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Accounting MCQs with Explanations

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191AccountingMedium

Which of the following statements is incorrect regarding capital account?

ACredit increases the capital account balance

BFresh capital increases the capital account balance

CDebit increases the capital account balance

DNet income increases the capital account balance

Correct answer

C. Debit increases the capital account balance

Explanation

Debit increases the capital account balance is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

192AccountingMedium

Which of the following factors are primarily considered to determine the economic life of an asset?

ATax regulations and SEBI guidelines

BSEBI guidelines and Asset usage

CTax regulations and asset usage

DPassage of time, asset usage, and obsolescence

Correct answer

D. Passage of time, asset usage, and obsolescence

Explanation

Passage of time, asset usage, and obsolescence is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

193AccountingMedium

The maintenance of accounts in a systematic way is called__________?

ABook Keeping

BAccounting

CReading

DAuditing

Correct answer

A. Book Keeping

Explanation

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

194AccountingMedium

On scrutiny of a firm‘s books of accounts, it was observed that the following errors have occurred in the previous years but have not yet been rectified.

A7,000 Overstated

B17,000 Overstated

C10,000 Overstated

D17,000 Understated

Correct answer

C. 10,000 Overstated

Explanation

Net income will be overstated by 10,000 because the accrued expense are understated. Under/ Overstatement of depreciation of the year 2011-2012 does not affect the net income of current year i.e., 2012-13.]

195AccountingMedium

The entry for creating a Provision for bad debts is_____________?

ADebit Provision for Bad Debts A/c and credit Profit & Loss A/c

BDebit Provision for Bad Debts A/c and credit Debtors A/c

CDebit Profit and Loss A/c and credit Provision for Bad Debts A/c.

DDebit Debtors A/c and credit Provision for Bad Debts A/c

Correct answer

C. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.

Explanation

Provision for bad debt is a charge against profit and therefore, the entry for creating provision for bad debts is done by debiting P&L A/c and crediting provision for bad debts account.

196AccountingMedium

Cash discount is provided on _______________?

ASales return

BPrompt payment

CSales

DPurchases

Correct answer

B. Prompt payment

Explanation

https://www.zintego.com

197AccountingMedium

Capital expenditure is an expenditure which

AWill benefit the next accounting period

BResults in the acquisition of a permanent asset

CResults in the acquisition of a current asset

DBenefits the current accounting period

Correct answer

B. Results in the acquisition of a permanent asset

Explanation

A capital expenditure is a non- recurring expenditure whose benefit lasts for more than one accounting period. Example is the acquisition of a fixed or permanent assets.

198AccountingMedium

Which of the following is the normal balance of a rent expense account?

AOverdraft

BCash balance

CCredit balance

DDebit balance

Correct answer

D. Debit balance

Explanation

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

199AccountingMedium

Which of the following is a liability?

ACash

BCreditors

CDebtors

DEquipment

Correct answer

B. Creditors

Explanation

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

200AccountingMedium

Cash discount is allowed on _______ repayment of debt.

APrompt

BLump sum

CActual

DNone of them

Correct answer

A. Prompt

Explanation

Prompt 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 statements is incorrect regarding capital account?

ACredit increases the capital account balance

BFresh capital increases the capital account balance

CDebit increases the capital account balance

DNet income increases the capital account balance

Correct answer

C. Debit increases the capital account balance

Explanation

Debit increases the capital account balance 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 factors are primarily considered to determine the economic life of an asset?

ATax regulations and SEBI guidelines

BSEBI guidelines and Asset usage

CTax regulations and asset usage

DPassage of time, asset usage, and obsolescence

Correct answer

D. Passage of time, asset usage, and obsolescence

Explanation

Passage of time, asset usage, and obsolescence is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

On scrutiny of a firm‘s books of accounts, it was observed that the following errors have occurred in the previous years but have not yet been rectified.

A7,000 Overstated

B17,000 Overstated

C10,000 Overstated

D17,000 Understated

Correct answer

C. 10,000 Overstated

Explanation

The entry for creating a Provision for bad debts is_____________?

ADebit Provision for Bad Debts A/c and credit Profit & Loss A/c

BDebit Provision for Bad Debts A/c and credit Debtors A/c

CDebit Profit and Loss A/c and credit Provision for Bad Debts A/c.

DDebit Debtors A/c and credit Provision for Bad Debts A/c

Correct answer

C. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.

Explanation

Provision for bad debt is a charge against profit and therefore, the entry for creating provision for bad debts is done by debiting P&L A/c and crediting provision for bad debts account.

Capital expenditure is an expenditure which

AWill benefit the next accounting period

BResults in the acquisition of a permanent asset

CResults in the acquisition of a current asset

DBenefits the current accounting period

Correct answer

B. Results in the acquisition of a permanent asset

Explanation

A capital expenditure is a non- recurring expenditure whose benefit lasts for more than one accounting period. Example is the acquisition of a fixed or permanent assets.