1. 1) The accounting process involves in recording:
A) Quantifiable economic event
B) Non quantifiable economic event
C) All of them
D) None of them
2) In accounting an Economic event is referred to as:
A) Cash
B) Bank statement
C) Transaction
D) Exchange of money
3) Identify the correct sequence of accounting process
A) Communicating→Recording→Identifying
B) Recording→Communicating→Identifying
C) Identifying→communicating→recording
D) Identifying→recording→communicating
4) Bookkeeping mainly concerns with which part of accounting process?
A) Analysing
B) Preparing financial statements
C) Recording financial information
D) Auditing the books of accounts

2. 5) Financial accounting provides financial information to all of the following external
users except:
A) Government agencies
B) investors
C) Creditors
D) Managers
6) For which step of accounting process the accountants of business entity prepare
financial statements?
A) Identification of economic event
B) Communication of financial information
C) Recording financial information
D) Making decisions about business
7) Keeping the log of financial information in books of original entries is called
A) Recording
B) summarizing
C) Grouping
D) Processing
8) Auditing is what?
A) Reporting the financial information
B) Examination of financial statements
C) Preparation financial statements
D) maintaining the ledger records

3. 9) Which of the following is the external user of financial statements?
A) Manager of the business
B) CEO of the business
C) Creditor of the business
D) Controller of the business
10) Which of the following is the internal user of financial statements?
A) Creditor of the business
B) Government agency
C) Shareholder of the business
D) Manager of the business
11) _________ is the first phase of accounting cycle
A) Identifying an economic event or transaction
B) Preparing journals
C) Posting entries to ledger accounts
D) Making decisions about business
12) Financial statements differ from management account because
A) They are mainly prepared for external users of financial information
B) They are more complex and hard to prepare
C) The are the summary of accounting data
D) The are prepared on basis of actual concept

4. 13) _______ is a separate legal entity that Total capital can be divided in many shares
A) Partnership
B) Sole proprietorship
C) Company
D) Non-profit organization
14) An asset posses which of the following?
A) Future economic benefits for the business
B) All kind of benefits for the business
C) Expenses for the business
D) Merits and Demerits for the business
15) Liabilities are which of the following?
A) Resources
B) Obligations
C) Future benefits
D) Expenses
16) _______ is the gross inflow of economic benefits
A) Assets
B) Liabilities
C) Income
D) Expenses

5. 17) The gross decrease in economic benefits for the business are what?
A) Expenses
B) Obligations
C) Creditors
D) Income or gain
18) An asset must be _______ by the business to be shown as an asset in its "balance
sheet"
A) Possessed
B) Owned
C) Controlled
D) Used
19) Liability are arisen from which of the following events?
A) Present event
B) Future event
C) Past event
D) Non of them
20) Which of the following can be considered as the most important phase of accounting
cycle and it is the primarily objective of financial accounting?
A) Identifying transactions
B) Preparing "T Accounts"
C) Preparing financial statements
D) Preparing trial balances

6. 21) Which is the most important characteristic that all assets of a business have?
A) Long life of assets
B) Value of assets
C) Intangible nature of assets
D) Future economic benefits
22) What is the basic accounting equation?
A) Capital+Liabilities=Assets
B) Assets+ liabilities =Capital
C) Capital+assets=liabilities
D) Liabilities+Capital
23) Which of the following is a liability?
A) Cash
B) Equipment
C) Debtors
D) Creditors
24) What is equity?
A) Cash from the business
B) liability of a business
C) Owner's claim on total assets
D) Owner's claim on total liabilities

7. 25) Identify the asset from the following
A) Cash and cash equivalent
B) Creditors
C) Notes payable
D) Bank loan
26) ______ the withdrawal of cash and goods by the owner of the busienss for his/her
personal use
A) Depreciation
B) Drawings
C) Outflow of cash
D) Appreciation
27) Net loss occurs when
A) Expenses are greater than Income
B) Expenses are less than Income
C) Expenses=Income
D) Liabilities are greater than income
`
28) Double entry implies that
A) Recording entries in journal
B) Recoding entries in Ledger account
C) Recording two aspects of every transaction
D) Recording every transaction in books

8. 29) Identify the nominal account
A) Machinery account
B) Building account
C) Creditors account
D) Rent expenses account
30) Which of the following accounts can be classified as a real account?
A) Rent expenses account
B) Rent income account
C) insurance expenses account
D) Cash account
30) What is the method of summarizing and classifying the record of financial transaction in
monetary terms?
Options:
A- Book Keeping
B- Auditing
C- Accountancy
D- Cost Accounting
31) Accounting is the process of matching:
Options:
A- Benefits and Costs
B- Revenues and Costs
C- Cash Inflows and Outflows
D- Potential and Real Performance
32) Choose the correct statement:
Options:
A- Keeping systematic record of business transaction is not the function of financial accounting.
B- Accounting is concerned with monetary transactions.
C- Accounting is concerned with past as well as future transactions.
D- Business and Businessman are one and the same from accounting point of view.
33) Which of the following is NOT an example of intangible assets?
Options:
A- Goodwill
B- Copyrights
C- Patents
D- Land

9. 34) Assets are usually reported on the balance sheet at which amount?
Options:
A- Cost
B- Current Market Value
C- Expected Selling Price
D- Replacement Cost
35) Resources owned by a company (such as cash, accounts receivable, vehicles) are reported
on the balance sheet and are referred to as __________.
Options:
A- Capital
B- Profit
C- Liabilities
D- Assets
36) Balance Sheet is a statement of…………….
A. Assets
B. Liabilities
C. Capital
D. All of these
37 ) Depreciation is a charge against –
A. Profit
B. Assets
C. Company
D. Books of A/c
38) Which expenses is a Capital Nature?
A. Depreciation
B. Wages
C. Salary
D. Stationary
Q39 ____________ is the art of recording, classifying, summarizing the transaction and
events of a business and interpreting the results thereof
(a) Book Keeping
(b) Accounting
(c) Management
(d) Statistics
Q40. Which one is smallest in scope?
(a) Accountancy
(b) Accounting
(c) Book Keeping
(d) None of them

10. Q41 The first step in accounting process is
(a) Recording the transaction
(b) Identifying the transaction
(c) Posting the transaction
(d) Preparing the source documents
Q42. The process of recording is done
(a) Two times a year
(b) once a year
(c) Frequently during the accounting period
(d) At the end of a accounting period
Q43. ____________ is concerned with establishment of relationship between the various
items of financial statements
(a) Interpreting
(b) Identifying the transaction
(c) Communicating
(d) Analysing
Q44. ____________ is concerned with explaining the meaning and significance of
relationship between two items of financial statements
(a) Interpreting
(b) Identifying the transaction
(c) Communicating
(d) Analysing
Q45. Which one is not an advantage of financial accounting?
(a) It facilitates to replace memory.
(b) It helps in a comparative study.
(c) Accountant can choose any method of inventory valuation.
(d) It acts as legal evidence.

11. Q46 Which one is a limitation of financial accounting?
(a) It ignores the qualitative elements
(b) It ignores price level changes.
(c) It is not free from bias.
(d) All the Above
Q47. _________ is the evidence that a transaction took place
(a) Source documents
(b) Ledger
(c) Bonds
(d) Journals
Q48. Double entry system was propounded by
(a) Chanakya
(b) Lee
(c) Confucius
(d) Luca Pacioli
Q49. Which of the following is a not an asset?
(a) Land and Building
(b) Debtors
(c) Cash Balance
(d) Loan from Bank
Q50. Cash or Goods withdrawn by the proprietor for personal use is called __________
(a) Depreciation
(b) Drawing
(c) Debtors
(d) Goodwill
Q51. Which of the following is the practical implementation of the accounting equation?
(a) Cash flow statement
(b) Income statement
(c) Statement of changes in equity
(d) Statement of financial position

12. Q 52 Discount allowed is
(a) Expense of business
(b) Income of business
(c) Loss of business
(d) Abnormal loss of business
Q53 Discount for quick repayment of debt is normally referred as
(a) Trade discount
(b) Prompt payment discount
(c) Cash discount
(d) Bulk discount
Q 54 Owner of the business is called ……………….
(a) Entrepreneur
(b) Proprietor
(c) Industrialist
(d) Director
Q 55 The amount which the proprietor has invested in the business is called ……………..
(a) Cash
(b) Assets
(c) Capital
(d) Income
Q 56 Accounting begins where ……………….. ends
(a) Book Keeping
(b) Transactions
(c) Financial year
(d) Production
Q 57 Every business transactions reveals ……….. aspects
(a) One
(b) Two
(c) Three
(d) Four
Q 58 Which of the following will not be recorded in the books of accounts?
(a) Sales of goods
(b) Payment of Salary
(c) Purchase of goods
(d) Quality of staff

13. Q 59 Book keeping is mainly concerned with
(a) Recording financial data relating to business operations
(b) Designing for systems recording classifying and summarizing recorded data
(c) Interpreting data for internal and external users
(d) All of the above
Q 60 Which of the following is not a business transaction?
(a) Purchase of goods for resale amounted to Rs.10,000
(b) Paid salaries amounted to Rs. 5,000
(c) Give an appointment letter to Mr.Sharama
(d) Paid rent for office premises Rs.3,000
Q 61 A person who owes money to a firm is called a …………………….
(a) Customer
(b) Supplier
(c) Debtor
(d) Creditor
Q 62 Purchase refers to the purchase of
(a) Goods for resale
(b) Stationery for office use
(c) Assets for the factory
(d) None of these
Q 63 Which of the following is not a fixed asset?
(a) Building
(b) Balance with bank
(c) Furniture & Fittings
(d) Plant & Machinery
Q 64 Goodwill is an example of
(a) Tangible account
(b) Personal account
(c) Intangible account
(d) Nominal account
Q 65 Bank overdraft is
(a) Short term liability
(b) Long term liability
(c) Owners’ liability
(d) Contingent liability
Q 66 Liabilities increase by
(a) Purchasing goods on credit
(b) Taking loan from bank
(c) Rent due
(d) All of these

14. Q 67 Capital will reduce by
(a) Purchase of goods on credit
(b) Selling of goods for cash
(c) Furniture purchased for personal use
(d) Computer purchased for office use
Q 68 Amount spent in order to produce and sell the goods and services is called
a) Expense
b) Income
c) Revenue
d) Drawings
Q 69 Accounting -
[a] Describe relationship with one another in society
[b] Describe about production systems
[c] Keep accounts of goods purchase and sales
[d] Recording; Classifying and Explaining of all financial transactions
Q 70 The debts owing to others by the business is known as
a) Liabilities
b) Expenses
c) Debtors
d) Assets
Q 71 Assets minus liabilities is
a) Drawings
b) Capital
c) Credit
d) Expenses
Q 72 A written document in support of a transaction is called
a) Receipt
b) Credit note
c) Voucher
d) Debit note
Ans: C
Q 73 Business transactions may be classified into
A) Three
b) Two
c) One
d) Four
Ans: B

15. Q 74 Purchases return means goods returned to the supplier due to
a) Good quality
b) Defective quality
c) Super quality
d) Excellent quality
Ans: B
Q75_________ is the first phase of accounting cycle
A) Identifying an economic event or transaction
B) Preparing journals
C) Posting entries to ledger accounts
D) Making decisions about business
Ans: A
Q 76 Financial statements differ from management account because
A) They are mainly prepared for external users of financial information
B) They are more complex and hard to prepare
C) The are the summary of accounting data
D) The are prepared on basis of actual concept
Ans: A
Q 77 ________ is a separate legal entity that Total capital can be divided in many shares
A) Partnership
B) Sole proprietorship
C) Company
D) Non-profit organization
Ans: C
Q78 An asset posses which of the following?
A) Future economic benefits for the business
B) All kind of benefits for the business
C) Expenses for the business
D) Merits and Demerits for the business
Ans : A
Q79 Liabilities are which of the following?
A) Resources
B) Obligations
C) Future benefits
D) Expenses
Ans: B
Q 80 ________ is the gross inflow of economic benefits
A) Assets
B) Liabilities
C) Income
D) Expenses
Ans: C

16. Q 90 The gross decrease in economic benefits for the business are what?
A) Expenses
B) Obligations
C) Creditors
D) Income or gain
Ans: A
Q 91 An asset must be _______ by the business to be shown as an asset in its "balance sheet"
A) Possessed
B) Owned
C) Controlled
D) Used
Ans: C
Q 92 Liability are arisen from which of the following events?
A) Present event
B) Future event
C) Past event
D) None of them
Ans: C
Q 93 Which of the following can be considered as the most important phase of accounting cycle
and it is the primarily objective of financial accounting?
A) Identifying transactions
B) Preparing "T Accounts"
C) Preparing financial statements
D) Preparing trial balances
Ans: C
Q94 Which is the most important characteristic that all assets of a business have?
A) Long life of assets
B) Value of assets
C) Intangible nature of assets
D) Future economic benefits
Ans : D
Q 95 What is the basic accounting equation?
A) Capital + Liabilities=Assets
B) Assets+ liabilities =Capital
C) Capital + assets=liabilities
D) Liabilities + Capital
Ans: A
Q 95 Which of the following is a liability?
A) Cash
B) Equipment
C) Debtors
D) Creditors
Ans: D

17. Q 96 What is equity?
A) Cash from the business
B) liability of a business
C) Owner's claim on total assets
D) Owner's claim on total liabilities
Ans: C
Q 97 Identify the asset from the following
A) Cash and cash equivalent
B) Creditors
C) Notes payable
D) Bank loan
Ans: A
Q 98 _______ the withdrawal of cash and goods by the owner of the business for his/her
personal use
A) Depreciation
B) Drawings
C) Outflow of cash
D) Appreciation
Ans: B
Q 99 Net loss occurs when
A) Expenses are greater than Income
B) Expenses are less than Income
C) Expenses=Income
D) Liabilities are greater than income
Ans: A
Q100 Double entry implies that
A) Recording entries in journal
B) Recoding entries in Ledger account
C) Recording two aspects of every transaction
D) Recording every transaction in books
Ans: C
101. Bank overdraft is
(a) Short term liability
(b) Long term liability
(c) Contingent liability
102. A liability arises because of
(a) Cash transaction
(b) Credit transaction
(c) Cash and Credit transaction
103. Which of the following is not a fixed asset
(a) Building
(b) Plant and Machinery
(c) Balance with bank

18. 104. Which of the following is not a long term liability?
(a) Creditors
(b) Term Loan
(c) Debentures
105. A person to whom money is owned by a firm is called …………..
(a) Creditor
(b) Debtor
(c) None of these
106. Withdrawal by proprietor would reduce :
(a) Owners equity and liabilities
(b) Both assets and Owner’s equity
(c) Assets and liabilities
107. Assets minutes liabilities is
(a) Drawings
(b) Capital
(c) Income
108 Amount spent in order to produce goods and sell the goods and services called
(a) Liability
(b) Revenue
(c) Expense
109 . As per the business entity assumption, the business is different from
(a) Owner
(b) Government
(c) Foreigner
109 Commission received is an example of
(a) Real account
(b) Personal account
(c) Nominal account
110 Drawings account is classified under
(a) Real account
(b) Personal account
(c) Nominal account
111The Accounting equation is connected with
(a) Assets and Liabilities
(b) Capital and Liabilities
(c) Assets, Capital and Liabilities
112 Good will is an example of
(a) Tangible account
(b) Intangible account
(c) Nominal account