Q#1: Income of the business includes:
(A) Cash sales only
(B) Credit sales only
(C) Credit purchases only
(D) Both cash sales and credit sales
Answer: (D) Both cash sales and credit sales
Q#2: Consider the following inventory using FIFO: Beginning inventory 10 units @ Rs.10, First purchase 35 units @ Rs.11, Second purchase 40 units @ Rs.12, Third purchase 20 units @ Rs.13. Eighty-five units sold. Ending inventory = ?
(A) Rs.260
(B) Rs.232
(C) Rs.284
(D) Rs.320
Answer: (C) Rs.284
Q#3: Which of the following is NOT an example of Current Asset?
(A) Bank Overdraft
(B) Accounts Receivable
(C) Notes Receivable
(D) Prepaid Expenses
Answer: (A) Bank Overdraft
Q#4: We can say that the business is in profit, when:
(A) Assets exceed Expenditure
(B) Assets exceed Liabilities
(C) Income exceeds Expenditure
(D) Income exceeds Liabilities
Answer: (C) Income exceeds Expenditure
Q#5: Essentials shown in Cash Book: Date, Narration, Cheque number
(A) (1) & (2) only
(B) (2) & (3) only
(C) (1) & (3) only
(D) (1), (2) & (3)
Answer: (D) (1), (2) & (3)
Q#6: Income of the business includes:
(A) Cash sales only
(B) Credit sales only
(C) Credit purchases only
(D) Both cash sales and credit sales
Answer: (D) Both cash sales and credit sales
Q#7: Economic resources owned by a business and expected to benefit for the future operations are called:
(A) Expenses
(B) Assets
(C) Capital
(D) Liabilities
Answer: (B) Assets
Q#8: Account credited when goods are purchased on cash:
(A) Stock account
(B) Cash account
(C) Supplier account
(D) Work in process account
Answer: (B) Cash account
Q#9: Cost of sales = 60,000; Sales = 95,000; Operating Expenses = 20,000. Net Profit = ?
(A) Rs.15,000
(B) Rs.35,000
(C) Rs.55,000
(D) Rs.60,000
Answer: (B) Rs.15,000
Calculation: 95,000 – 60,000 – 20,000 = 15,000 ✅
Q#10: Account balance shown on debit side of Trial Balance:
(A) Capital account
(B) Sundry creditors account
(C) Accounts payable account
(D) Cash account
Answer: (D) Cash account
Q#11: Account debited if business bought goods on cash from Mr. Ali:
(A) Purchases account
(B) Mr. Ali account
(C) Cash account
(D) Sales account
Answer: (A) Purchases account
Q#12: A summarized record of transactions related to individuals or things is called a/an ___
(A) Account
(B) Voucher
(C) Journal
(D) Trial balance
Answer: (A) Account
Q#13: When an asset is increased, it is recorded on:
(A) Right or debit side of the account
(B) Left or debit side of the account
(C) Left or credit side of the account
(D) Right or credit side of the account
Answer: (B) Left or debit side of the account
Q#14: Cost incurred for the maintenance of shop is considered as _________
(A) Deferred expense
(B) Capital expense
(C) Revenue expense
(D) Preliminary expense
Answer: (C) Revenue expense
Q#15: Double entry accounting system includes
(A) Accrual accounting only
(B) Cash accounting only
(C) Both cash and accrual accounting
(D) None of the given options
Answer: (C) Both cash and accrual accounting
Q#16: Allocation of cost of tangible plant asset to expense over its useful life:
(A) Appreciation
(B) Depreciation
(C) Fluctuation
(D) None of the given options
Answer: (B) Depreciation
Q#17: Under reducing balance method of depreciation:
(A) Amount of depreciation increases every year
(B) Amount of depreciation remains constant
(C) Amount of depreciation decreases every year
(D) None of the given options
Answer: (C) Amount of depreciation decreases every year
Q#18: Ending inventory using FIFO (80 units sold) from the same example:
(A) Rs.260
(B) Rs.232
(C) Rs.284
(D) Rs.320
Answer: (A) Rs.260
Q#19: Cost of asset Rs.100,000; Life 5 years; Depreciation Rs.5,000/year; Sale price Rs.50,000. Profit or Loss?
(A) Rs.25,000
(B) Rs.75,000
(C) Rs.15,000
(D) Rs.100,000
Answer: (A) Rs.25,000 Loss
Book value after 5 years = 100,000 – 5×5,000 = 75,000; Sold for 50,000 → Loss = 25,000 ✅
Q#20: In accounting, accumulated depreciation is:
(A) Treated as a reserve
(B) Treated as a contra asset
(C) Treated as a surplus
(D) Treated as an expense
Answer: (B) Treated as a contra asset
Q#21: Cash book is part of:
(A) Voucher
(B) General Journal
(C) General Ledger
(D) Trial Balance
Answer: (C) General Ledger
Q#22: Organization that converts raw material into finished goods:
(A) Trading concern
(B) Manufacturing concern
(C) Merchandising concern
(D) Service concern
Answer: (B) Manufacturing concern
Q#23: Account credited if vehicle purchased on cash:
(A) Vehicle account
(B) Cash account
(C) Business account
(D) Bank account
Answer: (B) Cash account
Q#24: Essentials shown in Bank Book: Date, Narration, Cheque number
(A) (1) & (2) only
(B) (2) & (3) only
(C) (1) & (3) only
(D) (1), (2) & (3)
Answer: (D) (1), (2) & (3)
Q#25: 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#26: Book in which receipts and payments are recorded:
(A) Pass Book
(B) Cash Book
(C) Purchase Book
(D) Sales Book
Answer: (B) Cash Book
Q#27: 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#28: Account credited when goods purchased on cash:
(A) Stock account
(B) Cash account
(C) Supplier account
(D) Work in process account
Answer: (B) Cash account
Q#29: Inventories of Trading Concern EXCEPT:
(A) Raw material
(B) Work in process
(C) Finished goods
(D) Merchandise inventory
Answer: (B) Work in process
Q#30: Word “Credit” is derived from ______ language
(A) Latin
(B) English
(C) French
(D) Chinese
Answer: (A) Latin
Q#31: “Mr. A collected cash from debtors” – Journal entry:
(A) Mr. “A” a/c Dr. and debtors a/c Cr.
(B) Mr. “A” a/c Dr. and cash a/c Cr.
(C) Cash a/c Dr. and debtors a/c Cr.
(D) None of the given options
Answer: (C) Cash a/c Dr. and debtors a/c Cr.
Q#32: Assets with limited useful life are termed as:
(A) Limited assets
(B) Depreciable assets
(C) Unlimited assets
(D) None of the given options
Answer: (B) Depreciable assets
Q#33: When Capital is increased by an amount, it is recorded on:
(A) Left or credit side of the account
(B) Right or debit side of the account
(C) Left or debit side of the account
(D) Right or credit side of the account
Answer: (A) Left or credit side of the account
Q#34: Depreciable value of an asset is equal to:
(A) Cost + scrap value
(B) Cost + market price
(C) Cost – scrap value
(D) None of the given options
Answer: (C) Cost – scrap value
Q#35: Area of accounting concerned with reporting financial information to interested parties:
(A) Cost Accounting
(B) Financial Accounting
(C) Management Accounting
(D) Tax Accounting
Answer: (B) Financial Accounting
Q#36: Effect on accounting equation if goods are purchased on cash:
(A) Increase in cash and decrease in equity
(B) Increase in cash and increase in goods
(C) Increase in goods and decrease in cash
(D) Increase in equipment and increase in equity
Answer: (C) Increase in goods and decrease in cash