Bookkeeping MCQs

Bookkeeping MCQs

These Bookkeeping multiple-choice questions and their answers will help you strengthen your grip on the subject of Bookkeeping. You can prepare for an upcoming exam or job interview with these Bookkeeping MCQs.
So scroll down and start answering.

1: Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount?

A.   Economic entity

B.   All of the above

C.   Cost Principle

D.   Business

E.   Monetary Unit

2: True or False? An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt.

A.   False

B.   True

3: A business with available cash to use will have a ......?

A.   Debit closing balance on the Bank Statement

B.   Debit balance in its Cash At Bank account

C.   Credit balance in its Cash at Bank account

4: Which of the following statement about the perpetual inventory system is TRUE?

A.   it provides a partial record of stock turnover

B.   it is cheaper to operate than the physical inventory system

C.   it eliminates the need to carry out stocktakes

D.   it provides a continuous record of stock turnover

E.   it does not record stock movements

5: What are the two main accounting methods used for record-keeping?

A.   debit & accrual basis

B.   debit and cash basis

C.   prepaid and accrual basis

D.   credit and debit basis

E.   cash and accrual basis

6: "A statement of assets and liabilities that is reconciled with the equity of the owner at the close of an accounting period" is a definition of which financial report?

A.   Income statement

B.   Bank reconciliation

C.   Balance sheet

D.   Equity statement

E.   Cashflow statement

7: If a company has $50,000 in Total Assets (including $10,000 in Current Assets + $40,000 in Fixed Assets) and $20,000 in Equity, what is their Total Liability?

A.   $0

B.   $20,000

C.   $30,000

D.   $10,000

E.   $40,000

8: When an owner invests more money into the business, which of the following bookkeeping entries is correct ?

A.   Credit Owners equity, Credit Cash account

B.   Credit Cash account, Debit Owners equity

C.   Debit Cash account, Debit Owners equity

D.   Debit Cash account, Credit Owners equity

9: Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements?

A.   Conservatism

B.   Matching Principle

C.   Full disclosure

D.   Materiality

E.   Going Concern

10: Which of the following would be reported in the financial statements as a current asset?

A.   Shares held in other companies

B.   Office furniture

C.   Plant and equipment

D.   Accounts receivable

E.   Patents

11: Which of the following does NOT form part of the bank reconciliation process?

A.   Outstanding deposits

B.   Aged debtors

C.   Bank charges

D.   Direct deposits from customers

E.   Outstanding checks

12: The golden rule of accounting says that, for every debit entry, there must be...

A.   an asset purchase

B.   a credit sale entry

C.   a cash sale entry

D.   a corresponding credit entry

13: Under what section is the Accounts Receivable account reported in the Balance Sheet?

A.   Non current assets

B.   Non current liabilities

C.   Liabilities

D.   Equity

E.   Current assets

14: Which of the following transactions is primarily identified in the bank reconciliation process?

A.   advertising expenses

B.   cash sales

C.   sales commission fees

D.   bank charges

E.   accounting fees

15: Net profit is always greater than Gross Profit.

A.   False

B.   True

16: If Assets totaled $55,000 and Liabilities totaled $25,000, Equity would be ....?

A.   impossible to calculate

B.   $25,000

C.   $80,000

D.   $55,000

E.   $30,000

17: All of the debt a company owes, such as bonds, loans and unpaid bills is called

A.   Liabilities

B.   Assets

C.   Balance Sheet

D.   Equity

18: For every financial transaction entered in the bookkeeping system, the total of the debits must equal the total of the credits?

A.   False

B.   True

19: True or False: Recording a business transaction always requires at least a debit to one account and a credit to a different account.

A.   True

B.   False

20: That part of the equity that the owner invests in the business is known as ...?

A.   Current earnings

B.   Loans

C.   Retained earnings

D.   Drawings

E.   Capital

21: When an owner contributes additional money to a business, the equity ....?

A.   Increases

B.   Decreases

C.   Is unaffected

22: For every debit there is a ----------------------------

A.   debit

B.   credit

23: Loan funds owed to a bank would belong to which account group?

A.   Assets

B.   Liabilities

C.   Expenses

D.   Revenue

E.   Equity

24: A _______ entry is entered on the left side of an account.

A.   decreased

B.   list

C.   increased

D.   credit

E.   debit

25: What three sections make up the Balance Sheet?

A.   income, liabilities and equity

B.   revenue, liabilities and equity

C.   revenue, expenses and equity

D.   assets, liabilities and equity

E.   assets, liabilities and revenue

26: Which of the following general ledger accounts would NOT generally have a subsidiary ledger?

A.   Accounts receivable

B.   Inventory

C.   Fixed assets

D.   Accounts payable

E.   Goodwill

27: Which term in accounting means that every transaction affects two or more accounts?

A.   triple entry

B.   double entry

C.   single entry

D.   multiple entry

28: What is money owed by a business to its suppliers shown as a liability on a company's balance sheet?

A.   Retained Earnings

B.   Accounts payable

C.   Unearned Revenue

D.   Accounts Receivable

E.   Inventory

29: An adjustment being made for an error relating to transactions posted to the wrong expense account would be recorded in which journal?

A.   purchases

B.   sales

C.   cash receipts

D.   cash payments

E.   general

30: Which amounts appear on left side of T-account?

A.   debit

B.   credit

31: Which of the following is a capital expenditure?

A.   Purchase of stationery

B.   Purchase of merchandise

C.   Salaries paid

D.   Payment for services rendered

E.   Purchase of equipment

32: What is a listing of account numbers with account titles but without amounts called?

A.   Balance Sheet

B.   Income Statement

C.   Ledgers

D.   Trial Balance

E.   Chart of Accounts

33: Which of the following items would be accounted for as an expense?

A.   Payment of the current period's rent

B.   The purchase of land

C.   Repayment of a bank loan

D.   Dividends to stockholders

34: Which account group does 'Accounts Receivable' belong to?

A.   Assets

B.   Equity

C.   Revenue

D.   Expenses

E.   Liabilities

35: There are two accounting methods for recording financial transactions, the cash method and the:

A.   receivable method

B.   adjustment method

C.   accrual method

D.   payable method

E.   prepaid method

36: Invoices from vendors (suppliers) which are due in 30 days should be credited to Accounts _______.

A.   Cash Flow

B.   Balance Sheet

C.   Credit

D.   Payable

E.   Receivable

37: Assets that will be converted to cash within one year will be reported under what category in the Balance Sheet?

A.   Current Assets

B.   Fixed Assets

C.   Long term Liabilities

D.   Current Liabilities

E.   Capital

38: Interest paid by a business on a bank loan is ...?

A.   an asset

B.   owner's drawings

C.   revenue

D.   a liability

E.   an expense

39: Income that has been earned within a financial period but has not yet been received in cash, is known as ...?

A.   revenue in advance

B.   accrued revenue

C.   accounts payable

D.   extraordinary income

E.   accrued expenses

40: "Amounts owed by the business and expected to be paid out within one year" is the description of which account group?

A.   Current assets

B.   Current liabilities

C.   Expenses

D.   Non-current liabilities

E.   Debtors

41: Inventories encompass all of the following, except:

A.   Finished goods produced

B.   Merchandise purchased by a retailer

C.   Materials and supplies awaiting use in the production process

D.   Land and other property not held for sale

42: An invoice being paid that relates to insurance cover for the next accounting period should be reported in the financial statements for this accounting period as .....?

A.   accrued revenue

B.   Insurance expense in the current accounting period

C.   Revenue in advance

D.   accrued expense

E.   a prepaid expense

43: Under which classification would 'Merchandise Inventory' be recorded?

A.   Non-current asset

B.   Current asset

C.   Intangible asset

D.   Fixed asset

E.   Inventments

44: An accounts payable ledger records which transactions?

A.   Cash payments

B.   Cash purchases

C.   Purchases made on credit

D.   Cash sales

E.   Sales made on credit

45: Which of the following account groups does NOT appear on the Balance sheet of the business?

A.   Current Liabilities

B.   Current Assets

C.   Owners equity

D.   Fixed Assets

E.   Expenses

46: The calculation for gross profit is, Sales less ...?

A.   Purchases

B.   Opening stock

C.   Expenses

D.   Cost of goods sold

E.   Closing stock

47: 'Prepaid expenses' are classified and reported in the financial statements under which account group?

A.   Expenses

B.   Assets

C.   Liabilities

D.   Revenue

E.   Owners equity

48: What is the typical balance of a liability account reported in the Balance Sheet?

A.   credit balance

B.   debit balance

49: On which part of a Balance Sheet do Prepaid Expenses appear?

A.   Prepaid Expenses do not appear on the Balance Sheet

B.   Assets

C.   Shareholders' Equity

D.   Liabilities

50: Which account group does 'Drawings' belong to?

A.   Revenue

B.   Liabilities

C.   Owners equity

D.   Expenses

E.   Assets