1.

Accounting is a
a. business language
b. computer language
c. statutory language
d. all of the above.
2. Financial accounting records and reports transactions of
a) monetary in nature only.
b) non-monetary nature only
c) any transaction(s) carried out by an organization
3. Financial accounting records and reports transactions as per
a) statutory requirements (GAAP).
b) business decisions
c) choices of accountant.
4. Outcomes of financial accounting are
a) statement of income and expenditure
b) statement of sources and applications of funds
c) statement of cash flow
d) all of the above
5. Statement of incomes and expenditures shows
a) financial performance of an organization during a particular period (financial
year in India).
b) financial position of an organization during a particular period (financial year
in India).
c) how much an organization owns and owes to others.
d) revenue during the financial year.
6. Statement of sources and application of funds shows
a) financial performance of an organization during a particular period (financial
year in India).
b) financial position of an organization on a particular date since inception.
c) how much an organization owns and owes to others.
d) revenue during the financial year.
7. Cash flow statement shows cash inflow to business and outflow from business with
respect to
a) operating activities
b) financing activities
c) investment activities
d) all of the above.
8. Business activities are governed by
a) market structure
b) Government policies
c) business’s own strategies.
d) all of the above
9. Financial accounting helps to assess
a) how business is performing i.e. whether making profit or loss
b) how business is utilizing its resources
c) how business has acquired its resources
d) all of the above
10. Financial Accounting includes
a. Journal Entries,
b. Ledger
 c. Trial Balance
d. Financial Statements
e. all of the above
11. Ledger is the summary of transactions of
a. similar nature
b. all transactions
c. non-monetary transactions
12. Trial balance is the summary of
a. ledge books
b. financial statements
c. journal entries
13. Financial accounting records and reports transactions from
a. organization point of view
b. owner’s point of view
c. shareholders’ point of view
14. The first step in the cycle of accounting is to ……………. that will find place in books of
accounts.
a) identify transactions
b) identify year
c) identify parties
d) all of the above
15. Transactions having ………………. only are to be recorded from business point of view.
a. financial impact
b. non-monetary impact
c. future impact

16. In financial accounting, recording of transactions happens as per the……………..

a. golden rules of accounting
b. practical rules of accounting
c. industry standards

17. Types of accounts are

a. personal account
b. real account
c. nominal accounts
d. all of the above
18. Profit & Loss account includes
a. incomes & gains and expenses & losses
b. sources and application of funds
c. profits and losses
19. Profit & Loss account shows financial performance of a business
a. during a particular period (financial year)
b. since inception to a particular date
c. during business recession.
20. Total income of a business could be
a. income from operation and income from other sources
b. income from other subsidiary
c. income from exports
21. Income from operation includes
a. sale of goods and services, and scrap from operation
 b. income from subsidiary
c. sale of fixed assets
22. Income from other sources includes
a. interest received
b. dividend received from investment made in other organizations.
c. all of the above
23. Gains includes
a. selling price of financial assets minus purchase price of financial assets.
b. selling price of old fixed assets minus book value of old assets
c. all of the above
24. Expenditure in profit & loss account is
a. capital expenditure
b. revenue expenditure
c. all of the above
25. Capital expenditures are
a. non-recurring in nature and meant for generating revenue for a longer period
b. meant for resale
c. tangible assets
26. Capital expenditures are investment in
a. fixed assets
b. current assets
c. fixed and current assets
27. Depreciation of charged against all fixed assets except
a. land
b. building of long life
c. high tech equipment.
28. Depreciation is expired
a. cost of fixed assets
b. market price of fixed assets
c. replacement value of fixed assets
29. Depreciation is a
a. non-cash expense
b. cash expense
c. deferred revenue expense
30. Depreciation expense
a. reduces profit but does not affect cash flow
b. reduces profit and cash flow
c. neither reduces profit nor cash flow.
31. Revenue expenditures in statement of income & expenditure are
a. expenses
b. investment
c. revenue income
32. Revenue expenses expenditures in statement of income & expenditure are
a. recurring in nature
b. non-recurring in nature
c. all of the above
33. Capital expenditures are
a. recurring in nature
b. non-recurring in nature
c. sometimes non-recurring in nature
34. Capital expenditures include
a. purchase of plant, equipment and machineries
b. purchase of consumables
c. purchase of equipment for resale
35. Revenue expenditure includes
a. salary paid to employees
b. rent paid on leased building
c. raw material and other inputs consumed to produce goods and services
d. interest paid on working capital borrowing
e. All of the above
36. Sources of funds in balance sheet include
a. capital contributed by the owners
b. reserves & surpluses
c. long term creditors liabilities
d. short term creditors liabilities.
e. All of the above
37. Reserves & surpluses belongs to
a. owners / equity shareholders
b. lenders who have contributed long terms loans.
c. employees
38. Application of funds include
a. investment of fixed assets
b. investment in current assets
c. All of the above
39. In personal account:
a. Debit the receiver or who owes to business and Credit the giver or to whom
business owes.
b. Debit the giver or who owes to business and Credit the receiver or to whom
business owes.
40. In real account:
a. Debit what comes into business and credit what goes out of business
b. Debit what goes out of business and credit what comes into the business
41. In nominal account:
a. Debit all expenses or losses and credit all income and gains
b. Credit all expenses or losses and debit all income and gains
42. Human resources will not appear in the balance sheet according to ______ concept.
a. Accrual
b. Going concern
c. Money measurement concept
d. None of the above
43. The proprietor/owner of the business is treated as a creditor for the capital introduced by
him due to_____ concept.
a. Money measurement
b. Cost
c. Separate legal Entity
d. Dual aspect
44. Fixed assets are held by business for _____
a. Converting into cash
b. Generating revenue
c. Resale
 d. None of the above
45. Business enterprise is separate from its owner according to _____ concept.
a. Money measurement concept
b. Matching concept
c. Separate Legal Entity concept
d. Dual aspect concept
46. The policy of anticipating no profit and provide for all possible losses arise due to the
concept of _____
a. Consistency
b. Full Disclosure
c. Conservatism
d. Matching
47. Cost concept basically recognizes ____
a. Fair Market value
b. Historical cost
c. Realisable value
d. Replacement cost
48. The Market price of good declined than the cost price. Then the concept that plays a key
role is ____
a. Materiality
b. Going concern concept
c. Realization
d. Consistency
49. As per the Matching concept, Revenue minus………. = Profit
a. Expenses
b. Liabilities
c. Losses
d. Assets
50. For every debit there will be an equal credit according to
a. Matching concept
b. Cost concept
c. Money measurement concept
d. Dual aspect concept
51. The comparison of the financial statement of one year with that of another is possible
only when ---------------- concept is followed
a. Going concern
b. Accrual
c. Consistency
d. Materiality
52. Matching concept means
a. Assets = capital + liabilities
b. Transactions recorded at accrual concept
c. Anticipate no profit but recognize all losses
d. Expenses should be matched with the revenue of the period.
53. The disclosure convention requires:
a. Full disclosure of all material facts that can affect the financial statement.
b. That profit should be realized.
c. Matching of incomes and expenses for a particular period.
d. The business to avoid being dissolved in the near future.
54. The realization concept does not include one of the following features:
 a. The concept requires proper care when calculating revenue.
b. The concept stresses that revenues should only be recorded if there is
reasonable certainty about their realization.
c. The concept describes the problems that may arise in the calculation of
incomes and expenses.
d. The concept explains that the comparison of incomes and expenses for a
particular period can give the period's net result.
55. Going concern can be defined best as:
a. The concept provides the basis for the formation of the accounting equation.
b. This concept refuses the allocation of cost on different accounting periods.
c. This concept discusses the issue of the realization of profit.
d. This concept assumes that the business will operate for an indefinite period of
time and will not be dissolved in the near future.
56. Entries in accounting records and data reported in financial statements must be based on
documentary evidence
a. Money measurement concept
b. Cost concept
c. Dual aspect concept
d. Verifiable objective evidence concept
57. The concept of conservatism will have the effect of:
a. Over-statement of assets
b. Understatement of assets
c. Understatement of provision for bad and doubtful debts
d. Overstatement of stock
58. Which of the following is not an accounting concept?
a. Matching concept
b. Dual Aspect concept
c. True and Fair concept
d. Going Concern concept
59. Final accounts must be prepared on a periodic basis rather than waiting till the business is
terminated:
a) Money measurement concept
b) Cost concept
c) Dual aspect concept
d) Accounting period Concept
60. Rent for the month of March 2021 is not paid. Under which accounting concept it should
be recorded as an expense for the year ended March 31, 2021?
a. Accrual Concept
b. Revenue Recognition Concept
c. Dual Aspect Concept
d. Both Revenue Recognition Concept and Dual Aspect Concept
61. According to which of the following concepts, in determining the net income from a
business, all costs which are applicable to the revenue of the period should be charged
against that revenue?
a) Matching Concept
b) Money Measurement Concept
c) Cost Concept
d) Dual Aspect Concept
62. Financial Accounting is a business language used by an organization to record and report
financial transactions as per?
 a) International Financial Reporting Standards
b) Generally Accepted Accounting Principles
c) Sustainability Accounting Standards
d) Public Company Accounting Oversight Board
63. In financial statement, what is described as a “snapshot” of a company’s financial position
of an organization since inception to a particular date?
a) Statement of Income and Expenditure
b) Cash Flow Statement
c) Funds Flow Statement
d) Statement of Sources and Application of Funds
64. As per the accounting rule, an organization has to charge depreciation against all
_______assets except __________.
a) current, land
b) fixed, buildings
c) current, plant and machinery
d) fixed, land
65. Net Block of Fixed Assets = Gross Block of fixed assets minus ____________.
a) Provision for Doubtful Debts
b) Depreciation
c) Prepaid expenses
d) Interest expense
66. The amount of prepaid insurance that has expired in the accounting period is reported as
an:
a) Income
b) Gain
c) Loss
d) Expense
67. As per the basic accounting equation, Assets =
a) Liabilities - Capital
b) Incomes – Expenses
c) Liabilities + Capital
d) Capital + Fixed Assets
68. _____________will cause an organization’s Stockholders’ Equity to increase.
a) Expenses
b) Profit or retained earnings
c) Operating losses
d) Losses
69. Depreciation is charged against all tangible fixed assets except ___________.
a) Buildings
b) Plant and Equipment
c) Land
d) Machinery
70. Depreciation is a _________ expense which reduces _______ but does not impact
________.
a) Cash, expenses, cash flow
b) Non-cash, profit, cash flow
c) Non-cash, losses, cash flow
71. Writing off of intangible fixed assets is known as _____________.
a) Depreciation
b) Amortization
 c) Depletion
d) Accretion
72. There are two types of expenditure viz. ________ expenditure and ________expenditure.
a) current, fixed
b) long-term, short-term
c) capital, revenue
d) income, loss
73. Income of an organization could be income from ________ and income from________.
a) Sale of fixed assets, sale of financial assets
b) operations, other sources
c) stocks, bonds
d) short term and long term capital gains
74. Statement of income and expenditure (P/L account) shows financial _________ of an
organization during a ___________year.
a) Position, inception
b) Performance, financial
c) Position, assessment
d) Performance, prior
75. Statement of Sources & Application of funds (B/S) shows financial __________ of an
organization on a particular date since ___________.
a) Position, inception
b) Performance, financial
c) Position, assessment
d) Performance, prior
76. ____________ is that expenditure which results in the acquisition of an asset, tangible or
intangible, which can be later sold and converted into cash or which results in increase in
the earning capacity of a business.
a) Revenue Expenditure
b) Capital Expenditure
c) Recurring Expenditure
77. Equity shareholders are known as __________ claimants of the business.
a) priority
b) residual
c) initial or foremost
78. An increase in expenses will ________ the profit of the business.
a) reduce
b) increase
c) may increase or decrease
d) not affect
79. The Statement of Sources and application of funds the liabilities include _________
liabilities and __________ liabilities.
a) Shareholders, bondholders
b) Owners, creditors
c) Debtors, creditors
80. The assets of a business include __________ assets and __________ assets.
a) current/short term, fixed/long-term
b) recurring, non-recurring
c) capital, revenue