PRINCIPAL OF ACCOUNTING

Dr. Izhar Bukhari

MCQS.

1-The art of recording, classifying and summarizing is called:

(A) Journalizing

(B) Accounting

(C) Bookkeeping

(D) Record Keeping

2- The goods which are purchased for the purpose of resale are called

(A) Purchases

(B) Merchandise

(C) Goods/Inventory

(D) All of the above

3- The book value of old furniture was Rs. 1,500. It was sold for Rs. 500. The
difference is a ___.

a) Revenue expenditure

b) Revenue loss

c) Capital expenditure
d) Capital loss

4- Repair incurred for using a second-hand car purchased recently

a) Capital expenditure

b) Revenue expenditure

c) Capital loss

d) Deferred revenue expenditure

5- Advance payments are recognized as

(A) Receivable

(B) payable

(C) bad debt

(D) none of these

6- Salaries paid to partners is an:

(a) Appropriation of profit among partners

(b) Income of the partnership firm

(c) Expense to partnership firm

(d) None of the above

7- Residual interest in the net asset of an entity that remains after deducting its
liabilities is?

(a) Owner Equity

(b) Liabilities

(c) Asset

(d) Expense
8- Which of the following item of revenue nature?

(a) Dividends payable

(b) Rent incur

(c) Fee earned

(d) Payment for building improvement

9 -Transactions are initially recorded in the?

(a) Book of Final Entry

(b) Accounting Equation

(c) T Accounts

(d) ledger accounts

10-Purchased goods from Ahmed for cash should be credited to?

(a) Account Payable _ Ahmed

(b) Cash A/c

(c) Purchases A/c

(d) Account Receivable _ Ahmed

11- In which order does the Journal list transactions?

(a) Chronological

(b) Decreasing

(c) Increasing

(d) Alphabetical

12- Which one of the following is used to record financial transactions in date
wise order?
(a) Account

(b) Voucher

(c) General Journal

(d) General Ledger

13- Accrued expenses are also called?

(a) Accrued liabilities

(b) Expenses incurred but not paid

(c) Both A & B

(d) None

14- Which one of the following is called book of original entry?

(a) General Journal

(b) General Ledger

(c) Trial Balance

(d) Receipt and Payment Account

15-___ they are the present obligations arising from past events. It also arises
when an asset is created or acquired.

a) Asset

b) Liabilities

c) Equity

d) All

16- Commission received is an example of?

(a) Real A/c

(b) Personal A/c

(c) Nominal A/c

(d) None

17- The payment to a creditor will?

(a) Increase one asset and decrease another

(b) Decrease an asset and decrease owner’s equity

(c) Decrease an asset and decrease a liability

(d) Increase an asset and increase a liability

18- Credit means?

(a) Entries on the right hand side

(b) A decrease in liabilities

(c) An increase in expenses

(d) An increase in assets

19- The balance of cash account indicates?

(a) Net cash on hand

(b) Net loss for the period

(c) Net income for the period

(d) Net worth of the business

20- An account is said to have a debit balance if?

(a) The amount of debit exceeds the amount of the credits

(b) There are more entries on the debit side than on the credit side

(c) The last entry of the accounting period was posted on the debit side
(d) None of above

21- Which of the following accounts normally has credit balance?

(a) Wages Outstanding

(b) Motor vehicles

(c) Prepaid Rent

(d) Return Inwards

22- Why does a business prepare a Trial Balance?

(a) To calculate the profit and loss

(b) To check the cash and bank balance

(c) To check the arithmetical accuracy of the ledgers

(d) To show the financial position

23- A Trial balance is a?

(a) Real account

(b) Nominal account

(c) Personal account

(d) None

24- ___________ accounting documents, monitors and assists in the financial

planning of an organization.

(a) Managerial accounting

(b) Cost accounting

(c) Tax accounting

(d) Financial accounting

25- Financial accountancy is governed by ___________

(a). local standards only

(b). international standards

(c). local as well as international accounting standards

(d). company’s internal top management only

26- Financial accounting reports include _____

(a) profit and loss account

(b) directors report

(c) balance sheet and auditors report

(d). all of the above

27-The nature of financial accounting is:

(a)Historical

b)Forward looking

c)Analytical

(d)Social

28- ________ A/c is credited and ____ A/c is debited in case wages are paid for
construction of business premises

(a) Cash, Wages

(b) Cash, Premises

(c) Premises, Cash

(d) Wages, Cash

29- Amount invested by the proprietor in the business should be credit to:
(a) A/c payable

(b) Capital

(c) Cash

(d) Drawing

30- When is trial balance prepared?

(a) At the end of an accounting period

(b) At the end of a year

(c) Frequently during the year

(d) At the end of a month

31. Among these transactions, which transaction will have no impact on

stockholders’ equity?
(a) Net loss
(b) Investment of cash by stockholders
(c) Dividends to stockholders
(d) Purchase of the land from the proceeds of bank loan

32. Amount invested by the proprietor in the business should be credit to:
(a) A/c payable
(b) Capital
(c) Cash
(d) Drawing
33. Transactions are first recorded in which book/account?
(a) Book of Original Entry
(b) T Accounts
(c) Accounting Equation
(d) Book of Final Entry
34. Goods returned by customer will be debited to which account?
(a) Purchases A/C
(b) Return outward
(c) Customer’s A/C
(d) Return inward
35. Journal is also called a?
(a) A day book
(b) History book
(c) Ledger book
(d) An entry book
36. ________ A/c is credited and ____ A/c is debited in case wages are paid for
construction of business premises
(a) Cash, Wages
(b) Cash, Premises
(c) Premises, Cash
(d) Wages, Cash
37. Journal lists transactions in which order?
(a) Decreasing
(b) Chronological
(c) Alphabetical
(d) Increasing
38. Among these statements which one is incorrect regarding journal entry?
(a) The debited account titles are listed first
(b) Journal entries show the effects of transactions
(c) Each journal entry should begin with a date
(d) Journal entries provide account balances
39 Cash withdrawal from business by the proprietor should be credited to
(a) Cash account
(b) Purchase account
(c) Capital account
(d) Drawings account

40. Which one of the following is called the book of original entry?
(a) Receipt and Payment Account
(b) Trial Balance
(c) General Journal
(d) General Ledger
41.__________ is a specialised branch of accounting that keeps track of a
company’s financial transactions.

a) Cost accounting
b) Management accounting
c) Financial Accounting
d) Corporate accounting

42. Which of the following is a debit entry to a partner’s current account?

a) Salary
b) Drawings
c) Share of profit
d) Interest on capital

43.Financial accountancy is governed by ___________

 a) local standards only
b) international standards
c) local as well as international accounting standards
d) company’s internal top management only

44.Double Entry means:

a) Entry for the two aspects of books
b) Entry at two dates
c) Entry in two aspects of transaction>
d) All of the above

45._____ is the scope of financial accounting.

a) Collection and processing of data

b) Verifying or auditing data
c) Publishing data
d) . All of the above

46.Which is not a benefit of financial accounting?

a. Maintaining systematic records

b. Protecting and safeguarding business assets
c. Historical in nature
d. Facilitates rational decision making

47.Financial accounting reports include _____

 a. profit and loss account
b. directors report
c. balance sheet and auditors report
d. all of the above

48.All of following are Assets except?

(a) Prepaid Rent

(b) Goods

(c) Unearned Income

(d) b and c

49. All revenue incomes are credited to

a. manufacturing account
b. trading account
c. profit and loss account
d. balance sheet
50.What is the main objective of financial accounting?

a) profit and loss account only

b) balance sheet only
c) both Profit & Loss account and balance sheet
d) Trial Balance only

51.Debit the receiver, credit the giver is rule for

a) personal account
b) tangible real account
c) nominal account
d) representative personal account

52.Investment is a

a) personal account
b) real account
 c) nominal account
d) representative personal account

53.The amount brought in by owner of the business should be credited

to?
(a) Owner Equity

(b) Drawing

(c) Cash

(d) All of above

54.Sales made to Ahmed on credit should be debited to?
(a) Account Receivable

(b) Cash

(c) Account Receivable-Ahmed

(d) Sales
55.General journal is a book of _______ entries?
a)First
b) Original
c)Secondary
d) Generic

56. Which one of the following is called the book of original entry?
a)Receipt and Payment Account
b)Trial Balance
c)General Journal

d)general Ledger
57.Among these statements which one is incorrect regarding journal entry?
(a) The debited account titles are listed first
(b) Journal entries show the effects of transactions
(c) Each journal entry should begin with a date
(d) Journal entries provide account balances

58.Revenue is the mechanisms where income ___ the company.

a) Enters in
b) Goes from
c) Withdraw
d) Invested in
59.What are the main types of accounting?
a. Financial accounting
b. Managerial accounting
c. Cost accounting
d. All
60.Balance Sheet is a statement of :
a) Assets
b) Liabilities
c) Capital
d) All of the above
61.One of the following is not a characteristic of accounting principles:
a) Results-oriented
b) Factual
c) Practical
d) Summarizing

62.The normal balance of capital account is

a) Credit balance
b) Debit balance
c) Cash balance
d) Neither debit nor credit balance

63.The term “Income” is also synonym with ______

a) Expense
b) Revenue
 c) Loss
d) Invested
64.The assets that can be converted into cash within a short period (i.e. 1
year or less) are known as;
a) Current Assets
b) Fixed Assets
c) Intangible Assets
d) Investments

65.In which of the following order, data is entered into the Journal?

a) Alphabetical order
b) Numeric order
c) Bullets order
d) Chronological order

66.The art of recording, classifying and summarizing is called:

a) Journalizing
b)Accounting
c) Bookkeeping
d) Record Keeping

67.The following is(are) the type(s) of Journal:

a) Purchase Journal
b) Sale Journal
c) Cash Journal
d) All of the above

68. Which of the following accounts will be credited if a company purchases

building for cash?

a) Capital account
b) Fixed assets account
c) Building account
 d) Cash account

69. Which of the following specialized journal records "goods returned

by customers"?

a) Purchase journal
b) Sales journal
c) Purchase return journal
d) Sales return journal

70.Transactions that a business does not record in any specialized

journal are recorded in which of the following books?

a) Cash payment journal

b) Cash receipt journal
c) Purchases return journal
d) General journal

71.An 'account' records the ______ in the balance of an item

a) Increase
b) Decrease
c) Increase or decrease
d) Appreciation

72.The normal balance of capital account is

e) Credit balance
f) Debit balance
g) Cash balance
h) Neither debit nor credit balance

73.Sales on credit is recorded in which of the following journal?

a) Purchase journal
b) Sales journal
 c) Purchase return journal
d) Sales return journal 

74.Accounting provides data or information on

a) Income and cost for the managers
b) Financial conditions of the institutions
c) Company’s tax liability for a particular year
d) All the above
75. Accounting provides data or information on:
a) Income and cost for the managers
b) Financial conditions of the institutions
c) Company’s tax liability for a particular year
d) All the above
76.Discounts received are:
a) Buyer of goods granted discount by seller
b) Deducted when we receive cash
c) Given by us when we sell goods on credit
d) None of these
77.If we take goods for own use we should
a) Debit Drawing Account, Credit Purchases Account
a) Debit Drawings Account: Credit Stock Account
b) Debit Sales Account: Credit Stock Account
c) Debit Purchases Account: Credit Drawings Account
78.The debts which are to be repaid within a short period(year or less) are
known as;
a) Current Liabilities
b) Fixed Liabilities
c) Contingent Liabilities
d) All of above
79.Patents, Copyrights and Trademarks are;
a)Current Assets
 b)Fixed Assets
c)Intangible Assets
d)Investments
80.The assets that can be converted into cash within a short period (i.e. 1
year or less) are known as;
a)Current Assets
b)Fixed Assets
c)Intangible Assets
d)Investments
81.The long term assets that have no physical existence but are rights that
have value is known as;
a) Current Assets
b) Fixed Assets
c) Intangible Assets
d) Investments

82.The following is(are) the type(s) of Journal:

a)Purchase Journal
b)Sale Journal
c)Cash Journal
d)All of the above
83.The following is a statement showing the financial status of the
company at any given time :
a) Trading Account
b) Profit & Loss statement
c) Balance Sheet
d) Cash Book
84.Managerial accounting help _____ team to make business decision.
a) Marketing
b) LAB
c) Management
 d) None
85.GAAP stand for?
a) Generally Accepted Accounting Principal
b) Generally Accounts Accepted principal
c) Generally Attendance Accounting principal
d) Both a & b
86.Choose the types of accounting:
a) Forensic Accounting
b) Tax Accounting
c) Management Accounting
d) All
87.Journal entry is used to record _____ in accounting records.
a) List of employs
b) Business Transaction
c) Number of machines
d) Number of Office Vans
89.In journal entry, Header line is used to define:
a) Debit amount
b) Credit amount
c) Name of account
d) Date and entry number
90.In journal entry, Footer line is used to define:
a) Debit amount
b) Credit amount
c) Reason/Description of Entry
d) Date
91.Example of Liabilities is:
a) Payable
b) Tax due
c) Both a & b
d) None
92.______ is the cost of doing business.
a) Income
b) Expense
 c) Loss
d) Profit

93.The two most common specialized fi elds of accounti ng in practi ce

are?
a. Environmental Accounti ng and Financial Accounti ng
b. Managerial Accounti ng and Financial Accounti ng
c. Managerial Accounti ng and Tax Accounting
d. None
94.Accounti ng is the language of?
a. Business
b. Management
c. Proprietor
d. School
95.Journal is also called a?
a. A day book
b. History book
c. Ledger book
d. An entry book
96.Which one of the following is called the book of original entry?
a. Receipt and Payment Account
b. Trial Balance
c. General Journal
d. General Ledger
97._____ is the scope of financial accounting.
a. Collection and processing of data
b.  Verifying or auditing data
c. Publishing data
d. All of the above
98.A process of accounting where revenue and expense recognition would occur
when cash is received and disbursed is called _
a) Cash
b) Accrual
c) None
d) a & b
99._ implies that a business unit is separate and distinct from the person who
owns or controls it
a) Money measurement
b) Business Entity
c) Going Concerned
d) None
100.The___ accounting system provides a system of checks and balances
a) Single Entry
b) Financial Entry
c) Double Entry
d) Triple Entry
101.Creditor may be _ types
a) 3
b) 2
c) 4
d) 5
102.A cashbook, which is used to record both cash and bank transactions, is
referred to as a _ column cash book.
a) 1
b) 2
c) 3
d) 4
103---------- is a brief explanation to a journal entry, given below the journal
entry, within brackets
a) Narration
b) Ledger
c) Credit
d) Debit
104.In journal ,business transaction is recorded in
a) same day
b) next day
c) after one weak
d) none of above
105.Interest on capital is added with
a) capital
b) profit
c) loss
d) donation
106.Personal accounts are related to
A) Assets and liabilities
B) Expense, losses and income
C) Customers, creditors etc
D) None of these
107.Which of the following is not included in the category of cash?
a)Bank deposits
b)Checks
c)Postdated checks
d)Money orders
108. Which of the following is not included in the category of cash?
a) Bank deposits
b) Checks
c) Postdated checks
 d) Money orders
109.Which one of the following is called the book of original entry?
a)Receipt and Payment Account
b)Trial Balance
c)General Journal
d)General Ledger
110.Net profit is calculated in which of the following account?
A) Profit and loss account
B) Balance sheet
C) Trial balance
D) Trading account
111.The debts which are to be repaid within a short period (a year or
less) are referred to as,
A) Current Liabilities
B) Fixed liabilities
C) Contingent liabilities
D) All the above
112.One of the following is not a characteristic of accounting
principles:
a)Results-oriented
b)Factual
c)Practical
d)Summarizing
113.The normal balance of capital account is

a)Credit balance

b)Debit balance

c)Cash balance

d)Neither debit nor credit balance

 114.The accounting cycle does not include:
a) Recording
b) Decision-making
c) Classification
d) Interpreting
115______ is the cost of doing business.
e) Income
f) Expense
g) Loss
h) Profit
116.The art of recording, classifying and summarizing is called:
(A) Journalizing
(B) Accounting
(C) Bookkeeping
(D) Record Keeping
117. Accounting provides information on:

a) cost and income for managers

b) company's tax liability for a particular year

c) fincial conditions of an institutions

d) All of these

118. PR stands for:

a) Post refrence

b) process refrence

c) product refrence

d) none of these

119. Choose the types of accounting:

a) Tax accounting
 b) Cost accounting

c) Financial accounting

d) All of these

120.Which of the following account will be credit if a company purchases

building for cash?

a) Captial account

b) fixed assets account

c) building account

d) Cash account

121 Which of the following account will be credit if bought goods on credit from
mr.Z?

a) purchases account

b) Mr. Z account

c) cash account

d) sales account

122. Investment is a:

a) personal account

b) real account

c) Both a &b

d) none of these

123. Patents, copyrights and trademarks are:

a) Intangibale assests
 b) fixed assets

c) current assets

d) investments

124. Which report gives a review on the profitability of a business?

(a) Statement of changes in equity
(b) Cash flow statement
(c) Balance sheet
(d) Income statement
125.When assets are subtracted from liabilities it will be equal to?
(a) Capital
(b) Net income
(c) Working capital
(d) Goodwidth
126.Which of the following options is not recorded in the Balance sheet?
(a) Cash
(b) Rent expenses
(c) Building
(d) Goodwill
127.Current assets are also known as:
(a) Cash
(b) Assets
(c) Invested capital
(d) Working capital
128.A  current asset that can be transferred into cash within three months is
known as:
(a) Cash equivalent
(b) Intangible asset
(c) Operating asset
(d) Cash asset
129.A method used in a comparative analysis of financial statement is:
(a) Returning analysis
(b) Common size analysis
(c) Preference analysis
(d) Graphical analysis
130.Which statement shows the flow of cash and cash equivalents during the
financial period?
(a) Statement of changes in equity
(b) Cash flow statement
(c) Balance sheet
(d) Income statement
131. A ledger is called a book of.
(a) Primary entry
(b) Final entry
(c) Original entry
(d) None of the above

132. From which of the following is a ledger account prepared.

(a) Transactions
(b) Journal
(c) Events
(d) None of the above
133.The process of transferring of items from a journal to their respective ledger
accounts is called as.
(a) Entry
(b) Arithmetic
(c) Balancing
(d) Posting
134. The ledger column that links the entry with the journal is called as.
(a) J.F column
(b) L.F column
(c) Credit column
(d) Debit column
135. The left hand side of the ledger account is referred to as.
(a) Footing
(b) Credit side
(c) Debit side
(d) Balance
136. Ledger is a principal book that contains.
(a) Real accounts only
(b) Personal accounts only
(c) All accounts
(d) Nominal accounts only
137. Accounts that have credit balance are closed by using the statement.
(a) By balance b/d
(b) By balance c/d
(c) To balance b/d
(d) To balance c/d
138. An account is having debit balance is established when.
(a) The last entry of the accounting period was posted on the debit side
(b) The amount of debit exceeds the amount of the credits
(c) There are more entries on the debit side than on the credit side
(d) None of above
139. Which of the following item will be appearing on the credit side of the
ledger account?
(a) Discount received
(b) Cash received
(c) Rent Expenses
(d) Purchases
140. Among these, which item is used as the base for preparing trial balance?
(a) Cash account
(b) Balance sheet
(c) Journal
(d) Ledger account
141.The term ‘Financial Statement’ covers
a) Profit & Loss Statement
b) Balance sheet and Profit & Loss Statement appropriation account
c) Profit & Loss Statement and Balance sheet
d) All of above are false
142. The form of balance sheet is
a) Vertical
b) Horizontal
c) Horizontal and vertical
d) Horizontal or vertical
143. The term current asset doesn’t cover
a) Car
b) Debtors
c) Stock
d) Prepaid expenses
144. P&L statement is also known as
a) Statement of operations
b) Statement of income
c) Statement of earnings
d) All of the above
145. Which of the following is true about financial statements?
A) Financial statement gives a summary of accounts.
B) Financial statements can be stated as recorded facts.
a) Only A
b) Only B
c) Both A and B
d) None of the above

146. The statement of financial position and the balance sheet are synonyms.
a) True
b) False
147. Schedules attached with the balance sheet forms a part of the financial
statements.
a) True
b) False
148. Which of the following statements are true?
A) Financial statements are only interim report.
B) Financial statements are also known as annual records.
C) Financial statements are historic.
c) Both B and C
d) None
149. Certain assumptions are essential to prepare financial statements.
a) True
b) False
150. Trial balance is used to check the accuracy of
A) Balance sheet balances
B) Ledger accounts balances
C) Cash flow statement balances
D) Income statement balances
151. In the books of account if a transaction is completely deleted, will it affect
the trial balance?
A) No
B) Yes
C) A transaction cannot be omitted
152. What is used in preparing trial balance?
A) Specialised Journals
B) Balance Sheet
C) Ledger Accounts
D) General Journal
153. What is the trial balance used for?
A) It is a financial statement
B) It records balances of a balance sheet
C) It doesn’t contribute to the accounting cycle
D) It records balances of accounts
154.Identify the nominal account
A. Building account
B. Machinery account
C. Creditors account
D. Rent expenses account
155. When debit balance is equal to credit balance then the trial balance means
A) Account balances are correct
B) Mathematically Capital+Liabilities=Assets
C) No mistake in recording transactions
D) No mistake in posting entries to ledger account
156. When is trial balance prepared?
A) At the end of an accounting period
B) At the end of a year
C) Frequently during the year
D) At the end of a month
157. Which items influence the trial balance agreement?

A) Deposit in transit
B) Compensating errors
C) Complete omission of a transaction
D) Partial omission of a transaction
158. When credit balances = debit balances, the trial balance check and shows
____ . It also indicates that there were no errors made during posting and
recording and posting.
A) Understatements of Balances
B) Errors of Commission
C) Arithmetic Accuracy
D) Omissions of Economic Events
159. Which of the following account with normal balance is shown at the debit
side of a trial balance?
A) Creditors account
B) Unearned income account
C) Rent income account
D) Cash account
160. In trial balance, which accounts with normal balance is recorded at the
credit side?
A) Bank account
B) Equipment account
C) Cash account
D) Accrued expenses account
161.Which of the following statements is incorrect?
A. (b) Assets – Liabilities = Capital
B. Liabilities + Capital = Assets
C. Liabilities + Assets = Capital
D. Assets - Capital = Liabilities
162. Accounting principles are generally based on
A. Practicability
B. Subjectivity
C. Conveniences in recordings
D. All are Correct
163. Resources minus capital equals:
A. Assets
B. Liabilities
C. Revenue
D. Equity
164. The accounting equation should remain in balance because every
transaction affects how many accounts?
A. Only one
B. Only two
C. Two or more
D. All of given options
165) A person or enterprise to whom a debt is owed
A. Accounts receivable
B. Note Payable
C. Note receivable
D. Accounts Payable
166) Assets are always equal to:
A. Capital
B. Liabilities
C. Liabilities + Capital
D. Liabilities + Accounts payable
167) Find out value of account receivable from following Cash Rs. 48,000
account payable Rs. 33,000 office equipment Rs. 21,000 owner equity Rs.
77,000?
A. Rs. 21,000
B. Rs. 41,000
C. Rs. 15,000
D. Rs. 110,000
168) Which one of the following equations correctly expresses the relationship
between assets (A), liabilities (L), revenues (R), expenses (E) and capital (C)?
A. A = L + R + E + C
B. A = C - (R - E) + L
C. A = (L - C) + (R - E)
D. A = C + L + (R-E)
169) A business event which can be measured in terms of money and recorded
in the books of accounts is called
A. Transaction
B. Owners equity
C. Equities
D. Assets
170) The system of recording transactions based on dual aspect concept is called
A. Double entry system
B. Single entry system
C. Double account system
D. Modern entry system
171) According to the money measurement concept, the following would be
recorded in the books of accounts of the business
A. Health of director of the company
B. Value of plant machinery
C. Quality of company’s goods
D. All are Correct
172) Mr. “A” borrowed money from bank; this transaction involves which one of
the following accounts?
A. Cash & Bank
B. Drawing & Cash
C. Bank & Debtors
D. Cash & Bank Loan
173) Revenue of the business includes?
A. Cash sales only
B. Credit sales only
C. Credit purchases only
D. Both cash sales and credit sales
174) A person who owes money to a business is known as:
A. Debtor
B. Creditor
C. Investor
D. Partner
175) Merchandise costing $1,000 are sold for $1,250. It will increase owner’s
equity by:
A. $1,000
B. $1,250
C. $250
D. None of the above
176) Cash is received from Mr A (a debtor of the business). It will affect:
A. Cash and debtors
B. Cash and owner's equity
C. Cash and creditors
D. Cash and merchandise
177) According to this concept, business and owner both have separate identity
A. Realization concepts
B. Going Concern Concept
C. Business entity concept
D. Cost Concept
178) According to this convention, accounting practice should remain
unchanged from one period to another
A. Conservatism
B. Materiality
C. Consistency
D. Full Disclosure
179) Assets minus liabilities is
A. Profit
B. Capital
C. Working Capital
D. Long-term liabilities
180) Capital + Liabilities – Assets = ?
A. zero
B. One
C. Two
D. three
181) Collected an amount due from customer would:
A. Increase both assets
B. Increase cash and increase liabilities
C. Increase assets and reduce owner’s equity
D. Increase one asset and reduced an other asset.
182) 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
183) An asset must be ___by the business to be shown as an asset in its balance.
A. Controlled
B. Owned
C. Possessed
D. Used
184) Which is the most important characteristic that all assets of the business
have?
A. Value of assets
B. Long life of assets
C. Future economic benefits
D. Intangible nature of assets
185) __ is the withdrawal of cash and goods by the owner of the business for
his/her personal use
A. Appreciation
B. Drawings
C. Depreciation
D. Outflow of cash
186) Closing stock and sundry debtors are examples of:
A. Fixed assets
B. Fictitious assets
C. Current assets
D. None of the above
187) The accounting equation can be written as:
A. Assets - Liabilities - Opening Capital + Drawings = Profit
B. Assets - Liabilities - Drawings = Opening Capital + Profit
C. Assets + Profits - Drawings - Liabilities = Closing Capital
D. Opening Capital + Profit - Drawings - Liabilities = Assets
188) Identify the nominal account
A. Building account
B. Machinery account
C. Creditors account
D. Rent expenses account
189) Using 'lower of cost and net realisable value for the purpose of inventory
valuation is the implementation of which of which of the following concepts?
A. The prudence concept
B. The separate entity concept C.
C. The going concern concept
D. Matching concept
190) Dose prudence concept allow a business to build substantially higher
reserves or provisions than that are actually required?
A. Yes
B. No
C. To some extent
D. It depends on the type of business
191) The capital of a sole trader would change as a result of:
A. A credit customer paying by cheque
B. Raw materials being purchased on credit
C. Non-current assets being purchased on credit
D. Personal petrol being paid for out of the business's petty cash
192) The purpose of the financial statement that lists an entity’s total
capital/liabilities is to show:
A. The financial performance of the entity over a period of time.
B. The amount of the entity could be sold for in liquidation
C. The amount of the entity could be sold as a going concern
D. The amount of the entity could be sold as a going concern

193) The matching concept matches which of the following?

A. Revenues with expenses
B. Expenses with capital
C. Asset with liabilities
D. Capital with income
194) Net profit is computed in which of the following?
A. Balance sheet
B. Income statement
C. Cash flow statement
D. Statement of changes in equity
195) Which of the following is a biological asset?
A. Land
B. Building
C. Environment
D. Living plants and animals
196) All of the following are the methods of inventory costing except
A. FIFO
B. LIFO
C. Stock take
D. AVCO or average cost
197) NRV or net realizable value of inventory is the expected selling price or
market value less
A. Carry value of the inventory
B. Cost of the stock
C. Replacement cost
D. Expenses necessary to complete sale
198) Term 'credit' means ___by the business
A. Receiving of benefits
B. It has no effect on business
C. Providing benefits
D. It depends upon items
199) When capital is increased by an amount it is recorded on the:
A. Left or credit side of the account
B. Right or debit side of the account
C. Right or credit side of the account
D. Left or debit side of the account
200) Bank passbook is also known as
A. Bank book
B. Bank statement
C. Bank column
D. Bank account