Accounting MCQs
Accounting MCQs are designed to help students and professionals reinforce their knowledge in financial accounting, cost accounting, and managerial accounting. This section covers core topics such as journal entries, ledger posting, trial balance, financial statements, ratio analysis, depreciation, and accounting standards. Whether you're preparing for professional certifications like ACCA, CA, or CMA, or sitting for competitive exams such as PPSC, FPSC, NTS, and bank recruitment tests, these MCQs provide a solid foundation. They're also useful for B.Com, BBA, and MBA students looking to enhance their conceptual clarity and problem-solving abilities. With real-world scenarios and exam-oriented questions, these MCQs make accounting easier to understand and apply. Practice regularly to boost your analytical skills and exam performance.
Q: Debit balance in trial balance indicates
A) Asset or expense
B) Profit
C) Reserve
D) Liability or income
✅ Correct Answer: A
Explanation: Debit balances usually represent assets or expenses.
Q: Petty cash book is used for recording
A) Fixed asset purchases
B) Capital contributions
C) Small day-to-day expenses
D) Bank transactions
✅ Correct Answer: C
Explanation: Petty cash covers minor daily expenses like postage or stationery.
Q: Fixed assets are held by business for
A) Donation
B) Resale
C) Production or services
D) Consumption
✅ Correct Answer: C
Explanation: Fixed assets are used to generate revenue, not for resale.
Q: Loss due to natural calamity is charged to
A) Capital account
B) Reserves
C) Suspense account
D) Profit and loss account
✅ Correct Answer: D
Explanation: Unexpected losses are reflected in the profit and loss account.
Q: Goodwill is recorded only when
A) Purchased
B) Internally generated
C) Sold to customer
D) Estimated
✅ Correct Answer: A
Explanation: Goodwill is recognized in accounts only when purchased.
Q: Expenses not yet paid are classified under
A) Accrued income
B) Revenue
C) Outstanding expenses
D) Prepaid expenses
✅ Correct Answer: C
Explanation: Such expenses are due but unpaid, thus considered outstanding.
Q: Purchase of goods on credit is recorded in
A) Cash book
B) Purchase book
C) Sales book
D) Journal proper
✅ Correct Answer: B
Explanation: Credit purchases are entered in the purchase book.
Q: If liabilities increase, the accounting equation remains balanced by
A) Increasing assets
B) Decreasing capital
C) Decreasing revenue
D) Increasing equity
✅ Correct Answer: A
Explanation: An increase in liabilities must be matched by a corresponding increase in assets.
Q: Losses and gains from sale of investments are recorded in
A) Profit and loss account
B) Cash book
C) Trading account
D) Capital account
✅ Correct Answer: A
Explanation: These transactions affect overall profit and are recorded accordingly.
Q: Bills receivable is a type of
A) Expense
B) Asset
C) Equity
D) Liability
✅ Correct Answer: B
Explanation: Bills receivable represent amounts legally owed to the business.