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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-1 section-5

Each section contains 100 MCQs on Accounting .
1
Which of the following is not a transaction?
Discuss
Answer & Solution
Answer: Option D
Solution:
An employee dismissed from the job is not a transaction. A transaction is an agreement between a buyer and a seller to exchange goods, services or financial instruments.
2
A promissory note is drawn by ______ in favor of _____
Discuss
Answer & Solution
Answer: Option B
Solution:
A promissory note is drawn by Maker in favor of Payee. Maker or Drawer is the person who makes or draws the promissory note. He is also called the promisor. Drawee or Payee is the person in whose favour the promissory note is drawn.
3
____ principle requires that the same accounting method should be used from one accounting period to the next
Discuss
Answer & Solution
Answer: Option B
Solution:
Consistency principle requires that the same accounting method should be used from one accounting period to the next.
4
The left side of an account is known as ___ and the right side as ____
Discuss
Answer & Solution
Answer: Option A
Solution:
The left side of an account is known as Debit and the right side as Credit. Asset accounts such as Cash, Accounts Receivable, Inventory, and Equipment should have debit balances. Liabilities are on the right side of the accounting equation.
5
The cost of a small calculator is treated as an expense and not shown as an asset in a financial statement of a business entity due to
Discuss
Answer & Solution
Answer: Option A
Solution:
The cost of a small calculator is treated as an expense and not shown as an asset in a financial statement of a business entity due to Materiality concept. The materiality concept refers to a situation where the financial information of a company is considered to be material from the point of view of the preparation of the financial statements if it has the potential to alter the view or opinion of a reasonable person.
6
A minimum quantity of stock always held as precaution against out of stock situation is called
Discuss
Answer & Solution
Answer: Option C
Solution:
A minimum quantity of stock always held as precaution against out of stock situation is called Base stock.
7
Discounting of bill by the drawer is done with
Discuss
Answer & Solution
Answer: Option C
Solution:
Discounting of bill by the drawer is done with Bank. An accepted draft or bill of exchange sold for early payment to a bank or credit institution at less than face value after the bank deducts fees and applicable interest charges.
8
A bill of exchange when drawn requires
Discuss
Answer & Solution
Answer: Option C
Solution:
A bill of exchange when drawn requires acceptance. By acceptance, the drawee engages himself to pay the amount from the bill of exchange to the person who will bear or hold it on the due term.
9
A bill of exchange is called a ____ by one who is liable to pay it on the due date
Discuss
Answer & Solution
Answer: Option C
Solution:
A bill of exchange is called a Bill payable by one who is liable to pay it on the due date. It is a written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum, either immediately (a sight bill) or on a fixed date (a term bill), for payment of goods and/or services received.
10
___ days of grace are allowed in case of time bills, for calculating date of maturity
Discuss
Answer & Solution
Answer: Option C
Solution:
3 days of grace are allowed in case of time bills, for calculating date of maturity. Legal due date of a term/usance bill will be the last day of grace ( maturity date plus three days of grace is the legal due date).