Principles of Accounting Objective Type Questions

Principles of Accounting Objective Type Questions

Question 1Depreciation of assets is due to

A Decrease in value of goodsHint:Wear and tear of assets

B Wear and tear of assets

C Prices fluctuationsHint:Wear and tear of assets

D All of theseHint:Wear and tear of assets

Question 2

In which method depreciation is reduced year to year

A Straight line methodHint:Diminishing balance method

B Original cost methodHint:Diminishing balance method

C Diminishing balance method

D None of theseHint:Diminishing balance method

Question 3The book value of a machine is Rs. 10,000 and it is sold for Rs. 11,000 and gain Rs. 1,000

A Capital profit

B Revenue profitHint:Capital profit

C An expenditureHint:Capital profit

D None of theseHint:Capital profit

Question 4

Maximum number of shareholders in a private limited company

A 20Hint:50

B 70Hint:50

C 50

D 10Hint:50

Question 5The share issued at printed price is called

A Issued at discountHint:Issued at par

B Issued at premiumHint:Issued at par

C Issued at par

D All of these are trueHint:Issued at par

Question 6

Artificial person created by law is called

A CombinationHint:Company

B Company

C Co-operative societyHint:Company

D PartnershipHint:Company

Question 7Receipts and payments account shows

A Income and expenditureHint:Cash receipts and payments

B Cash receipts and payments

C Assets and liabilitiesHint:Cash receipts and payments

D Capital and revenueHint:Cash receipts and payments

Question 8

Income and expenditure account reveals

A Cash in handHint:Surplus or deficiency

B Surplus or deficiency

C Capital accountHint:Surplus or deficiency

D Debtors accountHint:Surplus or deficiency

Question 9Debtors account

A Incomplete and unscientific

B Complete and scientificHint:Incomplete and unscientific

C Complete and unscientificHint:Incomplete and unscientific

D Incomplete and scientificHint:Incomplete and unscientific

Question 10

In single entry system, it is not possible to prepare

A Trial balance

B Balance sheetHint:Trial balance

C Receipts and payments accountHint:Trial balance

D Personal accountHint:Trial balance

Question 11The consignee acts entirely on behalf of

A DebtorHint:Principal

B CreditorHint:Principal

C CustomerHint:Principal

D Principal

Question 12

The total amount of capital of a company is divided into small units is ailed

A BondsHint:Shares

B ChequesHint:Shares

C Shares

D ReservesHint:Shares

Question 13Non-trading concerns prepare

A Profit & loss accountHint:Income & expenditure account

B Manufacturing accountHint:Income & expenditure account

C Trading accountHint:Income & expenditure account

D Income & expenditure account

Question 14

Single entry system cannot be maintained by

A Sole ownerHint:Joint stock company

B PartnershipHint:Joint stock company

C Joint stock company

D All of theseHint:Joint stock company

Question 15Under diminishing balance method depreciation is calculated on

A Original costHint:Written down value

B Written down value

C The scrap valueHint:Written down value

D Market valueHint:Written down value

Question 16

A company is formed by

A OwnersHint:Promoters

B GovernmentHint:Promoters

C DirectorsHint:Promoters

D Promoters

Question 17The face value of share is called

A Book valueHint:Par value

B Par value

C Market valueHint:Par value

D None of theseHint:Par value

Question 18

The written agreement of partnership is called

A Partnership deed

B Articles of associationHint:Partnership deed

C Memorandum of associationHint:Partnership deed

D Certificate of incorporationHint:Partnership deed

Question 19The persons who take the risk on the issue of shares are known as

A DirectorsHint:Underwriters

B PromotersHint:Underwriters

C PublicHint:Underwriters

D Underwriters

Question 20

Goodwill is due to

A Repute of partners

Hint:All of these

B ManagementHint:All of these

C LocationHint:All of these

D All of these

Question 21Amount received from any source, by way of gift is treated as

A SubscriptionHint:Donation

B LegacyHint:Donation

C Donation

D None of theseHint:Donation

Question 22

Non-trading institutions prepare

A Profit & Loss A/cHint:Income & expenditure A/c

B Manufacturing A/cHint:Income & expenditure A/c

C Income & expenditure A/c

D None of theseHint:Income & expenditure A/c

Question 23Receipts and payments account is

A Nominal accountHint:Real account

B Real account

C Personal accountHint:Real account

D An expense accountHint:Real account

Question 24

Goods sent on consignment should be debited by consignor to

A Consignment account

B Goods sent on consignment accountHint:Consignment account

C Consignor accountHint:Consignment account

D Consignee accountHint:Consignment account

Question 25In the absence of an agreement, profits and losses are divided by partners is the ratio of

A CapitalHint:Equally

B Time devoted by each partnerHint:Equally

C Equally

D Their drawingsHint:Equally

Question 26

A new partner may be admitted to partnership

A With the consent of all the old partners

B Without the consent of old partnersHint:With the consent of all the old partners

C With the consent of any one of the partnersHint:With the consent of all the old partners

D With the consent of any two of the partnersHint:With the consent of all the old partners

Question 27On the retirement of a partner, a reserve should be transferred to the capital accounts of

A All partners in old profit sharing ratio

B Remaining partners in new profit sharing ratioHint:All partners in old profit sharing ratio

C Remaining partners in old profit sharing ratioHint:All partners in old profit sharing ratio

D Neither the retiring partner nor the remaining partnersHint:All partners in old profit sharing ratio

Question 28

On the dissolution of firm, the partner's personal assets are first used for payment of

A Personal liabilitiesHint:Third party liabilities

B Firm's liabilitiesHint:Third party liabilities

C Third party liabilities

D None of theseHint:Third party liabilities

Question 29Non-profit earning companies are mostly formed as

A Companies limited by sharesHint:Companies limited by guarantee

B Companies limited by guarantee

C Unlimited companiesHint:Companies limited by guarantee

D Private limited companiesHint:Companies limited by guarantee

Question 30

In case of private company maximum number of members is

A SixHint:Fifty

B TenHint:Fifty

C SevenHint:Fifty

D Fifty

Question 31The gradual decrease in the value of the fixed assets due to its use in business is called

A Depreciation

B DepletionHint:Depreciation

C AmortizationHint:Depreciation

D FluctuationHint:Depreciation

Question 32

The process of writing of intangible assets is called

A DepreciationHint:Amortization

B FluctuationHint:Amortization

C DepletionHint:Amortization

D Amortization

Question 33A private company has to provide in its articles

A For restricting transfer of sharesHint:For prohibiting transfer of shares

B For prohibiting transfer of shares

C For permitting free transfer of sharesHint:For prohibiting transfer of shares

D None of theseHint:For prohibiting transfer of shares

Question 34

Debenture holders are

A Creditors

B DebtorsHint:Creditors

C CustomersHint:Creditors

D Debtors of the companyHint:Creditors

Question 35The amount of depreciation charged on machinery will be debited to

A Machinery accountHint:Depreciation account

B Depreciation account

C Cash accountHint:Depreciation account

D Reserve accountHint:Depreciation account

Question 36

Sale of old newspapers should be treated as

A Income

B ExpensesHint:Income

C AssetHint:Income

D LiabilityHint:Income

Question 37Consignor is also called

A AgentHint:Principal

B DebtorHint:Principal

C CreditorHint:Principal

D Principal

Question 38

Godown rent paid by consignee is debited to

A Consignee's A/cHint:Consignment A/c

B Consignor's A/cHint:Consignment A/c

C Consignment A/c

D None of theseHint:Consignment A/c

Question 39Income and expenditure account record the transaction

A Revenue nature

B Capital natureHint:Revenue nature

C These bothHint:Revenue nature

D None of themHint:Revenue nature

Question 40

Sinking fund investment is

A Asset

B LiabilityHint:Asset

C IncomesHint:Asset

D None of themHint:Asset

Question 41Discount on issue of shares is a loss of

A RevenueHint:Capital

B None of themHint:Capital

C Capital

D ExpenditureHint:Capital

Question 42

In the absence of agreement, the rate of interest on capital is

A Bank rate

Hint:6%

B Not at allHint:6%

C 6%

D None of theseHint:6%

Question 43The asset not depreciable is

A GoodwillHint:Land

B Land

C PatentHint:Land

D Office equipmentHint:Land

Question 44

Old profit sharing ratio is 5:3 whereas on admission of third one, new ratio is 5:2:2. The sacrificing ratio between two old partners will be

A 8:5Hint:5:11

B 5:8Hint:5:11

C 5:11

D 1 1 :5Hint:5:11

Question 45In a private company, minimum directors should be

A 2

B 3Hint:2

C 4Hint:2

D More than 4Hint:2

Question 46

Partnership is formed under the Act of

A 1984Hint:1932

B 1913Hint:1932

C 1932

D 1962Hint:1932

Question 47In Private Limited Company minimum numbers of share-holders are

A Six

B SevenHint:Two

C TenHint:Two

D Two

Question 48Assets contributed by the partner are recorded at

A Face valueHint:Agreed value

B Book valueHint:Agreed value

C Agreed value

D None of theseHint:Agreed value

Question 49Income and expenditure account is prepared on

A Cash basisHint:Accrual basis

B Accrual basis

C Both basisHint:Accrual basis

D None of theseHint:Accrual basis

Question 50

Realization account is a

A Nominal A/C

B Real A/CHint:Nominal A/C

C Personal A/CHint:

Nominal A/C

D Cash A/CHint:Nominal A/C

Question 51The activities of non-trading are managed by

A DirectorHint:Member

B Member

C Governing BodyHint:Member

D PromoterHint:Member

Question 52

Bad debts written off should be credited to

A Bad debts accountHint:Debtor account

B Creditor accountHint:Debtor account

C Debtor account

D Sale accountHint:Debtor account

Question 53Del credere commission is calculated on

A Total sale

B Cash saleHint:

Total sale

C Credit saleHint:Total sale

D None of theseHint:Total sale

Question 54

Memorandum of association is prepared by

A Sole proprietorshipHint:Joint stock company

B PartnershipHint:Joint stock company

C Joint stock company

D All of theseHint:Joint stock company

Question 55In consignment relation between consignor and consignee is

A Debtor and creditorHint:Principal and agent

B Buyer and sellerHint:Principal and agent

C Principal and agent

D All of theseHint:Principal and agent

Question 56

The minimum number of members in public limited company is

A 2Hint:7

B 7

C 10Hint:7

D 20Hint:7

Question 57System in which accounting record is not kept strictly according to double entry system is

A Single entry system

B Double entry systemHint:Single entry system

C Original entry systemHint:Single entry system

D None of theseHint:Single entry system

Question 58

Due to fluctuation in the market price the value of an asset may

A IncreaseHint:Not change

B DecreaseHint:Not change

C Not change

D All of theseHint:Not change

Question 59Depreciation is provided for

A Replacement of the assetHint:Both

B Calculation of true profitHint:Both

C Both

D None of theseHint:Both

Question 60

In Pakistan, joint stock companies are formed, under ordinance of

A 1973Hint:1962

B 1990Hint:1962

C 1962

D 1984Hint:1962

Question 61Liability of partners in partnership is

A Unlimited

B LimitedHint:Unlimited

C Up to their capitalHint:Unlimited

D None of theseHint:Unlimited

Question 62

For a firm, interest on capital is

A IncomeHint:Expenses

B Expenses

C AssetHint:Expenses

D None of theseHint:Expenses

Question 63Loss by an accident is example of

A Normal lossHint:Abnormal loss

B Normal loss and abnormal lossHint:Abnormal loss

C Abnormal loss

D None of theseHint:Abnormal loss

Question 64

A prospectus can be issued only by

A A public limited company

B A private companyHint:A public limited company

C Partnership firmHint:A public limited company

D None of theseHint:A public limited company

Question 65Equity shareholders are of the company

A CreditorsHint:Owners

B Owners

C CustomersHint:Owners

D DebtorsHint:Owners

Question 66

Share application account is the nature of

A Real accountHint:Personal account

B Personal account

C Nominal accountHint:Personal account

D Income accountHint:Personal account

Question 67Under straight line method of depreciation, it

A Increases every yearHint:

Is constant every year

B Is constant every year

C Decreases every yearHint:Is constant every year

D None of theseHint:Is constant every year

Question 68

Statement of assets and liabilities prepared under single entry system is called

A Balance sheetHint:Statement of affairs

B Profit & loss accountHint:Statement of affairs

C Statement of affairs

D Income statementHint:Statement of affairs

Question 69Trial balance is not obtained in

A Double entry systemHint:Single entry system

B Modern entry systemHint:Single entry system

C Single entry system

D None of theseHint:Single entry system

Question 70

The institutions which deal in, activities other than trade are called

A Trading concernsHint:Non-trading concerns

B Manufacturing concernsHint:Non-trading concerns

C Non-trading concerns

D None of theseHint:Non-trading concerns

Question 71The figure of the credit purchase can be worked out

A Total debtor accountHint:Total creditor account

B Total creditor account

C Cash bookHint:Total creditor account

D Balance sheetHint:Total creditor account

Question 72

The excess of total assets over total liabilities of a concern is called

A SurplusHint:Capital fund

B DeficitHint:Capital fund

C Capital fund

D ProfitHint:Capital fund

Question 73Receipt and payment is a summary of

A Cash book

B Balance sheetHint:Cash book

C Trial balanceHint:Cash book

D Profit and lossHint:Cash book

Question 74

Cash paid to creditor can be worked out from

A Debtor a/c

B Creditor a/cHint:Debtor a/c

C Balance sheetHint:Debtor a/c

D None of theseHint:Debtor a/c

Question 75Share Capital in the Balance Sheet is known as

A AssetHint:Liabilities

B Liabilities

C IncomeHint:Liabilities

D ReserveHint:Liabilities

Question 76

The liability of the shareholder of a public limited company is

A UnlimitedHint:Limited

B Limited

C CompulsoryHint:Limited

D None of theseHint:Limited

Question 77Joint Stock Company is an artificial person created by

A Law

B Federal GovernmentHint:Law

C RegistrarHint:Law

D None of theseHint:Law

Question 78

In the books of consignor, the balance of consignment stock account would be shown

A As an asset in balance sheet

B As a liability in balance sheetHint:As an asset in balance sheet

C On credit side of trading accountHint:As an asset in balance sheet

D In profit and loss accountHint:As an asset in balance sheet

Question 79In the books of consignee, the expenses incurred by him on consignment are debited to

A Consignment accountHint:Consignor's account

B Cash accountHint:Consignor's account

C Consignor's account

D Consignee's accountHint:Consignor's account

Question 80

In the absence of agreement, partners shall

A Be paid salariesHint:Not be paid salaries

B Not be paid salaries

C Get more profitHint:Not be paid salaries

D Equal salariesHint:Not be paid salaries

Question 81

On the admission of a new partner, depreciation fund is transferred to

A Revaluation account

B Partner's capital accountsHint:Revaluation account

C Cash accountHint:Revaluation account

D None of theseHint:Revaluation account

Question 82

On the retirement of a partner full goodwill is credited to the accounts of

A All partners

B Only the retiring partnersHint:All partners

C Only the remaining partnersHint:All partners

D Only the creditorsHint:All partners

Question 83Unrecorded liability when paid on dissolution of a firm is debited to

A Realization account

B Partner's capital accountsHint:Realization account

C Liability accountHint:Realization account

D None of theseHint:

Realization account

Question 84

Outstanding subscription represents

A Asset

B LiabilityHint:Asset

C ExpenseHint:Asset

D Asset and expenseHint:Asset

Question 85Donation received in advance is called

A ExpenseHint:Liability

B IncomeHint:Liability

C Liability

D AssetHint:Liability

Question 86

If debit side of income and expenditure account is greater than credit side it represents

A LossHint:Deficit

B ProfitHint:Deficit

C Deficit

D IncomeHint:Deficit

Question 87Capital fund of non-trading concern is calculated

A Assets - Liabilities

B Liabilities - AssetsHint:Assets - Liabilities

C Liabilities + AssetsHint:Assets - Liabilities

D Expenditure - IncomeHint:Assets - Liabilities

Question 88

Admission fee is called

A ExpenseHint:Income

B Income

C AssetHint:Income

D LiabilityHint:Income

Question 89Consignment account is prepared by

A Consignor

B BuyerHint:

Consignor

C ConsigneeHint:Consignor

D SellerHint:Consignor

Question 90

A remuneration paid by consignor to consignee for sale of goods is called

A WagesHint:Commission

B SalaryHint:Commission

C BonusHint:Commission

D Commission

Question 91Normal loss represents

A Routine lossHint:All of these

B Natural lossHint:All of these

C Unavoidable lossHint:All of these

D All of these

Question 92

The consignee is also called

A Agent

B DebtorHint:Agent

C CreditorHint:Agent

D OwnerHint:Agent

Question 93In partnership, number of partners should not exceed than

A 15Hint:20

B 20

C 30Hint:20

D 50Hint:20

Question 94A partner who has not attained the age of maturity is called

A Junior partnerHint:Minor partner

B Senior partnerHint:Minor partner

C Minor partner

D Young partnerHint:Minor partner

Question 95Partners’ contribution to the firm is called

A ShareHint:Capital

B Capital

C DebentureHint:Capital

D AssetHint:Capital

Question 96

A profit is distributed among shareholders is called

A Dividend

B GiftHint:Dividend

C RemunerationHint:Dividend

D SalaryHint:Dividend

Question 97Depreciation is called

A Expense

B IncomeHint:Expense

C LiabilityHint:Expense

D AssetHint:Expense

Question 98

Goodwill is an

A Asset

B LiabilityHint:Asset

C ExpenseHint:Asset

D IncomeHint:Asset

Question 99The liability of members of a company is generally

A Limited

B UnlimitedHint:Limited

C ContingentHint:Limited

D OutstandingHint:Limited

Question 100

The act of sending goods by owner to agent is called as

A Consignment

B Whole sellingHint:Consignment

C Retail sellingHint:Consignment

D ProprietorshipHint:Consignment

Question 101Partners in, a partnership, collectively known as

A PartnersHint:Firm

B Firm

C AgentsHint:Firm

D ShareholdersHint:Firm

Question 102

Additional commission paid to a consignee who guarantees the payment in case of credit sale is called

A BonusHint:Del credere commission

B CommissionHint:Del credere commission

C Del credere commission

D Credit commissionHint:Del credere commission

Question 103The powers of company are governed by

A ShareholdersHint:

Memorandum of association

B Memorandum of association

C ProspectusHint:Memorandum of association

D Articles of associationHint:Memorandum of association

Question 104

Institutions with activities other than trade are known as

A Manufacturing concernsHint:Non-trading concerns

B Non-trading concerns

C Trading concernsHint:Non-trading concerns

D Banking concernsHint:Non-trading concerns

Question 105Newly admitted partner in partnership is called

A Salaried partnerHint:Incoming partner

B Incoming partner

C Junior partnerHint:Incoming partner

D Minor partnerHint:Incoming partner

Question 106

For a firm, interest on capital is

A IncomeHint:Expense

B LiabilityHint:Expense

C AssetHint:Expense

D Expense

Question 107The assets having bodily substance are termed as

A Intangible assetsHint:Tangible assets

B Tangible assets

C Current assetsHint:Tangible assets

D Fictitious assetsHint:Tangible assets

Question 108

Depreciation on machinery will be debited to

A Machinery A/CHint:Depreciation A/C

B Depreciation A/C

C Cash A/CHint:Depreciation A/C

D None of themHint:Depreciation A/C

Question 109The directors of the company are

A OwnersHint:Employees

B Employees

C DebtorsHint:Employees

D CreditorsHint:Employees

Question 110

In absence of agreement the rate of interest on

A 6% p.a

B Bank rateHint:6% p.a

C Not at allHint:6% p.a

D None of themHint:6% p.a

Question 111Normal losses due to

A AvoidableHint:Unavoidable

B Unavoidable

C ContingentHint:Unavoidable

D None of themHint:Unavoidable

Question 112

For the firm interest on capital

A IncomeHint:Expense

B AssetHint:Expense

C Expense

D LiabilityHint:Expense

Question 113Credit sale can be obtained by

A Cash bookHint:Debtors

B Debtors

C CreditorsHint:Debtors

D None of theseHint:Debtors

Question 114

Collectively partners are called

A Members

Hint:Firm

B Firm

C WorkersHint:Firm

D None of themHint:Firm

Question 115Subscription received in advance is

A An income

B An assetHint:An income

C A liabilityHint:An income

D An expenditureHint:An income

Question 116

Joint Stock Company is an artificial person created by

A LawHint:Federal Government

B Federal Government

C RegistrarHint:Federal Government

D EmployeesHint:Federal Government

Question 117Sale of old newspaper should be treated as

A Income

B ExpendituresHint:Income

C AssetHint:Income

D LiabilitiesHint:Income

Question 118

Single entry system is a mixture of

A Single entryHint:All these

B Double entryHint:All these

C No entryHint:All these

D All these

Question 119In net worth method of single entry, net profit is ascertained by

A Preparing a tradingHint:Comparing opening and closing balances of capital

B Profit and loss accountHint:Comparing opening and closing balances of capital

C Comparing opening and closing balances of capital

D None of theseHint:Comparing opening and closing balances of capital

Question 120

Opening balance of capital is ascertained by preparing

A Cash accountHint:Opening statement of affairs

B Opening statement of affairs

C Total creditors accountHint:Opening statement of affairs

D Capital accountHint:Opening statement of affairs

Question 121In accounting, consignment signifies

A Goods forwarded by a person to anotherHint:Goods forwarded by owner to his agent for the purpose of sale

B Goods forwarded from one place to anotherHint:Goods forwarded by owner to his agent for the purpose of sale

C Goods forwarded by owner to his agent for the purpose of sale

D None of theseHint:Goods forwarded by owner to his agent for the purpose of sale

Question 122

In single entry it is not possible to prepare

A Trial balance

B Trading accountHint:Trial balance

C Profit and loss accountHint:Trial balance

D Balance sheetHint:Trial balance

Question 123Consignment account is in the nature of

A Real accountHint:Nominal account

B Nominal account

C Personal accountHint:Nominal account

D None of theseHint:Nominal account

Question 124

A partner goes out of a firm due to certain event is known as

A Outgoing partner

B Junior partnerHint:Outgoing partner

C Senior partnerHint:Outgoing partner

D Minor partnerHint:Outgoing partner

Question 125Object of partnership is

A To earn profit

B Not to earn profitHint:To earn profit

C The welfare of publicHint:To earn profit

D None of theseHint:To earn profit

Question 126

A prospectus can be issued only by

A A public company

B A private companyHint:A public company

C Partnership firmHint:A public company

D None of theseHint:A public company

Question 127An ordinary partnership firm cannot have

A Less than 7Hint:Less than 2

B Less than 2

C Less than 10Hint:Less than 2

D Less than 20Hint:Less than 2

Question 128

Fixed asset is a

A CashHint:Building

B Building

C InvestmentHint:Building

D None of themHint:Building

Question 129Outstanding rent is

A AssetHint:Liability

B Liability

C Income by preparingHint:Liability

D None of themHint:Liability