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Accounting MCQ
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Table of Contents
Accounting MCQ on Final Accounts
1. Land and Building owned by a firm should be classified as:
(a) Fixed Assets
(b) Current Assets
(c) Fictitious Assets
(d) None of the above
Ans. (a) Fixed Assets
2. The profit on sale of old furniture should be credited to:
(a) Trading Account
(b) Profit and Loss Account
(c) Manufacturing Account
(d) All of the above
Ans. (b) Profit and Loss Account
3. Carriage inwards is shown on:
(a) Debit side of Trading Account
(b) Debit side of Profit and Loss Account
(c) Assets side of the Balance Sheet
(d) Liabilities side of the Balance Sheet
Ans. (a) Debit side of Trading Account
4. Income tax paid by a sole trader on his business income should be:
(a) Credited to his capital Account
(b) Credited to Trading Account
(c) Debited to Profit and Loss Account
(d) Debited to Capital Account
And. (c) Debited to Profit and Loss Account
5. Returns Outward is deducted from:
(a) Sales
(b)Net Profit
(c) Capital
(d) Purchases
Ans. (d) Purchases
6. Trading Account reveals:
(a) Financial Position
(b) Gross Profit or Gross Loss
(c) Net Profit
(d) Appropriation of Profit
Ans. (b) Gross Profit or Gross Loss
7. An example of intangible asset is:
(a) Machinery
(b) Prepaid Insurance
(c) Mine
(d) Copyrights
Ans. (d) Copyrights
8. An example of fictitious asset is:
(a) Patent right
(b) Preliminary Expenses
(c) Furniture
(d) Investment
Ans. (b) Preliminary Expenses
9. Goodwill is:
(a) Current Asset
(b) Liquid Asset
(c) Intangible Asset
(d) Fictitious Asset
Ans .(c) Intangible Asset
10. Profit and Loss Account reveals:
(a) Gross Profit
(b) Net Profit or Net Loss
(c) Financial position
(d) Cash in Hand
Ans. (b) Net Profit or Net Loss
11. Balance Sheet of a firm shows:
(a) Gross Profit
(b) Sales made during the year
(c) Financial position
(d) Units produced during the year
Ans. (c) Financial position
12. Out of the following, the one which is the most liquid asset, is:
(a) Sundry Debtors
(b) Inventory
(c) Prepaid Insurance
(d) Cash
Ans. (d) Cash
13. Manufacturing Account reveals:
(a) Financial position
(b) Cost of Production
(c) Gross profit
(d) Net profit
Ans. (b) Cost of Production
14. Trade mark is a/an:
(a) Fictitious asset
(b) Intangible asset
(c) Current asset
(d) Liquid asset
Ans. (b) Intangible asset
15. Outstanding rent is a:
(a) Representative Personal Account
(b) Real Account
(c) Nominal Account
(d) Personal Account Balance Sheet reveals:
Ans. (a) Representative Personal Account
16. Balance Sheet reveals:
(a) Cost of production
(b) Gross profit
(c) Financial position
(d) Net profit
Ans. (c) Financial position
17. Selling and Administrative Expenses are shown in:
(a) Profit and Loss Account
(b) Trading Account
(c) Manufacturing Account
(d) Balance Sheet
Ans. (a) Profit and Loss Account
18. Which of the following is an intangible asset?
(a)Stock-in-trade
(b)Building
(c) Patents
(d) Bank Balance
Ans. (c) Patents
- Which of the following is a current asset?
(a)Land
(b)Cash at Bank
(c) Goodwill
(d) Plant and Machinery
Ans.(b) Cash at Bank
20. Direct expenses are shown in:
(a) Balance Sheet
(b) Profit and Loss Account
(c) Trading Account
(d) All of the above
Ans. (c) Trading Account
21. Which of the following is an example of current liabilities?
(a) Bank Loan
(b) Debentures
(c) Creditors
(d) Owner’s Capital
Ans. (c) Creditors
22. It is necessary to make a distinction between capital and revenue items because:
(a) It is helpful to assess financial position
(b) It is helpful in calculating true profit or loss
(c) It is required by accounting principles
(d)All of the above
Ans. (d) All of the above
23. Expenditure of installation of a new machinery, is:
(a) Capital expenditure
(b) Revenue expenditure:
(c) Deferred Revenue expenditure
(d) Recurring expenditure
Ans. (a) Capital expenditure
24. Heavy advertisement expenditure is an example of:
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Deferred Revenue Expenditure
(d) All of the above
Ans. (c) Deferred Revenue Expenditure
25. Which of the following is not a revenue receipt?
(a) Discount received
(b) Sales made
(c) Sale of Plant
(d) Commission
Ans. (b) Sale of Plant
26. Which liability is not shown in Balance Sheet?
(a) Contingent Liability
(b) Current Liability
(c) Long-term Liability
(d) None of the above
Ans. (a) Contingent Liability
27. Which of the following is not deducted from capital?
(a) Loss
(b) Drawings
(c) Loan
(d) Income Tax
Ans. (c) Loan
Accounting MCQ PDF
Accounting MCQ on Not-For-Profit Organizations
1. Which of the following is not an example of Not-for-Profit Organization :
(a) Sports Club
(b) College
(c) Hospitals
(d) Private Enterprises
Ans. (d) Private Enterprises
2. Receipts and Payments Account is :
(a) Personal A/c
(b) Real A/c
(c) Nominal Alc
(d) Profit and Loss A/c
Ans. (b) Real A/c
3. Income and Expenditure Account is :
(a) Personal A/c
(b) Real A/c
(c) Nominal Alc
(d) Profit and Loss A/c
Ans. (c) Nominal A/c
4. Income and Expenditure Account is prepared by:
(a) Trading Organisations
(b) Non-trading Organisations
(c) Industrial Units
(d) All Institutions
Ans. (b) Non-trading Organisations
5. Receipts and Payments Account generally shows
(a) Capital Fund
(b) Surplus or Deficit
(c) Credit Balance
(d) Debit Balance
Ans. (d) Debit Balance
6. Income and Expenditure Account is prepared to know:
(a) Net Profit
(b) Gross Profit
(c) Financial Position
(d) Excess of Income over Expenditure
Ans. (d) Excess of Income over Expenditure
7. Income and Expenditure Account shows a balance of:
(a) Capital Fund
(b) Cash in Hand
(c) Net Profit
(d) Surplus or Deficit
Ans. (d) Surplus or Deficit
8. Subscriptions received in advance during an accounting year is :
(a) An Expense
(b) A Liability
(c ) An Income
(d) An Asset
Ans. (b) A Liability
9. Life membership fee is:
(a) Earned Income
(b) Liability
(c) Expense
(d) Income
Ans. (b) Liability
10. Donations received for a special purpose will be treated as:
(a) Expenditure
(b) Income
(c) Asset
(d) Liability
Ans. (d) Liability
11. Sale of grass in the case of a sports club is:
(a) Capital Recript
(b) Revenue Receipt
(c) an asset
(d) a liability
Ans. (b) Revenue Receipt
12. Outstanding subscription is
(a) an asset
(b) a liability
(c) an expense
(d) an income
Ans. (a) an asset
13. Income and Expenditure Account is prepared in lieu of:
(a) Cash Book
(b) Trading Account
(c) Profit and Loss Account
(d) Balance Sheet
Ans. (c) Profit and Loss Account
14. Receipts and Payments Account reveals:
(a) Cash at the end of the period
(b) Gross Profit
(c) Financial Position
(d) Net Profit
Ans. (a) Cash at the end of the period
15. Receipts and Payments Account is prepared in lieu of :
(a) Profit and Loss Account
(b) Balance Sheet
(c) Profit and Loss Adjustment Account
(d) Cash Book
Ans. (d) Cash Book
16. Legacy is usually shown as an :
(a) Asset
(b) Liability
(c) Income
(d) Expense
Ans. (b) Liability
17. Difference between the two sides of the Receipts and Payments Account reveals:
(a) Net Profit or Loss
(b) Expenditure
(c) Net Cash Balance
(d) None of these
Ans. (c) Net Cash Balance
18. Income and Expenditure Account is prepared:
(a) to know gross profit
(b) to know net profit
(c) to know excess of income over expenditure
(d) to know profit on revaluation of assess and liabilities
Ans. (c) to know excess of income over expenditure
19. Income and Expenditure Account is the other name of:
(4) Trading Account
(b) Profit and Loss Account
(c) Balance Sheet
(d) Profit and Loss Adjustment Account
Ans. (b) Profit and Loss Account
20. Income and Expenditure Account records income and expenditure of:
(a) Revenue nature only
(b) Capital nature only
(c) Both revenue and capital nature
(d) None of the above
Ans. (a) Revenue nature only
Accounting MCQ PDF
Accounting MCQ on Depreciation
1. Depreciation is:
(a) an income
(b) an asset
(c) a liability
(d) a loss
Ans. (d) a Loss
2. Depreciation is a charge on:
(a) Liquid Assets
(b) Current Assets
(c) Fixed Assets
(d) Fictitious Assets
Ans. (c) Fixed Assets
3. In Machinery Account, depreciation charged is shown:
(a) on the credit side
(b) on the debit side
(c) as closing balance
(d) All of the above
Ans. (a) on the credit side
4. Depreciation arises due to:
(a) wear and tear in assets
(c) obsolescence
(b) efflux of time
(d) All of the above
Ans. (d) All of the above
5. A machinery costing 8,00,000 is depreciated @20% p.a. at straight line method basis. At the end of three years, the book value of the machinery will be
(a) 2,20,000
(b) 3,20,000.
(c) 4,20,000.
(d) 5,20,000.
Ans. (b) 3,20,000.
6. Asset Disposal Account is prepared:
(a) at the time of purchase of an asset
(b) at the time of sale of an asset
(c) at the time of purchase of additional machinery
(d) when the scrap value of asset is zero.
Ans. (b) at the time of sale of an asset
7. Under which method of providing depreciation, a fixed percentage of depreciation is applied every year on the book value?
(a ) Depreciation Fund Method
(b) Insurance Policy Method
(c) Written Down Value Method
(d) Straight Line Method
Ans. (c) Written Down Value Method
8. Loss on sale of machinery is shown on:
(a) debit side of machinery account
(b) credit side of depreciation account
(c) debit side of depreciation account
(d) credit side of machinery account.
Ans. (d) credit side of machinery account.
9. Depreciation is charged on:
(a) Fictitious Assets
(b) Fixed Assets
(c) Current Assets
(d) Liquid Assets
Ans. (b) Fixed Assets
10. Depletion method of depreciation is applicable to:
(a) Patents
(b) Oil well
(c) Loose tools
(d) Machineries
Ans. (b) Oil well
11. The method of depreciation applicable to a mine is:
(a) Depletion method
(b) Machine-hour method
(c) Diminishing balance method
(d) Straight Line method
Ans. (a) Depletion method
12. Depletion method of depreciation is applicable to:
(a) Current Assets
(b) Fictitious Assets
(c) Intangible Assets
(d) Wasting Assets
Ans. (d) Wasting Assets
13. The main objective of providing depreciation is:
(a) to ascertain true profit
(b) to reduce the income tax amount
(c) to know the true financial position
(d) All of the above
Ans. (d) All of the above
14. The term ‘Amortisation’ is used in terms of:
(a) Intangible Assets
(b) Tangible Assets
(c) Wasting Assets
(d) Fixed Assets
Ans. (a) Intangible Assets
15. Straight line method of charging depreciation is also known as:
(a) Original cost method
(b) Equal instalment method
(c) Fixed instalment method
(d) All of the above
Ans. (d) All of the above
16. Under which of the following method, depreciation is charged at a fixed percentage on
the original cost of assets?
(a) Straight line method
(b) Written down value method
(c) Depreciation fund method
(d) None of the above
Ans. (a) Straight line method
17. Under written down value method, the amount of depreciation:
(a) increases every year
(b) decreases every year
(c) remains constant every year
(d) All of the above
Ans. (b) decreases every year
18. Which of the following asset is generally not depreciable?
(a) Land
(b) Plant and Machinery
(c) Building
(d) Office Furniture
Ans. (a) Land
19. Depreciation account is a :
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) Natural Account
Ans. (c) Nominal Account
20. Which method of depreciation is approved by income tax authorities?
(a) Straight line method
(b) Written down value method
(c) Both (a) and (b)
(d) None of the above
Ans. (b) Written down value method
Accounting MCQ PDF
Accounting MCQ on Incomplete Records: Single Entry System
1. In single entry system records of which accounts are maintained :
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) Both (a) and (b)
Ans. (d) Both (a) and (b)
2. Which of the following entities generally prepare their books of accounts under single entry system?
(a) Joint stock companies
(b) Sole traders
(c) Government organisations
(d) Not-for-profit organisations
Ans. (b) Sole traders
3. Which of the following is mainly prepared for ascertaining capital in the beginning?
(a) Debtors’ account
(b) Cash account
(c) Creditors’ account
(d) Opening statement of affairs
Ans. (d) Opening statement of affairs
4. In the absence of introduction of fresh capital, when closing capital is more than opening
capital, it indicates:
(a) Loss
(b) Profit
(c) No profit, no loss
(d) None of the above
Ans. (b) Profit
5. From incomplete records, it is not always possible to prepare:
(a) Ledger
(b) Trial balance
(c) Balance Sheet
(d) All of the above
Ans. (d) All of the above
6. In the absence of drawings, when closing capital is less than opening capital, it indicates:
(a) Profit
(b) Loss
(c) No profit, no Loss
(d) None of the above
Ans. (b) Loss
7. Generally, which of the following accounts is maintained under single entry system:
(a) Expenses Account
(b) Cash Account
(c) Furniture Account
(d) Income Account
Ans. (b) Cash Account
8. Which of the following is not an advantage of single entry system:
(a) Requirement of only basic knowledge
(b) Flexibility
(c) Economical
(d) Incomplete System
Ans. (d) Incomplete System
9. Under single entry system’, capitals can be calculated by preparing:
(a) Balance Sheet
(b) Statement of Affair
(c) Income and Expenditure Account
(d) Cash Account
Ans. (b) Statement of Affair
10. To find out the profit, which of the following is added to closing capital ?
(a) Drawings
(b) Opening Capital
(c) Additional Capital
(d) None of the above
Ans. (a) Drawings
11. Which of the following is deducted from closing capital to find out profit under single
entry system?
(a) Additional Capital
(b) Drawings
(c) Both of the above
(d) None of the above
Ans. (a) Additional Capital
12. The system of accounting which is not based on dual aspect of accounting is :
(a) Double Entry system
(b) Single entry system
(c) No entry system
(d) None of the above
Ans. (b) Single entry system
13. One account which is always maintained in single entry system is :
(a) Building Account
(b) Machine Account
(c) Cash Account
(d) None of the above
Ans. (c) Cash Account
14. which one of the following accounts which is maintained in single entry system:
(a) Debtors Account
(b) Creditors Account
(c) Nominal Account
(d) None of the above
Ans. (b) Creditors Account
15. Which one of the following systems is applicable income tax purposes:
(a) Single entry system
(b) Double entry system
(c) Both of the above
(d) None of the above
Ans. (b) Double entry system
Accounting MCQ on Partnership Accounts – 1
1. Profit and Loss Appropriation Account shows:
(a) Gross Profit
(b) Appropriation of Profit
(c) Net Profit
(d) Excess of Income over Expenditure
Ans. (b) Appropriation of Profit
2. For distribution of profit amongst partners, the account which is opened, is:
(a) Revaluation Account
(b) Profit and Loss Appropriation Account
(c) Profit and Loss Adjustment Account
(d) Profit and Loss Account
Ans. (b) Profit and Loss Appropriation Account
3. In the absence of agreement, profits are divided by partners in the
ratio of:
(a) Equal
(b) Capital
(c) Time devoted
(d) None of these
Ans. (a) Equal
4. Interest on partner’s loan is paid at the rate of:
(a) 4% pa.
(b) 6% pa.
(c) 10% p.a.
(d) 5% pa.
Ans. (b) 6% p.a.
5. In the absence of agreement, partners are not entitled to receive:
(a) Salaries
(b) Commission
(c) Interest on Capital
(d) All of the above
Ans. (d) All of the above
6. Partner’s Current Accounts are opened, when the capitals are:
(a) Fixed
(b) Fixed or Fluctuating
(b) Fluctuating
(d) All of the above
Ans. (a) Fixed
7. When dates of withdrawal are not mentioned, interest on drawings is charged for:
(a) 6 months
(b) 6 months
(c) 5 months
(d) 12 months
Ans. (a) 6 months
8. Interest on capital is calculated on the:
(a) Opening Capital
(b) Closing Capital
(c) Average Capital
(d) Closing Capital less drawings
Ans. (a) Opening Capital
9. The fluctuating capital account of a partner will always
have:
(a) Credit balance
(b) Debit balance
(c) No balance
(d) May have debit or credit balance
Ans. (d) May have debit or credit balance
10. When partner is entitled to interest on capital, it is payable:
(a) Out of Profits
(b) Out of Capital
(c) May be out of profits or capital have:
(d) None of these
Ans. (a) Out of Profits
11. An ordinary partnership firm may have:
(a) Not more than 10 partners
(b) Not more than 20 partners
(c) Any number of partners
(d) Not more than 50 partners
Ans. (d) Not more than 50 partners
12. The Current Account of a partner always shows:
(a) Credit balance
(b) Debit and credit balance
(c) Debit balance
(d) Either debit or credit balance
Ans. (d) Either debit or credit balance
13. Which account is prepared by partnership firm for the distribution of profit?
(a) Profit and Loss Account
(b) Profit and Loss Appropriation Account
(c) Partners’ Loan Account
(d) Income and Expenditure Account
Ans. (b) Profit and Loss Appropriation Account
14. Which of the following is essential feature of Partnership?
(a) Mutual trust
(b) Honesty
(c) True and Fair Accounts
(d) All of the above
Ans. (d) All of the above
15. What is the minimum required number of partners to form a partnership?
(a) 4
(b) 5
(c) 2
(d) 10
Ans. (c) 2
16. Which of the following is not a content of partnership deed?
(a) Names of partners
(b) Amount available in personal account
(c) Addresses of partners
(d) Profit-sharing ratio
Ans. (b) Amount available in personal account
17. In the absence of partnership deed, partners’ are entitled to receive interest on
drawings:
(a) 4 % p.a.
(b) 5% p.a.
(c) No interest p.a.
(d) 10% p.a.
Ans. (c) No interest
18. Interest on loan of a partner:
(a) is a charge on profit
(c) is a share of partner’s profit
(b) is an appropriation of profit
(d) All of the above
Ans. (a) is a charge on profit
19. Partner’s Fixed Capital Account always shows:
(a) a credit balance
(b) debit and credit balance
(c) a debit balance
(d) either debit or credit balance
Ans. (a) a credit balance
20. Interest on partner’s loan is debited to:
(a) Profit and Loss Appropriation A/c
(b) Partners’ Capital Account
(c) Profit and Loss A/c
(d) Partner’s Current A/c
Ans. (c) Profit and Loss A/c
Accounting MCQ PDF
Accounting MCQ on Partnership Accounts – 2
1. A new partner may be admitted to a partnership:
(a) Without the consent of old partners
(b) With the consent of all old partners
(c) With the consent of any one partner
(d) With the consent of 2/3rd of old partners
ANS. (b) With the consent of all old partners
2. Goodwill is a:
(a) Current Asset
(b) Intangible Asset
(c) Wasting Asset
(d) Liquid Asset
ANS. (b) Intangible Asset
3. When a new partner brings his share of goodwill in cash, the amount is debited to:
(a) Premium A/c
(b) Cash A/c
(c) Capital A/cs of old partners
(d) Capital A/c of new partner
ANS. (b) Cash A/c
4. When a new partner does not bring his share of goodwill in cash, the amount is debited to:
(a) Premium A/c
(b) Current A/c of new partner
(c) Cash A/c
(d) Capital A/cs of old partners
ANS. (b) Current A/c of new partner
5. Goodwill brought in cash, will be shared by old partners in:
(a) Sacrificing ratio
(b) New profit-sharing ratio
(c) Capital ratio
(d) Old profit-sharing ratio
ANS. (a) Sacrificing ratio
6. If at the time of admission, there is some unrecorded liability, it will be:
(a) Debited to Revaluation A/c
(b) Credited to Revaluation A/c
(c) Transferred to Old Partner’s Capital A/cs
(d) Transferred to All Partner’s Capital A/cs
ANS. (a) Debited to Revaluation A/c
7. The sacrifice of old partners is equal to:
(a) Their new share
(b) Their old share
(c) New share – Old share
(d) Old share – New share
ANS. (d) Old share - New share
8. Profit or loss on revaluation is transferred to Partners’ Capital A/cs in:
(a) Old ratio
(b) New ratio
(c) Equal Ratio
(d) None of the above
ANS. (a) Old ratio
9. Accumulated profits at the time of admission of a partner is transferred to:
(a) Old partners’ capital accounts
(b) Revaluation account
(c) Balance sheet
(d) None of the above
ANS. (a) Old partners' capital accounts
10. Which of the following is debited to partners’ capital accounts at the time of admission
partner?
(a) General Reserve
(b) Profit on revaluation
(c) Accumulated losses
(d) Accumulated profits
ANS. (c) Accumulated losses
11. When the new partner brings in his share of goodwill in cash, it is credited to capital
accounts of:
(a) Sacrificing partners
(b) New partner
(c) Gaining partners
(d) Old Partners
ANS. (a) Sacrificing partners
12. The premium for goodwill brought in by the new partner will be transferred to old partners’ capital accounts in:
(a) Old profit-sharing ratio
(b) Gaining ratio
(c) Sacrificing Ratio
(d) None of the above
ANS. (c) Sacrificing Ratio
13. Revaluation Account is a:
(a) Real account
(b) Nominal Account
(c) Personal account
(d) All of the above
ANS. (b) Nominal Account
14. At the time of admission of a partner, Investments fluctuation fund, after meeting the loss on revaluation of investments, is transferred to:
(a) Revaluation account
(b) New partner’s capital account
(c) Sacrificing partners’ capital A/cs
(d) Old partners’ capital accounts
ANS. (d) Old partners' capital accounts
15. On the admission of a partner, decrease in the value of assets is recorded in:
(a) Profit and Loss adjustment A/c
(b) Old partners’ Capital A/cs
(c) Cash A/c
(d) None of the above
ANS. (a) Profit and Loss adjustment A/c
16. Rajesh and Bikash are sharing profits in the ratio of 4:3. Ramesh joins and the new profit-sharing ratio among Rajesh , Bikash and Ramesh is 7:4:3. The sacrificing ratio of Rajesh and Bikash is:
(a) 1:2
(b) 2:3
(c) 4:1
(d) 5:6
ANS. (a) 1:2
17. A, B and C are partners sharing profits in the ratio of 4:3:2. D is admitted for 1/3rd share in future profits. The sacrificing ratio is:
(a) 2:3:1
(b) 4:3:2
(c) 3:2:1
(d) 5:4:2
ANS. (b) 4:3:2
18. L and M are sharing profits and losses in the ratio of 2:2. They admit N as a partner who takes 1/4th share from L and 1/8th share from M. New profit-sharing ratio is:
(a) 2:3:2
(b) 1:1:1
(c) 3:2:1
(d)5:3:2
ANS. (a) 2:3:2
19. A and B are partners. They admit C for 1/4th share. In future, the ratio between A and B would be 2:1. Which of the following is new profit-sharing ratio of partners?
(a) 5:3:2
(b) 2:1:1
(c) 26:19:5
(d) 8:5:3
ANS. (b) 2:1:1
20. A and B are in partnership sharing profits and losses as 3:2. C is admitted for 1/4th share. Afterwards, D enters for 20 paisa in the rupee. After D’s admission, the new profit-sharing ratio among A, B, C and D is:
(a) 4:3:2:1
(b) 4:3:3:2
(c) 3:1:1:1
(d) 9:6:5:5
ANS. (d) 9:6:5:5
21. Profit on revaluation is not credited to the capital account of:
(a) Sacrificing Partners
(b) New Partner
(c) Gaining Partner
(d) Old Partners’
ANS. (b) New Partner
22. The purpose of Profit and Loss Adjustment Account is:
(a) to find out gross profit
(b) to find out net profit
(c) to find out financial position
(d) to find out results of revaluation of assets and liabilities
ANS. (d) to find out results of revaluation of assets and liabilities
23. On admission of a new partner, the increase in the value of assets is debited to:
(a) Asset A/c
(b) Revaluation A/c
(c) Partners’ Capital A/c
(d) Profit and Loss A/c
ANS. (a) Asset A/c
24. Which of the following is a method of calculation of goodwill:
(a) Average profit method
(b) Super profit method
(c) Capitalisation method
(d) All of the above
ANS. (d) All of the above
25. Number of purchase years is used to calculate:
(a) Gaining ratio
(b) Net Profit
(c) Goodwill
(d) Loss on revaluation
ANS. (c) Goodwill
Accounting MCQ PDF
Accounting MCQ on issue of Shares Capital
1. A company is a/an :
(a) Natural Person
(b) Artificial Person
(c) Both of the above
(d) None of the above
ANS. (b) Artificial Person
2. A Shareholder gets:
(a) Dividend
(b) Salary
(c) Commission
(d) Interest
ANS. (a) Dividend
3. The portion of the capital which can be called-up only on the winding up of the company is called:
(a) Authorised Capital
(b) Reserve Capital
(c) Uncalled Capital
(d) Issued Capital
ANS. (b) Reserve Capital
4. Equity shareholders are:
(a) Creditors
(b) Directors
(c) Owners
(d) None of these
ANS. (c) Owners
5. Securities Premium Reserve can be used for:
(a) Paying interest on debentures
(b) Meeting the cost of issue of shares
(c) Paying dividend on shares
(d) Paying tax liability
ANS. (b) Meeting the cost of issue of shares
6. The document required for issue of share capital by a company is:
(a) Prospectus
(b) Certificate of Incorporation
(c) Memorandum of Association
(d) Articles of Association
ANS. (a) Prospectus
7. Making an offer, inviting the public in general to subscribe for the shares is called:
(a) Initial Public Offer
(c) Over Subscription
(b) Minimum Subscription
(d) Pro-rata Allotment
ANS. (a) Initial Public Offer
8. If vendors are issued fully paid shares of Rs. 5,00,000 in consideration of net assets of
Rs. 4,50,000, the balance of Rs.40,000 will be debited to:
(a) Goodwill A/c
(b) Profit and Loss A/c
(c) Revenue Reserve A/c
(d) Capital Reserve A/c
ANS. (a) Goodwill A/c
9. Premium received on issue of shares is shown at:
(a) Assets side
(b) Equity and Liabilities side
(c) Debit side of Statement of Profit and Loss
(d) Credit side of Statement of Profit and Loss
ANS. (b) Equity and Liabilities side
10. After reissue of forfeited shares, the balance of ‘Share Forfeited A/e’ is transferred to:
(a) Capital Redemption Reserve A/c
(b) Revenue Reserve A/c
(c) General Reserve A/c
(d) Capital Reserve A/c
ANS. (d) Capital Reserve A/c
11. The maximum amount upto which a company can issue capital is called:
(a) Authorised Capital
(b) Issued Capital
(c) Called-up Capital
(d) Subscribed Capital
ANS. (a) Authorised Capital
12. A public limited company can raise share capital by issue of:
(a) Memorandum of Association
(b) Prospectus
(c) Articles of Association
(d) Certificate of Incorporation
ANS. (b) Prospectus
13. The maximum number of shareholders in a private company can be:
(a) 10
(b) 200
(c) 100
(d) Unlimited
ANS. (b) 200
14. A company can issue:
(a) two types of shares
(c) four types of shares
(b) three types of shares
(d) five types of shares
ANS. (a) two types of shares
15. The minimum number of shareholders in public limited company must be:
(a) 2
(b) 10
(c) 7
(d) 20
ANS. (c) 7
16. The maximum number of members in a public limited company is:
(a) Twenty
(b) Unlimited
(c)Fifty
(d) Two Hundred
ANS. (b) Unlimited
17. Preference shareholders get priority over equity shareholders:
(a) In payment of dividend only
(b) In refund of capital only
(c) In both payment of dividend and refund of capital
(d) In payment of interest
ANS. (c) In both payment of dividend and refund of capital
18. The amount received from shareholders towards share capital is:
(a) Authorised capital
(b) Called-up capital
(c) Paid-up capital
(d) Issued capital.
ANS. (c) Paid-up capital
19. The balance of Share Forfeited Account is transferred to:
(a) Profit and Loss Accountabl
(c) Revenue reserve
(b) Profit and Loss Adjustment Account
(d) Capital reserve
ANS. (d) Capital reserve
20. Calls-in-Arrear is:
(a) An expenditure
(b) An asset
(c) A liability
(d) An income
ANS. (b) An asset
21. Which of the following shares are convertible shares?
(a) Equity shares
(b) Preference shares
(c) All of the above
(d) None of the above
ANS. (d) None of the above
22. Which of the following is the main stage in the formation of a company?
(a) Promotion
(b) Incorporation
(c) Capital subscription
(d) All of the above
ANS. (d) All of the above
23. Which of the following defines the limits and scope of a company?
(a) Memorandum of Association
(b) Certificate of Incorporation
(c) Share Certificate
(d) Articles of Association
ANS. (a) Memorandum of Association
24. According to the Companies Act, which of the following is fixed as the rate of minimum subscription?
(a) 50% of the issue
(b) 90% of the issue
(c) 80% of the issue
(d) 60% of the issue
ANS. (b) 90% of the issue
25. When ‘Table F’ is applicable in case of a company, the company can charge interest call-in-arrears at the rate of not exceeding:
(a) 9%
(b) 8%
(c) 3%
(d)10%
ANS. (d)10%
26. When ‘Table F’ is applicable in case of company, the company is required to pay interest on calls-in-advance at the rate of not exceeding:
(a) 12%
(c) 5%
(b) 8%
(d) 4%
ANS. (a) 12%
27. Share Application account is a :
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) None of the Above
ANS. (a) Personal Account
28. Securities Premium Reserve is shown in the Balance Sheet under the sub-heading:
(a) Share Capital
(c) Current Liabilities
(b) Reserves and Surplus
(d) Non-current Liabilities
ANS. (b) Reserves and Surplus
29. When shares are allotted, which of the following account is credited?
(a) Share Capital A/c
(b) Share Allotment A/c
(c) Shareholders’ A/c
(d) Share Application A/c
ANS. (a) Share Capital A/c
30. Right issue of shares is issued to:
(a) Employees
(b) Directors
(c) Existing shareholders
(d) Public
ANS. (c) Existing shareholders
Accounting MCQ PDF
Accounting MCQ on MCQ on Debentures
1. Debentures are :
(a) Investments by equity shareholders
(b) Long-term liabilities of a business
(c) Directors’ share in a company
(d) None of these
ANS. (b) Long-term liabilities of a business
2. Debentureholders are:
(a) Owners of the company
(b) Customers of the company
(c) Creditors of the company
(d) Promoters of the company
ANS. (c) Creditors of the company
3. A debentureholder gets:
(a) Dividend
(b) Commission
(c) Interest
(d) Salary
ANS. (c) Interest
4. Debentures issued as collateral security will be debited to:
(a) Debentures Account
(b) Debenture Suspense Account
(c) Bank Account
(d) None of these
ANS. (b) Debenture Suspense Account
5. Premium on Redemption of Debentures A/c is:
(a) Asset
(b) Liability
(c) Expense
(d) Revenue
ANS. (b) Liability
6. Those debentures in which the holders are given option to partially or fully convert into equity shares after a specified period are known as:
(a) Registered Debenture
(b) Mortgage Debenture
(c) Naked Debenture
(d) Convertible Debenture
ANS. (d) Convertible Debenture
7. In the Balance Sheet of the company, debentures are shown under the head of:
(a) Current Liabilities
(b) Non-Current Liabilities
(c) Current Assets
(d) Share Capital
ANS. (b) Non-Current Liabilities
8. Which of the following is a type of debenture?
(a) Redeemable Debentures
(b) Convertible Debentures
(c) Secured Debentures
(d) All of the above
ANS. (d) All of the above
9. Debentures which do not carry any specific rate of interest are known as :
(a) Registered Debentures
(b) Bearer Debentures
(c) Zero Coupon Rate Debentures
(d) First Debentures
ANS. (c) Zero Coupon Rate Debentures
10. Debentures cannot be issued:
(a) for cash
(b) as Collateral Security
(c) for memorandum of association
(d) for consideration other than cash
ANS. (c) for memorandum of association
11. Debentures can be issued at:
(a) Par
(b) Premium
(c) discounts
(d) All of the above
ANS. (d) All of the above
12. A Debenture of Rs.100 is issued for Rs. 110, it is a case of debentures issued :
(a) at Par
(b) at Premium
(c) at discounts
(d) None of the above
ANS. (b) at Premium
13. The loss on issue of debentures is :
(a) Capital Loss
(b) Capital Profit
(c) Revenue loss
(d) All of the above
ANS. (a) Capital Loss
14. The discount on issue of debentures are part of:
(a) Borrowing Costs
(b) Preliminary expenses
(c) Intangible assets
(d) None of the above
ANS. (a) Borrowing Costs
15. Premium on issue of debentures for a company is :
(a) Revenue Receipts
(b) Capital Receipts
(c) Assets
(d) Profit
ANS. (b) Capital Receipts
16. Interest on debentures is :
(a) Appropriation of profit
(b) Capital gain
(c) Charge against profit
(d) Dividend
ANS. (c) Charge against profit
17. Debentures cannot be redeemed:
(a) at par
(b) at premium
(c) at discount
(d) all of the above
ANS. (c) at discount
18. Loss on issue of debentures can be written off from:
(a) Securities premium reserve
(b) Profit and Loss account
(c) Both (a) and (b)
(d) None of the above
ANS. (c) Both (a) and (b)
19. Debenture interest is paid:
(a) at a predetermined rate
(b) at variable rates
(c) at a proportion of net profit
(d) None of the above
ANS. (a) at a predetermined rate
20. The debentures which are to be repaid before the other debentures are known as :
(a) Secured debentures
(b) First debentures
(c) Registered debentures
(d) Specific coupon rate debentures
ANS. (b) First debentures
Accounting MCQ
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