MCQs on Accountancy

  1. Which of the following is not an asset?
    a) Cash
    b) Bank
    c) Loan
    d) Stock
    ✔️ Answer: c) Loan
  2. What is the basic accounting equation?
    a) Assets = Liabilities + Capital
    b) Assets = Revenue + Expenses
    c) Capital = Assets + Liabilities
    d) Liabilities = Assets + Capital
    ✔️ Answer: a) Assets = Liabilities + Capital
  3. Which of the following accounts is always credited in a journal entry when cash is received from a debtor?
    a) Cash Account
    b) Debtor Account
    c) Revenue Account
    d) Capital Account
    ✔️ Answer: a) Cash Account
  4. Which of the following is a liability?
    a) Building
    b) Equipment
    c) Accounts Payable
    d) Prepaid Expenses
    ✔️ Answer: c) Accounts Payable
  5. What is the purpose of preparing a trial balance?
    a) To determine the profit or loss of the business
    b) To check the accuracy of the ledger accounts
    c) To prepare financial statements
    d) To allocate expenses
    ✔️ Answer: b) To check the accuracy of the ledger accounts
  6. What is the normal balance of the capital account?
    a) Debit
    b) Credit
    c) Both Debit and Credit
    d) None of the above
    ✔️ Answer: b) Credit
  7. Which of the following is included in the liabilities section of the balance sheet?
    a) Stock in Trade
    b) Bank Loan
    c) Accounts Receivable
    d) Fixed Assets
    ✔️ Answer: b) Bank Loan
  8. In which of the following accounts, transactions are recorded chronologically?
    a) Ledger
    b) Journal
    c) Balance Sheet
    d) Trial Balance
    ✔️ Answer: b) Journal
  9. Which of the following is a type of financial statement?
    a) Ledger
    b) Trial Balance
    c) Balance Sheet
    d) Journal
    ✔️ Answer: c) Balance Sheet
  10. Which account is affected when goods are sold on credit?
    a) Accounts Receivable
    b) Cash
    c) Bank
    d) Inventory
    ✔️ Answer: a) Accounts Receivable
  11. What is the purpose of depreciation in accounting?
    a) To record the increase in asset value
    b) To reflect the decrease in asset value over time
    c) To adjust inventory values
    d) To increase the asset’s value
    ✔️ Answer: b) To reflect the decrease in asset value over time
  12. What is the closing entry for a revenue account?
    a) Debit the revenue account and credit the income summary
    b) Credit the revenue account and debit the income summary
    c) Debit the expense account and credit the income summary
    d) Credit the expense account and debit the income summary
    ✔️ Answer: b) Credit the revenue account and debit the income summary
  13. Which of the following is an example of an intangible asset?
    a) Land
    b) Goodwill
    c) Machinery
    d) Cash
    ✔️ Answer: b) Goodwill
  14. What is the main objective of accounting?
    a) To keep track of expenses
    b) To determine the profit and loss of a business
    c) To provide financial statements to shareholders
    d) To record all financial transactions
    ✔️ Answer: b) To determine the profit and loss of a business

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