Self Grading MCQs Test covering Topic 1 - 5

1. Identify the correct sequence of accounting process

a) Communicating→Recording→Identifying

b) Recording→Communicating→Identifying

c) Identifying→communicating→recording

d) Identifying→recording→communicating

2. Which is the most important characteristic that all assets of a business have?

a) Long life of assets

b) Value of assets

c) Intangible nature of assets

d) Future economic benefits

3. If the business's owner withdraws cash for his/her personal use what will be the effect on capital?

a) Increase in capital

b) Remain the same

c) Decrease in capital

d) No effect on capital

4. Cash received for services rendered will

a) Increase cash and liability

b) Increase cash and equity

c) Increase fixed assets and cash

d) Increase equity and liability

5. The term 2/10-n/30 implies that ______ % discount will be given if the payment is made within _____ days or full amount is receivable within 30 days

a) 2,10

b) 10,2

c) 10,30

d) 3,15

6. Which of the following will be debited if a business purchases goods on credit?

a) Cash

b) Debtors

c) Creditors

d) Purchases

7. Transactions that a business doesn't record in any specialised journal are recorded in which of the following journals or day books?

a) Cash payments journal

b) Cash receipts journal

c) Purchases return journal

d) General journal

8. "Business paid rent amounting to $100" which of the following specialized journals records this transaction?

a) Cash receipts journal

b) Cash payments journal

c) Sales journal

d) Purchase journal

9. If credit side of a bank account is greater than the debit side it indicates which of the following?

a) Bank overdraft

b) Cash at bank

c) Bank balance

d) Bank overdraft

10. Which of the following statements is incorrect regarding capital account?

a) Debit increases the capital account balance

b) Credit increases the capital account balance

c) Fresh capital increases the capital account balance