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) CommunicatingRecordingIdentifying
B) RecordingCommunicatingIdentifying
C) Identifyingcommunicatingrecording
D) Identifyingrecordingcommunicating
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
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
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
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
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
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
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
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
Accounting concept and conventions
1) Which of the following is not regarded as the fundamental concept that is identified by IAS-1
A) The going concern concept
B) The septate entity concept
C) The prudence concept
D) Correction concept
2)Using "lower of cost and net realisable value" for the purpose of inventory valuation is the
implementation of which of the following concepts?
A) The going concern concept
B) The septate entity concept
C) The prudence concept
D) Matching concept
3)The concept of separate entity is applicable to which of following types of businesses?
A) Sole proprietorship
B) Corporation
C) Partnership
D) All of them
4)Is Prudence concept allows a business to build substantially higher reserves or provisions than that are
actually required?
A) Yes
B) No

C) To some extent
D) It depends on the type of business
5)The revenue recognition principal dictates that all types of incomes should be recorded or recognized
when
A) Cash is received
B) At the end of accounting period
C) When they are earned
D) When interest is paid
6)The matching concept matches which of the following?
A) Asset with liabilities
B) Capital with income
C) Revenues with expenses
D) Expenses with capital
7)The allocation of owner's private expenses to his/her business violates which of the following?
A) Accrual concept
B) Matching concept
C) Separate business entity concept
D) Consistency concept
8)The going concern concept assumes that
A) The entity continue running for foreseeable future
B) The entity continue running until the end of accounting period
C) The entity will close its operating in 10 years
D) The entity can't be liquidated
9)American companies prepare their their financial statement in dollars whereas Japanese companies
produce financial statements in yens. Ths is an example of:
A) Stable monetary unit Concept
B) Unit of measurement Concept
C) Money value concept
D) Current swap concept
10)Which of the following is time span into which the total life of a business is divided for the purpose of
preparing financial statements?
A) Fiscal year
B) Calendar year
C) Accounting period
D) Accrual period

11)Showing purchased office equipments in financial statements is the application of which accounting
concept?
A) Historical cost convention
B) Materiality
C) Prudence
D) Matching concept
13)Information about an item is ________ if its omission or misstatement might influence the financial
decision of the users taken on the basis of that information
A) Concrete
B) Complete
C) Immaterial
D) Material
14)Exercising a degree of caution in the case of judgments needed under the condition of uncertainty is
assumption of which of the following accounting concepts?
A) Matching concept
B) Timeliness concept
C) Accrual concept
D) Prudence concept
15)Which one of the following concepts states that the publication or presentation financial statements
should not be delayed?
A) Objectivity Concept
B) Timing concept
C) Reliability Concept
16)land on lease should be shown in balance sheet contrary to fact that company doesn't own this piece of
land. This is the statement of what accounting concepts?
A) Matching concept
B) Accrual concept
C) Prudence concept
D) Substance over form Concept
17)"Financial information should be neutral and bias free" is the dictation of which one of the following?
A) Completeness concept
B) Faithful representation Concept
C) Objectivity Concept
D) Duality Concept
19)A company received cash $1000 in advance for auditing service. However, the company neither earned
this revenue nor made any adjusting entry in its books. Identify the effect of this omission?
A) Total liabilities to be understated

B) Total expenses to be overstated

C) Total income to be overstated
D) Total assets to be understated
20)Depreciation is charged on fixed asset to comply with which of the following accounting principles or
concepts?
A) Matching concept
B) Prudence concept
C) Timeliness concept
D) Reliability concept
Partnership Firm
1)What is the minimum number of partners required to commence a partnership business?
A) 20
B) 10
C) 2
D) 4
2)Partnership type of business is formed by the mutual agreement of partners. What kind of agreement is
it?
A) Oral agreement
B) Written agreement
C) Oral or written agreement
D) None of them
3)In the general form of partnership, liabilities of partners are:
A) limited
B) unlimited
C) limited to the business capital
4)Is partnership type of business considered as a separate legal entity?
A) No
B) Yes
5)Can a partner transfer his/her share of business to a third party without other partners consent?
A) No
B) Yes
6)Is it compulsory for all partners to contribute equal amount of capital in the business?
A) No
B) Yes
7)Interest on drawings is:

A) Debited to partners current a/c

B) Credited to partners current a/c
C) Not shown in current account
8)The written agreement of partnership is most commonly referred to as:
A) Agreement
B) Partnership deed
C) Partnership contract
D) Partnership Act
9)Where there is no partnership agreement exists between partners, what will be the profit sharing ratio
between the partners?
A) Equal
B) Unequal
C) It will depend on a partners capital
D) It will depend on the experience of a partner
10)Salary of a partner is _________ to current account
A) Debited
B) Credited
11)New investment by any partner in the partnership type of business is _______ to the partners capital
account
A) Debited
B) Credited
12)Under fluctuation method of capital, what is the treatment of interest on capital?
A) Credited to capital account
B) Debited to capital account
C) No treatment or adjustment needed
D) Credited to current account
13)Which of the following is NOT generally the characteristic of a partnership business?
A) Limited life
B) Ease of formation
C) Mutual agency
D) Limited liability
14)In which of the following types of partnership the liability of at least one partner is unlimited whereas
the liability of other partners is limited?
A) General partnership
B) Particular partnership

C) Partnership-at-will
D) Limited partnership
15)In which of the following types of partnership there is no agreement regarding the duration of
partnership?
A) General partnership
B) Partnership-at-will
C) Limited partnership
D) Registered partnership
18)Which of the following is known as the value addition to a business because of business reputation,
customers loyalty, brand name etc
A) Assets
B) Market capitalization
C) Goodwill
D) Market penetration
19)Which of following is the correct double entry for revaluation surplus
A) Revaluation = Debit and Partners capital accounts = Credit
B) Partners capital accounts = Debit and Revaluation surplus = Credit
21)Which one of the following double entries is correct regarding the cost of firm or partnership
dissolution?
A) Credit realization a/c and Debit partners capital a/c
B) Credit realization a/c and Debit bank a/c
C) Debit realization a/c and Credit bank/cash
22)Identify the correct double entry for realization profit at time dissolution of partnership
A) Debit realization a/c and Credit bank a/c
B) Debit bank a/c and Credit realization account
C) Debit realization account and Credit partners capital accounts
26)Which one of the following is the method of goodwill valuation?
A) Average capital method
B) Super capital method
C) Capital intensity method
D) Super profit method
27)Under capitalization method of goodwill valuation, which of the following formulas is used to calculate
the value of whole business?
A) Value of whole business=Profit / Reasonable rate of return X 100
B) Value of whole business= Total assets / Reasonable rate of return X 100
C) Value of whole business= Equity-Net assets

28)Which of the following is not recorded in the partners current accounts?

A) Drawings
B) Interest on Drawings
C) Partners salaries
29)A partner that doesnt take part in the management of business, but he/she has made investment in
business and liable to creditors of the business is known as:
A) Active partner
B) Nominal partner
C) Junior partner
D) Dormant partner
Financial A/c-1
1) We can say that the business is in profit, when:
A) Assets exceed Expenditure
B) Income exceeds Liabilities
C) Income exceeds Expenditure
D) Income exceeds Liabilities
2) According to the double entry system of accounting, an account that obtains benefit is:
A) Credit
B) Debit
C) Income
D) No need to show as accounting record
3) Term "Credit" means_______ by the business.
A) Receiving of benefits
B) It has no effect on business
C) Providing of benefits
D) It depends upon items
4) When a Liability is reduced or decreased, it is recorded on the:
A) Left or credit side of the account
B) Right or debit side of the account
C) Right or credit side of the account
D) Left or debit side of the account
5) When Capital is increased by an amount, it is recorded on the:
A) Right or debit side of the account
B) Left or credit side of the account
C) Left or debit side of the account
D) Right or credit side of the account

6) What type of expenses are paid out of Gross Profit?

A) General Expenses
B) Financial Expenses
C) Selling Expenses
D) All of the given options
7) Which of the following shows summary of a company's financial position at a specific date?
A) Profit & Loss Account
B) Cash Flow Statement
C) Balance Sheet
D) Income & Expenditure Account
8) Which of the following is NOT an example of intangible assets?
A) Franchise rights
B) Goodwill
C) Patents
D) Land
9) Which of the following is an example of business liability?
A) Land
B) Building
C) Cash
D) Creditors
10) The unfavorable balance of Profit and Loss account should be:
A) Added in liabilities
B) Subtracted from current assets
C) Subtracted from capital
D) Subtracted from liabilities
Fin -2
1) Which of the following account will be credited, if business bought goods on credit from Mr. Z
A) Purchases account
B) Mr.Z account
C) Cash account
D) Sales account
2) Interest on loan paid by business is an example of :
A) Revenue expense
B) Income
C) Asset

D) Return outward
3) Which of the following is NOT a function of bank reconciliation statement?
A) To check for errors in balance sheet
B) To update omitted entries into the cash book
C) To update omitted entries into the bank statement
D) To reconcile the difference in bank statement and cash book
4) Which of the following account will be credited when a typewriter is sold that has been used in the
office?
A) Office Equipment Account
B) Cash Account
C) Sales Account
D) Purchase Account
5) Which of the following subsidiary book(s) is (are) maintained for debtors control account?
A) Sales Day Book
B) Sales Return
C) Debtors Ledger
D) All of the given options
6) The allocation of the cost of a tangible plant asset to expense in the periods, in which services are
received from the asset, is termed as:
A) Appreciation
B) Depreciation
C) Fluctuation
D) None of the given options
7) Which of the following is NOT a function of bank reconciliation statement?
A) To check for errors in balance sheet
B) To update omitted entries into the cash book
C) To update omitted entries into the bank statement
D) To reconcile the difference in bank statement and cash book
8) Which of the following entry will be recorded when the Bad Debts are recovered?
A) Cash(Dr.) & Bad Debts recovered(Cr)
B) A/C Receivable(Dr.) & Bad Debts recovered(Cr.)
C) Bad debts recovered(Dr.) and Profit & Loss(Cr.)
D) Provision for doubtful debts(Dr.) & Cash(Cr.)
9) Which of the following subsidiary book(s) is (are) maintained for debtors control account?
A) Sales Day Book

B) Sales Return
C) Debtors Ledger
D) All of the given options
10) Which of the following item will be shown on debit side of debtors account?
A) Discount received
B) Return inwards
C) Discount allowed
D) Credit sales
Fin A/c-3
1) Goods of $1,000 purchased from Mr. A were recorded in sales book, the rectification of this error
will:
A) Increase the gross profit
B) Reduce the gross profit
C) Have no effect on gross Profit
D) None of the given options
2) Which of the following account will be credited when a typewriter is sold that has been used in the
office?
A) Purchase Account
B) Sales Account
C) Cash Account
D) Office Equipment Account
3) When one or both aspects of a transaction are recorded in the wrong class or category of account, this
is called:
A) Error of principle
B) Error of omission
C) Error of commission
D) Error of original entry
4) Which of the following item must be recorded in the adjusted Cash Book in order to bring it in line
with the entries in the Bank Statement?
A) Bank charges
B) An error on the Bank Statement
C) An uncredited deposit
D) An unpresented cheque
6) Which of the following is an example of operating expense?
A) Purchasing operating equipment
B) Purchasing a vehicle

C) Purchasing cleaning services

D) buying a computer
7) Which of the following would NOT be considered as a component of 'cost' of stock?
A) Transportation inward costs
B) Import duties
C) Salaries of selling staff
D) Purchase price
8) Which of the following will be debited, if cash is drawn by Proprietor?
A) Proprietors drawings
B) Proprietors cash
C) Proprietors capital
D) Out flows
9) Which of the following is TRUE about the treatment of insurance paid in advance $ 1200?
A) Current asset
B) Current liability
C) Short term liability
D) Fixed asset
10) When closing stock is given in trial balance, then it will effect:
A) Trading account only
B) Balance sheet only
C) Owner's equity only
D) Trading A/C and Balance sheet
Consignment A/c
1. In accounting consignment means.
(a) Goods forwarded from one place to another.
(b) Goods forwarded by a person to another.
(c) Goods sent by its owner to his agent.
(d) Goods sent by its owner to his agent for the purpose by sale. (T)
2. Goods sent on consignment should be debited by consignor to:
(a)
Consignment A/c (T)
(b)
Goods sent on consignment A/c
(c)
Consignees A/c
(d)
Consignors A/c
(3)In the books of consignor the balance of the consignment stock account would be shown:
(a)
As an asset in the balance sheet. (T)
(b)
As liability in the balance sheet.
(c)
On the credit side of trading account.
(d)
On the debit side of consignment account.
(4) On the dispatch of goods, the entry in the books of consignee would be:
(a)
Consignment A/c will be debited and goods sent on consignment A/c will be credited.
(b)
Consignment A/c debit and consignee A/c credit
(c)
No entry (T)

(d)

None of above

(5)The consignor is:

(a)
Principal (T) (b)
(c)
Debtor
(d)

Agent
None of them

(6) The consignee is:

(a)
Principal
(c)
Buyer
(7) Account sales is submitted by:
(a)
Consignor
(c)
Principal to his agent

(b)
(d)
(b)
(d)

Agent (T)
Seller
Consignee (T)
Debtor to creditor

(8)In the books of consignor, the expenses incurred by consignor should be debited to:
(a)
Consignees A/c (T)
(b)
Consignment A/c
(c)
Expenses A/c
(d)
Consignors A/c
(9)In the books of consignor, the expenses incurred by consignee should be debited to:
(a)
Consignee A/c
(b)
Consignment A/c (T)
(c)
Expenses A/c
(d)
Consignors A/c
(10)In the books of consignor the acceptance of bills of exchange by the consignee will be credited to:
(a)
Consignment A/c
(b)
Consignment A/c (T)
(c)
Income A/c
(d)
Consignors A/c
(11)In the books of consignor the acceptance of bills of exchange by the consignee will be credited to:
(a)
Consignment A/c
(b)
Consignees A/c (T)
(c)
Bill receivable A/c
(d)
Bills payable A/c
(12)In the books of consignor the abnormal loss should be credited to:
(a)
Profit & loss A/c
(b)
Consignment A/c (T)
(c)
Trading A/c
(d)
Consignees A/c
(13)In case of delcreder commission, the liability for bad debits is on:
(a)
Consignor
(b)
Consignee (T)
(c)
Customer
(d)
None of the above
(14)In the books of consignor, the balance in the goods sent on consignment account is shown:
(a)
On the asset side to balance sheet.
(b)
On the liability side of balance sheet.
(c)
On the credit side of trading A/c (T)
(d)
On the credit side of consignment A/c
(15)In the books of consignee the expenses incurred by him on consignment are debited to:
(a)
Consignment A/c
(b)
Cash A/c
(c)
Consignors A/c (T)
(d)
Expense A/c
(16)In the books of consignee, the sale of goods is credited to:
(a)
Consignors A/c (T)
(b)
Sales A/c
(c)
Consignees A/c
(d)
Cash A/c
(17)The term A/c and sale A/c are ________________ in nature.
(a)
Parallel
(b)
Some
(c)
Equal
(d)
Different (T)
(18)The consignment inward book or journal is maintained by ________.
(a)
Customer
(b)
Consignee (T)
(c)
Debtor
(d)
Customer
(19)The consignee acts entirely on behalf of the:
(a)
Customer
(b)
Debtor
(c)
Consignor (T)
(d)
Creditor
(20)Del creder commission is calculated on:
(a)
Credit sales
(b)
Cash sales
(c)
Total sale
(d)
Both (a) and (b) (T)

(21)Consignee A/c is the nature of:

(a)
Nominal A/c
(b)
(c)
Real A/c
(d)

Personal A/c (T)

None

(22)Normal losses are due to:

(a)
Avoidable factor
(c)
Contingent

Unavoidable (T)
None

(b)
(d)

(23)In consignee book, the acceptance of bill of exchange by consignee will be debited to:
(a)
Trading A/c
(b)
Consignor A/c (T)
(c)
Balance payable A/c
(d)
Consignee A/c