Accounting MCQs with Explanations

Explanation

$3000 will be subtracted from cash book balance is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

Explanation

Profit and Loss Account is an income statement which depicts all incomes/gains and expenses/losses during an accounting period. Drawings are neither an income nor an expense to be recorded in Profit and Loss Account. Thus A. is the correct answer. The items in other alternatives are either expenses or accrued expenses or probable income of discount on sundry creditors. The depreciation, bad debts and provision for doubtful debts and accrued expenses appear in the Profit and Loss Account and provision for income i.e., provision for discount on sundry creditors. Hence A. is the correct answer.

Explanation

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

Explanation

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

Explanation

A. When a discounted bill is honoured by the drawee on the due date, A. no journal entry is passed in the books of the drawer. The entry is passed at the time of discounting of the bill itself and no entry is required if the discounted bill is honoured on due date. Hence, A. is the correct answer. The other alternatives are incorrect because, when a bill is sent to the bank for collection B. a journal entry debiting bills sent to bank for collection and crediting Bills Receivable is passed. When a bill is renewed at the request of the drawee C. a journal entry is passed canceling the old bill and raising a new bill with interest. When a debtor accepts a bill drawn by the drawer D. when a debtor is converted to bills receivable and debtors balance is reduced and Bills Receivable account is increased to extent of the amount passing a journal entry to that effect. Thus, A. is the correct answer

Explanation

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

Explanation

Partial omission of a transaction is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

Explanation

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

Explanation

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

Explanation

Under the direct write off method of recognizing a bad debt expense, the alternative D. is the correct answer which the combination of the following statements A. The bad debt expense is not matched with the related sales because the expense is written off in the year of occurrence and it is not matching with the related sales. B. Revenue is overstated in the year of Sales as a result not making any provision for possible loss on account of non- recoverable account. C. It violates the matching principle of accounting as the expense of bad debt is not matched for the same period of income. Thus, D. is the correct answer.