Accounting Mcqs – MCQs

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1.Which of the following columns is absent in a three-column cash book?

2.When calculating funds from operations, how should gains and losses on the disposal of non-current assets be treated in relation to net profit?

Included as an addition for gains and subtracted for lossesAdded to net profit for both gains and lossesSubtracted from net profit for gains and added for lossesSubtracted from net profit for both gains and lossesNo adjustment is required

3.Which of the following represents a one-sided error in accounting?

A purchase of old equipment worth 500 not recorded anywhere in the accountsAn amount of 500 recorded as a credit in the travelling expenses accountBoth of the aboveNeither of the aboveNot applicable

4.Which of the following represents a principle-based accounting error?

5,000 received from Sham was mistakenly credited to Ram's account5,000 spent on installing new machinery was recorded under travelling expenses500 paid for wages was incorrectly debited to the salary account500 worth of raw materials purchased was wrongly charged to the purchase accountNone of the above

5.Which type of accounting errors impact multiple accounts simultaneously?

Errors involving total omission of transactionsErrors violating fundamental accounting principlesErrors arising from recording in incorrect accountsAll of the aboveNone of these

6.Which type of error impacts just a single account in accounting?

7.Which of the following costs should not be capitalized as part of fixed asset value?

Interest on loans or deferred payment obligations related to acquiring or constructing fixed assets prior to their operational readinessEquipment held in reserve and maintenance toolsCosts associated with test runs and trial production phasesGeneral administrative and overhead expensesNone of the above

8.Which of the following actions improves the revenue-generating potential of an asset?

Boosting the operational capacity of the assetLowering the expenses associated with asset operationRepairing or substituting broken components of the assetBoth enhancing operational capacity and fixing damaged partsNone of the above

9.Which of the following expenditures is classified as a capital expense?

Payments made to Directors as compensation upon ending their tenureCosts related to renewing a Trade Mark registrationGratuity payments made to Directors when their services endInstallment royalties paid for acquiring rights to produce and market patented drugsNone of the above

10.Which of the following best describes events occurring after the Balance Sheet date?

All material occurrences taking place after the Balance Sheet dateEvents happening between the Balance Sheet date and the filing with the Registrar of CompaniesEvents occurring after the Balance Sheet date but before the Board of Directors approves the financial statementsAny modifications made after the Balance Sheet date prior to its approvalNone of the above

11.Which of the following expenditures should be classified as a revenue expense?

Amount spent on constructing a new manufacturing facilityLoss suffered while expanding the seating capacity of a hotelPenalty paid due to violation of a contract for the delivery of goodsCost of repairing a used machine after purchaseNone of the above

12.Which of the following account balances remains recorded after being transferred to the Trading Account?

14.Which of the following does not qualify as a deferred revenue expenditure?

Costs related to the issuance of equity sharesExpenses incurred prior to starting operationsSignificant advertising costs for launching a new productLegal fees paid to defend a breach of contract lawsuit regarding goods supplyNone of the above

15.Which of the following best describes capital expenditure?

An expense that provides benefits only within the current financial yearA cost that will generate benefits in the upcoming financial periodAn outlay that leads to the purchase of a long-term assetAn expenditure incurred to obtain a short-term assetNone of the above

16.Which of the following items should not be classified as a revenue expenditure?

Interest expenses on borrowed funds and debenturesYearly fire insurance charges for machinery and equipmentSales tax incurred when acquiring office equipmentMinor costs on durable assets, like ₹20 spent on a paperweightNone of the above

17.Which type of error causes a Trial Balance to be out of balance?

Error made while balancing an accountFailure to enter a transaction in the subsidiary booksIncorrect recording of a transaction in the subsidiary booksPosting to the correct side but in an incorrect accountNone of the above

18.An accountant at Leo Ltd. recorded a cheque payment to a supplier as 1,340.56, whereas the bank processed the cheque correctly for 3,140.56. No correcting entries have been made, and the discrepancy was not identified during bank reconciliation. What is the effect of this error?

The Trial Balance will show discrepanciesThe creditor's account is reported lower than actualMaterial purchases are recorded at a lesser amountThe bank statement balance will appear lower than the cash book balanceNo impact on financial records

19.If the beginning inventory for the current year is overstated by 5,000 and the ending inventory is overstated by 12,000, how will these inventory errors impact the net income for the year?

Net income will be overstated by 17,000.Net income will be understated by 12,000.Net income will be overstated by 7,000.Net income will be understated by 7,000.There will be no effect on net income.