FINANCIAL ACCOUNTING MCQS
Cash Book & Rectification of Errors
1. When any entry is made on the
1
both sides of cash book is called
as?
(a) General entry
(b) Double entry
(c) Compound entry
(d) Contra entry
2. Which one of the following affects
cash book during a period?
(a) Recording depreciation expense
(b) Declaration of a cash dividend
(c) Write-off of an uncollectible
account receivable
(d) Payment of an accounts payable
3. How much kind of Cash book?
(a) 2
(b) 3
(c) 4
(d) None of them
4. A company issues check to pay
account payable. The effect of the
transaction is to?
(a) Increase assets and liabilities
(b) Increase assets and decrease
liabilities
(c) Decrease assets and liabilities
(d) Increase assets and stockholder's
equity
5. Contra entry is recorded in?
(a) Double column cash book
(b) Single column cash book
(c) Three column cash book
(d) a and c
6. A check received and paid into the
bank on the same date is recorded
in the?
(a) Bank column of the cash book
(b) Cash column of the cash book
(c) Both the cash and bank column
of the cash book
(d) None of above
7. A book in which cash balance and
bank balance are simultaneously
maintained is known as?
(a) Simple cash book
(b) Single column cash book
(c) Double column cash book
(d) None-of these
8. The transaction will be treated as a
contra entry when?
(a) Cash withdrew from bank for
personal use
(b) Check received from customer
and deposited
(c) Cash drew from bank for office
use
(d) Non of Above
9. Which one of the following is not
correct for cash book?
(a) It is a dual book
(b) It is journalized ledger
(c) It records liabilities
(d) Both b and c
10. Over drawn balance of cash book is
recorded on?
(a) If Dr or Cr balance not mentioned
will be overdrawn balance
(b) If mentioned O/D balance then will
be debited on debit side of cash
book
(c) Is Credited if the balance is
mentioned as an over drawn balance
(d) None of Above
11. A check received on 12th of
December dated 25th December is
considered as?
(a) Bank
(b) Cash
(c) Liability
(d) Revenue
12. Which of the following item is not
included in the Cash Book?
(a) Purchases of Rs. 10,000
(b) Sales of Rs.5,000
(c) Received cash for Salman Rs.
2,000
(d) Credit sales of Rs. 22,000
13. Which of the following items is not
considered as cash or cash
equivalent?
(a) Cash on hand
(b) Bank borrowings
(c) Demand deposits
(d) Investments with a maturity of
two months from the date of
acquisition
GUL E FARIS ZAMAN
LECTURER
GCMS HARIPUR
 FINANCIAL ACCOUNTING MCQS
Cash Book & Rectification of Errors

14. The Cash of a business would 20. When a check is received from a
2
change as a result of? customer and it is deposited into
(a) A supplier being paid by check the bank for collection but
and deposited ultimately returned dishonored, the
(b) Raw materials being purchased customer account will be?
on credit (a) Debited
(c) Non-current assets being (b) Credited
purchased on credit (c) Becomes a liability
(d) Wages being paid in cash (d) None of these

15. If a business shows a debit balance 21. When goods are purchased for
in its own record of its bank cash, the entry will be recorded in
balance, this indicates? the?
(a) The business has a bank (a) Cash book
overdraft (b) Purchases book
(b) The business is a debtor in the (c) Journal
books of bank (d) None
(c) The business has money in the
bank 22. The balance of petty cash is?
(d) The ledger entry must be wrong (a) An asset
(b) A liability
16. The unfavorable balance of cash in (c) An expense
cash book is? (d) An income
(a) An expense
(b) Liability 23. All of the following are not
(c) A gain considered cash except?
(d) An Asset (a) Postage and stamps
(b) Securities
17. When a company received check (c) Investments
from customer. The effect of the (d) Cheque
transaction is to?
(a) Increase assets and decrease 24. Entry representing the reversal or
assets cancellation of an entry on the
(b) Increase assets and liabilities other side is called?
(c) Decrease assets and liabilities (a) Closing entry
(d) Increase assets and stockholder's (b) Contra entry
equity (c) Bank overdraft
(d) Adjusting entry
18. Cash book involves the?
(a) For payment transactions 25. The debit side discount column of
(b) Both payment and receipt three column cash book is called?
transactions (a) Trade discount
(c) For receipt transactions (b) Cash discount
(d) None (c) Discount allowed
(d) Discount received
19. The transaction will be treated as a
contra entry when? 26. The total of the ‘Discounts
(a) Cash withdrew from bank for Allowed’ column in the Cash Book
domestic use is posted to?
(b) Check received from customer (a) The debit of the Discounts
and deposited Received account
(c) Cash drew from bank for office (b) The debit of the Discounts
use Allowed account
(d) 1 and 3 only
GUL E FARIS ZAMAN
LECTURER
GCMS HARIPUR
 FINANCIAL ACCOUNTING MCQS
Cash Book & Rectification of Errors

(c) The credit of the Discounts 33. The Debit balance of cash book
3
Allowed account indicates?
(d) The credit of the Discounts (a) Net income
Received account (b) Cash in hand
(c) Difference between debtors and
27. Cash discount is provided? creditors
(a) Early payment (d) None
(b) Late payment
(c) Bulk purchase 34. In triple column cash book, cash
(d) Bulk sales withdrawn from bank for office use
will appear in?
28. Which of the following explains (a) Both sides of the cash book
the imprest system of operating (b) Debit side of the cash book only
petty cash? (c) Credit side of the cash book only
(a) Weekly expenses cannot (d) All of above
exceed a set amount
(b) The exact amount of expenses
is reimbursed at intervals to 35. Petty cash may be used to pay?
maintain a fixed float (a) Salaries to staff
(c) All expenses out of the petty (b) Expenses relating to post and
cash must be properly telegrams
authorized (c) Purchase of furniture and fittings
(d) Regular equal amounts of cash (d) All of Above
are transferred into petty cash
at intervals 36. The discount column of a triple
column cash book records?
29. Which of the following payment is (a) Trade discount
made from petty cash? (b) Cash discount
(a) Purchase of non-current asset (c) Quality discount
(b) Payment to creditors (d) Seasonal discount
(c) Cash deposited into bank
(d) Payment of postage & 37. When cash is drawn from bank for
telegrams business use the entry type will be?
(a) Contra entry
30. Which of the following (b) Compound entry
transactions does not decrease (c) General entry
cash? (d) Double entry
(a) Purchasing inventory for cash
(b) Accruing operating expenses 38. In which books of prime entry
(c) Paying trade accounts payable would the following transactions be
(d) Purchasing securities that are not entered? A credit sale for Rs. 387
cash equivalents and a cash sale of Rs. 200 less 10%
discount for cash payment
31. The cash book called? (a) Sales day book and cash book
(a ) Dual Book (b) The petty cash book and sales day
(b) Journalized ledger book
(c) Book of prime and secondary entry (c) The purchase day book and sales
(d) All of before day book
32. If a cheque sent for collection is (d) The journal and cash book
dishonored, the debit is given to?
(a) Suppliers A/c
(b) Bank A/c
(c) Customers A/c
(d) All of above
GUL E FARIS ZAMAN
LECTURER
GCMS HARIPUR
 FINANCIAL ACCOUNTING MCQS
Cash Book & Rectification of Errors
39. On Jan 1st 2002, Rs. 1,000 given to
4
petty cashier, he has spent Rs.860
during the month of January. On
Feb 1st to make the imprest he will
receive cheque for
Rs.______________?
(a) Rs. 1,000
(b) Rs. 860
(c) Rs. 1,860
(d) None
40. When cash is drawn from bank for
business use the entry type will be?
(a) Contra entry
(b) Compound entry
(c) General entry
(d) Double entry
41. All of the following are other
receivables except?
(a) Income taxes refundable
(b) Accrued revenue
(c) Petty cash
(d) Advances to employees
42. If transaction is totally omitted
from the books, it is called?
(a) Error of commission
(b) Error of principle
(c) Error of recording
(d) Error of omission
43. Interest on loan paid by business is
an example of?
(a) Deferred expense
(b) Revenue expense
(c) Capital expense
(d) None of the given options
44. If the sum of the debits and credits
in a trial balance is not equal, then?
(a) The chart of accounts also does
not balance
(b) It is safe to proceed with the
preparation of financial statements
(c) Most likely an error was made in
posting journal entries to the
general ledger or in preparing the
trial balance
(d) There is no concern because the
two amounts are not meant to be
equal
45. What is the treatment of ending
stock in trial balance?
(a) Dr
(b) Cr
(c) Not considered
(d) Subtracted from opening stock
46. Which one of the following could
not be classified as revenue
expense?
(a) Purchase of a fixed asset, by
check
(b) Goods purchase for resale by
cash
(c) Paid rent
(d) Wages paid by cash
47. Which of the following account(s)
will be affected, while rectifying
the error of carriage charges, paid
for a new plant purchased
mistakenly debited to carriage
account?
(a) Plant account
(b) Carriage account
(c) Both plant account and carriage
account
(d) Trading account
48. Which error will discovered by the
preparation of trial balance?
(a) Capital expenditure treated as
revenue expenses
(b) An incorrect amount entered as
both a debit and credit
(c) Completed omission of a
transaction
(d) An incorrect amount entered
twice as a debit
49. Disagreement of trial balance
includes which errors?
(a) Errors of omission
(b) Wrongly totaling of subsidiary
books
(c) Compensating errors
(d) a and c only
50. Freight expenses for moving
machinery to factory are?
(a) Capital expenditure
(b) Deferred revenue expenditure
(c) Revenue expenses
(d) None of the above
GUL E FARIS ZAMAN
LECTURER
GCMS HARIPUR
 FINANCIAL ACCOUNTING MCQS
Cash Book & Rectification of Errors

51. Which of the following account(s) 57. Failure to differentiate between

5
will be affected, while rectifying capital and revenue expenditures so
the error of sales to Rahim Rs. 336 this error is called?
posted to his account as Rs. 363? (a) Error of omission
(a) Sales account (b) Compensating error
(b) Both sales and Rahim’s Account (c) Error of Principles
(c) Cash account (d) none of them
(d) Rahim’s account

52. Sale of goods to Mr. Amir is
wrongly debited to Umair
A/c(debtor) instead of Amir
A/c(debtor), this is an example?
(a) Error of principle
(b) Error of omission
(c) Error of commission
(d) Error of original entry
53. Errors which affect one side of an
account are called?
(a) Single sided errors
(b) Double sided errors
(c) a and b
(d) None of the above
54. Goods of Rs. 1,000 purchased from
Mr. “A” were recorded in sales
book, the rectification of this error
will?
(a) Increase the gross profit
(b) Reduce the gross profit
(c) Have no effect on gross Profit
(d) None of the given options
58. Error of Principle arises when?
(a) Proper distinction is not made
between Capital and Revenues
(b) There is an omission of
transaction
(c) Wrong amounts are entered in the
Ledgers
(d) Transaction are entered in the
wrong Ledgers
59. Expenditure incurred on erecting
machinery is?
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Deferred Revenue Expenditure
(d) None of the above
60. Which account is generally used
for Rectification of Errors?
(e) Memorandum Account
(f) Adjustment Account
(g) Rectification Account
(h) Suspense Account

55. Which of the following account(s)

will be affected, while rectifying
the error of Carriage paid Rs.50 for
the newly purchased machinery
mistakenly debited to carriage
account?
(a) Only machinery account
(b) Only carriage account
(c) Both carriage and machinery
account
(d) Only cash account

56. Suspense a/c is not used in which

of the following cases?
(a) Before trial balance
(b) After trial balance
(c) Before final accounts
(d) None of the above

GUL E FARIS ZAMAN

LECTURER
GCMS HARIPUR