Refer to MCQs for Accountancy Class 11 with Answers Chapter 1 Introduction to Accounting designed as per the latest syllabus issued by CBSE. All Multiple choice questions have been provided with solutions and have been prepared based on the expected pattern in upcoming board exams. MCQs Chapter 1 Introduction to Accounting have been prepared by our team of best accountancy teachers

Question Goodwill account is a   
(a) Personal Account.
(b) Real Account.
(c) Nominal Account.
(d) None of these.

Question. Current Liabilities include: 
(A) Bills Payable
(B) Creditors
(C) Outstanding Expenses
(D) All of the above

Question Basic function of financial accounting is to   
(a) record all business transactions.
(b) interpret financial data.
(c) assist the management.
(d) None of these.

Question  Which of the following is not a long-term liability?  A
(a) Creditors
(b) Term-loan
(c) Debentures
(d) Capital

Question Which of the following accounts has a credit balance?   
(a) Carriage Inward
(b) Discount Received
(c) Carriage Outward
(d) Discount Allowed

Question. Cash, goods or assets invested by the proprietor in the business for earning profit is called-
(a) Profit
(b) Capital
(c) Fixed assets
(d) None of these.

Question Which of the following will not be recorded in the books of account? 
(a) Sales of goods
(b) Payment of salary
(c) Quality of staff
(d) Purchase of Goods

Question  Which of the following transaction is not of financial character? 
(a) Purchase of asset on credit
(b) Purchase of asset for cash
(c) Withdrawing of money by proprietor from business
(d) Strike by employees.

Question. Which of the following limitations of accounting states that accounts may be manipulated to conceal vital facts :   
(A) Accounting is not fully exact
(B) Accounting may lead to window dressing
(C) Accounting ignores price level changes
(D) Accounting ignores qualitative elements

Question. Book – keeping is-
(a) An art
(b) A science
(c) An art and science both
(d) None of these.

Question Drawings Account is a 
(a) Personal Account.
(b) Real Account.
(c) Nominal Account.
(d) None of these.

Question  Balance of Capital Account is shown as   
(a) Capital Account.
(b) Liability Account.
(c) Revenue Account.
(d) None of these.

Question  Out of the following assets, which one is not an intangible asset?   
(a) Machinery
(b) Patents
(c) Goodwill
(d) Trade Mark

Question Which external user of accounting information is most interested in knowing the long-term solvency position of the firm?   
(a) Employees
(b) Management
(c) Bank and Financial Institutions
(D) Researchers

Question Sundry Creditors Account is a   
(a) Revenue Account.
(b) Capital Account.
(c) Liability Account.
(d) None of these.

Question. The thing which is purchased and sold in the business is called …………….
(a) Machine
(b) Furniture
(c) Goods
(d) Debtor

Question  Purchase refers to the purchase of 
(a) goods for resale.
(b) stationery for office use.
(c) assets for the factory.
(d) None of the above.

Question. If accounting information is based on facts and it is verifiable by documents it has the quality of ……   
(A) Relevance
(B) Reliability
(C) Understandability
(D) Comparability

Question Which of the following is not a qualitative characteristic of accounting information?   
(a) Reliability
(b) Understandability
(c) Comparability
(d) Materiality

Question. Current assets do not include: 
(A) Debtors
(B) Motor Car
(C) Bank Balance
(D) Prepaid Expenses

Question. Tangible Assets do not include:  A
(A) Goodwill
(B) Furniture
(C) Stock
(D) Cash

Question Which of the following is not an internal user of financial statements?   
(a) Board of Directors
(b) Managers
(c) Employees
(d) Lenders

Question  A liability arises because of 
(a) cash transactions.
(b) credit transactions.
(c) cash as well as credit transactions.
(d) None of these.

Question  The amount invested by the proprietor in a business is called 
(a) capital.
(b) cash.
(c) revenues.
(d) loan.

Question. The art of recording all business transactions in a systematic manner in a set of books is called-
(a) Accounting
(b) Book – keeping
(c) Ledger
(d) None of these.

Question. The unsold goods left at the end of the year is called ……………..
(a) Bad Debts
(b) Opening Stock
(c) Closing Stock
(d) Liabilities

Question. The term sales is used only for the sales of …… and is never used for the sale of ……. 
(A) Assets, Investments
(B) Assets, Goods
(C) Intangible Assets, Goods
(D) Goods, Assets

Question. Out of the following assets which one is NOT an intangible asset? 
(A) Patents
(B) Investments
(C) Goodwill
(D) Trademark

Question. External users of accounting information are :   
(A) Researchers
(B) Government
(C) Potential Investors
(D) All of the above

Question. The person, firm or institution who does not pay the price in cash for the goods purchased or the services received is called-
(a) Creditor
(b) Proprietor
(c) Debtor
(d)None of these.

Question  Purchase refers to the buying of 
(a) Stationery for office use.
(b) Assets for the factory.
(c) Goods for resale.
(d) Investment.

Question  Revenue from Operations refers to   
(a) Revenue earned from Operating Activities.
(b) Revenue earned from activities that are not Operating Activities.
(c) Both (a) and (b).
(d) None of the above.

Question Accounting does not show the realisable value of business. It is a/an   
(a) limitation of Accounting.
(b) advantage of Accounting.
(c) Both (a) and (b).
(d) None of these.

Question. …………… represents the excess of assets over liabilities.
(a) Capital
(b) Debtors
(c) Creditors
(d) Profit

Question3. A person who owes money to the firm is called ……. 
(A) Debtor
(B) Creditor
(C) Supplier
(D) None of these

Question. Goods means: 
(A) Commodity to be bought and sold
(B) Commodity to be bought but not to be sold
(C) Commodity to be used as an asset
(D) All of the above

Question. Ghanshyam is a furniture dealer. Which one of the following will not be recorded in his books?   
(A) Purchase of Timber for Rs.50,000
(B) Sofa set worth Rs.40,000 taken to his home
(C) Sale of household furniture for Rs.5.000
(D) Dining table of Rs.30,000 given to his friend as gift

Question. The process of recording, classifying and summarizing all business transactions in order to know the financial result is called –
(a) Book – keeping
(b)Accounting
(c) Journalizing
(d) None of these.

Question. The things or properties which helps in smooth functioning of the business and which are owned by the business are called ……………. of the business.
(a) Liabilities
(b) Capital
(c) Profit
(d) Assets

Question. Which of the following is the most relevant accounting information for taxation authorities?   
(A) Cash Balance of the firm
(B) Book Value of the Fixed Assets
(C) Credit Sales of the year
(D) Profit generated during the year

Question. The document certifying the purchase or sale of goods or any monetary transaction is called …………….
(a) Bills
(b) Receipts
(c) Voucher
(d) None of the Above

Question. Which of the following will be treated as drawings: 
(A) Withdrawing money for payment of salary to employees
(B) Withdrawing money for payment to creditors
(C) Withdrawing money from business for private expenses
(D) Withdrawing money for purchase of asset

Question. Main feature of business transaction is: 
(A) It involves an economic activity
(B) It results in a change in the financial position of the firm
(C) Change must be capable of being expressed in terms of money
(D) All of the above

Question. External users of accounting information are :
(a) Researchers      
(b) Government
(c) Tax authorities 
(d) All of the above

Question  Expenditure of revenue nature that gives benefit for more than one accounting period is categorised as 
(a) Capital Expenditure.
(b) Revenue Expenditure.
(c) Deferred Revenue Expenditure.
(d) None of these.

Question  A person who owes money to a firm against goods sold is called a 
(a) creditor.
(b) debtor.
(c) Both (a) and (b)
(d) None of these.

Question  Which of the following is revenue? 
(a) Purchases
(b) Purchases Return
(c) Sales
(d) Salary Payable

Question  Which of the following is not an expense? 
(a) Furniture
(b) Salary
(c) Rent
(d) Electricity Expenses

Question Which is the last step of accounting as a process of information? 
(a) Recording the transaction
(b) Preparation of financial statements
(c) Communication of information
(d) Analysis and interpretation of information

Question. In accounts recording is made of: 
(A) Only Financial Transactions
(B) Only Non-financial transactions
(C) Financial as well as non-financial transactions
(D) Personal transactions of the Proprietor

Question  Sale is recognised as revenue
(a) when the contract for sale is entered into.
(b) at the point of sale or performance of service.
(c) after the expiry of credit period allowed to debtors.
(d) after the money collected from the customers.

Question  The nature of accrued income is   
(a) revenue.
(b) liability.
(c) expenses.
(d) asset.

Question. Accounting is :
(a) Accounting : A Profession           
(b) Accounting : A Social Force
(c) Accounting : A Service Activity  
(d) All of the above

Question. In accounts recording is made of  :
(a) Only financial transactions
(b) Only non-financial transactions
(c) Financial and non-financial transactions
(d) Personal transactions of the proprietor

Question  Amount received or receivable against sale of goods is 
(a) revenue receipt.
(b) capital receipt.
(c) sometimes revenue receipt and sometimes capital receipt.
(d) None of these.

Question  Amount paid or payable against purchase of goods is 
(a) revenue expenditure.
(b) capital expenditure.
(c) Both (a) and (b).
(d) None of these.

Question. Internal users of accounting information are :   
(A) Potential Investors
(B) Creditors
(C) Management
(D) Employees

Question. Management Accounting :
(a) Is a clerical work
(b) Is accounting for future
(c) Is a recording technique of the management related transactions|
(d) None of the above

Question. Which of the following transactions is not of financial character  :
(a) Purchase of goods on credit
(b) Purchase of a building
(c) Payment of salaries
(d) Strike by employees

Question. Which of the following is not a sub-field of accounting?   
(A) Financial accounting
(B) Book Keeping
(C) Management accounting
(D) Cost Accounting

Question. Trade Discount is: 
(A) Which is allowed at the time of receiving the payment
(B) Which is allowed at the time of sale of goods
(C) Which is allowed both at the time of receiving payment and sale of goods
(D) Allowed in all of the above

Question. Cash Discount is: 
(A) Which is received at the time of making the payment
(B) Which is allowed at the time of sale of goods
(C) Which is received at the time of purchase of goods
(D) Which is received both at the time of making payment and purchase of goods

Question. Which is the last step of accounting as a process of information?
(a) Recording of data in the books of accounts
(b) Preparation of summaries in the form of financial statements
(c) Communication of information
(d) Analysis and interpretation of information

Question Which of the following is not a characteristic of accounting?   
(a) Recording non-monetary transactions
(b) Classifying
(c) Analysis
(d) Summarising

Question  Bank overdraft is   
(a) short-term liability.
(b) long-term liability.
(c) contingent liability.
(d) None of these.

Question  Which of the following is not a business transaction? 
(a) Bought furniture of Rs. 25,000 for business.
(b) Paid for salaries of employees, Rs. 20.000.
(c) Cash withdrawn from personal bank account, Rs. 10,000 for domestic use.
(d) All of the above.

Question. Use of common unit of measurement and common format of reporting promotes
(a) Comparability
(b) Understandability
(c) Relevance
(d) Reliability

Question. External users of accounting information are not:   
(A) Lenders
(B) Officers
(C) Employees
(D) Public

Question Cost of Goods Manufactured is determined by   
(a) Financial Accounting.
(b) Cost Accounting.
(c) Management Accounting.
(d) Human Resource Accounting.

Question. Which of the following is not a business transaction?
(a) Bought furniture of Rs. 10,000 for business
(b) Paid for salaries of employees Rs. 5,000
(c) Paid sons fees from her personal bank account Rs. 20,000
(d) Paid sons fees from the business Rs. 2,000

Question. Which is the last step of accounting as a process of information?
(a) Preparation of financial transaction
(b) Analysis of information
(c) Communication of information
(d) Recording the transaction

Question. Sale is also known as ________
(a) Revenue from operations
(b) Profit
(c) Cost of goods sold
(d) Income

Question. Book-keeping is mainly concerned with :   
(A) Recording of financial data 
(B) Designing the systems of summarising the recorded data
(C) Interpreting the data for internal and external users
(D) Preparation of financial statements of the business enterprise

Question. Which of the following is a limitation of accounting?
(a) Facilitates loan
(b) Replacing Memory
(c) Window Dressing
(d) Evidence in court

Question. A liability is a current liability if it satisfies
(a) It is expected to be settled in the company’s normal operating cycle
(b) It is held primarily for the purpose of being traded
(c) It is due to settled within 12 months after reporting date
(d) All of these

Question Book Keeping is concerned with 
(a) recording financial data relating to business operations.
(b) designing for systems recording, classifying and summarising recorded data.
(c) interpreting data for internal and external users.
(d) All of the above.

Question. Which of the following transactions is not of financial character?   
(A) Purchase of asset on credit
(B) Purchase of asset for cash
(C) Withdrawing of money by
(D) Strike by Employees proprietor from business

Question  Which of the following is a business transaction? 
(a) Goods purchased on credit.
(b) An employee being dismissed.
(c) Proprietor purchasing a car for own use.
(d) Sale of personal asset by the proprietor.

Question  The nature of capital is 
(a) an asset.
(b) a liability.
(c) an income.
(d) an expense.

Question. The expense that has been incurred but has not been paid are called
(a) Prepaid expenses
(b) Outstanding expenses
(c) Loss
(d) Revenue

Question. The person who makes the investment and bears all the risks connected with the business is called
(a) Proprietor
(b) Debtor
(c) Debenture holder
(d) Creditor

Question Which of the following is a limitation of accounting?   
(a) Assistance to Management
(b) Replaces Memory
(c) Unrealistic Information
(d) Evidence in Court

Question. Amount paid in advance for a particulars expense is known as_____
(a) Outstanding expense
(b) Prepaid expense|
(c) Both
(d) None

Question. Which of the following transactions is of a financial character and will be recorded in the business?   
(A) Goods taken from the business by the proprietor for her personal use
(B) Interviewing the candidates for employment
(C) Sale of Household furniture Rs.5,000
(D) Received an order for sales of goods

Question. A business can make contribution to the society & environment by
i) Using foreign raw materials in production
ii) Using local raw materials in production
iii) Giving scholarship among poor & meritorious students
Which one is correct?
(a) ii
(b) ii & iii
(c) i & ii
(d) i & iii

Question  Which of the following is an asset? 
(a) Machinery
(b) Purchases
(c) Sales Return
(d) Interest Received

Question. How the desired result can be achieved of Business organization?
(a) By purchasing assets
(b) By taking correct decision
(c) By controlling Expenses
(d) By purchasing Goods 

Question. Expected profit of an organization can be achieved by –
(a) Increasing Assets
(b) Decreasing Liabilities
(c) Controlling Expenditures
(d) Increasing Expenditure

Question Transactions are posted into Ledger Account from   
(a) Vouchers.
(b) Journal book,
(c) Bank Statement.
(d) None of these.

Question. Whose objective is to record transactions correctly?
(a) Business’s
(b) Debtors and creditors
(c) Recording Transactions
(d) Accounting’s

Question Book Keeping and Accounting   
(a) means same and are used interchangeably.
(b) does not mean same and are not used interchangeably.
(e) means both (a) and (b).
(d) None of the above.

Question Trade Discount allowed 
(a) is shown separately in the books of account.
(b) is not shown separately in the books of account.
(c) can be shown either separately or deducted from purchase cost.
(d) None of the above.

Question. Last step of accounting process is :   
(A) Provide information to various parties who are interested in business enterprise.
(B) Record transactions in the books.
(C) To make summary in the form of financial statements.
(D) To classify the transactions under separate heads in the ledger.

Question Which qualitative characteristic of accounting information is reflected when accounting information is clearly presented?   
(a) Reliability
(b) Relevance
(c) Comparability
(d) Understandability

Question. Science & Technology –
(a) Reduce Accounting
(b) Makes Accounting expensive
(c) Restrict the movement of Accounting
(d) Improve Accounting

Question. The unsold merchandise of business on particular day is called
(a) Purchase Return
(b) Stock / Inventory
(c) Bad Debts
(d) Sales Return

Question Capital Account is a   
(a) Natural Personal Account.
(b) Artificial Personal Account.
(c) Representative Personal Account.
(d) None of these.

Question  Which of the following are goods? 
(a) Machines manufactured for sale.
(b) Furniture purchased for sale.
(c) Books and stationery purchased by a book seller.
(d) All of the above.

Question. Any written evidence in support of business transaction is called
(a) Cash memo
(b) Invoice
(c) Voucher
(d) None of these

Question. Which one of the following is not an objective of accounting?   
(A) To provide information about the assets, liabilities and capital of the enterprise.
(B) To provide information about the private assets and liabilities of the proprietor.
(C) To maintain records of the business
(D) To provide information regarding the profit and loss of the enterprise.

Question Sales Account is a   
(a) Revenue Account.
(b) Liability Account.
(c) Capital Account.
(d) None of these.

Question. Which of the following is the Capital expenditure?   
(A) Wages paid for repair of building
(B) Wages paid for white washing of building
(C) Wages paid for construction of building
(D) Wages paid for cleaning of building

Question. Consider the following items:   
1. Prepaid Salary
2. Accrued Interest (Receivable)
3. Loan (Short term)
4. Bank Overdraft
Current Liability would include:
(A) 1, 2, 3, 4
(B) 2,3,4
(C) 4, 3, 1
(D) 3, 4

Question. The complete process of accounting is called
(a) Journalizing
(b) Posting
(c) Summary
(d) Accounting Cycle

Question. Which of the following is capital expenditure? 
(A) Wages
(B) Wages paid for building construction
(C) Repair expenses of building
(D) Advertisement Expenses

Question Outstanding salary is a   
(a) Real Account.
(b) Personal Account.
(c) Nominal Account.
(d) None of these.

Question. Current Liabilities do not include: 
(A) Bills Payable
(B) Creditors
(C) Outstanding Exp.
(D) Debentures

Question An increase in which of the following account will be recorded on the debit side?   
(a) Building Account.
(b) Capital Account.
(c) Bills Payable Account.
(d) Rent Received Account.

Question. All events of business are measured in terms of
(a) Money
(b) Ethical Value
(c) Units
(d) Goods

Question Salaries Account is   
(a) an Expense Account.
(b) an Asset Account.
(c) a Liability Account.
(d) None of these.

Question  A person to whom money is owed by a firm for purchase of goods is called a 
(a) creditor.
(b) debtor.
(c) Both (a) and (b)
(d) None of these.

Question  Stock is valued at   
(a) Cost or Net Realisable Value (Market Value), whichever is lower.
(b) Cost or Net Realisable Value (Market Value), whichever is higher.
(c) Cost.
(d) Net Realisable Value (Market Value).

Question Sale of goods to Ram for cash is debited to 
(a) Ram.
(b) Cash A/c.
(c) Sales A/c.
(d) None of these.

Question Which of the following transactions will not be recorded in the books of account? 
(a) Purchased a LCD for personal use, paying the amount from personal bank account.
(b) Purchased machinery for manufacture.
(c) Purchased machinery for resale.
(d) Paid salaries and wages.

Question. Which concept represents the assumption of long period existence of a business
(a) Dual Aspect Concept
(b) Materiality Concept
(c) Going Concern Concept
(d) Matching Concept

Question. At the end of financial year, during which sale of goods was worth Rs.5,00,000, the closing stock is valued at Rs.40,000. This is   
(A) An event
(B) A transaction
(C) Both an event as well as transaction
(D) None of (A) and (B)

Question Capital is   
(a) internal liability.
(b) external liability.
(c) internal as well as external liability.
(d) None of these.

Question Withdrawal of cash from business by the proprietor is credited to 
(a) Drawings A/c.
(b) Capital A/c,
(c) Cash A/c.
(d) Profit and Loss A/c.

Question Qualitative characteristic of Accounting includes   
(а) Reliability and Relevance.
(b) Understandability and Comparability.
(c) Both (a) and (b).
(d) None of the above.

Question. An activity under-taken for the purpose of earning profit is called
(a) Dealing
(b) Performance
(c) Business
(d) Duties

Question Accounting   
(a) includes Book Keeping.
(b) does not include Book Keeping.
(c) may or may not include Book Keeping.
(d) None of these.

Question  Credit means 
(a) an increase in asset.
(b) an increase in liability.
(c) a decrease in liability.
(d) a decrease in proprietor’s equity.

Question  Which of the following is not a fixed asset? 
(a) Building
(b) Plant and Machinery
(c) Balance with bank
(d) Goodwill

Question  Which of the following is a liability? 
(a) Furniture
(b) Rent Payable
(c) Interest Received
(d) Stock

Question. Which of the following is not a limitation of accounting?   
(A) Based on accounting conventions
(B) Evidence in Legal Matters
(C) Incomplete Information
(D) Omission of Qualitative Informations

Question. Any dealing between two persons or things is called
(a) Transaction
(b) Introduction
(c) Meeting
(d) Seminar

Question. To control the cost of production and distribution is the main field of:
(a) Financial Accounting
(b) Cost Accounting
(c) Auditing
(d) None of these

Question Which of the following is not a business transaction? 
(a) Purchase of goods for resale amounted to Rs. 50,000
(b) Paid salaries and wages amounted to Rs. 10,000
(c) Paid rent for office premises Rs. 5,000
(d) Purchased a LCD for personal use

Question Bank account is a   
(ci) Personal Account.
(b) Real Account,
(c) Nominal Account.
(d) None of these.

Question  Goods taken by the proprietor for personal use is 
(a) Sale.
(b) Drawings.
(c) Purchase.
(d) None of these.

Question  Goodwill is an 
(a) Tangible Asset. 
(b) Intangible Asset.
(c) Current Asset.
(d) Fictitious Asset.

Question. Modern system of bookkeeping is
(a) Single entry system
(b) Double entry system
(c) British system
(d) None of these

Question Debit means   
(a) an increase in asset.
(b) an increase in liability.
(c) an increase in the proprietor’s equity.
(d) a decrease in asset.

Question Nominal Accounts are related to:   
(a) Assets and Liabilities.
(b) Expenses and Revenue.
(c) Debtors and Creditors.
(d) None of these.

Question. Purchases refers to the buying of 
(A) Stationery for office use
(B) Assets for the factory
(C) Goods of resale
(D) Investment

Question. Promise to pay a certain amount is called
(a) Account Payable
(b) Notes Payable
(c) Amount Payable
(d) Discount Payable