Accounting MCQ Questions and Solutions with Explanations

Accounting MCQ Questions and Solutions with Explanations | Commerce

Accounting MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Accounting MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-7 section-3

Which of the following is a selling expense?

A) Any tax/freight is paid on purchases B) General salaries paid to laborers C) Tax & freight paid on sale D) Interest on deposits

Discuss

Answer & Solution

Answer: Option C

Solution:

Tax & freight paid on sale is a selling expense. Selling expense (or sales expense) includes any costs incurred by the sales department.

A debit balance in the bank statement indicates

A) Cash at bank B) Bank overdraft C) Over payment to creditors D) Cash in hand

Discuss

Answer & Solution

Answer: Option B

Solution:

A debit balance in the bank statement indicates Bank overdraft. Overdrafts are where the bank account becomes negative and the businesses in effect have borrowed from the bank.

Which one of the following is NOT true about capital expenditure?

A) Creates future benefits B) Incurred to acquire fixed assets C) Incurred to increase the economic life of existing fixed assets D) Reduce the profit of the concern

Discuss

Answer & Solution

Answer: Option D

Solution:

Capital expenditure does not reduce the profit of the concern. Capital expenditures refer to funds that are used by a company for the purchase, improvement, or maintenance of long-term assets to improve the efficiency or capacity of the company.

Which of the following is not an item of Balance Sheet?

A) Accounts receivable B) Accounts payable C) Sales revenue D) Marketable securities

Discuss

Answer & Solution

Answer: Option C

Solution:

Sales revenue is not an item of Balance Sheet. Sales revenue is the amount realized by a business from the sale of goods or services.

In an account, when credit side total < debit side total, then, the balance is known as

A) Negative balance B) Debit balance C) Positive balance D) Credit balance

Discuss

Answer & Solution

Answer: Option B

Solution:

In an account, when credit side total < debit side total, then, the balance is known as Debit balance. It is the positive balance in the left side of the account.

Which of the following is used to record financial transactions in chronological (day-to-day) order?

A) Voucher B) General Journal C) General Ledger D) Trial Balance

Discuss

Answer & Solution

Answer: Option B

Solution:

General Journal is used to record financial transactions in chronological (day-to-day) order.

Net Profit = Gross Profit minus

A) Operating expenses B) Product cost C) Deferred expenses D) Direct cost

Discuss

Answer & Solution

Answer: Option A

Solution:

Net Profit = Gross Profit minus Operating expenses.

Money spent to acquire or upgrade physical assets is known as

A) Revenue expense B) Capital expense C) Administrative expense D) Operating expense

Discuss

Answer & Solution

Answer: Option B

Solution:

Money spent to acquire or upgrade physical assets is known as Capital expense, as the asset is expected to be utilised in a long run.

Salaries paid in advance should be shown on

A) Asset side of the Balance sheet B) Liability side of the Balance sheet C) Credit side of the Trading account D) All of the above

Discuss

Answer & Solution

Answer: Option A

Solution:

Salaries paid in advance should be shown on Asset side of the Balance sheet. An advance paid is recorded as a current asset in the company's balance sheet.

Which of the following assets are shown at written down value in Balance sheet?

A) Current assets B) Liquid asset C) Floating assets D) Fixed asset

Discuss

Answer & Solution

Answer: Option D

Solution:

Fixed asset are shown at written down value in Balance sheet. If the asset is not impaired and the company operates under GAAP, then the cost model must be used.