1.

——————— accounting system is the combination of both cash as well

as on credit.

a) Cash basis
b) Credit system
c) Hybrid System
d) None of the above

2. Increase in Asset is

a) Debited
b) Credited
c) Ignored
d) None of the above

3. Increase in Liabilities is

a) Debited
b) Credited
c) Ignored
d) None of the above

4. Which is not the features of Accounting Vouchers?

a) It is a written document.
b) It is prepared by labour.
c) It is prepared on the basis of evidence of the transaction.
d) It contains an analysis of a transaction.

5. Which is not the business transaction.

a) X commences the business with cash Rs. 50,000.

b) He purchased goods for cash Rs. 18,000
c) He got a gift worth Rs. 7,000 in a family function.
d) He deposited cash into bank Rs. 20,000
6. Which is the business transaction?

a) Suresh sold goods for cash Rs.30,000

b) X paid house tax for his own house
c) A deposited into bank Rs. 6,000 as school fee for his children
d) He purchased house hold goods worth Rs. 8,000

7. The terms of an accounting equations can be presented as under;

a) Assets = Liabilities – Capital

b) Capital= Assets – Liabilities
c) Assets = Capital + Liabilities
d) Liabilities= Assets – Capital

8. The fundamental rule for recording changes in Assets/Expenses/Losses is

a) Increase in liabilities is credited and decrease in liabilities is debited.

b) Increase in Assets is debited and decrease in Assets is Credited.
c) Increase in capital is credited and decrease in capital is debited.
d) Increase in expenses/losses is credited and decrease in expenses/losses is
debited.

9. Depreciation reduces the value of —————————-

a) Asset
b) Liability
c) Goodwill
d) None of the above

10. No entry is made for ————– discount in the Journal.

a) Cash
b) Trade
c) Both
d) None of the above
11. Accrued Income is —————– in the Journal

a) Debited
b) Credited
c) Ignored
d) None of the above

12. A combination of two or more simple Journal entries is known as

a) Single Entry
b) Double Entry
c) Compound Entry
d) Ledger Entry

13. Drawings _____________ the amount of Capital

a) Reduce
b) Increase
c) Balance
d) None of these

14. Another name for Journal is

a) Book of original records

b) Transaction
c) Entry
d) Cash records

15. Which is not the column of a Journal?

a) Particulars
b) Ledger Folio
c) Journal Folio
d) Date
16. Brief explanation of a journal entry is known as

a) Transaction
b) Journalising
c) Narration
d) Processing

17. Which is not the compound entries?

a) Discount allowed
b) Bad debt
c) Discount received
d) Sales

18. Ledger is known as ——————-

a) Primary Book
b) Secondary Book
c) Cash Book
d) Sales Book

20. The Revenue and expense accounts are closed by taking the balances to
—————————–

a) Ledger
b) Trading and Profit loss A/c
c) Balance sheet
d) Trial Balance

21. Assets ledger does not contain:

a) Capital account
b) Machinery account
c) Building account
d) Furniture account
22. Revenue ledger contains

a) Building account
b) Loan account
c) Sales account
d) Bank overdraft account

23. _____________ contains rent paid, wages paid, electricity charges etc.

a) Creditors ledger
b) General ledger
c) Debtors ledger
d) Expenses ledger

24. Name of the account in the journal is entered in _________ column of the
relevant account in the ledger.

a) Particulars
b) Transaction
c) Debit
d) Credit

25. The balance of an account is written on the side having ______ total, so
that its total becomes equal to the total of other side.

a) Higher
b) Lower
c) Same
d) None of the above

26. The balance of _________ accounts are debit balances.

a) Liability
b) Capital
c) Asset
d) None of the above
27. Which of the following columns does a ledger have-

a) Date
b) Particulars
c) Debit and Credit
d) All of the above

28. Which of the following comprises small cash transactions?

a) Payment to service providers
b) Petty cash
c) Purchase of inventory
d) Receipt from sales.
29. What is the purpose of credit notes?
a) It shows a purchase on credit.
b) It is used when a deposit is paid on goods.
c) It is used to cancel all or part of a sales invoice.
30. Which of the following transactions is likely to occur on a daily basis in
a large business organization?
a) Credit sales
b) Payroll
c) purchase of equipment
d) Payment of supplies
31. Which of the following is not an internal document for purchase?
a) Supplier list
b) Delivery note
c) Goods received notes
d) Purchase order
32. What is remittance advice for?
a) To indicate that item which is paid
b) To identify goods received
c) To advise remittance received
d) For notification of goods dispatched.
33. What is the purpose of the purchase invoice?
1. To claim back the sales tax
 2. To identify the goods bought
3. To record how much is owed to the supplier
4. To record how much is owed from the customer.

a) 1, 2, and 3 only.
b) All
c) 2 and 3 only
d) 1 and 2 only.
34. In the purchasing process, which document will usually follow the
goods received notes?
a) Delivery note
b) Invoice
c) Statement
d) Advice note
35. What is the prime document used to record small transactions in the
Petty cash books?
a) An invoice
b) A till receipt
c) A Petty cash voucher
36. Which of the following is a source document for financial transactions?
a) Statement
b) Paying slip
c) Purchase order
d) Goods received note
37. How will a sales invoice from a supplier be regarded by the customer?
a) As a credit note
b) As a debit note
c) Purchase invoice
d) Or as a receipt.
38. What is meant by an event in the business?
a) Event is the other name of transaction which means exchanging of values
b) An event means buying something
c) Event means having a party in the business
39. A business has a bank overdraft of $350 and $50 cash in hand at the end of the
accounting period.
What is the balance for the next accounting period?
a) bank debit and cash credit
b) bank credit and cash debit
c) cash debit and bank debit
d) cash credit and bank credit.
40. A sole trader has an opening capital of $20000 and a closing capital of $23000.
during a period the owner introduced capital of $4000 and withdrew $15000 for his
own use.
What was the sole trader’s profit or loss during the accounting period?
a) $8000 profit
b) $14000 profit
c) $15000 profit
d) $22000 profit.
41. What does a credit entry usually represent?
a) Asset and income
b) Liabilities and income
c) Asset and expense
d) Liabilities and expenses.
42. What is the double entry to record the purchase of plant and machinery for cash?
a) Debit plant repairs and credit cash
b) Plant and machinery debit and cash credit
c) Debit plant repairs and credit A/P
d) Plant and machinery debit and A/P credit.
43. What is the double entry to record the introduction of capital into a business bank
account by the owner?
a) Drawings debit and cash credit
b) Cash debit and drawings credit
c) Cash debit and capital credit
d) Capital debit and cash credit.
44. A business buys goods on credit from a supplier and will pay one month later.
When the payment is made, what is the double entry required to record this?
a) Cash account debit and A/R credit
b) Cash account debit and A/P credit
c) A/R debit and cash account credit
d) A/P debit and cash account credit.
45. Which of the following is a liability?
a) Capital introduced
b) Inventory
c) Bank Overdraft
d) Drawings
46. What is the primary function of a credit sale invoice that a customer has received
from a supplier?
a) It is a receipt for money
b) It is a demand for immediate payment by the supplier
c) Used to record goods purchased by the customer
d) It is demand for payment within an agreed time from the supplier.
47. Which of the following correctly describes the function of a credit note issued by a
supplier to one of its customers?
a) A demand for payment
b) An agreed allowance that can be deducted from the next invoice payment
c) A loan available to the customer
d) A document issued by a supplier to cancel part or all of previously issued invoices.
48. Which of the following correctly describes the term ‘debit note’?
a) supplier to customer to demand payment in full for goods supplied.
b) It is issued by a customer to a supplier to request a credit note
c) Issued by a customer when goods are delivered
d) Customer to the supplier to cancel an invoice received.
49. What is a trade discount?
a) A reduction in the amount of an invoice given by the supplier if a customer pays
promptly
b) A price reduction that supplier applies to a selection of goods on a special offer
 c) Refund which a supplier agrees with an individual customer after an invoice has
been sent at full price.
d) A reduction in the invoice price by a supplier because of the terms of trade
agreed with an individual customer.
50. Which of the following correctly explains the sales tax?
a) A tax on business profit
b) A tax on the sale of goods and services is collected by the government.
c) Tax on sales and services which is administered by the government
d) A tax on sales and services which all businesses have to pay the must.