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Financial Accounting MCQS With Answers pdf

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1.Accounting is a language of.
A. Accountants
B. Business
C. Economy
D. Science
ANSWER: B

2.Accounts payable are also called.
A. Creditors
B. Debtors
C. Book Debts
D. Expense
ANSWER: A

3.Concession OR deduction allowed by a trader on list price of a product on
spot of sale, is called.
A. Cash Discount
B. Discount Allowed
C. Trade Discount
D. Discount Received
ANSWER: C

4.Amount of cash or goods which is withdrawn from business for personal use of owner is recorded as.
A. Expense
B. Asset
C. Liabilities
D. Drawings
ANSWER: D

5.Sales returns are also termed as.
A. Carriage Inward
B. Return Outwards
C. Return Inwards
D. None of Above
ANSWER: C

6.In Accounting Equation income earned and received in cash is recorded as
A. Increase in Cash and increase in Capital
B. Increase in Cash and increase in Creditors
C. Increase in Cash and increase in Debtors
D. None of Above
ANSWER: A

7.In Accounting Equation (Assets – Liabilities – Capital) represent.
A. Negative balance
B. Positive Balance
C. Equal Balance
D. Zero Balance
ANSWER: D

8.In Accounting Equation cash received from debtors will.
A. Increase capital and decrease debtors
B. Increase cash and decrease debtors
C. Decrease cash and decrease debtors
D. Decrease capital and decrease debtors
ANSWER: B

9.Which of the following is correct.
A. Capital = Assets + Liabilities
B. Liabilities = Capital + Assets
C. Assets – Capital = Liabilities
D. All above
ANSWER: C

10.In Accounting Equation rent paid for office will be recorded as.
A. Decrease in cash and decrease in capital
B. Decrease in cash and increase in expense
C. Decrease in cash and increase in liability
D. Increase in cash and increase in capital
ANSWER: A

11.Collection of accounts is called.
A. Balance Sheet
B. Income Statement
C. Ledger
D. Journal
ANSWER: C

12.For purchase of Equipment on cash, following journal entry will be passed.
A. Equipment- debit and cash- credit
B. Asset debit- and cash- credit
C. Machinery- debit and accounts payable- credit
D. Machinery- debit and cash- credit
ANSWER: A

13.When goods are lost by fire which account will be credited.
A. Sales
B. Loss by fire
C. Purchases
D. Drawings
ANSWER: C

14.Which of the following accounts is contra account by nature.
A. Sales Return
B. Purchase Return
C. Drawings
D. All above
ANSWER: D

15.Which account will be credited when owner brings money or goods into the business.
A. Assets
B. Drawings
C. Capital
D. Revenue
ANSWER: C

16.A business owned by two or more individuals is called.
A. Sole proprietorship
B. Cooperative Society
C. Partnership
D. Corporation
ANSWER: C

17.Modern system of book keeping is.
A. Single Entry System
B. Modern System
C. Double Entry System
D. None of Above
ANSWER: C

18.The articles purchased for the purpose of selling are known as.
A. Merchandise
B. Assets
C. Debtors
D. Creditors
ANSWER: A

19.Economic resources which have useful life of more than one accounting period are termed as.
A. Liabilities
B. Expenses
C. Income
D. Assets
ANSWER: D

20.A summarized record of transactions relating to a person or thing is known as.
A. Journal
B. Account
C. Ledger
D. transaction
ANSWER: B

21.In Accounting Equation income earned but not received is recorded as.
A. Increase in Cash and increase in Capital
B. Increase in Cash and increase in Creditors
C. Increase in Capital and increase in Debtors
D. None of Above
ANSWER: C

22.In Accounting Equation (Assets = Liabilities + Capital) represent.
A. Negative balance
B. Positive Balance
C. Equal Balance
D. None of the Above
ANSWER: C

23.In Accounting Equation cash paid to creditors will.
A. Decrease cash and decrease creditors
B. Increase cash and decrease debtors
C. Increase capital and decrease debtors
D. Decrease capital and decrease debtors
ANSWER: A

24.Which of the following is not correct.
A. Capital = Assets – Liabilities
B. Liabilities = Capital + Assets
C. Assets – Capital = Liabilities
D. A and C
ANSWER: B

25.In Accounting Equation salaries paid to employees will be recorded as.
A. Decrease in cash and decrease in capital
B. Decrease in cash and increase in expense
C. Decrease in cash and increase in liability
D. Increase in cash and increase in capital
ANSWER: A

26.A book in which transactions are recorded chronologically is called.
A. Balance Sheet
B. Income Statement
C. Ledger
D. Journal
ANSWER: D

27.For purchase of machinery on credit, following journal entry will be passed.
A. Merchandise- debit and accounts payable- credit
B. Asset debit- and accounts payable- credit
C. Machinery- debit and accounts payable- credit
D. Machinery- debit and cash- credit
ANSWER: C

28.When goods are given as donation which account will be credited.
A. Sales
B. Donation
C. Purchases
D. Drawings
ANSWER: C

29.For sale of furniture on credit, following journal entry will be passed.
A. Furniture- debit and accounts payable- credit
B. Asset debit- and accounts payable- credit
C. Accounts receivable- debit and sales- credit
D. Accounts receivable- debit and furniture- credit
ANSWER: D

30.Which account will be debited when owner withdrew money or goods from business.
A. Expense
B. Drawings
C. Capital
D. Debtors
ANSWER: B

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