Accounting MCQs, Questions and Answer for the FPSC, CSS, SPSC – Lecturer and Subject Specialist

Accounting MCQs and Commerce MCQs are important for the jobs of lecturers and subject specialists announced by FPSC, SPSC, PPSC and NTS. The Principles of Accounting MCQs, Questions and Answers provided here will be very helpful for the aspirants who want to be lecturer in commerce.

For more Accounting MCQs, Commerce MCQs, Introduction to Business MCQs and Cost Accounting MCQs keep visiting our website.

Multiple Choice Questions (MCQs)

1. An investment of the owner in the business is known as__________________________.

(a) Asset

(b) Liability

(c) Capital

(d) Drawings

View Answer

(c) Capital

2. Which of the following is an example of Books of Original Entry?

(a) WorkSheets

(b) Trial Balance

(c) Ledger

(d) Journal

View Answer

(d) Journal

3. Balance Sheet is always prepared_______________________.

(a) at specific date

(b) for a specific period

(c) both (a) & (b)

(d) None of the above

View Answer

(a) at specific date

4. The payment of rent of shop will treated as_______________in accounting.

(a) Revenue

(b) Drawings

(c) Expense

(d) Asset

View Answer

(c) Expense

5. An expenditure is revenue Expenditure because_______________________.

(a) ) It is intended to benefit the current period

(b) The amount involved is small

(c) It is deducted from the gross sale proceeds

(d) All of the Above

View Answer

(a) It is intended to benefit the current period

6. In Accounting, outstanding wages are treated as______________________.

(a) Expense

(b) Liability

(c) Revenue

(d) Capital

View Answer

(d) 13th August 1954

7. Which of the following is the most liquid asset?

(a) Accounts Receivable

(b) Office Supplies

(c) Merchandise

(d) Cash

View Answer

(d) Cash

8. The assets which are converted into cash within____________are called Current Assets.

(a) Three Months

(b) Six Months

(c) Nine Months

(d) Twelve Months (one year)

View Answer

(d) Twelve Months (one year)

9. The adjusting entries are normally passed________________________.

(a) at the end of the Accounting Period

(b) at the start of the Accounting Period

(c) In the middle of the Accounting Period

(d) Both (a) and (b)

View Answer

(a) at the end of Accounting Period

10. The unsold merchandise inventory at the end of the accounting period is termed as______________.

(a) Opening Inventory

(b) Closing Inventory

(c) Both (a) and (b)

(d) None of the above

View Answer

(b) Closing Stock

11. Which of the following statements shows the financial position of a business entity?

(a) Income Statement

(b) Balance Sheet

(c) Retained Earnings Statement

(d) Bank Reconciliation Statement

View Answer

(b) Balance Sheet

12. In Accounting, Liquidity deals with_____________________.

(a) Long term liability

(b) Long term benefits

(c) Conversion into cash

(d) Return on Investment

View Answer

(c) Conversion into Cash

13. A working paper of accountants, which helps them to minimize errors in the financial statements is called__________________.

(a) Bank Reconciliation Statement

(b) General Journal

(c) Work Sheet

(d) Ledger

View Answer

(c) Work Sheet

14. In accounting, Transcations having short term effects are known as___________________.

(a) Revenue Expenditure

(b) Capital Expenditure

(c) Both (a) and (b)

(d) None of the above

View Answer

(a) Revenue Expenditure

15. In accounting, depriciation is always charged to the___________________.

(a) Current Assets

(b) Fixed Assets

(c) Tangible Assets

(d) All of the Above

View Answer

(b) Fixed Assets

16. Goods that are purchased for the purpose of resale are known as_____________.

(a) Merchandise

(b) Office Supplies

(c) Withholding Assets

(d) Both (a) and (b)

View Answer

(a) Merchandise

17. What is the amount of Purchases? Where the Cost of Goods Sold 60,000, Opening Stock is 15000 and Closing Stock is 25000.

(a) 50,000

(b) 60,000

(c) 70,000

(d) 80,000

View Answer

(c) 70,000

18. Which of the following is known as the founder of Double Entry Bookkeeping?

(a) Alfred Marshal

(b) Luca Pacioli

(c) Karl Marx

(d) Stephen Samuelson

View Answer

(b) Luca Pacioli

19. According to the credit terms 2/10, n/30, How much discount will be paid if the payment is received with in 10 days?

(a) 10%

(b) 30%

(c) 2%

(d) 0% 

View Answer

(c) 2%

20. Under credit terms 2/10, n/60, what is the due date of payment?

(a) 02 days

(b) 10 days

(c) 60 days

(d) 20 days

View Answer

(c) 60 days

21. Bank Overdraft is considered a good source of finance for_________________.

(a) Long term projects

(b) Short term projects

(c) Mid Term Projects

(d) Both (a) and (c)

View Answer

(b) Short Term Projects

22. Recording of business transactions take place in__________________.

(a) Ledger

(b) Work Sheet

(c) Trial Balance

(d) General Journal

View Answer

(d) General Journal

23. An account is defined as___________________.

(a) Summarised record of transactions relating to a person or thing

(b) Chronological Records of business transaction

(c) List of revenues and expenses of a business

(d) Both (a) and (b)

View Answer

(a) Summarised record of transactions relating to a person or a thing

24. a piece of written evidence in support of a transaction is called____________.

(a) Bank Statement

(b) Cost of Goods Sold Statement

(c) Retail Statement

(d) Voucher

View Answer

(d) Voucher

25. Which of the following records dual effect of business transactions?

(a) Single Entry System

(b) Single Account System

(c) Double Entry System

(d) Both (a) and (b)

View Answer

(c) Double Entry System

26. In company form of business organisation the total capital of the company is divided into small units and each unit is called_______________.

(a) Debenture

(b) Share

(c) Bond 

(d) Deferred Shares

View Answer

(b) Shares

27. If a business entity owns assets of Rs. 400,000 and its liabilities stand at Rs. 250,000. Find out its Capital.

(a) 150,000

(b) 300,000

(c) 250,000

(d) 120,000

View Answer

(a) 150,000

28. Which of the following are called the real owners of a company?

(a) Common Shareholders

(b) Preference Shareholders

(c) Debenture Holders

(d) Both (a) and (b)

View Answer

(a) Common Shareholders

29. The authorised capital is also called_________________.

(a) Issued Capital

(b) Subscribed Capital

(c) Paid-up Capital

(d) Registered Capital

View Answer

(d) Registered Capital

30. The properties owned by a business entity are called____________of the the entity.

(a) Assets

(b) Revenues 

(c) Expenses

(d) Capital

View Answer

(a) Assets 

31.purpose of accounting information is to provide financial information to_______________________.

(a) Shareholders

(b) Board of directors

(c) Tax Authorities

(d) All of these

View Answer

(d) All of these

32. Bank account is a_______________________.

(a) Personal Account

(b) Real Account

(c) Nominal Account

(d) All of these

View Answer

(a) Personal Account

33. According to the going concern concept, a business is viewed as having_______________________.

(a) A limited life

(b) An unlimited life

(c) A very long life

(d) All of these

View Answer

(b) An unlimited life

34. According to which of the following accounting concept, even the proprietor of a business is treated as a creditor to the extent of his capital?

(a) Money Measurement Concept

(b) Cost Concept

(c) Dual Aspect Concept

(d) Entity Concept

View Answer

(d) Entity Concept

35. According to which of the following accounting concept, 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) Cost Concept

(c) Money Measurement Concept

(d) Dual Aspect Concept

View Answer

(a) Matching Concept

36. According to the money measurement concept, the following will be recorded in the books of accounts?

(a) Quality control in business

(b) Commission payable to a salesmen

(c) Extra profits made due to introduction of a budgetary control system

(d) All of these

View Answer

(b) Commission payable to a salesmen

37. Stock in trade does not include_______________.

(a) Goods in the process of manufacture

(b) Raw materials

(c) Items held as fixed assets

(d) Finished Goods

View Answer

(c) Items held as fixed assets

38. The comparison of net profit with the profit of the same year is_______________.

(a) Vertical comparison

(b) Horizontal comparison

(c) Three dimensional comparison

(d) None of the above

View Answer

(a) Vertical comparison

39. The term current assets does not include_______________.

(a) Cash

(b) Stock in trade

(c) Advance payments

(d) Furniture

View Answer

(d) Furniture

40. The convention of conservatism will have the effect of_______________.

(a) Overstatement of Assets

(b) Understatement of Assets

(c) Understatement of liabilities

(d) Understatement of provision for bad debts and doubtful debts

View Answer

(b) Understatement of Assets

41. Convertible debentures are those on which____________________________.

(a) Accumulated interest payable is converted into equity shares

(b) Interest is paid when the company is running on a loss

(c) Interest is payable and keeps on accumulating, if not paid

(d) Equity shares may be exchanged at the option of the debenture holders

View Answer

(d) Equity shares may be exchanged at the option of the debenture holders

42. The left side of an account is termed as______________________.

(a) Increase side

(b) Debit side

(c) Credit side

(d) Decrease side

View Answer

(b) Debit Side

43. Which of the following accounts normally have a debit balance?

(a) Assets

(b) Drawings

(c) Expenses

(d) All of the above

View Answer

(d) All of the above

44. Which of the following is an accounting equation?

(a) Assets = Liabilities + Capital 

(b) Capital + Liabilities – Assets = Zero

(c) Liabilities = Assets – Capital

(d) All of the above

View Answer

(d) All of the above

45. Accounting records transaction in terms of___________________.

(a) Commodity Units

(b) Monetary Units

(c) Production Units

(d) All of the above

View Answer

(b) Monetary Units

46. A balance sheet does not include which of the following?

(a) Assets

(b) Liabilities

(c) Owner’s Equity

(d) Expenses

View Answer

(d) Expenses

47. After the transaction have been recorded in the proper journals, they are posted to____________.

(a) General Ledger

(b) Work Sheet

(c) Trial Balance

(d) General Journal

View Answer

(a) General Ledger

48. Credit is not the normal balance for which of the account listed below?

(a) Dividend Account

(b) Revenue Account

(c) Liability Account

(d) Owner’s Equity Account

View Answer

(a) Dividend Account

49. Purchase of machinery for business on cash is recorded in______________.

(a) Purchase Journal

(b) Cash Journal

(c) General Journal

(d) None of these

View Answer

(b) Cash Journal

50. Which of the following books should be used to record purchase of a typewriter on account?

(a) Cash books

(b) Purchase book

(c) sales book

(d) Journal

View Answer

(d) Journal

51. Which ratio indicates a firm’s ability to pay current liabilities in the shortest possible time?

(a) Current Ratio

(b) Equity Ratio

(c) Debt Ratio

(d) Quick Ratio

View Answer

(c) Debt Ratio

52. A summarised record of transactions relating to a person or thing is called as_______________.

(a) Ledger

(b) Journal

(c) Account

(d) Trial Balance

View Answer

(c) Account

53. Creditors are also termed as________________.

(a) Accounts Receivables 

(b) Accounts Payable

(c) Bills Payable

(d) Proprietor

View Answer

(b) Accounts Payable

54. In Pakistan which of the statement is also known as Profit and Loss Account?

(a) Balance Sheet

(b) Income Statement

(c) Cash Flow Statement

(d) Retained Earnings Statements

View Answer

(b) Income Statement

55. Under diminishing balance method depreciation is calculated on__________________________.

(a) Original Cost

(b) Written down value 

(c) The scrap value

(d) All of the Above

View Answer

(b) Written down value

56. Discount on issue of shares amount being the loss of :

(a) Capital

(b) Revenue 

(c) Expenditure

(d) All of the Above

View Answer

(a) Capital

57. X, Y and Z are partners in the ratio of ½: 2/5: 1/10. What will be the new ratio of remaining partners if X retires?

(a) 2:1

(b) 4:1 

(c) 5:1

(d) 6:1

View Answer

(b) 4:1

58. In case of liquidation, which of the following is repayable in the last?

(a) Equity Shares

(b) Preference Shares

(c) Debentures

(d) Public Deposits

View Answer

(a) Equity Shares

59. What is the amount of purchases, when the cost of goods sold is Rs. 22,000?

(a) 20,000

(b) 24,000

(c) 27,000

(d) 17,000

View Answer

(a) 20,000

60. Gross Profit – Operating Expanses =______________________.

(a) Profit Margin

(b) Net Profit 

(c) Net Loss

(d) Both (a) or (b)

View Answer

(d) Both (a) or (b)

61. Receipts ans Payments accounts records receipts ans payments of :

(a) Revenue nature

(b) Capital nature

(c) Both (a) and (b)

(d) None of the Above

View Answer

(d) Both (a) or (b)

62. Bank overdraft should be classified as:

(a) Current Asset

(b) Current Liability

(c) Fixed Asset

(d) Fixed Liability

View Answer

(b) Current Liability

63. Bank reconciliation statement is prepared by:

(a) Customer of the bank

(b) Bank

(c) Proprietor of business

(d) Tax authorities

View Answer

(a) Customer of the bank

64. Which one the following is the registered capital of the joint-stock company:

(a) Paid-up Capital

(b) Payment of dividend

(c) Authorized Capital

(d) Reserve Capital

View Answer

(c) Authorized Capital

65. The immediate solvency ratio is:

(a) Quick ratio

(b) Current ratio

(c) Stock turns over ratio

(d) debtor turn over ratio

View Answer

(a) Quick ratio

66. Which one of the following is a capital expenditure?

(a) compensation paid for breach of a contract of supply of goods

(b) interest on borrowing during the period of construction of the workshop

(c) loss of stock by fire

(d) loss due to embezzlement by the manager

View Answer

(b) interest on borrowing during the of construction of the workshop

67. Equity shareholders are:

(a) creditors

(b) owners

(c) customers of the company

(d) All of the Above

View Answer

(b) owners

68. “Interest earned but not received” should be classified as:

(a) accrued asset

(b) accrued liability

(c) prepaid expense

(d) Unearned revenue

View Answer

(a) accrued asset

69. The amount of depreciation charged on machinery will be debited to:

(a) machinery

(b) depreciation

(c) cash account

(d) all of these

View Answer

(b) depreciation

70. Credit may signify:

(a) decrease in assets

(b) increase in liability

(c) increase in the capital account

(d) all of these

View Answer

(d) all of these

71. A balance sheet shows only:

(a) Personal accounts and nominal accounts

(b) Real accounts and nominal accounts

(c) Personal accounts and real accounts

(d) Personal, real and nominal accounts

View Answer

(c) Personal accounts and real accounts

72. Working capital is represented by_______________.

(a) Current liabilities

(b) Current Assets minus Current Liabilities

(c) Total Assets minus Current Liabilities

(d) Cash-in-hand and Stock-in-trade

View Answer

(b) Current Assets minus Current Liabilities

73. Credit may signify:

(a) Decrease in assets

(b) Increase in liability

(c) Increase in Capital

(d) All of these

View Answer

(d) All of these

74. Which of the following assets is usually assumed not to depreciate?

(a) Land

(b) Building

(c) Plant

(d) Furniture

View Answer

(a) Land

75. Assets very easily convertible into cash are_______________.

(a) Current Assets

(b) Fixed Assets

(c) Liquid Assets

(d) Floating assets

View Answer

(c) Liquid Assets

76. Outstanding wages is an item of:

(a) Current Assets

(b) Current Liabilities

(c) Non-Current Assets

(d) Non-Current Liability

View Answer

(b) Current Liability

77. When the sale is Rs. 480,000 gross loss is 25% on cost, the purchase is Rs. 350,000 and closing stock is Rs. 60,000, the stock beginning will be:

(a) 70,000

(b) 94,000

(c) 134,000

(d) 350,000

View Answer

(d) 350,000

78. A transaction is possible, when there will be:

(a) One party

(b) Two Parties

(c) No Party

(d) None of the above

View Answer

(b) Two Parties

79. In the double-entry bookkeeping system every business transaction effects:

(a) Debit or Credit side of the same account

(b) Two Accounts

(c) The same side of the same account 

(d) None of the above

View Answer

(b) Two Accounts

80. Which of the following account is a real account?

(a) Rent Expense Account

(b) Rent Income Account

(c) Insurance Expanse Account

(d) Cash

View Answer

(d) Cash

81. Which of the following ratios are used to indicate firms financial leverage?

(a) Liquidity Ratios

(b) Asset Management Ratios

(c) Profitability Ratios

(d)Long-term Solvency Ratios

View Answer

(d) Long-term Solvency Ratios

82. Bank Overdraft is_______________.

(a) Current Assets

(b) Current Liability

(c) Expanse Account

(d) Capital Account

View Answer

(b) Current Liability

83. At the time of making a closing entry for the closing stock, we debit:

(a) Trading Account

(b) Purchase Account

(c) Opening Stock

(d) Closing Stock

View Answer

(d) Closing Stock

84. Income received in advance but not earned is called:

(a) Prepaid Revenue

(b) Outstanding Income 

(c) Accrued Income

(d) Unearned Revenue

View Answer

(d) Unearned Revenue

85. Sales are equal to_________________.

(a) Cost of Goods Sold + Profit

(b) Cost of Goods Sold + Gross Profit

(c) Cost of Goods Sold – Gross Profit

(d) Cost of Goods Sold – Gross Profit

View Answer

(b) Cost of Goods Sold + Gross Profit

86. Balance Sheet shows the financial position of a business entity:

(a) For a given period of time

(b) On a specific date

(c) Both (a) and (b)

(d) None of the Above

View Answer

(b) On a specific date

86. Balance Sheet shows the financial position of a business entity:

(a) For a given period of time

(b) On a specific date

(c) Both (a) and (b)

(d) None of the Above

View Answer

(b) On a specific date

87. The income statement normally includes________________________.

(a) Nominal Account

(b) Real Account

(c) Personal Account

(d) All of the Above

View Answer

(a) Nominal Accounts

87. The income statement normally includes________________________.

(a) Nominal Account

(b) Real Account

(c) Personal Account

(d) All of the Above

View Answer

(a) Nominal Accounts

88. If the income statement shows excess of revenues over expenses, it is case of___________________.

(a) Net Loss

(b) Net Profit

(c) Break-Even

(d) All of the Above

View Answer

(b) Net Profit

89. The valuation of closing stock is at:

(a) Market Price

(b) Cost Price

(c) Cost or Market Price whichever is lower

(d) Both on Cost and Market Price

View Answer

(c) Cost or Market Price whichever is lower

90. The assets which can not be seen or touched and they have no physical existence are called:

(a) Current Assets

(b) Fixed Assets

(c) Tangible Assets

(d) Intangible Assets

View Answer

(d) Intangible Assets

91. Bookkeeping is mainly concerned with________________.

(a) Recording of business transactions

(b) Classifying of business transactions

(c) Interpreting of business transactions in monetary terms

(d) None of the Above

View Answer

(a) Recording of business transactions

92. Credit signifies_______________.

(a) Increase in liability

(b) Increase in revenue

(c) Increase in Capital

(d) All of the Above

View Answer

(d) All of the Above

93. A ledger is a book in which____________are opened.

(a) Only personal and cash account

(b) Only real accounts

(c) Only nominal accounts

(d) All personal, nominal and real accounts

View Answer

(d) All personal, nominal and real accounts

94. A prospectus for shares can be issued only by________________.

(a) Private Company

(b) Public Company

(c) A firm

(d) A single-member company

View Answer

(b) Public company

95. Share capital in the balance sheet can be shown under_________________.

(a) Assets

(b) Liabilities 

(c) Income

(d) None of the Above

View Answer

(d) None of the Above

96. The expenses that are incurred but not paid  are called_________________.

(a) Prepaid Expenses

(b) Advance Expanses

(c) Accrued Expenses

(d) None of the Above

View Answer

(c) Accrued Expenses

97. If goods costing rupees 8000 sold for Rs. 12000 then the profit of Rs. 4000 will___________________.

(a) Increase Assets

(b) Increase Liability

(c) Decrease Owner’s Equity

(d) Increase Owner’s Equity

View Answer

(d) Increase Owner’s Equity

98. Assets, which have physical existence are called:

(a) Tangible Assets

(b) Intangible Assets

(c) Quick Assets

(d) All of the Above

View Answer

(a) Tangible Assets

99. The rights of outsiders, in the properties of the business, are called:

(a) Assets

(b) Incomes

(c) Liabilities

(d) Capital

View Answer

(c) Liabilities

100. Simply accounting is defined as___________________________.

(a) Performance of the Business

(b) Language of the Business

(c) Understanding of the Business

(d) All of the Above

View Answer

(b) Language of the Business

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