1. Accounting is mainly concerned with:
- A. Recording financial transactions
- B. Manufacturing goods
- C. Marketing products
- D. Hiring employees
Answer: A
2. Which of the following is an asset?
- A. Bank loan
- B. Accounts payable
- C. Cash in hand
- D. Outstanding expenses
Answer: C
3. Accounts Payable represents:
- A. Money owed by debtors
- B. Money owed to creditors
- C. Owner’s capital
- D. Business income
Answer: B
4. Accounts Receivable is classified as:
- A. Liability
- B. Expense
- C. Asset
- D. Capital
Answer: C
5. Accrual basis of accounting records income when it is:
- A. Received
- B. Earned
- C. Deposited in bank
- D. Withdrawn by owner
Answer: B
6. Which accounting method records transactions only when cash is received or paid?
- A. Accrual system
- B. Double entry system
- C. Cash basis system
- D. Mercantile system
Answer: C
7. Balance Sheet shows:
- A. Profit and loss
- B. Cash flow only
- C. Financial position
- D. Expenses only
Answer: C
8. Which of the following is NOT a liability?
- A. Bank loan
- B. Creditors
- C. Capital
- D. Outstanding expenses
Answer: C
9. Capital means:
- A. Total expenses
- B. Owner’s investment
- C. Total liabilities
- D. Total income
Answer: B
10. Cash Flow Statement shows:
- A. Profit earned
- B. Assets and liabilities
- C. Movement of cash
- D. Sales only
Answer: C
11. Which professional is authorized to audit accounts?
- A. CMA
- B. CPA
- C. CFA
- D. Bookkeeper
Answer: B
12. Chart of Accounts is a list of:
- A. Employees
- B. Assets only
- C. Ledger accounts
- D. Customers
Answer: C
13. Closing the books means:
- A. Destroying records
- B. Finalizing accounts
- C. Auditing accounts
- D. Opening ledger
Answer: B
14. Cost of Goods Sold (COGS) includes:
- A. Advertising cost
- B. Office rent
- C. Material and labor
- D. Interest paid
Answer: C
15. Credit increases:
- A. Assets
- B. Expenses
- C. Liabilities
- D. Drawings
Answer: C
16. Debit increases:
- A. Liabilities
- B. Assets
- C. Capital
- D. Income
Answer: B
17. Depreciation is charged on:
- A. Current assets
- B. Fixed assets
- C. Liabilities
- D. Capital
Answer: B
18. Dividend is paid to:
- A. Creditors
- B. Employees
- C. Shareholders
- D. Customers
Answer: C
19. Double entry system records:
- A. One aspect
- B. Two aspects
- C. Three aspects
- D. Four aspects
Answer: B
20. Enrolled Agent (EA) can represent clients before:
- A. Courts
- B. RBI
- C. Income Tax Department
- D. IRS
Answer: D
21. Equity represents:
- A. Total expenses
- B. Net worth of business
- C. Total revenue
- D. Cash balance
Answer: B
22. Fixed costs remain:
- A. Constant
- B. Variable
- C. Seasonal
- D. Temporary
Answer: A
23. General Ledger contains:
- A. Summary of all accounts
- B. Cash only
- C. Creditors list
- D. Debtors list
Answer: A
24. GAAP stands for:
- A. Global Accounting Principles
- B. General Accounting Audit Policy
- C. Generally Accepted Accounting Principles
- D. Government Approved Accounting Process
Answer: C
25. Gross Profit =
- A. Sales – Expenses
- B. Sales – COGS
- C. Net profit – tax
- D. Revenue – capital
Answer: B
26. Income Statement shows:
- A. Assets and liabilities
- B. Profit or loss
- C. Cash position
- D. Owner’s capital
Answer: B
27. Inventory includes:
- A. Cash
- B. Machinery
- C. Goods for sale
- D. Furniture
Answer: C
28. A liability payable within one year is called:
- A. Fixed liability
- B. Long-term liability
- C. Current liability
- D. Capital liability
Answer: C
29. Liquidity means:
- A. Profitability
- B. Cash availability
- C. Asset ownership
- D. Business growth
Answer: B
30. Net Profit is calculated after deducting:
- A. Only expenses
- B. Only tax
- C. All expenses and taxes
- D. Only depreciation
Answer: C
31. Sales made without immediate payment are called:
- A. Cash sales
- B. Credit sales
- C. Net sales
- D. Gross sales
Answer: B
32. Overhead expenses include:
- A. Direct materials
- B. Factory wages
- C. Office rent
- D. Raw materials
Answer: C
33. Payroll accounting deals with:
- A. Assets
- B. Employees’ salaries
- C. Capital
- D. Loans
Answer: B
34. Present Value relates to:
- A. Past income
- B. Future money value today
- C. Gross profit
- D. Current expenses
Answer: B
35. A receipt is:
- A. A payment
- B. Proof of transaction
- C. An expense
- D. A liability
Answer: B
36. Retained earnings increase:
- A. Liabilities
- B. Expenses
- C. Equity
- D. Loss
Answer: C
37. ROI measures:
- A. Expense ratio
- B. Profitability of investment
- C. Cash flow
- D. Liquidity
Answer: B
38. Revenue is earned from:
- A. Owner’s capital
- B. Sale of goods/services
- C. Loans
- D. Investments only
Answer: B
39. Single entry system records:
- A. Assets and liabilities
- B. Only income and expenses
- C. All transactions twice
- D. Capital only
Answer: B
40. Trial Balance is prepared to:
- A. Find profit
- B. Check arithmetical accuracy
- C. Prepare budget
- D. Audit accounts
Answer: B
41. Variable cost changes with:
- A. Time
- B. Production level
- C. Accounting period
- D. Capital
Answer: B
42. Which is NOT a financial statement?
- A. Balance Sheet
- B. Income Statement
- C. Trial Balance
- D. Cash Flow Statement
Answer: C
43. Which account normally has debit balance?
- A. Capital
- B. Liability
- C. Asset
- D. Income
Answer: C
44. Expenses are recorded on which side?
- A. Credit
- B. Debit
- C. Both
- D. None
Answer: B
45. Bookkeeping is a part of:
- A. Auditing
- B. Accounting
- C. Finance
- D. Economics
Answer: B
46. Which statement is true?
- A. Assets = Liabilities – Capital
- B. Assets = Capital + Liabilities
- C. Capital = Assets + Liabilities
- D. Liabilities = Assets – Expenses
Answer: B
47. Which cost remains constant even if output increases?
- A. Variable cost
- B. Fixed cost
- C. Direct cost
- D. Marginal cost
Answer: B
48. Cash is classified as:
- A. Fixed asset
- B. Intangible asset
- C. Current asset
- D. Liability
Answer: C
49. Which accounting principle ensures consistency?
- A. Prudence
- B. Consistency
- C. Materiality
- D. Dual aspect
Answer: B
50. The dual aspect concept states that:
- A. Every transaction has two effects
- B. Assets equal expenses
- C. Income equals expenses
- D. Capital equals cash
Answer: A
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