Accounting Principles & Procedures MCQs (Set-II) for all Competitive Exams

What does the certification CA stand for (in Canada)?
(a) Accrued revenue
(b) Chartered Accountant
(c) All of the above
(d) Nome of the above
Answer: b

When you have yet to bill a customer for services rendered and have not received the money in the same financial period that the service was performed, then the transaction is recorded as a(n) ________ (assume accrual basis of accounting)?
(a) accrued revenue
(b) accrued expense
(c) unearned revenue
(d) prepaid expense
Answer: a

What are internal controls designed to do?
(a) only safeguard assets
(b) only ensue accurate accounting records
(c) only achieve maximum revenue
(d) safeguard assets and optimize the use of resources
Answer: d

Who writes instructions that directs a computer’s action?
(a) Writer
(b) Programmer
(c) systems analyst
(d) operator
Answer: b

Who designs a computer system?
(a) Operator
(b) Manager
(c) systems analyst
(d) programmer
Answer: c

What is a firm’s payment to a supplier for merchandise inventory recorded in?
(a) sales journal
(b) cash receipts journal
(c) purchases journal
(d) cash disbursements journal
Answer: d

Where are amounts owed by customers for credit purchases found?
(a) accounts receivable subsidiary ledger
(b) sales journal
(c) accounts receivable journal
(d) general ledger
Answer: a

Which of the following transactions is not recorded in the cash receipts journal?
(a) expensing prepaid rent
(b) receipt of customer payments
(c) borrowing money from a bank
(d) sale of equipment for cash
Answer: a

Where would a debit posted to accounts payable in the general ledger come from?
(a) sales journal
(b) cash disbursements journal
(c) purchases journal
(d) cash receipts journal
Answer: b

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The owner of a business puts money into the business. What is credited?
(a) Owner a/c
(b) Capital a/c
(c) Investment a/c
(d) Loan a/c
Answer: b

A loan in cash is received from D Michael. What is credited?
(a) D Michael a/c
(b) Loan a/c
(c) Cash a/c
(d) D Michael Loan a/c
Answer: d

Which of the following is a control account?
(a) Capital
(b) Prepaid Rent
(c) Accounts Receivable
(d) Salary Payable
Answer: c

What does the abbreviation GAAP stand for?
(a) Great Accepted Accounting Principles
(b) Great American Accounting Principles
(c) Generally Accepted Accounting Principles
(d) Generally American Accounting Principles
Answer: c

Which accounting principle states that the same amount of time must be used for each accounting period?
(a) Accounting Period Principle
(b) Time Period Principle
(c) Written Period Principle
(d) Bookkeeping Period Principle
Answer: b

What is the cash basis of accounting?
(a) When cash comes in, something else must go out.
(b) Cash is always the most liquid asset.
(c) Revenue and expenses are recognized as cash comes in or goes out.
(d) All assets must be recorded by how much cash they’re worth at that very moment.
Answer: c

This can be written either in an account form or a report form.
(a) Income Statement
(b) Balance Sheet
(c) Trial Balance
(d) Journal Entry
Answer: b

Which of the following is not considered a financial statement?
(a) These Are All Financial Statements
(b) Balance Sheet
(c) Trial Balance
(d) Income Statement
Answer: c

What is the amount earned from the sale of goods and services called?
(a) Growth
(b) Revenue
(c) Credit
(d) Profit
Answer: b

What is it called when your expenses are greater than your revenues on an income statement?
(a) Debt
(b) Net Loss
(c) Loss
(d) Minor Loss
Answer: b

An income statement encompasses which of the following?
(a) Assets, Liabilities, Owners Equity
(b) Expenses, Revenues, Net Income or Net Loss
(c) Liquidity and Maturity
(d) T-Charts, Balance Sheets and Trial Balances
Answer: b

A cost that changes with the number of units produced, but that can never be zero, is what kind of cost?
(a) Mixed cost
(b) Period cost
(c) Variable cost
(d) Product cost
Answer: a

Manufacturing overhead is allocated as what kind of cost?
(a) Variable cost
(b) Period cost
(c) Product cost
(d) Fixed cost
Answer: c

A cost that changes with the number of units produced and is zero when no units are produced is what kind of cost?
(a) Period cost
(b) Mixed cost
(c) Variable cost
(d) Product cost
Answer: c

A cost that remains unchanged across the relevant range of units produced is what kind of cost?
(a) Period cost
(b) Mixed cost
(c) Fixed cost
(d) Product cost
Answer: c

The costing system that tracks costs to a department or work group and assigns the cost to products produced by that department or work group is which kind of costing system?
(a) Job order costing system
(b) Process costing system
(c) Activity based costing system
(d) Backflush costing system
Answer: b

A costing system that tracks costs to a specific lot of a product is which kind of costing system?
(a) Activity based costing system
(b) Backflush costing system
(c) Process costing system
(d) Job order costing system
Answer: d

The costing system that initially assigns all costs to Cost of Goods Sold and then removes them to the appropriate inventory values is which kind of costing system?
(a) Process costing system
(b) Just in time costing system
(c) Job order costing system
(d) Backflush costing system
Answer: d

A few days ago, my friend came to me and asked for a loan. I lent him 10 dollars. How will I be recorded in my friend’s books of accounts? (My name is Victor)
(a) Jason’s Loan account
(b) Income account
(c) Nobody’s Loan account
(d) Victor’s Loan account
Answer: d

I helped to sell a piece of land and received some commission for it. Would commission received be credited or debited in my accounts?
(a) Creditor
(b) Credited
(c) Debtor
(d) Debited
Answer: b

A primary user of accounting information with a direct financial interest in the business is a…?
(a) labour union
(b) director
(c) taxing authority
(d) regulatory agency
Answer: b

Accounting for government, foundations, hospitals, labour unions, colleges/universities, and charities is part of which broad category within the accounting profession?
(a) Management consulting
(b) Cost accounting
(c) Public accounting
(d) Not-for-profit accounting
Answer: d

When revenue is greater than expenses, you have a ___?
(a) Net Loss
(b) Net Income
(c) Contributed Capital
(d) Historical Valuation
Answer: b

Assets – Liabilities = ____?
(a) Net Income
(b) Revenue
(c) Net Loss
(d) Shareholder’s Equity
Answer: d

Which financial statement shows the results of the operating activities of a firm for a specific period of time?
(a) Income Statement
(b) Statement of Cash Flow
(c) Balance Sheet
(d) Trial Balance sheet
Answer: a

This statement reports the net cash flows relating to operating, investing, and financing activities for a period of time?
(a) Income Statement
(b) Unadjusted Trial Balance
(c) Comparative Balance Sheet
(d) Statement of Cash Flows
Answer: d

Which government agency has the authority to set acceptable accounting methods in the U.S.?
(a) State Department
(b) FAA
(c) SEC
(d) EEOC
Answer: c

The amount of cash paid in acquiring an asset is called what?
(a) Current Replacement Cost
(b) Present Value
(c) Net Realizable Cost
(d) Historical Cost
Answer: d

Which is an example of an intangible asset?
(a) Cash
(b) Patent
(c) Equipment
(d) Building
Answer: b

Earnings that a firm realizes in excess of dividends are called what?
(a) Retained Earnings
(b) Expenses
(c) Revenue
(d) Income Statement
Answer: a

A ____ lists each of the accounts in the general ledger with its balance as of a particular date. What is it?
(a) Trial Balance
(b) Balance Sheet
(c) General Journal
(d) Statement of retained earnings
Answer: a

What is the normal balance for an expense account?
(a) Credit
(b) Debit
(c) Contraliability
(d) None of these
Answer: b

The act of transferring the information from the General Journal to the General Ledger is called what?
(a) Posting
(b) Journalizing
(c) Transferring
(d) Pasting
Answer: a

Total sales for August, including 7% sales tax, was $21,400. What was the Actual Sales Revenue?
(a) $21,400
(b) $20,000
(c) $22,898
(d) $1,400
Answer: b

The abbreviations for debit and credit (Dr. and Cr.) come from what language, and mean what?
(a) Latin, debere and credere
(b) Latin, debitor and creditor
(c) Greek, debere and credere
(d) Greek, debitor and creditor
Answer: a

What kind of balance sheet makes distinctions between current and capital assets?
(a) Classified
(b) Gregarian
(c) Normal
(d) Keynesian
Answer: a

What is an account that involves expenses, losses, incomes and gains known as?
(a) Basic Account
(b) Nominal Account
(c) Spending Account
(d) None Of These
Answer: b

What is a salary in terms of expenses and incomes?
(a) Expense for employer and income for employee
(b) Expense for employer and income for customer
(c) Expense for manager and income for owner
(d) Expense for customer and income for employee
Answer: a

What is opportunity cost?
(a) The next best undergone alternative
(b) The cost of the product
(c) The next best transfer earning
(d) The next best foregone alternative
Answer: a

What happens in a Double entry system?
(a) For every Debit there is an equal Credit
(b) For every Liability there is an equal Credit
(c) For every Debit there is an equal Asset
(d) There is no such thing as double entry system
Answer: a

In the term “Balance C/D”, what does “C/D” stand for?
(a) caught down
(b) carry down
(c) carry does it
(d) caught does it
Answer: b