Basic Accounting 2

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Objective Questions and Answers of MBA: Basic Accounting 2

Subject: Objective Questions and Answers of MBA: Basic Accounting 2

Part 2: Objective questions and answers of Basic Accounting


Q1. Creating provision against fluctuation in the price of investment is an example of which accounting convention

a) Convention of conservatism

b) Convention of full disclosure

c) Convention of materiality

d) Convention of consistency


Q2. Cash discount allowed to a debtor should be credited to

a) Discount account

b) Customer’s account

c) Sales account

d) Cash account


Q3. Accounting principles are generally based upon:

a) Practicability

b) Subjectivity

c) Convenience in recording

d) None of the above


Q4. Managerial accounting information is generally prepared for

a) Shareholders

b) Creditors

c) Managers

d) Regulatory agencies


Q5. Which one of the following items would fall under the definition of a liability

a) Cash

b) Debtor

c) Owner’s equity

d) None of these


Q6. The basic sequence in the accounting process can best be described as:

a) Transaction, journal entry, source document, ledger account, trial balance.

b) Source document, transaction, ledger account, journal entry, trial balance.

c) Transaction, source document, journal entry, trial balance, ledger account.

d) Transaction, source document, journal entry, ledger account, trial balance.


Q7. Which of the following is a real (permanent) account?

a) Goodwill

b) Sales

c) Accounts receivable

d) Both goodwill and accounts receivable


Q8. Which of the following errors will be disclosed in the preparation of a trial balance?

a) Recording transactions in the wrong account.

b) Duplication of a transaction in the accounting records.

c) Posting only the debit portion of a particular journal entry.

d) Recording the wrong amount for a transaction to both the account debited and the account credited.


Q9. If closing stock appears in the trial balance, it should be

a) Credited to the trading account

b) Credited to the profit and loss account

c) Deducted from the purchases in the trading account

d) Shown on the liability side of the balance sheet


Q10. Which of the following statements is not an objective of financial reporting?

a) Provide information that is useful in investment and credit decisions.

b) Provide information regarding policy of organization

c) Provide information that is useful in assessing cash flow prospective

d) None of theses


Q11. A book containing a chronological record of business transaction & original record

a) Journal

b) Ledger

c) Trial balance

d) None of these


Q12. The amount of salary paid to Suresh should be debited to

a) The account of Suresh

b) Salaries a/c

c) Cash a/c

d) Bank a/c


Q13. Accounting does not record non-financial transactions because of:

a) Accrual concept

b) Cost concept

c) Continuity concept

d) Money measurement concept


Q14. Accounting is the process of matching

a) Benefits & costs

b) Revenues & costs

c) Cash inflow & cash outflow

d) Potential & real performance


Q15. Of the following account types, which would be increased by a debit?

a) Liabilities and expenses.

b) Assets and equity.

c) Assets and expenses.

d) Equity and revenues.


Q16. Custom and traditions which guide the accountant while preparing the accounting statements

a) Accounting convention

b) Accounting concepts

c) Accounting principles

d) None of these


Q17. The convention of disclosure implies that all material information should be

a) Disclosed in the account

b) Disclosed in the accounts which is required to owner

c) Not disclosed

d) None of these


Q18. Proprietor (owner) is treated as creditor of business due to:

a) Periodicity concept

b) Materiality principle

c) Entity concept

d) Consistency concept


Q19. Interest, rent, electricity bill are types of account

a) Personal a/c

b) Impersonal a/c

c) Real a/c

d) Nominal a/c


Q20. P & l a/c is prepared for a period of one year by following:

a) Consistency concept

b) Conservatism concept

c) Accounting period concept

d) Cost concept


Part 2: Objective questions and answers of Basic Accounting


Q1. Answer a


Q2. Answer b


Q3. Answer a


Q4. Answer c


Q5. Answer c


Q6. Answer d


Q7. Answer d


Q8. Answer c


Q9. Answer a


Q10. Answer b


Q11. Answer a


Q12. Answer b


Q13. Answer d


Q14. Answer b


Q15. Answer c


Q16. Answer c


Q17. Answer a


Q18. Answer c


Q19. Answer d


Q20. Answer c

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