MCQ of Accounting

1 What is the accounting equation for capital employed?

A current assets – current liabilities

B fixed assets + current assets – current liabilities

C fixed assets + current assets + current liabilities

D net assets – current liabilities

2 When preparing a sole trader’s annual accounts, no adjustments were made for closing amounts

prepaid. What is the effect of these omissions?
A net profit overstated | creditors understated

B net profit understated | creditors understated

C current assets overstated | owner’s capital overstated

D current assets understated | owner’s capital understated

3 Which item is revenue expenditure?

A cost of painting new office premises during construction

B cost of repairs to factory plant and machinery

C legal fees for the purchase of new factory premises

D wages of a company’s own workmen for building an office extension

4 In the cash book of a company the bank account showed a credit balance of $5000. There were

unpresented cheques amounting to $1500. The bank statement showed bank charges of $700 not

in the cash book. What is the balance on the bank statement?

A $3300 debit B $4200 debit C $4200 credit D $5800 credit

5 A business increases its provision for doubtful debts by $1600.

What will be the effect of this adjustment on the final accounts?
net profit | net debtors

A decrease by $1600 | decrease by $1600

B decrease by $1600 | increase by $1600

C increase by $1600 | decrease by $1600

D increase by $1600 | increase by $1600

6 What will always be classified in a Balance Sheet as a current liability?

A debentures

B preference shares

C prepaid expense

D proposed dividend

7 There is great uncertainty about the continuance of a business. This has caused the proprietor to

make a large reduction in the valuation of the year-end stock.

Which accounting concept does this illustrate?

A going concern

B matching

C materiality

D substance over form

8 The table shows information from the books of a business at 30 April 2002.
invoiced $

Credit sales invoiced during financial year 79 000

Goods sent to customers on 28 April 2002 and invoiced 4 May 2002 6 100

Goods sent to customers during April 2002 on sale or return basis 8 300

but not sold by 30 April 2002
What is the amount to be credited to the Trading Account as sales for the year ended 30 April

2002?

A $76 800 B $85 100 C $85 300 D $93 400

9 The balance on a Sales Ledger Control account is $40 000.

The following items are then discovered:
Total of sales day book understated 500

Discounts allowed not entered in Sales Ledger Control account 1 200

Bad debts written off not recorded in Sales Ledger Control account 400

Provision for bad debts 2 500
What is the total of the balances in the sales ledger?

A $37 900 B $38 600 C $38 900 D $41 100