TRB PG Assistant - Introduction to accounting - accounting concepts and conventions, Indian Accounting Standards, accounting equation, double entry system, journal, ledger, cash book, other subsidiary books, trial balance, rectification of errors, bank reconciliation statement Online Test (MCQ Quiz)

1. Which accounting concept states that a business is assumed to continue operating indefinitely?

A) Matching Concept B) Going Concern Concept C) Business Entity Concept D) Cost Concept

2. The accounting concept that requires expenses to be recognized in the same period as the revenues they help generate is known as:

A) Conservatism B) Full Disclosure C) Matching D) Materiality

3. According to the Business Entity Concept, the owner and the business are treated as:

A) A single unit B) Separate entities C) Interdependent entities D) Unrelated entities

4. Which accounting convention suggests that all material information should be disclosed in financial statements?

A) Consistency B) Full Disclosure C) Materiality D) Conservatism

5. The convention of 'Conservatism' implies that accountants should:

A) Anticipate no profits but provide for all possible losses. B) Anticipate all possible profits and losses. C) Provide for all possible profits and no losses. D) Recognize profits only when realized.

6. The accounting equation is represented as:

A) Assets = Liabilities - Owner's Equity B) Assets = Liabilities + Owner's Equity C) Liabilities = Assets + Owner's Equity D) Owner's Equity = Assets + Liabilities

7. Which of the following is an example of an asset?

A) Loan from a bank B) Capital invested by the owner C) Machinery D) Accounts Payable

8. The 'Double Entry System' of accounting means that:

A) Every transaction is recorded twice. B) Every transaction has at least two effects. C) Every transaction affects only two accounts. D) Each transaction is recorded in two different books.

9. In double-entry bookkeeping, for every debit, there must be an equal and corresponding:

A) Debit B) Credit C) Contra Entry D) Balancing Entry

10. The book of original entry where all business transactions are first recorded is called the:

A) Ledger B) Journal C) Cash Book D) Trial Balance

11. Recording a transaction in the journal is known as:

A) Posting B) Balancing C) Journalizing D) Summarizing

12. The process of transferring entries from the journal to the ledger is called:

A) Journalizing B) Posting C) Balancing D) Rectification

13. The ledger is a collection of:

A) Journals B) Accounts C) Vouchers D) Statements

14. Which of the following is a special journal used to record all cash receipts and cash payments?

A) Sales Journal B) Purchases Journal C) Cash Book D) General Journal

15. The Sales Journal is used to record:

A) All credit sales of goods B) All cash sales of goods C) All credit purchases of goods D) All cash purchases of goods

16. The Purchases Journal is used to record:

A) All credit sales of goods B) All cash sales of goods C) All credit purchases of goods D) All cash purchases of goods

17. Which subsidiary book is used to record returns of goods sold on credit?

A) Sales Book B) Purchases Returns Book C) Sales Returns Book D) Bills Receivable Book

18. A Trial Balance is a statement showing:

A) All transactions for the year B) The debit and credit balances of ledger accounts C) The profit or loss of the business D) The financial position of the business

19. The primary purpose of preparing a Trial Balance is to verify:

A) Accuracy of arithmetic in ledger postings B) Completeness of transactions recorded C) Profitability of the business D) Liquidity of the business

20. If the Trial Balance does not tally, it indicates:

A) The business is profitable B) There are errors in the accounting records C) The business has sufficient liquidity D) All transactions have been posted correctly

21. An error where a transaction is completely omitted from the books of account is called a:

A) Posting Error B) Principle Error C) Commission Error D) Omission Error

22. An error where an amount is recorded incorrectly in the books is a type of:

A) Omission Error B) Commission Error C) Principle Error D) Compensating Error

23. Recording an expense as an asset is an example of a:

A) Commission Error B) Omission Error C) Principle Error D) Recording Error

24. An error that counterbalances another error is known as a:

A) Principle Error B) Commission Error C) Compensating Error D) Omission Error

25. Which account is debited when rectifying an error of overcasting the credit side of an account?

A) The account that was over-credited B) The account that was under-credited C) The Suspense Account D) The Profit and Loss Account

26. If a sale of goods to Mr. X for $500 was wrongly recorded as $50 in the sales journal, this is an error of:

A) Omission B) Principle C) Commission D) Compensating

27. A Bank Reconciliation Statement is prepared to reconcile the difference between:

A) Cash balance in books and cash in hand B) Bank balance as per passbook and bank balance as per cash book C) Assets and Liabilities of the business D) Sales and Purchases during the period

28. Which of the following items typically appears as an unpresented cheque on the bank side of a reconciliation?

A) Dividend collected by bank B) Cheque issued by the company but not yet cashed by the payee C) Bank charges debited by the bank D) Interest credited by the bank

29. An interest credit by the bank appearing in the passbook but not in the cash book will:

A) Increase the cash book balance B) Decrease the cash book balance C) Not affect the cash book balance D) Require adjustment in the passbook

30. Bank charges debited by the bank and not yet recorded in the cash book will:

A) Increase the cash book balance B) Decrease the cash book balance C) Require addition to the passbook balance D) Require subtraction from the passbook balance

31. When starting a bank reconciliation, if you begin with the balance as per the cash book and there are unpresented cheques, you should:

A) Add them B) Subtract them C) Ignore them D) Credit them

32. When starting a bank reconciliation, if you begin with the balance as per the passbook and there are deposits not yet credited by the bank, you should:

A) Add them B) Subtract them C) Ignore them D) Debit them

33. Which of the following is NOT a principle of the Double Entry System?

A) Every transaction has two aspects. B) Every transaction affects at least two accounts. C) Every debit requires an equal credit. D) Every credit requires an equal credit.

34. The 'Cost Concept' in accounting states that assets should be recorded at:

A) Their current market value B) Their realizable value C) Their historical cost D) Their depreciated value

35. Which accounting concept emphasizes that only transactions that can be measured in monetary terms should be recorded?

A) Going Concern Concept B) Money Measurement Concept C) Periodicity Concept D) Dual Aspect Concept

36. The concept of 'Periodicity' in accounting means that:

A) Business life is divided into artificial periods for reporting. B) All transactions are recorded as they occur. C) Assets are valued at current market prices. D) Profits are recognized only when realized.

37. Which Indian Accounting Standard (Ind AS) deals with the presentation of financial statements?

A) Ind AS 1 B) Ind AS 7 C) Ind AS 101 D) Ind AS 115

38. The accounting equation Assets = Liabilities + Owner's Equity is derived from the principle of:

A) Matching B) Dual Aspect C) Conservatism D) Full Disclosure

39. A 'Suspense Account' is generally opened when:

A) The Trial Balance does not agree and the error cannot be immediately found. B) The business is highly profitable. C) All transactions are recorded perfectly. D) A new accounting system is implemented.

40. Which of the following is a liability?

A) Building B) Cash C) Loan from proprietor D) Patents

41. The Sales Returns Journal is used to record:

A) Goods returned by customers B) Goods returned to suppliers C) All credit sales D) All cash sales

42. An error of casting (addition) in the Purchases Journal is an error of:

A) Omission B) Commission C) Principle D) Original Entry

43. If a cheque received from a customer is dishonoured, it should be:

A) Debited to the customer's account and credited to the bank account B) Credited to the customer's account and debited to the bank account C) Debited to the bank account and credited to the customer's account D) Credited to the bank account and debited to the customer's account

44. Which of the following is an example of an intangible asset?

A) Land B) Goodwill C) Machinery D) Buildings

45. The 'Materiality' convention implies that:

A) All information, however insignificant, must be disclosed. B) Only material information needs to be disclosed. C) Immaterial items should be combined with material items. D) Accounting standards should be strictly followed for all items.

46. Which principle requires that financial statements should be prepared on a consistent basis from one period to another?

A) Conservatism B) Consistency C) Matching D) Materiality

47. The 'Entity Concept' means that the business is considered:

A) Part of the owner's personal affairs B) A separate entity distinct from its owners C) An extension of the government's financial system D) A temporary arrangement for profit generation

48. When reconciling the bank statement, if the balance as per the cash book is taken as the starting point, and there is an error of overcasting the 'Bank' column in the cash book, what adjustment is needed?

A) Add the over-casted amount B) Subtract the over-casted amount C) No adjustment is needed D) Credit the over-casted amount

49. Which of the following is typically a credit balance in the ledger?

A) Accounts Receivable B) Sales Revenue C) Expenses D) Assets

50. The primary function of a Journal is to:

A) Classify transactions B) Summarize transactions C) Record transactions chronologically D) Provide a balance of accounts

Introduction to accounting - accounting concepts and conventions, Indian Accounting Standards, accounting equation, double entry system, journal, ledger, cash book, other subsidiary books, trial balance, rectification of errors, bank reconciliation statement - Online Test

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