Q#1: The accounting concept according to which business is independent from its owner is called:
(A) Separate Entity Concept
(B) Matching Concept
(C) Going Concern Concept
(D) Materiality Concept
Answer: (A) Separate Entity Concept
Q#2: According to the double entry system, an account that obtains benefit is:
(A) Debit
(B) Credit
(C) Income
(D) No need to show as accounting record
Answer: (A) Debit
Q#3: Commercial accounting is based on:
(A) Single entry book keeping
(B) Double entry book keeping
(C) Both single and double entry book keeping
(D) Cash basis of book keeping
Answer: (B) Double entry book keeping
Q#4: Assets = Rs.50,000 and Liabilities = Rs.10,000. Equity will be:
(A) Rs. 40,000
(B) Rs. 60,000
(C) Rs. 10,000
(D) Rs. 50,000
Answer: (A) Rs. 40,000
Q#5: Excess of income over expenses in Income & Expenditure Account is called:
(A) Profit
(B) Loss
(C) Surplus
(D) Deficit
Answer: (C) Surplus
Q#6: Accrued expenses are an example of:
(A) Current liabilities
(B) Long term liabilities
(C) Deferred costs
(D) Capital expenses
Answer: (A) Current liabilities
Q#7: Cost of Goods Sold (COGS) formula is:
(A) Beginning inventory + Purchases – Work in Process
(B) Beginning inventory + Purchases – Sales
(C) Beginning inventory + Purchases – Ending inventory
(D) Ending inventory + Purchases – Beginning inventory
Answer: (C) Beginning inventory + Purchases – Ending inventory
Q#8: Which statement is correct about closing stock
(A) Appears in assets side of balance sheet
(B) Decreases cost of goods sold
(C) Becomes opening stock of next year
(D) All of the given options
Answer: (D) All of the given options
Q#10: Investment in business by the owners is called:
(A) Capital
(B) Liability
(C) Asset
(D) Profit
Answer: (A) Capital
Q#11: Which of the following is an example of liability?
(A) Accounts payable
(B) Accounts receivable
(C) Commission received
(D) Commission paid
Answer: (A) Accounts payable
Q#12: Which of the following is an example of expense?
(A) Accounts payable
(B) Accounts receivable
(C) Salary received
(D) Salary paid
Answer: (D) Salary paid
Q#13: Which statement is TRUE regarding Debit & Credit rules?
(A) Increase in capital is Credit
(B) Decrease in capital is Debit
(C) Increase in expense is Debit
(D) All of the given options
Answer: (D) All of the given options
Q#14: When goods are given as charity or free samples, purchases account is:
(A) Debited
(B) Credited
(C) Recorded in balance sheet
(D) None of the given options
Answer: (B) Credited
Q#15: Payment of Rs.500 for bringing a machine to factory will be debited to:
(A) Saeed & Co.
(B) Cash account
(C) Machinery account
(D) Carriage account
Answer: (C) Machinery account
Q#16: Cash sales are recorded in:
(A) Cash book
(B) Debtor’s book
(C) Sales book and cash book
(D) Sales book
Answer: (C) Sales book and cash book
Q#17: Which statement is TRUE about Profit & Loss Account?
(A) It shows financial performance of business
(B) Prepared for a specific period
(C) Prepared after trial balance
(D) All of the given options
Answer: (D) All of the given options
Q#18: Which account will be credited when Rs.10,000 is withdrawn from bank for business use?
(A) Cash account
(B) Bank account
(C) Drawings account
(D) Capital account
Answer: (B) Bank account
Q#19: Alternate term for Capital is:
(A) Opening capital
(B) Owner’s net worth
(C) Working capital
(D) Closing capital
Answer: (B) Owner’s net worth
Q#20: Which voucher is used to record payments of cash or cheque?
(A) Journal Voucher
(B) Receipt Voucher
(C) Payment Voucher
(D) Cash voucher
Answer: (C) Payment Voucher