Unit 1 – Accounting MCQs
. The Golden Rule of Accounting for Personal Accounts is:
A) Debit what comes in, Credit what goes out
B) Debit expenses and losses, Credit incomes and gains
C) Debit the receiver, Credit the giver
D) None of the above
Correct Answer: C
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. What is the primary purpose of preparing a trial balance?
A) To calculate the net profit or loss
B) To ensure that debits equal credits in the ledger accounts
C) To prepare the balance sheet directly
D) To determine the cash flow of the business
Correct Answer: B
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. Which of the following is not a nominal account?
A) Salaries Account
B) Rent Account
C) Capital Account
D) Commission Received Account
Correct Answer: C
. The rule "Debit what comes in, Credit what goes out" applies to which
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type of account?
A) Personal Account
B) Real Account
C) Nominal Account
D) All of the above
Correct Answer: B
3
. Expenses and losses are debited, while incomes and gains are
credited, according to the rule for which account type?
A) Personal Account
B) Real Account
C) Nominal Account
D) None of the above
Correct Answer: C
2
. A business purchases machinery for cash ₹50,000. Which accounts
are affected and how?
A) Machinery A/c Dr, Cash A/c Cr
B) Cash A/c Dr, Machinery A/c Cr
C) Machinery A/c Dr, Capital A/c Cr
D) Cash A/c Dr, Capital A/c Cr
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Correct Answer: A
. A firm received ₹10,000 from a debtor. Which rule is applied?
A) Debit the giver, Credit the receiver
B) Debit the receiver, Credit the giver
C) Debit what comes in, Credit what goes out
D) Debit expenses, Credit incomes
Correct Answer: C
6
. Classification for 'Bank Loan, Rent Paid, Commission Earned, Debtors':
A) Asset, Expense, Income, Liability
B) Liability, Expense, Income, Asset
C) Expense, Income, Asset, Liability
D) Liability, Income, Expense, Asset
Correct Answer: B
. You are asked to design a ledger structure that helps a large
organization quickly identify errors in posting and facilitate
compartmentalizing roles for debtor and creditor systems. What
approach would you recommend?
A) Use only a general ledger and trial balance
B) Implement a self-balancing ledger system with control accounts
C) Use journals for all transactions
D) Eliminate nominal accounts
Correct Answer: B
. A business purchases furniture ₹15,000 on credit. Which ledger
accounts will be affected?
A) Furniture A/c & Cash A/c
B) Furniture A/c & Creditor’s A/c
C) Furniture A/c & Capital A/c
D) Furniture A/c & Purchases A/c
Correct Answer: B
. Business owner withdrew ₹5,000 for personal use. Ledger posting?
A) Cash A/c Dr, To Drawings A/c
B) Drawings A/c Dr, To Cash A/c
C) Capital A/c Dr, To Cash A/c
D) Cash A/c Dr, To Capital A/c
Correct Answer: B
. Which of the following is used for checking the arithmetical accuracy
of the account books?
A) Ledger
B) Trial Balance
.
C) Journal
D) BRS
Correct Answer: B
. Should the total of the trial balance always be equal?
A) Yes, except when the trial balance total is tallied at the end of the
year
B) No, because it depends on the interests of the company
C) Yes, always
D) No, because it differs from a balance sheet
Correct Answer: C
. An asset worth ₹50,000 is depreciated at 10% using the WDV method.
What will be its book value at the end of the first year?
A) ₹45,000
B) ₹40,000
C) ₹50,000
D) ₹35,000
Correct Answer: A
. Compare the Straight-Line and WDV methods. Which method would
result in higher depreciation in the initial years?
A) Both methods give the same amount
B) Straight-Line Method
C) WDV Method
D) Neither method
Correct Answer: C
. If a company uses the WDV method and the depreciation rate is
increased, what impact will this have on net income in the initial years?
A) Net income will increase
B) Net income will decrease
C) Net income will remain unchanged
D) Depreciation will not affect net income
Correct Answer: B
. A company under Ind AS must classify its liabilities as current or non-
current based on:
A) Management discretion
B) Liquidity needs
C) Expected settlement period or operating cycle
D) Tax benefits
Correct Answer: C
. According to IFRS, an asset should be recognized when:
.
A) It is purchased in cash
B) It is probable that future economic benefits will flow to the entity
and its cost or value can be reliably measured
C) The management plans to use it
D) It is fully paid for
Correct Answer: B
. A company purchases office supplies worth ₹25,000 on credit from
Stationery World. What is the correct journal entry?
A) Office Supplies Dr. ₹25,000 / Cash Cr. ₹25,000
B) Office Supplies Dr. ₹25,000 / Stationery World Cr. ₹25,000
C) Cash Dr. ₹25,000 / Office Supplies Cr. ₹25,000
D) Stationery World Dr. ₹25,000 / Office Supplies Cr. ₹25,000
Correct Answer: B
. A company sells goods worth ₹50,000 for cash to a customer. What is
the correct journal entry?
A) Cash Dr. ₹50,000 / Sales Cr. ₹50,000
B) Sales Dr. ₹50,000 / Cash Cr. ₹50,000
C) Cash Dr. ₹50,000 / Purchases Cr. ₹50,000
D) Sales Dr. ₹50,000 / Purchases Cr. ₹50,000
Correct Answer: A
. Ledger is also known as:
A) Book of Original Entry
B) Book of Secondary Entry
C) Final Accounts
D) None of these
Correct Answer: B
. Ledger balances are transferred to which statement for preparing
financial results?
A) Cash Book
B) Trial Balance
C) Journal Proper
D) Petty Cash Book
Correct Answer: B
. Purchased Goods ₹5,000 for cash. Ledger posting?
A) Debit Purchases A/c, Credit Cash A/c
B) Debit Cash A/c, Credit Purchases A/c
C) Debit Purchases A/c, Credit Capital A/c
D) Debit Cash A/c, Credit Capital A/c
Correct Answer: A
. If Purchases A/c has a balance of ₹50,000, on which side of the Trial
Balance will it appear?
A) Debit side
B) Credit side
C) Both sides
D) Does not appear
Correct Answer: A