Accounting mcqs

✅ The correct answer is C.
Double entry accounting system includes both cash and accrual accounting. Double entry, a fundamental concept underlying present-day bookkeeping and accounting, states that every financial transaction has equal and opposite effects in at least two different accounts.

✅ The correct answer is D.
Gross profit is equal to Sales – Cost of goods sold.

✅ The correct answer is B.
Dividend appears in the profit and loss appropriation account. The main intention of preparing a profit and loss appropriation account is to show the distribution of profits among the partners.

✅ The correct answer is C.
Purchases will be credited if goods are given as charity. When accounting for goods given as charity, purchases are reduced with the exact cost of goods contributed. The amount is reduced from purchases in the trading account. It is shown as an expense on the debit side of the income statement.

✅ The correct answer is B.
Trial balance shows the accumulated depreciation as a credit item. Accumulated depreciation has a credit balance, because it aggregates the amount of depreciation expense charged against a fixed asset.

✅ The correct answer is C.
Amortization of unidentified intangible assets is in terms of Matching concept. In the Matching Concept of Accounting, all the expenses matched with the revenue of an accounting period should only be taken into consideration.

✅ The correct answer is A.
If debit balances = credit balances, trial balance only shows or checks the Arithmetic accuracy and it does not indicate that no errors were made during recording and posting.

✅ The correct answer is C.
Revenue earned but not yet received by the business is known as Accrued revenue. Accrued income is very important in accounting because companies receive advances for their goods or services all the time. To prevent overstating certain accounts, companies need to differentiate between the revenue that they have earned versus revenue that they have not earned yet.

✅ The correct answer is B.
Assets = Liabilities + Owner’s eq accounting equations is correct. It shows that a company’s total amount of assets equals the total amount of liabilities plus owner’s (or stockholders’) equity.

✅ The correct answer is A.
Depreciation is charged on fixed assets to comply with Matching concept which requires that revenues must be matched with associated expenses to get a complete and accurate picture of profit and loss.