Capital Account and System Entry MCQs

By: Prof. Dr. Fazal Rehman | Last updated: May 21, 2025

1. Single entry system of accounting:
(A) Dual aspects of a transaction is recorded
(B) Single aspect of a transaction is recorded
(C) Important transactions are recorded
(D) All of them

2. Statement of financial position produced from incomplete accounting record is commonly known as:
(A) Balance sheet
(B) Cash flow statement
(C) Statement of affairs
(D) Statement operations of financial

3. Which of the following businesses usually maintain incomplete accounting record of the business activities?
(A) Large businesses
(B) Companies
(C) Big partnership firms
(D) Small businesses

4. The accrual basis of accounting reflects a true and fair view of an entity and is considered to produce more accurate accounting records.
(A) Single entry system
(B) Double entry system
(C) Cash based system
(D) Credit base system

5. Identify the correct formula used to ascertain the closing balance of capital:
(A) Opening capital + net income – Drawing + Assets = Closing capital
(B) Closing capital − Opening capital + Net loss – Drawings
(C) Closing Capital = Opening capital + Assets + Incomes – Expenses
(D) Closing capital – Opening capital = Net income – Drawing

6. Which of the following formulas is used to calculate the net income for an accounting period?
(A) Net income = Opening capital − Drawings + Ending capital
(B) Net income = Opening capital + Drawings − Ending capital
(C) Net income = Opening capital + Drawings + Ending capital
(D) Net income = Opening capital + Total assets

7. The net income for the period is $1,000, calculated as the difference between closing capital ($52,000) and opening capital ($51,000) with no drawings.
(A) $1000 net income
(B) $1000 net loss
(C) $2000 net income
(D) $2000 net loss

8. Total opening balances of assets and liabilities are $10,000 and $5,000 respectively. Find out the opening capital of the business:
(A) $10,000
(B) $5,000
(C) $15,000
(D) $50,000,000

9. Which one of the following accounts is supposed to be used to get the figure of credit purchases made during the current accounting period?
(A) Debtor account
(B) Revenue account
(C) Creditors account
(D) Expenses account

10. To obtain the amount of credit sales made during an accounting period, which account is generally used in single entry and incomplete records?
(A) A/c payable account
(B) Total revenue account
(C) Debtors account
(D) Stock account

11. Which of the following is used to work out the balance of cash drawings for an accounting period?
(A) Debtor account
(B) Credit account
(C) Cash payments journal
(D) Cash book

12. Closing balance of cash can be obtained by drawing up a:
(A) Balance sheet
(B) Statement of affairs
(C) Income statement
(D) Cash account

13. A method wherein omitted information is determined in the first place and by using this information net income or loss is ascertained is known as:
(A) Nominal method
(B) Cash method
(C) Conversion method
(D) Net profit method

14. The amount of purchases made during 2017 is $3,500, calculated as the increase in creditors from $1,000 to $2,000 plus the payment of $500 made to creditors.
(A) $2500
(B) $500
(C) $1500
(D) $2000

15. The debtors account balance at 31st December 2017 is $1,500, calculated as the opening balance of $2,000 plus credit sales of $1,000, minus payments received from debtors of $1,500.
(A) $1000
(B) $2000
(C) $1500
(D) $500

16. Calculate the amount of net income or loss if the capital has been increased by $1,000 during this accounting period, drawing $5,000 and $1,000 fresh capital was introduced in the business:
(A) $5000 net loss
(B) $5000 net profit
(C) $6000 net loss
(D) $6000 net profit