Accounting
Master the fundamentals of Accounting with our extensive collection of Accounting MCQs with answers and detailed explanations. Covering topics like financial accounting, cost accounting, auditing, partnership accounts, corporate accounting, and managerial accounting, these multiple-choice questions are ideal for students, teachers, and candidates preparing for competitive exams (CA, ACCA, ICMA, CSS, PMS, NTS, FPSC, PPSC, UPSC, etc.). Each question is followed by a clear solution and explanation to strengthen your concepts, improve problem-solving skills, and boost exam preparation. Perfect for practice, self-assessment, and revision in Accounting.
A) Cash at bank
B) Bank overdraft
C) Over payment to creditors
D) Cash in hand
✅ ANSWER: B
A debit balance in the bank statement indicates Bank overdraft. Overdrafts are where the bank account becomes negative and the businesses in effect have borrowed from the bank.
A) Amount of sales
B) Gross profit
C) Cost of goods sold
D) Net income
✅ ANSWER: C
Purchases + opening stock – closing stock = Cost of goods sold.
A) Debtors
B) Creditors
C) Drawee
D) Drawer
✅ ANSWER: D
Endorsement, discounting and collection of bills of exchange is made by Drawer. The individual or firm that issues or signs a draft instructing the drawee to pay a specified sum of money to, or to the order of, a named person (payee), or to bearer.
A) Bill receivable
B) Noted bill of exchange
C) Bill payable
D) None of the above
✅ ANSWER: C
A bill of exchange is called a Bill payable by one who is liable to pay it on the due date. It is a written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum, either immediately (a sight bill) or on a fixed date (a term bill), for payment of goods and/or services received.
A) Purchase of materials
B) Sale of products
C) Returns outward
D) Return of unsold goods
✅ ANSWER: A
Carriage inwards refers to the cost of transportation for Purchase of materials. The carriage inwards costs are considered to be part of the cost of items purchased, since an asset’s cost is defined as all costs that are necessary to get the asset in place and ready for use.
A) Current liabilities
B) Loans and advances
C) Notes to balance sheet
D) Director’s report
✅ ANSWER: C
The claims against the company not acknowledged as debts are shown as notes to balance sheet. All claims which the company does not acknowledge as debts should be disclosed. Claims against the company by the labour union for additional wages, compensation, etc. come under this category.
A) Left or credit side of the account
B) Right or debit side of the account
C) Right or credit side of the account
D) Left or debit side of the account
✅ ANSWER: C
When capital is increased by an amount, it is recorded on the Right or credit side of the account.
A) Bank
B) Accountant of business
C) Manager of a company
D) Bank’s cashier
✅ ANSWER: B
Cash book is prepared by Accountant of business. A cash book is set up as a ledger in which all cash transactions are recorded according to date. It is a book of original entry and final entry.
A) Credit balance
B) Debit balance
C) Cash balance
D) Neither debit nor credit balance
✅ ANSWER: B
The normal balance of asset account is Debit balance. Normal balance is the side where the balance of the account is normally found.
A) Income
B) Owner’s capital
C) Assets
D) All of the above
✅ ANSWER: B
Profit is a part of Owner’s capital. When a company generates a profit and retains a portion of that profit after subtracting all of its costs, the owner’s equity generally rises.