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Accounting MCQs with Explanations

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91AccountingMedium

Discount allowed is a kind of deduction from_____________?

ADiscount account

BCash account

CAccount receivable

DAccount payable

Correct answer

C. Account receivable

Explanation

Account receivable is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

92AccountingMedium

The cost of obsolete inventory acquired several years ago, to be considered in a keep vs. disposal decision is an example of :

AOpportunity cost

BSunk cost

CAvoidable cost

DUncontrollable cost

Correct answer

B. Sunk cost

Explanation

Sunk cost is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

93AccountingMedium

The process of recording is done?

ATwo times a year

BFrequently during the accounting period

Conce a year

DAt the end of a accounting period

Correct answer

B. Frequently during the accounting period

Explanation

Frequently during the accounting period is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

94AccountingMedium

Which of the following is a revenue expenses?

AShare Capital

BRaw material consumed

CLong term loan raised from bank

DPlant purchased

Correct answer

B. Raw material consumed

Explanation

Raw material consumed is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

95AccountingMedium

Depreciation fund method is also known as__________?

ASinking Fund Method

BAnnuity Method

CNone of these

DSum of Year Digits Method

Correct answer

A. Sinking Fund Method

Explanation

Sinking Fund Method is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

96AccountingMedium

Which of these types of expenditure would not be treated as a Capital Expenditure?

AMaintenance of the Asset

BExtension of an Asset

CAcquisition of an Asset

DImprovement of the existing Asset

Correct answer

A. Maintenance of the Asset

Explanation

Maintenance of the Asset is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

97AccountingMedium

Which of the following is true with respect to providing depreciation under diminishing balance method?

AThe amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing

BThe amount of depreciation decreases while the rate of depreciation remains the same

CThe amount of depreciation and the rate of depreciation increases every year

DThe amount of depreciation and the rate of depreciation decrease every year

Correct answer

B. The amount of depreciation decreases while the rate of depreciation remains the same

Explanation

Under the written down value method of depreciation, the rate of percentage of depreciation is fixed, but it applies to the value of the asset at which the asset stands in the books in the beginning of the year. Therefore, the amount of depreciation decreases as the fixed rate of depreciation is charged on written down values of the asset.

98AccountingMedium

Obligation of the Business are known as___________?

ARevenues

BExpenses

CLiabilities

DAssets

Correct answer

C. Liabilities

Explanation

Liabilities is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

99AccountingMedium

Identify the correct sequence of accounting process

AIdentifying→communicating→recording

BCommunicating→Recording→Identifying

CIdentifying→recording→communicating

DRecording→Communicating→Identifying

Correct answer

C. Identifying→recording→communicating

Explanation

Identifying→recording→communicating is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

100AccountingMedium

A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car?

A10,000 Loss

B10,000 Profit

C20,000 Profit

D20,000 Loss

Correct answer

D. 20,000 Loss

Explanation

20,000 Loss is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

The process of recording is done?

ATwo times a year

BFrequently during the accounting period

Conce a year

DAt the end of a accounting period

Correct answer

B. Frequently during the accounting period

Explanation

Frequently during the accounting period is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

Which of these types of expenditure would not be treated as a Capital Expenditure?

AMaintenance of the Asset

BExtension of an Asset

CAcquisition of an Asset

DImprovement of the existing Asset

Correct answer

A. Maintenance of the Asset

Explanation

Maintenance of the Asset is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

Which of the following is true with respect to providing depreciation under diminishing balance method?

AThe amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing

BThe amount of depreciation decreases while the rate of depreciation remains the same

CThe amount of depreciation and the rate of depreciation increases every year

DThe amount of depreciation and the rate of depreciation decrease every year

Correct answer

B. The amount of depreciation decreases while the rate of depreciation remains the same

Explanation

Identify the correct sequence of accounting process

AIdentifying→communicating→recording

BCommunicating→Recording→Identifying

CIdentifying→recording→communicating

DRecording→Communicating→Identifying

Correct answer

C. Identifying→recording→communicating

Explanation

Identifying→recording→communicating is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.