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: Interest on loan taken is shown as
A) Liability
B) Expense
C) Asset
D) Income
✅ Correct Answer: B
Explanation: Interest paid on loans is treated as an expense in financial accounts.
Q: Short-term loans are reflected under
A) Long-term liability
B) Current liability
C) Capital
D) Reserve
✅ Correct Answer: B
Explanation: These loans are due within a year and are current liabilities.
Q: Sales return affects which account
A) Sales account
B) Purchase account
C) Profit and loss appropriation
D) Asset account
✅ Correct Answer: A
Explanation: Returned sales reduce the total revenue and impact the sales account.
Q: Debit note is issued for
A) Credit purchase
B) Sales return
C) Purchase return
D) Cash receipt
✅ Correct Answer: C
Explanation: Debit notes are issued when returning goods to suppliers.
Q: Bank overdraft appears on which side of the balance sheet
A) Asset side
B) Debit side
C) Capital side
D) Liability side
✅ Correct Answer: D
Explanation: Overdrafts represent money owed to banks and are shown under liabilities.
Q: Cheque received but not deposited is recorded as
A) Customer balance
B) Contra entry
C) Cash balance
D) Bank balance
✅ Correct Answer: C
Explanation: Such cheques are considered part of cash-in-hand until deposited.
Q: Purchase of machinery is recorded as
A) Operating expense
B) Capital expenditure
C) Deferred expense
D) Revenue expenditure
✅ Correct Answer: B
Explanation: Machinery is a fixed asset, and its purchase is treated as capital expenditure.
Q: Provision for depreciation is created to
A) Increase profit
B) Reflect true value of asset
C) Meet future liabilities
D) Record interest
✅ Correct Answer: B
Explanation: This provision ensures that asset values reflect wear and tear or obsolescence.
Q: Rent paid in advance appears under
A) Equity
B) Expense
C) Liability
D) Current asset
✅ Correct Answer: D
Explanation: Prepaid rent is treated as a current asset.
Q: Profit transferred to capital account reflects
A) Increase in capital
B) Increase in revenue
C) Decrease in income
D) Increase in liabilities
✅ Correct Answer: A
Explanation: Profits add to the owner's capital balance.