Multiple Choice questions:

1. The resources owned by a business are called:

A. Assets. B. liabilities. C. the accounting equation D.
Owners equity
Ans: A
2. A listing of business entitys assets, liabilities, and owners
equity as of a specific date is a(n):
A. A balance sheet B. Income Statement C. Statement of
Owners equity D. Statement of Cash flows
Ans: A
3. If total assets increased Rs.20,000, during a period and total
liabilities increased Rs. 12000 during the same period, the
amount and direction (increase or decrease) of the change in
owners equity for that is a(n):
A. Rs.32000 increase B. Rs32000decrease C. Rs
8000increase D. 8000decrease
Ans: C
4. If revenue was Rs. 45000 expenses were Rs 37500 and the
owners withdrawals were Rs 10000 the amount of net
income or net loss would be:
A. Rs, 45000 net income B. Rs. 7500 net income C. Rs.
37500 net loss
D. Rs 2500 net loss
Ans: B
5. A debit may signify a(n):
A. Increase in an asset account B, Decrease in an asset
account C. increase in a liability account D. increase in the
owners capital account
Ans:A
6. The type of account with a normal credit balance is:
A. An asset B. a drawing C. a revenue D. an expense
Ans: C
7. A debit balance in which of the following accounts would
indicate a likely error?

A. Accounts Receivable B. Cash C. Commission earned D.

Miscellaneous expense
Ans: C
8. The receipt of cash from customers in payment of their
accounts would be recorded by:
A. A debit to cash and a credit to Accounts Receivable
B. A debit to accounts receivable and a credit to cash
C. A debit to cash and a credit to Accounts Payable
D. A debit to accounts payable and a credit to cash
Ans:A
9. The form listing the titles and balances of the accounts in the
ledger on a given date is the:
A. Income statement B. Balance sheet. C. Statement of
owners equity D. Trial balance
Ans: D
10.
Which of the following items represents a deferral?
A. Prepaid insurance B. Wages Payable C. Fees Earned D,
Accumulated depreciation
Ans: A
11.
If the supplies account, before adjustment on May 31,
indicated a balance of Rs. 2250 and supplies on hand at May
31, totaled Rs950 the adjusting entry would be:
A. Debit supplies, Rs. 950; credit supplies Expense Rs 950
B. Debit supplies 1300 credit supplies expense 1300
C. Debit supplies expense 950 credit supplies 950
D. Debit supplies expense 1300 credit supplies 1300
Ans:D
12.
The balance in the unearned rent account for Jones Co.
as of December 31 is
1200. If Jones Co. failed to record
the adjusting entry for Rs600 of rent earned during
December, the effect on the balance sheet and income
statement for December would be.
A. Assets understated Rs600 net income overstated Rs 600
B. Liabilities understated rs 600 net income understated Rs 600
C. Liabilities overstated Rs 600 net income understated Rs 600
D. Liabilities overstated rs 600 net income overstated Rs600
Ans: C

13.
If the estimated amount of depreciation on equipment
for a period is Rs 2000 the adjusting entry to record
depreciation would be
A. Debit depreciation expense rs 2000, credit equipment Rs
2000
B. Debit equipment Rs 2000 credit depreciation expense
2000
C. Debit depreciation expense Rs 2000 credit accumulated
depreciation Rs 2000
D. Debit accumulated depreciation Rs 2000 credit
Depreciation expense Rs 2000
Ans: C
14.
If the equipment account has a balance of Rs 22500
and its accumulated depreciation account has a balance of
Rs 14000 the book value of the equipment would be:
A, Rs. 36500 B. Rs 22500 C Rs 14000 D. 8500
Ans: D
15. Which of the following accounts would be classified as a
current asset on the balance sheet?
A. Office equipment B. Land C. Accumulated Depreciation
D. Accounts Receivable
Ans: D
16.
Which of the following entries closes the owners
drawing account at the end of the period?
A. Debit the drawing account, credit the income summary
account
B. Debit the owners equity account, credit the drawing
account,
C. Debit the income summary account, credit the drawing
account
D. Debit the drawing account, credit the owners capital
account
Ans: B
17.
Which of the following accounts would not be closed to
the income summary account at the end of a period?

A. Fees earned B. Wages Expense C. Rent Expense D.

Accumulated Depreciation
Ans: D
18.
Which of the following accounts would not be included
in a post-closing traial balance?
A. Cash B. Fees Earned C. Accumulated Depreciation D. J.C.
Smith capital
Ans: B
19.
A payment of cash for the purchase of services should
be recorded in the :
A. Purchase journal B. Cash payments journal C. Revenue
Journal D. Cash receipts journal
Ans: B
20.
The bank erroneously charged Tropical Services
account for Rs. 450.50 for a check that was correctly written
and recorded by Tropical Services as Rs 540.50. To reconcile
the bank account of Tropical Services at the end of the
month, you would:
A. Add Rs. 90 to the cash balance according to the bank
statement
B. Add Rs 90 to the cash balance according to the Tropical
Services records
C. Deduct Rs 90 from the cash balance according to the bank
statement
D. Deduct Rs 90 from the cash balance according to the
Tropical services records
Ans:C
21.
In preparing a bank reconciliation, the amount of
checks outstanding would be:
A. Added to the cash balance according to the bank
statement
B. Deducted from the cash balance according to the bank
statement
C. Added to the cash balance according to the companys
records

D. Deducted from the cash balance according to the

companys records
Ans: B
22.
Journal entries based on the bank reconciliation are
required for:
A. Additions to the cash balance according to the companys
records
B. Deductions from the cash balance according to the
companys records
C. Both A and B
D. Neither A nor B
Ans: C
23.
A petty cash fund is :
A. Used to pay relatively small amounts
B. Established by estimating the amount of cash needed for
disbursements of relatively small amounts during a
specified period
C. Reimbursed when the amount of money in the fund is
reduced to a predetermined minimum amount
D. All of the above
Ans: D
24.
At the end of the fiscal year, Accounts Receivable has a
balance of RS 100,000 and allowance for doubtful accounts
has a balance of Rs 7000. The expected net realizable value
of the accounts receivable is:
A. 7000 B. 93,000 C. 100,000 D. 107,000
Ans: B
25.
Equipment purchased on January 3, 2008 for Rs, 80,000
was depreciated using the straight-line method based upon
a 5-year life and Rs.7500 residual value. The equipment was
sold on December 31, 2010, for Rs40,000. What is the gain
on the sale of the equipment?
A. Rs3,500 B. Rs 14,500 C. 36,500 D. 43,500
Ans:A