Accounting Fundamentals & Concepts — Part 1: 40 MCQs with Explanations

When a discounted bill is honoured by the drawee on the due date is the correct answer to “Under which of the following situations, is journal entry not passed in the books of the drawer”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Business entity concept is the correct answer to “Based on which of the following concepts, is Share Capital Account shown on the liabilities side of a Balance Sheet”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Property, Plant and Equipment are conventionally presented in the Balance Sheet at Historical cost − Depreciation portion thereof .

Balance Sheet is the correct answer to “Which of the following statement is considered as the accountants snapshot of firms accounting value as of a particular date”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Rs. 17,000 is the correct answer to “During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases by Rs. 8,000. What will be the amount of cash received from customers for the period”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Book value is the correct answer to “Average Accounting Return is a measure of accounting profit relative to:”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

The accounting process of gradually converting the unexpired cost of fixed assets into expenses over a series of accounting periods is Depreciation .

Debtors journal is the correct answer to “Which of these is not a special purpose journal”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

5,000 incurred on installation of new plant debited to travelling expenses A/c is the correct answer to “Which of the following error is an error of principle”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Purchase journal is kept to record All credit purchases of goods .

Journal proper is meant for recording All such transactions for which no special journal has been kept by the business .

The concept of conservatism will have the effect of Understatement of Assets .

Journals are also referred as Book of original entries .

Assets column is the correct answer to “The standard format of journal does not include which of the following”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Chronological order is the correct answer to “In which of the following orders data is entered in journal”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

The first step in accounting process is Identifying the transaction .

General journal is a book of Original entries.

The process of recording transactions in different journals is called Journalizing .

The other name of journal is Day book .

A journal entry in which two or more account is debited or credited is referred as Compound entry .

Statement of financial position is the correct answer to “Which of the following is the practical implementation of the accounting equation”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Assets-Liabilities=Capital is the correct answer to “Which of the following accounting equation is correct”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Nominal accounts is the correct answer to “Which of the following accounts are closed at the end of an accounting period”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Balance c/d is the correct answer to “Which of the following is the closing balance of a ledger account”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

The Basic accounting equation is Assets=Capital+Liabilities .

Transferring entries from journal to ledger account is commonly known as Posting .

Recording two aspects of every transaction is the correct answer to “Double entry implies that”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Capital+Liabilities=Assets is the correct answer to “What is the basic accounting equation”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Preparing financial statements is the correct answer to “Which of the following can be considered as the most important phase of accounting cycle and it is the primarily objective of financial accounting”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Transaction is the correct answer to “In accounting an Economic event is referred to as:”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Identifying → recording → communicating is the correct answer to “Identify the correct sequence of accounting process”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Recording financial information is the correct answer to “Bookkeeping mainly concerns with which part of accounting process”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Managers is the correct answer to “Financial accounting provides financial information to all of the following external users except:”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Communication of financial information is the correct answer to “For which step of accounting process the accountants of business entity prepare financial statements”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Identifying an economic event or transaction is the first phase of accounting cycle.

Big businesses is the correct answer to “Specialized journals are more adequate for which TYPE OF BUSINESSES”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Cash payments journal is the correct answer to “BUSINESS paid rent amounting to $100; which of the following specialized journals records this transaction”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Sales return day book is the correct answer to “Credit memo or credit note No. is entered in which of the following journal”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Sales return journal is the correct answer to “Which of the following specialized journals records œgoods returned by customers”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.

Sales journal is the correct answer to “Sales on credit is recorded in which of the following journal”. Items of this type are drawn from the Accounting Fundamentals & Concepts — Part 1 syllabus of Pakistani competitive exams, where the fact is tested verbatim.