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-4

Which of the following is a long term liability?

A) Outstanding expenses B) Share capital C) Debentures D) All of the above

Discuss

Answer & Solution

Answer: Option C

Solution:

Debentures is a long term liability. Long-term liabilities are financial obligations of a company that become due more than one year. In accounting, they form a section of the balance sheet that lists liabilities not due within the next 12 months including debentures, loans, deferred tax liabilities and pension obligations.

Drawing is a type of

A) Expense B) Withdrawal of capital C) Income D) None of the above

Discuss

Answer & Solution

Answer: Option B

Solution:

Drawing is a type of Withdrawal of capital. An owner's drawing affects the capital account of a balance sheet, whereas a withdrawal has no such effect.

Profit is a part of

A) Income B) Owner's capital C) Assets D) All of the above

Discuss

Answer & Solution

Answer: Option B

Solution:

Profit is a part of Owner's capital. When a company generates a profit and retains a portion of that profit after subtracting all of its costs, the owner's equity generally rises.

Petty cash is used for payment of

A) Salaries & wages of the staff B) For purchase of assets C) Small expenses relating to postage's and conveyance etc. D) All of the above

Discuss

Answer & Solution

Answer: Option C

Solution:

Petty cash is used for payment of Small expenses relating to postage's and conveyance etc. Petty Cash is a current asset account; it is part of a company's cash.

Promissory note is prepared by

A) Drawer B) Endorsee C) Drawee D) All of the above

Discuss

Answer & Solution

Answer: Option A

Solution:

Promissory note is prepared by Drawer. Promissory note is prepared and signed by the a person / organisation ( borrower) while borrowing money from a lender.

Which reserve is not shown in the Balance sheet?

A) Secret reserve B) General reserve C) Capital reserve D) All of the above

Discuss

Answer & Solution

Answer: Option A

Solution:

Secret reserve is not shown in the Balance sheet. The term secret reserve refers to a reserve the existence of which is not disclosed in the Balance Sheet. It can be said that there is a surplus of assets over liabilities and that surplus is not disclosed or shown by the Balance Sheet.

Which liability is not included in the total of Balance Sheet?

A) Current liabilities B) Contingent liabilities C) Fixed liabilities D) All of the above

Discuss

Answer & Solution

Answer: Option B

Solution:

Contingent liabilities is not included in the total of Balance Sheet. The contingent liability will be disclosed in the notes to the financial statements.

Revenue expenditures are recorded in the

A) Manufacturing account B) Trading account C) Profit & loss account D) All of the above

Discuss

Answer & Solution

Answer: Option D

Solution:

Revenue expenditures are recorded in the Manufacturing account, Trading account and Profit & loss account.

In case of opening Credit Balance, the word ______ are written on the credit side.

A) By Balance b/d B) To Balance b/d C) By Balance c/d D) To Balance c/d

Discuss

Answer & Solution

Answer: Option A

Solution:

In case of opening Credit Balance, the word By Balance b/d are written on the credit side.

Preliminary expenses are treated as

A) Fixed asstes B) Current assets C) Intangible assets D) Miscellaneous expenditure

Discuss

Answer & Solution

Answer: Option D

Solution:

Preliminary expenses are treated as Miscellaneous expenditure. Preliminary expenses are those that are incurred before incorporation of a company or commencement of business.