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.

171. The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as

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Appreciation
Depreciation
Fluctuation
None of the above
✅ The correct answer is B.
The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the as set, is termed as Depreciation. Depreciation is any method of allocating such net cost to those periods in which the organization is expected to benefit from use of the asset. The asset is referred to as a depreciable asset.

172. An entry which is made on both sides of a cash book is called

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Cash entry
Contra entry
Payment entry
Compound entry
✅ The correct answer is B.
An entry which is made on both sides of a cash book is called Contra entry. In the dual entry accounting system, a Contra Entry is an entry which is recorded to reverse or offset an entry on the other side of an account. If a debit entry is recorded in an account, it will be recorded on the credit side and vice-versa.

177. Which of the following can be distributed among the shareholders?

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Capital reserve
General reserve
Revaluation reserve
All of the above
✅ The correct answer is B.
General reserve can be distributed among the shareholders. General reserve can be used for distribution of dividend among shareholders when profit is insufficient. Reserves and surpluses are shown in liabilities side of balance sheet.

178. Which of the following is a commonly used base to create the provision for doubtful debts?

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Total purchases
Total credit sales
Total current assets
Total current liabilities
✅ The correct answer is B.
Total credit sales is a commonly used base to create the provision for doubtful debts. The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. It is identical to the allowance for doubtful accounts.

179. Which of the following instruments is not a negotiable instrument?

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Bearer cheque
Promissory note
Crossed cheque
Bills of exchange
✅ The correct answer is C.
Crossed cheque is not a negotiable instrument. A cheque is a negotiable instrument. It can either be open or crossed. While a crossed cheque is not payable over the counter but shall be collected only through a banker. The amount payable for the crossed cheque is transferred to the bank account of the payee.

180. The normal balance of liability account is

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Credit balance
Debit balance
Cash balance
Neither debit nor credit balance
✅ The correct answer is A.
The normal balance of liability account is Credit balance. Normal balance is the side where the balance of the account is normally found. Asset accounts normally have debit balances, while liabilities and capital normally have credit balances. Income has a normal credit balance since it increases capital .