Accounting Mcqs - Set 5

1)   What is the basic accounting equation?

a. Capital+Liabilities=Assets
b. Assets+ liabilities =Capital
c. Capital+assets=liabilities
d. Liabilities+Capital
Answer  Explanation 

ANSWER: Capital+Liabilities=Assets

Explanation:
No explanation is available for this question!


2)   Which of the following is a liability?

a. Cash
b. Equipment
c. Debtors
d. Creditors
Answer  Explanation 

ANSWER: Creditors

Explanation:
No explanation is available for this question!


3)   What is equity?

a. Cash from the business
b. liability of a business
c. Owner’s claim on total assets
d. Owner’s claim on total liabilities
Answer  Explanation 

ANSWER: Owner’s claim on total assets

Explanation:
No explanation is available for this question!


4)   Identify the asset from the following:

a. Cash and cash equivalent
b. Creditors
c. Notes payable
d. Bank loan
Answer  Explanation 

ANSWER: Cash and cash equivalent

Explanation:
No explanation is available for this question!


5)   _______ the withdrawal of cash and goods by the owner of the busienss for his/her personal use?

a. Depreciation
b. Drawings
c. Outflow of cash
d. Appreciation
Answer  Explanation 

ANSWER: Drawings

Explanation:
No explanation is available for this question!


6)   Net loss occurs when______________?

a. Expenses are greater than Income
b. Expenses are less than Income
c. Expenses=Income
d. Liabilities are greater than income
Answer  Explanation 

ANSWER: Expenses are greater than Income

Explanation:
No explanation is available for this question!


7)   Double entry implies that

a. Recording entries in journal
b. Recording entries in Ledger account
c. Recording two aspects of every transaction
d. Recording every transaction in books
Answer  Explanation 

ANSWER: Recording two aspects of every transaction

Explanation:
No explanation is available for this question!


8)   Identify the nominal account

a. Machinery account
b. Building account
c. Creditors account
d. Rent expenses account
Answer  Explanation 

ANSWER: Rent expenses account

Explanation:
No explanation is available for this question!


9)   Which of the following accounts can be classified as a real account?

a. Rent expenses account
b. Rent income account
c. insurance expenses account
d. Cash account
Answer  Explanation 

ANSWER: Cash account

Explanation:
No explanation is available for this question!


10)   Transferring entries from journal to ledger account is commonly known as____________?

a. Recording
b. Transferring
c. Posting
d. Entry making
Answer  Explanation 

ANSWER: Posting

Explanation:
No explanation is available for this question!


11)   An account records the ___________ in the balance of an item?

a. Increase
b. Decrease
c. Increase or decrease
d. Appreciation
Answer  Explanation 

ANSWER: Increase or decrease

Explanation:
No explanation is available for this question!


12)   If credit side of a bank account is greater than the debit side, it indicates which of the following?

a. Bank overdraft
b. Cash at bank
c. Bank balance
d. Current Asset
Answer  Explanation 

ANSWER: Bank overdraft

Explanation:
No explanation is available for this question!


13)   If debit side of a bank account is greater than credit side it indicates which of the following?

a. Cash at bank
b. Bank understatement
c. Bank overdraft
d. Balance overstatement
Answer  Explanation 

ANSWER: Cash at bank

Explanation:
No explanation is available for this question!


14)   _________ will be credited if goods are given as charity?

a. Cash
b. Charity
c. Purchases
d. Sales
Answer  Explanation 

ANSWER: Purchases

Explanation:
No explanation is available for this question!


15)   Which of the following is known as the base for preparing trial balance?

a. Journal
b. Cash account
c. Ledger account
d. Balance sheet
Answer  Explanation 

ANSWER: Ledger account

Explanation:
No explanation is available for this question!


16)   If debit balance is greater than creadit balance then the account blance will be__________?

a. Credit balance
b. Debit and credit balance
c. Cash balance
d. Debit balance
Answer  Explanation 

ANSWER: Debit balance

Explanation:
No explanation is available for this question!


17)   The normal balance of capital account is_____________?

a. Credit balance
b. Debit balance
c. Cash balance
d. Neither debit nor credit balance
Answer  Explanation 

ANSWER: Credit balance

Explanation:
No explanation is available for this question!


18)   The normal balance of asset account is____________?

a. Credit balance
b. Debit balance
c. Cash balance
d. Neither debit nor credit balance
Answer  Explanation 

ANSWER: Debit balance

Explanation:
No explanation is available for this question!


19)   The normal balance of liability account is____________?

a. Debit balance
b. Credit balance
c. Cash balance
d. Neither debit nor credit balance
Answer  Explanation 

ANSWER: Credit balance

Explanation:
No explanation is available for this question!


20)   Which of the following statements is incorrect regarding capital account?

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
Answer  Explanation 

ANSWER: Debit increases the capital account balance

Explanation:
No explanation is available for this question!