Q#1: 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#2: What will be the effect on accounting equation when payment is made to the creditor of the business?
(A) Increase in an asset, increase in owner’s equity
(B) Increase in an asset, increase in a liability
(C) Decrease in an asset, decrease in owner’s equity
(D) Decrease in an asset, decrease in a liability
Answer: (D) Decrease in an asset, decrease in a liability
Q#3: Which of the following financial statement summarizes the profitability of an organization for a particular period?
(A) Balance Sheet
(B) Trading and Profit & Loss account
(C) Cash Flow Statement
(D) Statement of Retained Earnings
Answer: (B) Trading and Profit & Loss account
Q#4: Which of the following account balance will be shown on debit side of Trial Balance?
(A) Cash account
(B) Furniture account
(C) Vehicle account
(D) All of the given options
Answer: (D) All of the given options
Q#5: Which of the following is NOT a type of voucher?
(A) Journal Voucher
(B) Receipt Voucher
(C) Payment Voucher
(D) Drawings Voucher
Answer: (D) Drawings Voucher
Q#6: What would be the value of total factory cost if material consumed = Rs. 6,000, labor cost = Rs. 2,000 and factory overhead = Rs. 2,500?
(A) Rs. 6,000
(B) Rs. 8,000
(C) Rs. 4,500
(D) Rs. 10,500
Answer: (D) Rs. 10,500
Q#7: All the costs incurred on incomplete assets up to the balance sheet date must be transferred to:
(A) Capital account
(B) Capital work in progress account
(C) Relevant asset account
(D) Owner’s equity account
Answer: (B) Capital work in progress account
Q#8: Accounting is the language of:
(A) Business
(B) School
(C) Proprietor
(D) Management
Answer: (A) Business
Q#9: An accounting system is used by a business to:
(A) Analyze transactions
(B) Handle routine book-keeping tasks
(C) Classify and summarize financial information
(D) All of the given options
Answer: (D) All of the given options
Q#10: Mr. A sold goods for Rs. 300,000 to Mr. B. This amount will be treated as ______ for the business of Mr. A.
(A) Revenue
(B) Net profit
(C) Gross profit
(D) Operating profit
Answer: (A) Revenue
Q#11: Normally the practice of Book Keeping under Single Entry System is followed by:
(A) Small businesses only
(B) Governments only
(C) Large scale businesses only
(D) Both small businesses and governments
Answer: (A) Small businesses only
Q#12: The amount brought by the proprietor in the business should be credited to:
(A) Cash account
(B) Capital account
(C) Drawings account
(D) Assets account
Answer: (B) Capital account
Q#13: Which of the following shows a debit balance under normal circumstances?
(A) Asset
(B) Capital
(C) Liability
(D) Profit
Answer: (A) Asset
Q#14: Which of the following is TRUE with respect to the rules of Debit & Credit?
(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#15: Wages of workmen employed for setting up new machinery should be debited to:
(A) Expenses account
(B) Wages account
(C) Salaries account
(D) Machinery account
Answer: (D) Machinery account