Set#01 (Accounting) Flashcards by Compitative Exams MCQs

A systematic way to maintain the books of accounts is called_________?
0

A. Accountancy
B. Economics
C. Book Keeping
D. Auditing

C. Book Keeping

How well did you know this?

Not at all

Perfectly

An Art of reading, classifying & Summarizing of accounts in a systematic way is called__________?
0

A. Accounting
B. Accountancy
C. Auditing
D. Book Keeping

A. Accounting

How well did you know this?

Not at all

Perfectly

The maintenance of accounts in a systematic way is called__________?
0

A. Accounting
B. Reading
C. Book Keeping
D. Auditing

C. Book Keeping

How well did you know this?

Not at all

Perfectly

Goods Return by the customer are termed as :
0

A. Purchase return
B. Customer return
C. Sales return
D. Inventory return

C. Sales return

How well did you know this?

Not at all

Perfectly

Modern system of book keeping is called______________?
0

A. Double entry system
B. American system
C. Single entry system
D. Italic system

A. Double entry system

How well did you know this?

Not at all

Perfectly

The person to whom goods are sold on credit is called___________?
0

A. Buyer
B. Seller
C. Debtor
D. Creditor

C. Debtor

How well did you know this?

Not at all

Perfectly

Double entry means______________?
0

A. Entry in two sets of books
B. Entry at two ends
C. Entry at two dates
D. Entry for two aspects of the transaction

D. Entry for two aspects of the transaction

How well did you know this?

Not at all

Perfectly

Discount received is a/an:
1

A. Asset
B. Expense
C. Liability
D. Revenue

D. Revenue

How well did you know this?

Not at all

Perfectly

Obligation of the Business are known as___________?
0

A. Liabilities
B. Revenues
C. Expenses
D. Assets

A. Liabilities

How well did you know this?

Not at all

Perfectly

The amount invested by the proprietor to start the business is called:
0

A. Capital
B. Business
C. Drawings
D. All of them

A. Capital

How well did you know this?

Not at all

Perfectly

Cash discount is provided on _______________?
0

A. Purchases
B. Prompt payment
C. Sales
D. Sales return

B. Prompt payment

How well did you know this?

Not at all

Perfectly

Goods return to supplier are known as:__________?
4

A. Merchandise return
B. Purchase return
C. Return inwards
D. Sales return

B. Purchase return

How well did you know this?

Not at all

Perfectly

The excess of current assets over current liabilities is called:
0

A. Working Capital
B. Circulating capital
C. Fixed capital
D. Trading capital

A. Working Capital

How well did you know this?

Not at all

Perfectly

When goods, in which business deals are sold, it is called___________?
0

A. Purchases
B. Return inward
C. Sales
D. Return outwards

C. Sales

How well did you know this?

Not at all

Perfectly

Sales return is also known as____________?
0

A. Return received
B. Return Payed
C. Return inward
D. Return outward

C. Return inward

How well did you know this?

Not at all

Perfectly

reduction in price is called:
0

A. Paid price
B. Invoice price
C. Book price
D. Discount

D. Discount

How well did you know this?

Not at all

Perfectly

Cash brought by the owner to start business is called__________?
2

A. Capital
B. Loan
C. Drawing
D. None of these

A. Capital

How well did you know this?

Not at all

Perfectly

The concession received on the price of defective goods is called:
0

A. Discount
B. Cash discount
C. Allowance
D. Trading discount

C. Allowance

How well did you know this?

Not at all

Perfectly

In support of business transaction, any written evidence is called ___________?
0

A. Discount
B. Voucher
C. Allowance
D. Price

B. Voucher

How well did you know this?

Not at all

Perfectly

Building and furniture are called ____________?
0

A. Current asset
B. Fictitious asset
C. Tangible asset
D. Fixed assets

D. Fixed assets

How well did you know this?

Not at all

Perfectly

For the business, capital is ____________?

A. Expense
B. Liability
C. financial assets
D. All of them

C. financial assets

How well did you know this?

Not at all

Perfectly

When owner withdraw cash for its private use, it is called ___________?
0

A. Profit
B. Income
C. Expense
D. Drawing

D. Drawing

How well did you know this?

Not at all

Perfectly

Assets having physical existence are called ___________?
0

A. Current asset
B. intangible asset
C. Tangible asset
D. Liquid asset

B. intangible asset

How well did you know this?

Not at all

Perfectly

The assets which have some market value are called ____________?
0

A. Fixed asset
B. Quick asset
C. Fictitious assets
D. Real assets

D. Real assets

How well did you know this?

Not at all

Perfectly

The assets which come into existence upon the happening of a certain event are called__________? 0 A. Contingent assets B. Fixed assets C. Fictitious assets D. Quick assets

A. Contingent assets

Income earned but not received is called ____________? 3 A. Fictitious assets B. Quick asset C. Real asset D. Outstanding asset

D. Outstanding asset

Debts which are payable in the course of a month are called _____________? 0 A. External liabilities B. Fixed liabilities C. Current liabilities D. Liquid Liabilities

C. Current liabilities

The unsold goods are ______________? 0 A. Equity B. Sale return C. Inventory D. Purchases

C. Inventory

The systems of accounting are _____________? 1 A. Two B. Three C. Five D. Six

A. Two

A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________? 0 A. Error of omission B. Error of commission C. Compensating error D. Error of principle

B. Error of commission

Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of____________? 1 A. Error of principle B. Error of commission C. Error of omission D. Error of duplication

A. Error of principle

Institute of Chartered Accountants of Pakistan was established in____________? 0 A. 1949 B. 1956 C. 1961 D. 1972

C. 1961

Trial balance is prepared to check accuracy of_______________? 0 A. Ledger accounts balances B. Balance sheet balances C. Income statement balances D. Cash flow statement balances

A. Ledger accounts balances

If a transaction is completely omitted from the books of accounts, will it affect the agreement of a trial balance? 0 A. Yes B. No C. Transactions can’t be omitted D. none of these

B. No

________ is the common base for preparing a trial balance? 0 A. Ledger accounts B. General Journal C. Specialized journals D. Balance sheet

A. Ledger accounts

Which of the following is true about a trial balance? 0 A. It lists down the balances of accounts B. It lists down the balances of a balance sheet C. It is a kind of financial statement D. It is not a part of accounting cycle

A. It lists down the balances of accounts

Debit balance = Credit balance in a trial balance indicates that: 0 A. No error in recording transactions B. No error in posting entries to ledger accounts C. Account balances are correct D. Mathematically Capital+Liabilities=Assets

D. Mathematically Capital+Liabilities=Assets

Trial balance is commonly prepared? 0 A. Frequently during the year B. At the end of an accounting period C. At the end of a month D. At the end of a year

B. At the end of an accounting period

Which of the following will affect the agreement of a trial balance? 0 A. Complete omission of a transaction B. Partial omission of a transaction C. Error of principle D. Compensating errors

B. Partial omission of a transaction

If debit balances = credit balances, trial balance only shows or check the ____________ and it does not indicate that no errors were made during recording and posting. 0 A. Arithmetic accuracy B. Errors of commission C. Omissions of economic events D. Understatements of balances

A. Arithmetic accuracy

Which of the following account with normal balance is shown at the debit side of a trial balance? 0 A. Rent income account B. Creditors account C. Unearned income account D. Cash account

D. Cash account

Which of the following account with normal balance is shown at the credit side of a trial balance? 0 A. Cash account B. Bank account C. Equipment account D. Accrued expenses account

D. Accrued expenses account

Which of the following specialized journals records “goods returned by customers”? 0 A. Purchase journal B. Sales journal C. Purchases return journal D. Sales return journal

D. Sales return journal

Sales on credit is recorded in which of the following journal? 0 A. Purchase journal B. Sales journal C. Purchases return journal D. Sales return journal

B. Sales journal

Transactions that a BUSINESS doesn’t record in any specialised journal are recorded in which of the following journals or day books? 0 A. Cash payments journal B. Cash receipts journal C. Purchases return journal D. General journal

D. General journal

Another name of journal is_____________? 0 A. Specialized journal B. Day book C. Cash book D. Record book

B. Day book

Which of the following specialised journals will record “goods returned by the BUSINESS “? 0 A. Purchase journal B. Sales journal C. Purchases return journal D. Sales return journal

C. Purchases return journal

Sales and purchase journal don’t record__________? 0 A. Credit sales B. Credit purchases C. Credit sales and purchases D. Cash sales and purchases

D. Cash sales and purchases

Cash received from debtor is recorded in which of the following SPECIALIZED journals? 0 A. Purchase journal B. Sales journal C. Cash receipts D. Cash payments journal

C. Cash receipts

Which of the following is a type of cash receipt journal + cash payment journal? 0 A. Bank statement B. Statement of cash flow C. Cash book D. Cash documents

C. Cash book

Cash purchases is recorded in which of the following specialized journals? 0 A. Purchase journal B. Sales journal C. Purchases return journal D. Cash payments journal

D. Cash payments journal

A brief explanation recorded below every entry in general journal is commonly known as__________? 0 A. Narration B. Explanation C. Summary D. Other information

A. Narration

Credit purchase of plant and machinery is recorded in which of the following journals? 19 A. General journal B. Cash journal C. Purchase journal D. Purchase return journal

A. General journal

Debit note is the basis for recording a transaction in which of the following journals? 4 A. General journal B. Cash journal C. Purchase journal D. Purchase return journal

D. Purchase return journal

SALE of old furniture” will be recorded in which of the following specialised journals? 0 A. Purchase journal B. Sales journal C. General journal D. Cash receipt journal

B. Sales journal

Specialized journals are more adequate for which TYPE OF BUSINESSES? 0 A. Small businesses B. Big businesses C. Sole proprietorship D. Partnership

B. Big businesses

Which of the following is known as an evidence that a transaction took place? 0 A. Cash receipts journal B. General journal C. Source document D. Cash book

C. Source document

BUSINESS paid rent amounting to $100″ which of the following specialized journals records this transaction? 0 A. Cash receipts journal B. Cash payments journal C. Sales journal D. Purchase journal

B. Cash payments journal

Credit memo or credit note No. is entered in which of the following journal? 4 A. General journal B. Cash journal C. Purchase journal D. Sales return day book

D. Sales return day book

In accounting an Economic event is referred to as: 0 A. Cash B. Bank statement C. Transaction D. Exchange of money

C. Transaction

Identify the correct sequence of accounting process 0 A. Communicating→Recording→Identifying B. Recording→Communicating→Identifying C. Identifying→communicating→recording D. Identifying→recording→communicating

D. Identifying→recording→communicating

Bookkeeping mainly concerns with which part of accounting process? 1 A. Analyzing B. Preparing financial statements C. Recording financial information D. Auditing the books of accounts

C. Recording financial information

Financial accounting provides financial information to all of the following external users except: 0 A. Government agencies B. investors C. Creditors D. Managers

D. Managers

For which step of accounting process the accountants of business entity prepare financial statements? 0 A. Identification of economic event B. Communication of financial information C. Recording financial information D. Making decisions about business

B. Communication of financial information

Keeping the log of financial information in books of original entries is called__________? 0 A. Recording B. summarizing C. Grouping D. Processing

A. Recording

Auditing is what? 1 A. Reporting the financial information B. Examination of financial statements C. Preparation financial statements D. maintaining the ledger records

B. Examination of financial statements

Which of the following is the external user of financial statements? 1 A. Manager of the business B. CEO of the business C. Creditor of the business D. Controller of the business

C. Creditor of the business

Which of the following is the internal user of financial statements? 0 A. Creditor of the business B. Government agency C. Shareholder of the business D. Manager of the business

D. Manager of the business

_________ is the first phase of accounting cycle? 0 A. Identifying an economic event or transaction B. Preparing journals C. Posting entries to ledger accounts D. Making decisions about business

A. Identifying an economic event or transaction

Financial statements differ from management account because 0 A. They are mainly prepared for external users of financial information B. They are more complex and hard to prepare C. The are the summary of accounting data D. The are prepared on basis of actual concept

A. They are mainly prepared for external users of financial information

________ is a separate legal entity that Total capital can be divided in many shares. 0 A. Partnership B. Sole proprietorship C. Company D. Non-profit organization

C. Company

An asset posses which of the following? 0 A. Future economic benefits for the business B. All kind of benefits for the business C. Expenses for the business D. Merits and Demerits for the business

A. Future economic benefits for the business

________ is the gross inflow of economic benefits? 0 A. Assets B. Liabilities C. Income D. Expenses

C. Income

Liabilities are which of the following? 0 A. Resources B. Obligations C. Future benefits D. Expenses

B. Obligations

The gross decrease in economic benefits for the business are what? 0 A. Expenses B. Obligations C. Creditors D. Income or gain

A. Expenses

An asset must be _______ by the business to be shown as an asset in its “balance sheet” 1 A. Possessed B. Owned C. Controlled D. Used

C. Controlled

Liability are arisen from which of the following events? 0 A. Present event B. Future event C. Past event D. None of them

C. Past event

Which of the following can be considered as the most important phase of accounting cycle and it is the primarily objective of financial accounting? 0 A. Identifying transactions B. Preparing “T Accounts” C. Preparing financial statements D. Preparing trial balances

C. Preparing financial statements

Which is the most important characteristic that all assets of a business have? 0 A. Long life of assets B. Value of assets C. Intangible nature of assets D. Future economic benefits

D. Future economic benefits

What is the basic accounting equation? 0 A. Capital+Liabilities=Assets B. Assets+ liabilities =Capital C. Capital+assets=liabilities D. Liabilities+Capital

A. Capital+Liabilities=Assets

Which of the following is a liability? 0 A. Cash B. Equipment C. Debtors D. Creditors

D. Creditors

What is equity? 0 A. Cash from the business B. liability of a business C. Owner’s claim on total assets D. Owner’s claim on total liabilities

C. Owner’s claim on total assets

Identify the asset from the following: 0 A. Cash and cash equivalent B. Creditors C. Notes payable D. Bank loan

A. Cash and cash equivalent

_______ the withdrawal of cash and goods by the owner of the business for his/her personal use? 0 A. Depreciation B. Drawings C. Outflow of cash D. Appreciation

B. Drawings

Net loss occurs when______________? 0 A. Expenses are greater than Income B. Expenses are less than Income C. Expenses=Income D. Liabilities are greater than income

A. Expenses are greater than Income

Double entry implies that 0 A. Recording entries in journal B. Recording entries in Ledger account C. Recording two aspects of every transaction D. Recording every transaction in books

C. Recording two aspects of every transaction

Identify the nominal account 0 A. Machinery account B. Building account C. Creditors account D. Rent expenses account

D. Rent expenses account

Which of the following accounts can be classified as a real account? 0 A. Rent expenses account B. Rent income account C. insurance expenses account D. Cash account

D. Cash account

Transferring entries from journal to ledger account is commonly known as____________? 0 A. Recording B. Transferring C. Posting D. Entry making

C. Posting

An account records the ___________ in the balance of an item? 0 A. Increase B. Decrease C. Increase or decrease D. Appreciation

C. Increase or decrease

If credit side of a bank account is greater than the debit side, it indicates which of the following? 0 A. Bank overdraft B. Cash at bank C. Bank balance D. Current Asset

A. Bank overdraft

If debit side of a bank account is greater than credit side it indicates which of the following? 0 A. Cash at bank B. Bank understatement C. Bank overdraft D. Balance overstatement

A. Cash at bank

_________ will be credited if goods are given as charity? 0 A. Cash B. Charity C. Purchases D. Sales

C. Purchases

Which of the following is known as the base for preparing trial balance? 0 A. Journal B. Cash account C. Ledger account D. Balance sheet

C. Ledger account

If debit balance is greater than creadit balance then the account blance will be__________? 0 A. Credit balance B. Debit and credit balance C. Cash balance D. Debit balance

D. Debit balance

The normal balance of capital account is_____________? 0 A. Credit balance B. Debit balance C. Cash balance D. Neither debit nor credit balance

A. Credit balance

The normal balance of asset account is____________? 0 A. Credit balance B. Debit balance C. Cash balance D. Neither debit nor credit balance

B. Debit balance

The normal balance of liability account is____________? 0 A. Debit balance B. Credit balance C. Cash balance D. Neither debit nor credit balance

B. Credit balance

Which of the following statements is incorrect regarding capital account? 0 A. Debit increases the capital account balance B. Credit increases the capital account balance C. Fresh capital increases the capital account balance D. Net income increases the capital account balance

A. Debit increases the capital account balance