Comprehensive Accounting MCQs for Accounts Officer (1-100)

1. Which financial statement shows the financial position of a business at a particular point in time?

A. Income Statement

B. Cash Flow Statement

C. Balance Sheet

D. Statement of Owner's Equity

Answer: C

2. The double entry system of accounting means:

A. Each transaction affects only one account

B. Each transaction is recorded twice

C. Each transaction has a debit and a credit entry

D. Transactions are recorded in a single account

Answer: C

3. Which account is affected when goods are sold on credit?

A. Cash

B. Sales

C. Accounts Payable

D. Purchases

Answer: B

4. Depreciation is:

A. A reduction in the market value of an asset

B. An allocation of the cost of an asset over its useful life

C. A provision for bad debts

D. An increase in asset value

5. Which of the following is not a current asset?

A. Cash

B. Accounts Receivable

C. Equipment

D. Inventory

Answer: C

6. Which document is issued by the seller to the buyer when goods are sold on credit?

A. Debit Note

B. Invoice

C. Credit Note

D. Receipt

Answer: B

7. Which of the following errors would not affect the trial balance?

A. Error of Omission

B. Error of Commission

C. Error of Original Entry

D. Compensating Error

Answer: D

8. A trial balance is prepared to:

A. Detect all errors

B. Help in preparing bank reconciliation

C. Check the arithmetical accuracy of ledger accounts

D. Show the financial position

Answer: C
9. Purchases Returns are:

A. Debited in the Purchases Account

B. Credited in the Purchases Account

C. Recorded in the Sales Book

D. Debited in the Sales Account

Answer: B

10. Which of the following is an intangible asset?

A. Land

B. Machinery

C. Copyright

D. Building

Answer: C

11. Which of the following accounts will normally have a credit balance?

A. Cash

B. Accounts Receivable

C. Sales

D. Purchases

Answer: C

12. The matching principle in accounting requires:

A. Revenues to be recorded only when received

B. Expenses to be matched with revenues in the same period

C. All transactions to be recorded twice

D. Revenues to be recorded only when earned

Answer: B

13. A credit balance in the bank column of the cash book indicates:
A. Overdraft

B. Surplus

C. Bank charges

D. Interest received

Answer: A

14. Which of the following is a capital expenditure?

A. Purchase of raw materials

B. Salaries

C. Repairs

D. Purchase of machinery

Answer: D

15. Which account is affected when a business pays rent?

A. Capital

B. Rent Expense

C. Rent Payable

D. Revenue

Answer: B

16. Petty cash is used for:

A. Large purchases

B. Paying employee salaries

C. Minor day-to-day expenses

D. Capital investments

Answer: C

17. Which of the following is an example of a real account?

A. Capital Account
B. Rent Account

C. Machinery Account

D. Salary Account

Answer: C

18. Which document is prepared to find the reasons for the difference between the cash book and

the bank statement?

A. Cash Flow Statement

B. Trial Balance

C. Bank Reconciliation Statement

D. Ledger

Answer: C

19. Bad debts written off are classified as:

A. Revenue expenditure

B. Capital expenditure

C. Asset

D. Liability

Answer: A

20. The person who owes money to the business is called:

A. Creditor

B. Debtor

C. Supplier

D. Customer

Answer: B

21. Which accounting concept assumes a business will continue to operate in the foreseeable

future?
A. Accrual

B. Going Concern

C. Consistency

D. Prudence

Answer: B

22. An error which affects both debit and credit sides equally is called:

A. Error of omission

B. Error of principle

C. Compensating error

D. Error of commission

Answer: C

23. Goods withdrawn by owner for personal use are recorded in:

A. Purchase Book

B. Journal Proper

C. Sales Book

D. Cash Book

Answer: B

24. When preparing final accounts, carriage inward is shown in:

A. Balance Sheet

B. Profit and Loss Account

C. Trading Account

D. Journal

Answer: C

25. Provision for doubtful debts is created to:

A. Reduce tax liability

C. Increase profit

D. Record income

Answer: B

26. In accounting, drawings are:

A. Business expenses

B. Assets

C. Reduction in owner's equity

D. Liabilities

Answer: C

27. What type of account is 'Rent Received'?

A. Expense

B. Revenue

C. Asset

D. Liability

Answer: B

28. If total assets are TZS 100,000 and total liabilities are TZS 30,000, owner's equity is:

A. TZS 70,000

B. TZS 130,000

C. TZS 30,000

D. TZS 100,000

Answer: A

29. Suspense accounts are used to:

A. Record fixed assets

B. Correct errors temporarily

D. Record depreciation

Answer: B

30. Credit note is issued when:

A. Goods are returned by the buyer

B. Goods are sold

C. Payment is made

D. Invoice is issued

Answer: A

31. What is the purpose of depreciation?

A. To increase profit

B. To allocate cost of asset over its useful life

C. To reduce tax

D. To increase asset value

Answer: B

32. Which of the following is not an accounting concept?

A. Prudence

B. Matching

C. Opportunity Cost

D. Going Concern

Answer: C

33. Which is a personal account?

A. Cash

B. Capital

C. Furniture
D. Rent

Answer: B

34. The balance of which account is carried to the balance sheet?

A. Sales

B. Rent

C. Capital

D. Purchases

Answer: C

35. Return inward is deducted from:

A. Sales

B. Purchases

C. Capital

D. Expenses

Answer: A

36. Goodwill is classified as:

A. Tangible Asset

B. Intangible Asset

C. Current Asset

D. Liability

Answer: B

37. When cash is received from debtors, the effect is:

A. Increase in liability

B. Decrease in asset

C. Exchange of assets

D. Increase in expense
Answer: C

38. The accounting entry for payment of salary is:

A. Debit Salary, Credit Cash

B. Debit Cash, Credit Salary

C. Debit Salary, Credit Capital

D. Debit Capital, Credit Salary

Answer: A

39. A journal is also known as:

A. Subsidiary Book

B. Ledger

C. Final Accounts

D. Statement

Answer: A

40. Trade discount is:

A. Recorded in the books

B. Given to encourage early payment

C. Not recorded in the books

D. Included in profit and loss

Answer: C

41. The amount spent on the repair of an existing asset is:

A. Capital expenditure

B. Revenue expenditure

C. Deferred revenue expenditure

D. Asset

Answer: B
42. The two sides of a balance sheet must always:

A. Be equal

B. Have the same items

C. Be in debit

D. Include net profit

Answer: A

43. What is recorded in the Sales Book?

A. All sales

B. All credit sales

C. All cash sales

D. All types of receipts

Answer: B

44. Which of the following is not a function of accounting?

A. Recording

B. Planning

C. Summarizing

D. Analyzing

Answer: B

45. Net profit is transferred to:

A. Capital Account

B. Cash Account

C. Sales Account

D. Purchases Account

Answer: A

46. Which book is used to record all credit purchases of goods?

B. Purchases Book

C. Journal

D. Cash Book

Answer: B

47. A liability arises when:

A. The business earns profit

B. The business buys goods for cash

C. The business owes money to others

D. The business pays salary

Answer: C

48. In the accounting equation, assets = liabilities + ?

A. Expenses

B. Capital

C. Revenue

D. Drawings

Answer: B

49. Which is a current liability?

A. Debentures

B. Mortgage

C. Creditors

D. Capital

Answer: C

50. Purchase of furniture on credit is recorded as:

A. Debit Purchases, Credit Cash

C. Debit Furniture, Credit Capital

D. Debit Cash, Credit Furniture

Answer: B

51. Which one is not part of the financial statements?

A. Statement of Financial Position

B. Income Statement

C. Trial Balance

D. Cash Flow Statement

Answer: C

52. The matching principle in accounting ensures that:

A. Revenues are recognized only when cash is received

B. Expenses are recorded when paid

C. Revenues and related expenses are recorded in the same period

D. Assets match liabilities

Answer: C

53. Which financial statement would you check to determine a company's liquidity?

A. Balance Sheet

B. Income Statement

C. Statement of Equity

D. Notes to Accounts

Answer: A

54. What does a debit balance in the bank column of the cash book indicate?

A. Bank overdraft

B. Credit balance
C. Favorable balance

D. Loss

Answer: C

55. Provision for doubtful debts is an example of:

A. Asset

B. Liability

C. Expense

D. Contra asset

Answer: D

56. In accounting, goodwill is classified as:

A. Tangible Asset

B. Current Asset

C. Intangible Asset

D. Liability

Answer: C

57. Accrued expenses are:

A. Expenses paid in advance

B. Income received in advance

C. Expenses incurred but not yet paid

D. Capital expenditures

Answer: C

58. A credit note is issued when:

A. A customer overpays

B. A payment is made

C. A purchase is recorded
D. Goods are returned by a customer

Answer: D

59. Which of the following is a contingent liability?

A. Salaries payable

B. Debentures

C. Lawsuit under dispute

D. Interest on loan

Answer: C

60. Petty cash vouchers are used for:

A. Capital purchases

B. Recording large expenses

C. Authorizing petty cash transactions

D. Authorizing journal entries

Answer: C

61. What is the main objective of internal control in accounting?

A. Maximize profit

B. Ensure accuracy and reliability of financial data

C. Prepare tax returns

D. Record transactions

Answer: B

62. Which principle requires accountants to use the same methods from one period to another?

A. Prudence

B. Materiality

C. Consistency

D. Matching
Answer: C

63. When a business purchases office furniture on credit, the correct entry is:

A. Debit Furniture, Credit Cash

B. Debit Furniture, Credit Creditor

C. Debit Cash, Credit Furniture

D. Debit Purchases, Credit Creditor

Answer: B

64. Which account is not closed at the end of an accounting period?

A. Wages

B. Interest income

C. Capital

D. Rent

Answer: C

65. The double-entry principle means:

A. Recording in the journal and ledger

B. Recording each transaction in two places

C. Debit equals credit

D. Financial statements must be audited

Answer: C

66. If an asset is sold for less than its book value, the difference is recorded as:

A. Profit

B. Expense

C. Gain

D. Loss

Answer: D
67. Which of the following is an example of a capital receipt?

A. Sale of goods

B. Interest income

C. Sale of fixed asset

D. Commission earned

Answer: C

68. Errors affecting both debit and credit sides equally are called:

A. Compensating errors

B. Omission errors

C. Commission errors

D. Principle errors

Answer: A

69. A trial balance ensures that:

A. The books are free from fraud

B. Financial statements are ready

C. Debit and credit totals match

D. No errors exist

Answer: C

70. The term "fiscal year" refers to:

A. A calendar year

B. A 6-month financial period

C. A 12-month accounting period

D. A tax season

Answer: C

71. Which accounting concept assumes a business will continue operating in the foreseeable
future?

A. Accrual

B. Going Concern

C. Consistency

D. Conservatism

Answer: B

72. An entry that affects two or more accounts in the general ledger is known as:

A. Journal entry

B. Compound entry

C. Contra entry

D. Adjusting entry

Answer: B

73. The ledger is defined as:

A. A book of original entry

B. A document showing transaction evidence

C. A record of all accounts

D. A trial balance

Answer: C

74. The balance of which account is carried forward to the next year?

A. Wages

B. Interest income

C. Capital

D. Rent

Answer: C

75. When goods are returned to a supplier, the document issued is a:

B. Debit note

C. Voucher

D. Invoice

Answer: B

76. Which type of account is "Drawings"?

A. Asset

B. Expense

C. Liability

D. Capital (but contra)

Answer: D

77. In accounting, the term "posting" refers to:

A. Recording in journal

B. Recording in trial balance

C. Transferring from journal to ledger

D. Calculating profit

Answer: C

78. A balance sheet shows:

A. Income and expenses

B. Assets and liabilities

C. Sales and cost of goods sold

D. Cash inflows and outflows

Answer: B

79. If a company pays rent in advance, it is recorded as:

A. Revenue
B. Accrued expense

C. Prepaid expense (asset)

D. Liability

Answer: C

80. Which of the following is a liability?

A. Stock

B. Prepaid rent

C. Bank loan

D. Equipment

Answer: C

81. If closing stock is undervalued, what is the impact on net profit?

A. No effect

B. Net profit increases

C. Net profit decreases

D. Net profit remains constant

Answer: C

82. Which of the following best describes an intangible asset?

A. Land

B. Equipment

C. Goodwill

D. Inventory

Answer: C

83. A cash book serves the purpose of:

A. Ledger only

B. Journal only
C. Both journal and ledger

D. Trial balance

Answer: C

84. The person or business to whom money is owed is called:

A. Debtor

B. Creditor

C. Banker

D. Supplier

Answer: B

85. Which accounting standard deals with inventories?

A. IAS 1

B. IAS 2

C. IAS 7

D. IAS 10

Answer: B

86. If a business purchases goods worth TZS 2,000,000 on credit, the correct entry is:

A. Debit Cash, Credit Sales

B. Debit Purchases, Credit Creditors

C. Debit Sales, Credit Purchases

D. Debit Expenses, Credit Revenue

Answer: B

87. Trade discount is:

A. Recorded in the books

B. Not recorded in the books

C. Treated as an expense
D. Added to cost

Answer: B

88. What is depreciation?

A. Increase in asset value

B. Allocation of cost of asset over its useful life

C. Appreciation of capital

D. Maintenance expense

Answer: B

89. When preparing a bank reconciliation, unpresented cheques are:

A. Added to bank statement balance

B. Deducted from bank statement balance

C. Ignored

D. Added to cash book

Answer: B

90. Which type of expenditure is incurred for the daily running of a business?

A. Capital expenditure

B. Revenue expenditure

C. Deferred revenue expenditure

D. Development expenditure

Answer: B

91. What does the accrual basis of accounting recognize?

A. Revenues when cash is received

B. Expenses when cash is paid

C. Revenues when earned and expenses when incurred

D. Transactions only when settled

92. If a company issues shares at a premium, the premium amount is recorded in:

A. Share Capital

B. Securities Premium Account

C. General Reserve

D. Capital Reserve

Answer: B

93. What is bank reconciliation used for?

A. Matching sales and purchases

B. Comparing ledger and journal

C. Matching cash book and bank statement

D. Estimating expenses

Answer: C

94. Which of the following errors affects the trial balance?

A. Error of omission

B. Error of principle

C. Posting to the wrong side of account

D. Compensating error

Answer: C

95. Which financial statement is also known as a Profit and Loss Statement?

A. Balance Sheet

B. Income Statement

C. Cash Flow Statement

D. Statement of Changes in Equity

Answer: B
96. The term 'liquidity' refers to:

A. Ability to earn profit

B. Availability of assets

C. Ability to pay short-term obligations

D. Equity in the business

Answer: C

97. Preliminary expenses are classified as:

A. Capital loss

B. Intangible asset

C. Miscellaneous expenditure

D. Revenue expense

Answer: C

98. Discount received is recorded as:

A. Expense

B. Asset

C. Income

D. Liability

Answer: C

99. Which of the following is not a cash equivalent?

A. Treasury bills

B. Commercial paper

C. Inventory

D. Money market funds

Answer: C

100. Accounting policies are disclosed in:

B. Balance Sheet

C. Notes to accounts

D. Auditor's report

Answer: C