets
B. Intangible Assets
C. Current Liabilities
D. Fixed Liabilities
76.The debit side of the Profit & Loss A/c shows:
A. Expenses & losses
B. Income
C. Assets
D. Liabilities
77.Input GST is a:
A. Current Asset
B. Current Liability
C. Expense
D. Reserve
78.The term “debit” means:
A. Left side of an account
B. Right side
C. Increase
D. Decrease
79.Sundry debtors are shown in the Balance Sheet as:
A. Current Assets
B. Fixed Assets
C. Liabilities
D. Reserves
80.Unpaid salary is an example of:
A. Outstanding Expense
B. Prepaid Expense
C. Income
D. Capital
81.Amount received in advance is a:
A. Liability
B. Asset
C. Expense
D. Profit
82.Which of these is a final account?
A. Cash Book
B. Ledger
C. Profit & Loss A/c
D. Journal
83.The amount withdrawn from bank is shown in:
A. Cash Book
B. Journal
C. Purchase Book
D. Sales Book
84.Bank interest allowed is:
A. Income
B. Expense
C. Liability
D. Asset
85.Which is an example of an indirect expense?
A. Salaries
B. Wages
C. Freight Inward
D. Carriage on Purchases
86.Depreciation is charged on:
A. Fixed Assets
B. Current Assets
C. Liabilities
D. Cash
87.Which of these is a cash transaction?
A. Purchase of goods for cash
B. Sale on credit
C. Cheque received
D. Interest due
88.Trial balance is a list of:
A. Ledger Balances
B. Journal Entries
C. Vouchers
D. Receipts
89.Discount allowed is shown in:
A. Debit side of Profit & Loss A/c
B. Credit side of Trading A/c
C. Balance Sheet
D. Trading A/c
90.Capital is a:
A. Asset
B. Liability
C. Expense
D. Income
91.Bank loan is a:
A. Long-term liability
B. Short-term asset
C. Income
D. Reserve
92.Furniture purchased is recorded in:
A. Purchase Book
B. Journal Proper
C. Sales Book
D. Cash Book
93.The credit side of Cash Book represents:
A. Payments
B. Receipts
C. Discounts
D. Deposits
94.Accrued income is a:
A. Current Asset
B. Current Liability
C. Income received
D. Loss
95.Revenue from operations means:
A. Sales revenue
B. Interest income
C. Dividend received
D. Rental income
96.Profit earned increases:
A. Assets
B. Liabilities
C. Capital
D. Expenses
97.Which of the following is a direct expense?
A. Freight Inward
B. Rent
C. Salaries
D. Office Expense
98.Bills Receivable is a:
A. Current Asset
B. Liability
C. Expense
D. Income
99.Unpaid Rent is shown under:
A. Assets
B. Liabilities
C. Expenses
D. Reserves
100. Bank column in Cash Book records:
A. Transactions through bank
B. Cash only
C. Journal entries
D. Sales only
101. Prepaid expenses are shown under:
A. Current Assets
B. Fixed Assets
C. Liabilities
D. Capital
102. Which of the following is not an intangible asset?
A. Goodwill
B. Furniture
C. Patent
D. Trademark
103. Cash withdrawn from bank is recorded in:
A. Cash Book
B. Journal Proper
C. Purchase Book
D. Sales Book
104. Revenue is also known as:
A. Income
B. Expense
C. Asset
D. Liability
105. Ledger is a book of:
A. Original entry
B. Final entry
C. Secondary entry
D. Budgetary entry
106. Purchase return is recorded in:
A. Purchase Return Book
B. Sales Return Book
C. Purchase Book
D. Journal
107. Debit Note is issued when:
A. Goods are returned to supplier
B. Goods are sold
C. Goods are purchased
D. Goods are received back from customer
108. Outstanding expenses are shown under:
A. Current Assets
B. Current Liabilities
C. Capital
D. Fixed Assets
109. Rent received in advance is a:
A. Liability
B. Asset
C. Expense
D. Income
110. The main objective of financial accounting is to:
A. Provide financial information
B. Control inventory
C. Pay taxes
D. Fix prices
111. Depreciation is charged to:
A. Allocate cost over useful life
B. Improve value
C. Increase asset life
D. Adjust profit
112. Cash received from debtors is recorded in:
A. Cash Book
B. Journal
C. Sales Book
D. Petty Cash Book
113. The accounting rule for Real Account is:
A. Debit what comes in, Credit what goes out
B. Debit the receiver
C. Credit all expenses
D. None of the above
114. Advance received from customers is a:
A. Liability
B. Asset
C. Income
D. Reserve
115. Trial balance helps to:
A. Check arithmetical accuracy
B. Prepare vouchers
C. Audit accounts
D. File taxes
116. Carriage Inward is shown in:
A. Trading A/c
B. P&L A/c
C. Balance Sheet
D. Petty Cash
117. Which of the following is not a current asset?
A. Stock
B. Machinery
C. Cash
D. Debtors
118. Petty Cash Book is used for:
A. Small day-to-day expenses
B. Recording purchases
C. Recording bank payments
D. Depreciation
119. Capital expenditure results in:
A. Asset creation
B. Revenue loss
C. Expense
D. Liability
120. Closing stock is shown in:
A. Balance Sheet and Trading A/c
B. Profit & Loss A/c
C. Only Balance Sheet
D. Cash Book
121. Amount spent on repairs is a:
A. Revenue expense
B. Capital expenditure
C. Fixed asset
D. Liability
122. Loss due to fire is shown in:
A. Trading A/c
B. P&L A/c
C. Balance Sheet
D. Cash Book
123. A person who owes money to the business is a:
A. Debtor
B. Creditor
C. Lender
D. Investor
124. A bill accepted by the business is recorded as:
A. Bills Payable
B. Bills Receivable
C. Loan
D. Interest
125. Bank overdraft is shown as:
A. Liability in Balance Sheet
B. Asset
C. Income
D. Reserve
126. Which is not a nominal account?
A. Land
B. Rent
C. Commission paid
D. Salary
127. Cash sales are recorded in:
A. Cash Book
B. Sales Book
C. Journal Proper
D. Ledger
128. Which of the following is a fictitious asset?
A. Preliminary expenses
B. Goodwill
C. Plant
D. Machinery
129. Which of the following is an example of Real Account?
A. Furniture A/c
B. Capital A/c
C. Salaries A/c
D. Rent A/c
130. Which type of account is Capital A/c?
A. Real
B. Personal
C. Nominal
D. Intangible
131. Unpresented cheque is:
A. Cheque issued but not presented in bank
B. Cheque deposited
C. Cheque cancelled
D. Dishonoured cheque
132. Which of the following appears on the credit side of Trading A/c?
A. Sales
B. Purchases
C. Wages
D. Carriage inward
133. Which is not a direct expense?
A. Salary
B. Wages
C. Freight
D. Carriage
134. Goodwill is:
A. Intangible Asset
B. Current Asset
C. Fixed Liability
D. Expense
135. Discount received is shown on the:
A. Debit side of P&L A/c
B. Credit side of P&L A/c
C. Balance Sheet
D. Journal
136. Which is not a cash inflow?
A. Payment to creditors
B. Loan received
C. Cash sales
D. Capital introduced
137. Accounting equation is:
A. Assets = Liabilities + Capital
B. Capital = Assets – Liabilities
C. Profit = Income – Expense
D. Capital = Liabilities – Assets
138. Rectification of error is done in:
A. Journal Proper
B. Cash Book
C. Ledger
D. Petty Cash
139. Income earned but not received is called:
A. Accrued Income
B. Prepaid Income
C. Outstanding Income
D. Deferred Income
140. Provision for doubtful debts is a:
A. Contra Asset
B. Liability
C. Income
D. Expense
141. Which document is used for recording credit purchases?
A. Invoice
B. Receipt
C. Debit Note
D. Credit Note
142. Unpaid interest is:
A. Outstanding expense
B. Accrued income
C. Deferred revenue
D. Prepaid expense
143. If a business buys a computer, it is recorded in:
A. Purchase Book
B. Journal Proper
C. Sales Book
D. Petty Cash
144. A ledger is a book of:
A. Original Entry
B. Final Entry
C. Temporary Entry
D. Rectified Entry
145. Loss from sale of asset is recorded in:
A. Trading A/c
B. Profit & Loss A/c
C. Cash Book
D. Balance Sheet
146. Carriage Outward is charged to:
A. Trading A/c
B. Profit & Loss A/c
C. Capital A/c
D. Suspense A/c
147. Net profit is transferred to:
A. Capital A/c
B. Trading A/c
C. Suspense A/c
D. Cash Book
148. Which of the following is shown on the assets side?
A. Creditors
B. Loan
C. Prepaid rent
D. Outstanding salary
149. The person to whom money is owed is called:
A. Debtor
B. Creditor
C. Borrower
D. Partner
150. Which is not a book of original entry?
A. Journal
B. Purchase Book
C. Sales Book
D. Ledger
151. Which is not a book of original entry?
A. Journal
B. Purchase Book
C. Sales Book
D. Ledger
152. Accounting is mainly concerned with:
A. Recording financial transactions
B. Budgeting
C. Auditing
D. Tax planning
153. The term ‘credit’ in accounting means:
A. Right side of an account
B. Left side of an account
C. Cash receipt
D. Expense
154. Which of these is an example of revenue expenditure?
A. Rent paid
B. Machinery purchase
C. Building construction
D. Vehicle purchase
155. Which of the following accounts is a personal account?
A. Sales A/c
B. Wages A/c
C. Capital A/c
D. Rent A/c
156. Which concept assumes a business will continue indefinitely?
A. Going Concern Concept
B. Consistency Concept
C. Dual Aspect Concept
D. Accrual Concept
157. Which financial statement shows financial position on a particular date?
A. Profit and Loss Account
B. Balance Sheet
C. Cash Flow Statement
D. Ledger
158. Which of the following is a liability?
A. Prepaid rent
B. Building
C. Bank loan
D. Machinery
159. Loss from sale of asset is:
A. Revenue loss
B. Capital loss
C. Cash loss
D. Inventory loss
160. The full form of GAAP is:
A. Generally Accepted Accounting Principles
B. General Accounting Analysis Program
C. Gross Annual Accounting Process
D. General Act of Account Process
161. Which account is debited when business pays for rent?
A. Cash A/c
B. Rent A/c
C. Capital A/c
D. Landlord A/c
162. Which item is not included in cost of goods sold?
A. Office rent
B. Freight inward
C. Carriage
D. Purchase cost
163. Bank reconciliation is prepared to:
A. Match bank balance with cash book
B. Reconcile petty cash
C. Finalize income
D. Adjust inventory
164. Who is a creditor?
A. Person who receives money
B. Person to whom money is owed
C. Owner
D. Partner
165. Double entry system means:
A. Every transaction has two effects
B. Double profit
C. Two balance sheets
D. Two books
166. Salaries outstanding is an example of:
A. Asset
B. Liability
C. Income
D. Reserve
167. Which account is credited when goods are sold on credit?
A. Sales A/c
B. Debtors A/c
C. Cash A/c
D. Bank A/c
168. What is the golden rule of personal account?
A. Debit the receiver, Credit the giver
B. Debit what comes in
C. Credit all incomes
D. Debit all expenses
169. Trade discount is:
A. Not recorded in books
B. Shown as income
C. Added to cost
D. A liability
170. Which book is used to record credit sales?
A. Purchase Book
B. Sales Book
C. Journal Proper
D. Cash Book
171. Goods given as charity are shown in:
A. Profit & Loss A/c
B. Capital A/c
C. Sales A/c
D. Balance Sheet
172. Purchase of machinery is recorded in:
A. Purchase Book
B. Journal Proper
C. Sales Book
D. Ledger
173. Which of these is a non-cash expense?
A. Depreciation
B. Rent
C. Salary
D. Postage
174. Bank column in the cash book represents:
A. Transactions with bank
B. Loan
C. Cash sales
D. Revenue
175. Trial balance is prepared:
A. To check accuracy of books
B. To pay tax
C. To find bank balance
D. To buy assets
176. Accounting cycle starts with:
A. Posting
B. Identifying transactions
C. Journal
D. Trial balance
177. Cash deposited into bank is recorded as:
A. Debit Bank A/c, Credit Sales A/c
B. Debit Bank A/c, Credit Cash A/c
C. Debit Cash A/c, Credit Bank A/c
D. Credit Debtors, Debit Cash A/c
178. Drawings are:
A. Deducted from capital
B. Added to assets
C. Treated as expenses
D. Liability
179. Accounting principles are:
A. Rules followed in accounting
B. Government rules
C. Tax rules
D. Audit methods
180. What is suspense account used for?
A. To temporarily hold unclassified entries
B. To record final profit
C. To show bank errors
D. To post fixed assets
181. Closing entries are passed in:
A. Journal
B. Ledger
C. Trial Balance
D. Balance Sheet
182. Accrual concept means:
A. Record income & expenses when they occur
B. Only cash basis
C. Record when received
D. Record capital only
183. Capital introduced by owner increases:
A. Drawings
B. Owner’s Equity
C. Liability
D. Expenses
184. Which document is sent by supplier with goods?
A. Invoice
B. Debit note
C. Credit note
D. Receipt
185. Provision for bad debts is:
A. A charge against profit
B. Shown as asset
C. An income
D. A reserve
186. Bank charges are:
A. Expense
B. Asset
C. Income
D. Liability
187. Wages paid for installation of machinery is:
A. Capital expenditure
B. Revenue expenditure
C. Indirect expense
D. Salary
188. Debentures are:
A. Long-term borrowings
B. Current liabilities
C. Equity
D. Fixed assets
189. In which account do we record depreciation?
A. Profit & Loss A/c
B. Trading A/c
C. Capital A/c
D. Cash Book
190. Which of the following has a credit balance?
A. Salary A/c
B. Purchases A/c
C. Capital A/c
D. Rent A/c
191. Net profit increases:
A. Capital
B. Expenses
C. Liabilities
D. Drawings
192. The balance of cash account can never be:
A. Positive
B. Negative
C. Zero
D. Equal
193. Fixed Assets are held for:
A. Long-term use
B. Resale
C. Quick profit
D. Charity
194. Unpaid rent is:
A. Outstanding expense
B. Prepaid expense
C. Accrued income
D. Fixed asset
195. Income received in advance is called:
A. Unearned Income
B. Accrued Income
C. Revenue
D. Debtor
196. Who is the father of accounting?
A. Luca Pacioli
B. Adam Smith
C. Charles Babbage
D. Karl Marx
197. Revenue is:
A. Total income before expenses
B. Expense
C. Loss
D. Loan
198. Sales return is also known as:
A. Return Inward
B. Return Outward
C. Purchase Return
D. Capital Return
199. Credit balance in cash book means:
A. Overdraft
B. Profit
C. Loan
D. Purchase
200. Purchase of goods on credit affects:
A. Purchases A/c and Creditors A/c
B. Sales A/c and Cash A/c
C. Bank A/c and Capital A/c
D. Rent A/c and Debtors A/c
201. Depreciation is charged on:
A. Fixed Assets
B. Current Assets
C. Liabilities
D. Income
202. Which of the following is an intangible asset?
A. Land
B. Building
C. Goodwill
D. Machinery
203. Which account is credited when capital is introduced?
A. Cash A/c
B. Capital A/c
C. Drawings A/c
D. Expenses A/c
204. Which of the following is a nominal account?
A. Salary A/c
B. Debtor A/c
C. Furniture A/c
D. Capital A/c
205. Cash received from debtors is recorded in:
A. Cash Book
B. Purchase Book
C. Journal
D. Ledger
206. The dual aspect concept is the basis for:
A. Trial Balance
B. Double Entry System
C. Cost Accounting
D. Cash Flow Statement
207. Which one is not a fixed asset?
A. Inventory
B. Machinery
C. Land
D. Furniture
208. Prepaid insurance is a:
A. Current Asset
B. Current Liability
C. Expense
D. Revenue
209. Bank overdraft is a:
A. Asset
B. Liability
C. Income
D. Reserve
210. Ledger is known as:
A. Book of Final Entry
B. Book of Prime Entry
C. Journal
D. Cash Book
211. A withdrawal of cash by the owner for personal use is called:
A. Drawings
B. Capital
C. Expense
D. Liability
212. Furniture purchased for office is a:
A. Capital Expenditure
B. Revenue Expenditure
C. Deferred Revenue
D. Income
213. Which one is a real account?
A. Salary A/c
B. Cash A/c
C. Capital A/c
D. Rent A/c
214. Which of the following is shown on the credit side of trial balance?
A. Capital
B. Wages
C. Debtors
D. Purchase
215. Bad debts are:
A. Irrecoverable debts
B. Liability
C. Income
D. Assets
216. A person who keeps and examines financial records is called:
A. Accountant
B. Manager
C. Clerk
D. Cashier
217. Which concept states that expenses should match the revenues?
A. Matching Concept
B. Accrual Concept
C. Cost Concept
D. Going Concern
218. Purchase returns are recorded in:
A. Sales Book
B. Purchase Return Book
C. Journal Proper
D. Cash Book
219. Which account is affected when interest is received on bank deposit?
A. Interest Income A/c
B. Capital A/c
C. Bank A/c
D. Debtors A/c
220. Which of the following is an asset account?
A. Rent A/c
B. Salary A/c
C. Debtors A/c
D. Capital A/c
221. In a partnership, capital is shown under:
A. Liabilities
B. Assets
C. Expenses
D. Income
222. Outstanding expenses are shown in:
A. Trading Account
B. Profit & Loss Account
C. Balance Sheet (Liabilities side)
D. Cash Flow
223. Which statement is prepared to find out net profit or loss?
A. Profit & Loss Account
B. Trading Account
C. Balance Sheet
D. Journal
224. Commission received in advance is a:
A. Liability
B. Income
C. Expense
D. Asset
225. The main objective of accounting is to:
A. Record Transactions
B. Prepare Balance Sheet
C. Ascertain Profit or Loss and Financial Position
D. Audit the Books
226. Which entry is passed for goods lost by fire?
A. Loss by Fire A/c Dr. To Purchases A/c
B. Purchases A/c Dr. To Sales A/c
C. Sales A/c Dr. To Loss by Fire A/c
D. Loss by Fire A/c Dr. To Sales A/c
227. Which is not a type of error in accounting?
A. Error of Exchange
B. Error of Commission
C. Error of Omission
D. Compensating Error
228. The balance of drawings account is:
A. Debited to Capital A/c
B. Credited to Capital A/c
C. Closed to Trading A/c
D. Ignored
229. Which book records both cash and bank transactions?
A. Cash Book
B. Ledger
C. Journal Proper
D. Trial Balance
230. Petty cash is maintained for:
A. Small daily expenses
B. Fixed assets
C. Inventory
D. Capital
231. When goods are sold on credit, which account is debited?
A. Debtors A/c
B. Sales A/c
C. Purchase A/c
D. Cash A/c
232. Accounting equation is:
A. Assets = Liabilities + Capital
B. Assets = Capital – Liabilities
C. Assets = Income + Expenses
D. Capital = Assets – Liabilities
233. Rent paid in advance is a:
A. Prepaid Expense
B. Outstanding Expense
C. Income
D. Loss
234. Freight paid on purchase of machinery is a:
A. Capital Expenditure
B. Revenue Expenditure
C. Deferred Revenue
D. Operating Expense
235. Which of the following is a current liability?
A. Furniture
B. Creditors
C. Building
D. Debtors
236. A trial balance has:
A. Debit and Credit columns
B. Only Debit column
C. Only Credit column
D. No column
237. Accounting helps in:
A. Marketing decisions
B. Financial decision-making
C. Product designing
D. Advertising
238. The full form of ERP is:
A. Enterprise Resource Planning
B. Enterprise Revenue Process
C. Expense Record Planning
D. Entity Resource Process
239. If rent is paid in cash, entry is:
A. Rent A/c Dr. To Cash A/c
B. Rent A/c Dr. To Capital A/c
C. Rent A/c Dr. To Bank A/c
D. Cash A/c Dr. To Rent A/c
240. Income tax paid by the proprietor is:
A. Drawings
B. Expense
C. Capital
D. Income
241. Which of these is a contingent liability?
A. Guarantee given
B. Bank loan
C. Creditors
D. Debtors
242. Which document shows all ledgers with closing balances?
A. Trial Balance
B. Journal
C. Invoice
D. Bank Statement
243. The purchase of building is:
A. Capital Expenditure
B. Revenue Income
C. Deferred Income
D. Revenue Expense
244. Return outward means:
A. Purchase return
B. Sales return
C. Asset sale
D. Profit return
245. When a customer returns goods, it is recorded in:
A. Sales Return Book
B. Purchase Book
C. Journal
D. Cash Book
246. Which of these is a revenue receipt?
A. Rent received
B. Loan taken
C. Share capital
D. Asset sale
247. Account maintained by a bank customer is called:
A. Bank Account
B. Loan Account
C. Expense Account
D. Suspense Account
248. Loss by theft is recorded as:
A. Indirect Expense
B. Income
C. Direct Expense
D. Liability
249. Assets which can be quickly converted into cash are called:
A. Current Assets
B. Fixed Assets
C. Fictitious Assets
D. Deferred Assets
250. The main purpose of audit is to:
A. Verify the accuracy of accounts
B. Prepare accounts
C. Increase profit
D. Manage payroll
251. Which of the following is not a current asset?
A. Cash
B. Inventory
C. Debtors
D. Machinery
252. Assets = Liabilities + ?
A. Drawings
B. Capital
C. Profit
D. Expense
253. Journal is also known as:
A. Book of Original Entry
B. Ledger
C. Cash Book
D. Final Account
254. Income received but not earned is called:
A. Unearned Income
B. Accrued Income
C. Prepaid Income
D. Deferred Revenue
255. Which of these is an operating expense?
A. Salary
B. Machinery
C. Loan
D. Capital
256. The credit balance of a personal account indicates:
A. Amount Payable
B. Amount Receivable
C. Asset
D. Income
257. Sales of old furniture should be treated as:
A. Capital Receipt
B. Revenue Income
C. Capital Expenditure
D. Expense
258. Purchase of goods on credit should be recorded in:
A. Purchase Book
B. Journal Proper
C. Sales Book
D. Cash Book
259. If total assets are ₹60,000 and liabilities are ₹15,000, then capital is:
A. ₹75,000
B. ₹45,000
C. ₹30,000
D. ₹15,000
260. Real Accounts relate to:
A. Expenses
B. Assets
C. Incomes
D. Capital
261. Which voucher type is used for making payments?
A. Payment Voucher
B. Receipt Voucher
C. Journal Voucher
D. Contra Voucher
262. Which is not shown in the Balance Sheet?
A. Net Sales
B. Cash in Hand
C. Creditors
D. Debtors
263. Prepaid rent is a:
A. Current Asset
B. Fixed Asset
C. Liability
D. Income
264. The discount allowed appears in:
A. Debit side of P&L A/c
B. Credit side of P&L A/c
C. Trading A/c
D. Balance Sheet
265. Provision for doubtful debts is:
A. A liability
B. An asset
C. An expense
D. Income
266. The golden rule for Personal Account is:
A. Debit the receiver, Credit the giver
B. Debit what comes in
C. Credit all incomes
D. Debit all expenses
267. Which of the following is not a personal account?
A. Salary A/c
B. Ram’s A/c
C. Bank A/c
D. Creditor A/c
268. Which of the following shows financial position?
A. Trading A/c
B. Profit & Loss A/c
C. Balance Sheet
D. Journal
269. Liabilities payable after 1 year are:
A. Long-term Liabilities
B. Current Liabilities
C. Outstanding Liabilities
D. Fixed Liabilities
270. Which of these is not a ledger account?
A. Capital A/c
B. Cash A/c
C. Journal
D. Sales A/c
271. Salaries outstanding is shown as:
A. Asset
B. Liability
C. Income
D. Capital
272. When wages are paid for installation of machinery, it is:
A. Capital Expenditure
B. Revenue Expense
C. Deferred Expense
D. Loss
273. Discount received is shown in:
A. Debit side of P&L A/c
B. Credit side of P&L A/c
C. Debit side of Trading A/c
D. Asset side of Balance Sheet
274. Cash account is a:
A. Nominal A/c
B. Personal A/c
C. Real A/c
D. Income A/c
275. Bad debts recovered is:
A. Income
B. Expense
C. Asset
D. Liability
276. Ledger is prepared from:
A. Journal
B. Trial Balance
C. Balance Sheet
D. Cash Book
277. Sales Return is also called:
A. Return Inward
B. Return Outward
C. Purchase Return
D. Discount
278. Trial Balance is prepared to check:
A. Arithmetical accuracy
B. Journal entries
C. Cash balance
D. Bank statement
279. Which of the following is a fictitious asset?
A. Preliminary Expenses
B. Furniture
C. Cash
D. Stock
280. Rent Outstanding is shown under:
A. Asset
B. Liability
C. Income
D. Capital
281. Unpaid expenses are also called:
A. Outstanding Expenses
B. Accrued Income
C. Prepaid Expense
D. Capital Expense
282. Which item appears in Trading Account?
A. Wages
B. Commission
C. Office Rent
D. Salaries
283. The balance of Profit & Loss A/c is transferred to:
A. Capital A/c
B. Cash A/c
C. Drawing A/c
D. Suspense A/c
284. Petty Cash is handled by:
A. Petty Cashier
B. Accountant
C. Auditor
D. Director
285. Tally is an example of:
A. Accounting Software
B. Operating System
C. Hardware
D. Network Tool
286. Which of the following reduces the capital?
A. Drawings
B. Profit
C. Income
D. Reserves
287. The term ‘Credit Note’ is used in case of:
A. Sales Return
B. Purchase Return
C. Payment
D. Receipt
288. Amount spent on repair of second-hand machine before use is:
A. Capital Expenditure
B. Revenue Expense
C. Deferred Expense
D. Loss
289. Prepaid expenses are shown under:
A. Assets
B. Liabilities
C. Income
D. Capital
290. Trial Balance is prepared after:
A. Posting into Ledger
B. Journalizing
C. Preparing Balance Sheet
D. Final Accounts
291. Ledger account for income is closed by transferring it to:
A. Capital A/c
B. Profit & Loss A/c
C. Drawings A/c
D. Trading A/c
292. Drawings A/c has a:
A. Debit Balance
B. Credit Balance
C. Zero Balance
D. Suspense
293. The main book of accounts is:
A. Ledger
B. Journal
C. Purchase Book
D. Sales Book
294. Revenue means:
A. Income from main business activities
B. Loan
C. Capital
D. Drawings
295. Which item is shown in Trading Account?
A. Carriage Inward
B. Carriage Outward
C. Interest Paid
D. Rent
296. Provision is created for:
A. Known liabilities or losses
B. Unknown profits
C. Hidden incomes
D. Future profits
297. All direct expenses are shown in:
A. Trading Account
B. P&L Account
C. Balance Sheet
D. Journal
298. The cash account is always:
A. Debit Balance
B. Credit Balance
C. Zero Balance
D. Suspense Balance
299. Sales of goods for cash is recorded in:
A. Cash Book
B. Journal
C. Purchase Book
D. Sales Return Book
300. Bank Reconciliation Statement is prepared to reconcile:
A. Cash Book & Pass Book
B. Journal & Ledger
C. Cash Book & Ledger
D. Trial Balance
301. Which of the following is not a direct expense?
A. Rent of office building
B. Wages
C. Freight Inward
D. Carriage Inward
302. If liabilities increase, the accounting equation must:
A. Decrease capital
B. Increase assets
C. Decrease assets
D. Have no effect
303. Depreciation is charged on:
A. Fixed Assets
B. Current Assets
C. Liabilities
D. Incomes
304. Accrued income is shown under:
A. Liability
B. Asset
C. Capital
D. Expense
305. Sales of goods is a:
A. Revenue Receipt
B. Capital Receipt
C. Expense
D. Income Tax
306. Which is not a fixed asset?
A. Inventory
B. Machinery
C. Building
D. Furniture
307. Bank overdraft is a:
A. Liability
B. Asset
C. Income
D. Capital
308. Trial balance does not include:
A. Capital
B. Drawings
C. Closing Stock
D. Debtors
309. Which is not an example of intangible asset?
A. Furniture
B. Goodwill
C. Trademark
D. Patent
310. Outstanding wages are:
A. Prepaid expenses
B. Current Liabilities
C. Non-current Liabilities
D. Revenue
311. Debit note is prepared by:
A. Buyer
B. Seller
C. Bank
D. Auditor
312. TDS stands for:
A. Tax Deducted at Source
B. Total Direct Sales
C. Taxable Depreciation Summary
D. Trial Deduction Statement
313. In accounting, ‘GAAP’ stands for:
A. Generally Accepted Accounting Principles
B. General Adjustment and Accounting Procedures
C. Gross Annual Accounting Plan
D. General Assets and Allocation Plan
314. Which of these is not recorded in journal proper?
A. Cash Sales
B. Opening entries
C. Rectification entries
D. Adjustment entries
315. Goodwill is a:
A. Intangible Asset
B. Current Asset
C. Fixed Liability
D. Expense
316. Loss of stock by fire is shown in:
A. Trading Account
B. Profit & Loss A/c
C. Balance Sheet
D. Journal only
317. Cash discount is given for:
A. Prompt payment
B. Bulk order
C. Purchase of goods
D. Sale return
318. Capital expenditure is:
A. Long-term in nature
B. Short-term in nature
C. Recurring
D. Regular
319. Prepaid insurance is an example of:
A. Current Asset
B. Fixed Asset
C. Liability
D. Capital
320. Revenue expenses are recorded in:
A. Profit & Loss Account
B. Trading Account
C. Balance Sheet
D. Capital Account
321. Ledger posting means:
A. Transferring from journal to ledger
B. Transferring from ledger to journal
C. Transferring from cash book to balance sheet
D. Transferring from trial balance to ledger
322. Credit balance in bank column of cash book means:
A. Bank overdraft
B. Cash in bank
C. Profit
D. Suspense
323. What does the term “Amortization” relate to?
A. Intangible Assets
B. Fixed Assets
C. Inventory
D. Debtors
324. Closing Stock is valued at:
A. Cost or Market Price whichever is lower
B. Cost only
C. Market Price only
D. Selling Price
325. Bank charges are debited to:
A. Bank Charges A/c
B. Bank A/c
C. Capital A/c
D. Profit A/c
326. In case of credit purchases, which account is credited?
A. Creditor’s A/c
B. Purchases A/c
C. Bank A/c
D. Sales A/c
327. If sales is ₹1,00,000 and gross profit is ₹25,000, then cost of goods sold is:
A. ₹75,000
B. ₹1,25,000
C. ₹75,000
D. ₹25,000
328. Sales Book is used to record:
A. Credit Sales of Goods
B. Cash Sales
C. Credit Purchases
D. Asset Sales
329. If a transaction is not recorded at all, it is called:
A. Error of Omission
B. Error of Commission
C. Error of Principle
D. Compensating Error
330. Prepaid Rent Account has a:
A. Debit Balance
B. Credit Balance
C. Zero Balance
D. Liability
331. The accounting equation remains in balance after every:
A. Transaction
B. Year
C. Trial Balance
D. Journal Entry
332. Income received in advance is:
A. Liability
B. Asset
C. Capital
D. Expense
333. A bill of exchange is a:
A. Written Order
B. Oral Agreement
C. Contract
D. Letter
334. Which of these is not a current liability?
A. Accounts Payable
B. Long-term Debt
C. Accrued Expenses
D. Taxes Payable
335. Which of the following is not a liability?
A. Accounts Payable
B. Bank Overdraft
C. Capital
D. Drawing
336. Which of the following does not form part of the current assets?
A. Cash
B. Land
C. Inventory
D. Accounts Receivable
337. The normal balance of a revenue account is:
A. Debit
B. Credit
C. None
D. Both
338. A debit balance in the trial balance indicates:
A. A mistake
B. Asset or Expense
C. Liability
D. Income
339. The purchase of office supplies on credit is recorded in:
A. Purchases Journal
B. General Journal
C. Purchases Ledger
D. Sales Journal
340. The business entity concept assumes that:
A. The business is separate from its owner
B. The business includes the personal assets of the owner
C. The business can use personal funds
D. The business is part of the personal finances
341. A ledger is a:
A. Book of original entry
B. Book of secondary entry
C. Book of summary
D. Book of final account
342. The main purpose of preparing a trial balance is to:
A. Determine net profit or loss
B. Ensure that debits and credits are balanced
C. Record transactions
D. Close the books
343. Sales Returns are deducted from:
A. Sales
B. Gross Profit
C. Net Profit
D. Assets
344. A journal entry is:
A. Record of transactions
B. Original record of financial transactions
C. Summary of accounts
D. Transferred record
345. The accounting principle that says revenue should be recognized when earned is:
A. Matching Principle
B. Revenue Recognition Principle
C. Consistency Principle
D. Cost Principle
346. The principle of “conservatism” in accounting suggests:
A. Anticipating no profit, but all possible losses
B. Anticipating profits
C. Recognizing revenue early
D. Only recording actual losses
347. Which of the following statements is correct about the Cost Principle?
A. Assets are recorded at their fair market value
B. Assets are recorded at their historical cost
C. Assets are recorded at their current market price
D. Assets are recorded at their selling price
348. When an asset is sold on credit, the transaction is recorded in:
A. Credit Journal
B. Sales Journal
C. Cash Book
D. Purchase Journal
349. The difference between sales and cost of sales is:
A. Gross Profit
B. Net Profit
C. Operating Profit
D. Non-operating Income
350. The purpose of the income statement is to:
A. Determine the profit or loss
B. Track assets
C. Determine liabilities
D. Record transactions
351. Bank account is a:
A. Personal Account
B. Real Account
C. Nominal Account
D. Suspense Account
352. Creditors are also called:
A. Accounts Payable
B. Accounts Receivable
C. Debtors
D. Assets
353. Which of the following errors is not disclosed by a Trial Balance?
A. Error of Omission
B. Error of Posting
C. Error of Casting
D. Error of Balancing
354. The balance of the Capital Account is shown on the:
A. Liability side of Balance Sheet
B. Asset side of Balance Sheet
C. Debit side of Trial Balance
D. Credit side of Profit & Loss A/c
355. A drawing account normally has a:
A. Debit balance
B. Credit balance
C. Zero balance
D. No balance
356. Purchase of machinery should be recorded in:
A. Journal Proper
B. Purchase Book
C. Sales Book
D. Cash Book
357. The amount spent on repair of old machine purchased is:
A. Capital Expenditure
B. Revenue Expenditure
C. Deferred Revenue
D. Not an expense
358. Petty cash book is maintained by:
A. Petty cashier
B. Accountant
C. Manager
D. Cashier
359. The trial balance shows:
A. Arithmetical accuracy
B. Financial position
C. Profit or loss
D. Budget
360. If an account is debited, it means:
A. An asset or expense has increased
B. An asset has decreased
C. A liability has increased
D. Income has increased
361. Commission received is shown on the:
A. Credit side of Profit & Loss A/c
B. Debit side of Profit & Loss A/c
C. Debit side of Trading A/c
D. Credit side of Trading A/c
362. Accounts receivable is a:
A. Current Asset
B. Current Liability
C. Fixed Asset
D. Long-term Liability
363. The balance in Suspense Account is due to:
A. Errors in books
B. Expenses
C. Incomes
D. Cash shortage
364. The term ‘Insolvent’ means:
A. Unable to pay debts
B. Increase in profit
C. Loss due to theft
D. Cash in hand
365. Which book is used to record credit purchases only?
A. Purchase Book
B. Sales Book
C. Journal
D. Ledger
366. The entry for depreciation is:
A. Depreciation A/c Dr. To Asset A/c
B. Asset A/c Dr. To Depreciation A/c
C. Profit A/c Dr. To Asset A/c
D. Expense A/c Dr. To Cash A/c
367. Trade Discount is shown in:
A. Invoice only
B. Books of Accounts
C. Profit & Loss A/c
D. Cash Book
368. A decrease in asset is:
A. Credited
B. Debited
C. Ignored
D. Balanced
369. Salaries outstanding is an example of:
A. Accrued Expense
B. Prepaid Expense
C. Asset
D. Income
370. Custom duty paid on import of machine is:
A. Capital Expenditure
B. Revenue Expenditure
C. Deferred Revenue
D. Miscellaneous Expense
371. Which is not shown in the Balance Sheet?
A. Goodwill written off
B. Capital
C. Cash in hand
D. Debtors
372. Income Tax paid by owner is:
A. Drawings
B. Expense
C. Asset
D. Capital Expenditure
373. Which of the following is not a financial statement?
A. Trial Balance
B. Balance Sheet
C. Profit & Loss A/c
D. Cash Flow Statement
374. Revenue is recognized when it is:
A. Earned
B. Received
C. Deposited
D. Confirmed
375. Bank Reconciliation Statement is prepared by:
A. Business
B. Bank
C. Government
D. Supplier
376. Provision for doubtful debts is:
A. A liability
B. An asset
C. An income
D. A reserve
377. Carriage Outward is shown in:
A. Profit & Loss A/c
B. Trading A/c
C. Balance Sheet
D. Cash Book
378. Rent received in advance is:
A. A liability
B. An asset
C. An expense
D. A capital
379. Debit balance in trial balance means:
A. Asset or expense
B. Income
C. Capital
D. Liability
380. Discount received is shown on the:
A. Credit side of Profit & Loss A/c
B. Debit side of Profit & Loss A/c
C. Debit side of Trading A/c
D. Credit side of Trading A/c
381. Provision for depreciation is:
A. A liability
B. An asset
C. A capital
D. A reserve
382. The accounting concept that assumes business will continue:
A. Going Concern Concept
B. Money Measurement
C. Cost Concept
D. Realization Concept
383. Capital + Net Profit – Drawings =
A. Closing Capital
B. Gross Profit
C. Net Worth
D. Assets
384. Which one is an example of current liability?
A. Creditors
B. Machinery
C. Furniture
D. Building
385. Rent paid for the factory is shown in:
A. Trading Account
B. Profit & Loss A/c
C. Balance Sheet
D. Journal Proper
386. Return outward is also known as:
A. Purchase Return
B. Sales Return
C. Sales
D. Purchase
387. A firm started with a capital of ₹50,000. After one month, the capital is ₹60,000. The increase of ₹10,000 is:
A. Profit
B. Drawings
C. Income
D. Liability
388. Which of the following is a non-operating income?
A. Profit on sale of assets
B. Rent received
C. Discount allowed
D. Commission received
389. The balance in capital account shows the:
A. Owner’s equity
B. Assets
C. Liabilities
D. Profit
390. If goods are sold on credit, it will:
A. Increase Debtors
B. Increase Creditors
C. Increase Cash
D. Decrease Assets
391. Cash paid to creditors is recorded in:
A. Cash Book
B. Journal
C. Ledger
D. Trial Balance
392. Credit purchase of goods is recorded in:
A. Purchase Book
B. Cash Book
C. Sales Book
D. Bank Book
393. The main objective of accounting is:
A. To provide financial information
B. To show profit
C. To minimize taxes
D. To calculate sales
394. Cost of goods sold is:
A. An expense
B. An asset
C. A liability
D. An income
395. Purchase of goods for resale is recorded in:
A. Purchase Book
B. Cash Book
C. Sales Book
D. Bank Book
396. Interest on capital is:
A. An expense
B. A liability
C. An asset
D. An income
397. Which of the following is a current asset?
A. Inventory
B. Land
C. Machinery
D. Debtors
398. The owner of the business is called:
A. Capital
B. Drawings
C. Credit
D. Equity
399. Revenue is recognized when:
A. Earned
B. Received
C. Deposited
D. Confirmed
400. Purchase book is used for recording:
A. Credit purchases
B. Cash purchases
C. Sales of goods
D. Assets
401. A contra entry is recorded in:
A. Cash Book only
B. Journal
C. Ledger
D. Trial Balance
402. Balance of a Real Account is:
A. Carried forward
B. Transferred to P&L A/c
C. Transferred to Capital A/c
D. Not shown anywhere
403. Which of the following is not a cash inflow?
A. Purchase of machinery
B. Issue of shares
C. Collection from debtors
D. Sale of fixed assets
404. Sales Return is shown in:
A. Trading Account
B. Profit & Loss Account
C. Balance Sheet
D. Cash Flow Statement
405. The credit balance of the bank column in cash book indicates:
A. Overdraft
B. Cash in bank
C. Profit
D. Loan
406. Double entry system was introduced by:
A. Luca Pacioli
B. Kohler
C. Adam Smith
D. Paton
407. Discount allowed is:
A. An expense
B. An income
C. A liability
D. An asset
408. Depreciation is charged on:
A. Fixed Assets
B. Current Assets
C. Liabilities
D. Stock
409. What is the primary objective of accounting?
A. To maintain systematic records
B. To calculate tax
C. To prepare audit reports
D. To make budget
410. Prepaid Rent is shown as:
A. Current Asset
B. Current Liability
C. Expense
D. Long-term Asset
411. Which one of the following is a liability?
A. Creditors
B. Debtors
C. Stock
D. Cash
412. Closing stock is valued at:
A. Cost or market price whichever is lower
B. Market price
C. Cost price
D. Selling price
413. Which account is affected when salary is paid?
A. Salary A/c and Cash A/c
B. Salary A/c and Capital A/c
C. Capital A/c and Cash A/c
D. Salary A/c and Bank A/c
414. Bad debts written off are transferred to:
A. Profit & Loss A/c
B. Trading A/c
C. Suspense A/c
D. Capital A/c
415. In accounting, the term “goods” means:
A. Items purchased for resale
B. All assets
C. Machinery
D. Furniture
416. Outstanding expenses are:
A. Current liabilities
B. Current assets
C. Fixed assets
D. Capital
417. What is goodwill?
A. Intangible Asset
B. Current Asset
C. Liability
D. Expense
418. Which account is prepared to check arithmetical accuracy?
A. Trial Balance
B. Journal
C. Ledger
D. Profit & Loss A/c
419. Cash Sales are recorded in:
A. Cash Book
B. Purchase Book
C. Sales Book
D. Journal
420. Amount withdrawn by owner for personal use is called:
A. Drawings
B. Capital
C. Loan
D. Expense
421. Debit Note is issued when:
A. Goods are returned to supplier
B. Goods are purchased
C. Goods are sold
D. Goods are received
422. Which is not a fixed asset?
A. Debtors
B. Land
C. Machinery
D. Building
423. Which of the following is a direct expense?
A. Wages
B. Rent
C. Salary
D. Commission
424. Credit balance in cash book indicates:
A. Bank Overdraft
B. Cash balance
C. Profit
D. Income
425. If closing stock is not given, it is assumed to be:
A. Nil
B. Equal to Opening Stock
C. Equal to Purchases
D. Zero
426. Which document is used for recording credit sales?
A. Invoice
B. Cash Memo
C. Debit Note
D. Cheque
427. An increase in liability is:
A. Credited
B. Debited
C. Ignored
D. Expense
428. Salary paid in advance is a:
A. Prepaid Expense
B. Outstanding Expense
C. Revenue Expense
D. Capital Expense
429. The owner of the business is called:
A. Proprietor
B. Director
C. Partner
D. Creditor
430. Amount paid for insurance is:
A. Revenue Expense
B. Capital Expense
C. Income
D. Liability
431. The balance of cash book is:
A. Debit Balance
B. Credit Balance
C. Zero Balance
D. Contra Balance
432. Which concept assumes a business will last indefinitely?
A. Going Concern
B. Cost
C. Matching
D. Accrual
433. Revenue expenditure is shown in:
A. Profit & Loss A/c
B. Balance Sheet
C. Trading A/c
D. Trial Balance
434. Which is not a tangible asset?
A. Goodwill
B. Land
C. Furniture
D. Machinery
435. Which one is an indirect expense?
A. Salary
B. Wages
C. Carriage Inward
D. Freight
436. Return inward is also known as:
A. Sales Return
B. Purchase Return
C. Discount Received
D. Discount Allowed
437. A statement prepared to ascertain profit or loss is:
A. Profit & Loss A/c
B. Balance Sheet
C. Ledger
D. Trial Balance
438. Drawings are deducted from:
A. Capital
B. Cash
C. Bank
D. Profit
439. Balance sheet is prepared:
A. At the end of the year
B. Monthly
C. Weekly
D. Daily
440. Bank charges are recorded on:
A. Credit side of Cash Book
B. Debit side of Cash Book
C. Journal
D. Balance Sheet
441.Provision for discount on creditors is:
A. Income
B. Expense
C. Asset
D. Liability
442. Purchase Book is used for:
A. Credit purchases of goods only
B. Cash purchases
C. All purchases
D. Fixed Asset purchases
443. Which one is not part of final accounts?
A. Trial Balance
B. Trading A/c
C. Profit & Loss A/c
D. Balance Sheet
444. Bank Overdraft is shown under:
A. Current Liabilities
B. Current Assets
C. Fixed Liabilities
D. Capital
445. Bank reconciliation statement is prepared to:
A. Reconcile bank passbook with cash book
B. Find errors in the cash book
C. Find errors in bank passbook
D. Prepare trial balance
446. Depreciation is:
A. An expense
B. A liability
C. A revenue
D. An asset
447. Balance Sheet shows:
A. Financial position of the business
B. Profit of the business
C. Loss of the business
D. Income of the business
448. Closing stock is shown in:
A. Balance Sheet
B. Trading A/c
C. Profit & Loss A/c
D. Cash Flow Statement
449. Which of the following is not a source of finance?
A. Purchase of Assets
B. Issue of shares
C. Bank Loan
D. Debentures
450. Which of the following is not included in cost of goods sold?
A. Administrative Expenses
B. Opening stock
C. Purchases
D. Closing stock
451. Rent paid but not yet due is considered as:
A. Prepaid Expense
B. Outstanding Expense
C. Accrued Income
D. Contingent Liability
452. Which account is real in nature?
A. Machinery A/c
B. Capital A/c
C. Rent A/c
D. Drawings A/c
453. Freight inward is included in:
A. Cost of goods purchased
B. Selling expenses
C. General expenses
D. Office expenses
454. Rent received is a:
A. Revenue Income
B. Capital Receipt
C. Personal Income
D. Loan
455. Credit purchases are recorded in:
A. Purchase Book
B. Cash Book
C. Sales Book
D. Journal
456. Net profit is transferred to:
A. Capital A/c
B. Cash A/c
C. Drawings A/c
D. Purchases A/c
457. Which of the following is an example of capital expenditure?
A. Purchase of furniture
B. Salary paid
C. Wages
D. Rent paid
458. Which is a nominal account?
A. Commission Received
B. Building
C. Cash
D. Furniture
459. Goodwill is shown under:
A. Intangible Assets
B. Tangible Assets
C. Current Assets
D. Liabilities
460. Income received in advance is shown as:
A. Liability
B. Asset
C. Income
D. Expense
461. A cash memo is used in:
A. Cash Sales
B. Credit Sales
C. Credit Purchase
D. Cash Purchase
462. Debentures are part of:
A. Long-term liabilities
B. Current assets
C. Fixed assets
D. Expenses
463. Opening Stock is recorded on:
A. Debit side of Trading A/c
B. Credit side of Trading A/c
C. Balance Sheet
D. Journal
464. Sales Book records:
A. Credit sales of goods
B. Cash sales
C. All sales
D. Sales of fixed assets
465. Unpaid salary is shown as:
A. Outstanding Expense (Liability)
B. Asset
C. Income
D. Contingent Liability
466. Provision for discount on debtors is shown as:
A. Deduction from Debtors
B. Added to Creditors
C. Liability
D. Added to Expenses
467. Revenue receipts are:
A. Recurring in nature
B. Non-recurring
C. Capital in nature
D. Contingent
468. Which document is used in return outward?
A. Debit Note
B. Credit Note
C. Invoice
D. Cash Memo
469. Trial balance checks:
A. Arithmetical accuracy
B. Fraud
C. Closing stock
D. Net profit
470. The account which always shows a debit balance is:
A. Cash A/c
B. Capital A/c
C. Sales A/c
D. Creditors A/c
471. A suspense account is used to:
A. Rectify one-sided errors
B. Record all entries
C. Record cash transactions
D. Adjust depreciation
472. Carriage outward is:
A. Selling expense
B. Buying expense
C. Office expense
D. Capital expense
473. Unpresented cheque is:
A. Added to bank balance
B. Deducted from cash
C. Deducted from bank balance
D. Added to cash
474. Rent received in advance is:
A. Liability
B. Asset
C. Income
D. Expense
475. Net sales =
A. Total Sales – Sales Return
B. Total Sales + Purchases
C. Sales – Purchases
D. Gross Profit – Expenses
476. Outstanding salary is:
A. Liability
B. Asset
C. Income
D. Expense
477. Petty cash is used to pay:
A. Small day-to-day expenses
B. Salaries
C. Purchases
D. Fixed assets
478. Capital introduced is recorded in:
A. Journal Proper
B. Purchase Book
C. Sales Book
D. Petty Cash Book
479. Bills Receivable is:
A. Asset
B. Liability
C. Expense
D. Income
480. Bank Reconciliation Statement is prepared by:
A. Customer
B. Bank
C. Auditor
D. Government
481. Accrued income is shown as:
A. Current Asset
B. Current Liability
C. Fixed Asset
D. Expense
482. Capital Expenditure results in:
A. Acquisition of assets
B. Payment of salary
C. Payment of rent
D. Routine expense
483. Income Tax paid by sole proprietor is:
A. Drawings
B. Expense
C. Capital
D. Liability
484. Loss on sale of asset is shown in:
A. Profit & Loss A/c
B. Trading A/c
C. Balance Sheet
D. Journal Proper
485. Discount received is a:
A. Revenue Income
B. Revenue Expense
C. Capital Income
D. Asset
486. Which is a direct income?
A. Sales
B. Rent Received
C. Commission Received
D. Discount Received
487. Provision for depreciation is shown on:
A. Liabilities side of Balance Sheet
B. Asset side of Balance Sheet
C. Trading A/c
D. Journal Proper
488. Carriage inward is added to:
A. Purchases
B. Sales
C. Profit
D. Rent
489. Profit & Loss A/c shows:
A. Net profit or net loss
B. Gross Profit
C. Balance
D. Cash Flow
490. Credit balance of ledger account is shown as:
A. Liability or income
B. Asset
C. Expense
D. Loss
491. Trade Discount is:
A. Not recorded in the books
B. Recorded as income
C. Expense
D. Debited
492. Rent Outstanding is shown in:
A. Balance Sheet as liability
B. Trading A/c
C. Cash Book
D. Asset
493. Cash discount is allowed for:
A. Prompt payment
B. Bulk purchase
C. Delay in payment
D. Return of goods
494. If closing stock appears inside the trial balance, it is treated as:
A. Asset only
B. Deduction from Purchases
C. Liability
D. Not shown anywhere
495. Purchase of building is:
A. Capital Expenditure
B. Revenue Expense
C. Income
D. Asset Sale
496. Cash deposited into bank is recorded in:
A. Contra Entry
B. Journal Proper
C. Petty Cash Book
D. Ledger only
497. Which is a capital receipt?
A. Sale of fixed assets
B. Sales
C. Commission
D. Rent Received
498. Which of the following is not shown in balance sheet?
A. Drawings
B. Capital
C. Creditors
D. Debtors
499. Furniture purchased is recorded in:
A. Asset account
B. Cash account
C. Purchase book
D. Capital account
500. Income tax payable is:
A. Current Liability
B. Current Asset
C. Capital Reserve
D. Non-current Asset