Accounting MCQs / Q&A

A. Profit and Loss A/c
B. Trading A/c
C. Deducted from the concerned assets A/c
D. Shown on the liability side

A. Trading A/c and Balance Sheet
B. Profit and Loss A/c
C. Balance Sheet only
D. Trading A/c only

A. At the time of opening new books of account
B. At the time of closing the accounts
C. During the course of accounting period any time
D. After certification of accounts

i. Income received in advance
ii. Stock
iii. Debtors
iv. Pre-paid expenses
v. Accrued income
A. Both (i) and (iv) above
B. Both (ii) and (iii) above
C. (i),(ii) and (iii) above
D. (ii),(iii),(iv) and (v) above

A. Debts included in Sundry Debtors which are doubtful in nature
B. Uncalled liability on partly paid s
C. Claims against the company not acknowledged as debts
D. Arrears of fixed cumulative dividend
A contingent liability is the loss which will be known or determined only on the
occurrence or non- occurrence of one or more future uncertain events. Debts of debtors is not an uncertain event but only the realization of a part of the debt in doubtful for which provision must be provided and hence it is not a contingent liability. Items in other alternatives uncalled liability on partly paid s B. may be called up in the event of necessity, claims against the company not acknowledged as debts (c ) they may or may not turn out to be debts in future. Arrears of cumulative fixed dividend D. are contingent liabilities.

A. Business entity concept
B. Money measurement concept
C. Going concern concept
D. Matching concept
A. capital is the contribution made by the owner(s) and is regarded as a liability to the business in the nature of owner‘s equity. The underlying feature for this treatment is the distinction between the owner(s) and that of the business owned by them. According to business entry concept whenever an owner brings capital into the business, the business in turn is deemed to owe the capital to the owner. As such the capital account is treated as a liability to the business and shown under liabilities.
The other concepts are not correct because,
B. Money measurement concept explains that in financial accountancy, a record is made only of information that can be expressed in monetary terms and ignores other events, however significant they may be. It is silent about the treatment of capital account.
C. Going concern concept explains that the resources of the concern would continue to be used for the purposes for which they are meant to be used. The very categorization of assets into fixed and current presupposes the going concern concept. It does not deal about the treatment of capital account.
D. Conservatism concept: The theme behind this principle is that recognition of revenue requires better evidence than recognition of expenses. It deals with revenues and expenses and not the capital account.

A. Prepaid expenses
B. Trademark
C. Discount on issue of s
D. Outstanding Salaries
Outstanding salaries are short term obligations expected to be paid off during the short period of time. So, it is a current liability. Prepaid expenses, trademark and discount on issue of s are assets. Hence, D. is correct answer

A. Trade mark
B. Franchise
C. Accounts Receivable
D. Secret Profit
An accounts receivable is not an intangible asset. It is the amount that the business has to receive from its debtors. The other assets mentioned in alternatives a, b, and d- trademark, franchises and secret processes are intangible assets. Hence, the correct answer is C.

A. Current assets
B. Intangible assets
C. Deferred revenue expenditure
D. Not an asset
Computers taken on hire by a business for a period of twelve months is not an asset because it is not owned by the business to be classified as asset. Thus, the correct answer is D.. Since it is not an asset it cannot be classified as any asset and other alternatives are not the correct
answers.

i. Stock at the end of the financial year
ii. Stock at the beginning of the financial year
iii. Drawings
iv. Prepaid Rent
v. Interest received but not yet earned
A. Only (i) above
B. Only (iii) above
C. Both (i)and (iii) above
D. (i), (iii), (iv) and (v) above
Stock at the end of the financial year is the closing stock, drawings are the amounts withdrawn by the owner of the business for personal use; and prepaid rent is the amount of rent which is paid in advance of the current financial year and interest received but not yet earned is the amount of interest received which does not pertain to the current year are the items that appear in the Balance Sheet of a business. Stock at the beginning of the financial year is the opening stock that appears in Trading Account of a business and not in the Balance Sheet. Thus D., the combination of all the accounts in alternatives (i), (iii), (iv) and (v) is the correct answer.]