Principles of Accounting Objective Type QuestionsQuestion 1

Depreciation of assets is due toADecrease in value of goodsHint:Wear and tear of assets

BWear and tear of assets

CPrices fluctuationsHint:Wear and tear of assets

DAll of theseHint:Wear and tear of assets

Question 2

In which method depreciation is reduced year to yearAStraight line methodHint:Diminishing balance method

BOriginal cost methodHint:Diminishing balance method

CDiminishing balance method

DNone of theseHint:Diminishing balance method

Question 3

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

BRevenue profitHint:Capital profit

CAn expenditureHint:Capital profit

DNone of theseHint:Capital profit

Question 4

Maximum number of shareholders in a private limited companyA20Hint:50

B70Hint:50

C50

D10Hint:50

Question 5

The share issued at printed price is calledAIssued at discountHint:Issued at par

BIssued at premiumHint:Issued at par

CIssued at par

DAll of these are trueHint:Issued at par

Question 6

Artificial person created by law is calledACombinationHint:Company

BCompany

CCo-operative societyHint:Company

DPartnershipHint:Company

Question 7

Receipts and payments account showsAIncome and expenditureHint:Cash receipts and payments

BCash receipts and payments

CAssets and liabilitiesHint:Cash receipts and payments

DCapital and revenueHint:Cash receipts and payments

Question 8

Income and expenditure account revealsACash in handHint:Surplus or deficiency

BSurplus or deficiency

CCapital accountHint:Surplus or deficiency

DDebtors accountHint:Surplus or deficiency

Question 9

Debtors accountAIncomplete and unscientific

BComplete and scientificHint:Incomplete and unscientific

CComplete and unscientificHint:Incomplete and unscientific

DIncomplete and scientificHint:Incomplete and unscientific

Question 10

In single entry system, it is not possible to prepareATrial balance

BBalance sheetHint:Trial balance

CReceipts and payments accountHint:Trial balance

DPersonal accountHint:Trial balance

Question 11

The consignee acts entirely on behalf ofADebtorHint:Principal

BCreditorHint:Principal

CCustomerHint:Principal

DPrincipal

Question 12

The total amount of capital of a company is divided into small units is ailedABondsHint:Shares

BChequesHint:Shares

CShares

DReservesHint:Shares

Question 13

Non-trading concerns prepareAProfit & loss accountHint:Income & expenditure account

BManufacturing accountHint:Income & expenditure account

CTrading accountHint:Income & expenditure account

DIncome & expenditure account

Question 14

Single entry system cannot be maintained byASole ownerHint:Joint stock company

BPartnershipHint:Joint stock company

CJoint stock company

DAll of theseHint:Joint stock company

Question 15

Under diminishing balance method depreciation is calculated onAOriginal costHint:Written down value

BWritten down value

CThe scrap valueHint:Written down value

DMarket valueHint:Written down value

Question 16

A company is formed byAOwnersHint:Promoters

BGovernmentHint:Promoters

CDirectorsHint:Promoters

DPromoters

Question 17

The face value of share is calledABook valueHint:Par value

BPar value

CMarket valueHint:Par value

DNone of theseHint:Par value

Question 18

The written agreement of partnership is calledAPartnership deed

BArticles of associationHint:Partnership deed

CMemorandum of associationHint:Partnership deed

DCertificate of incorporationHint:Partnership deed

Question 19

The persons who take the risk on the issue of shares are known asADirectorsHint:Underwriters

BPromotersHint:Underwriters

CPublicHint:Underwriters

DUnderwriters

Question 20

Goodwill is due toARepute of partnersHint:All of these

BManagementHint:All of these

CLocationHint:All of these

DAll of these

Question 21

Amount received from any source, by way of gift is treated asASubscriptionHint:Donation

BLegacyHint:Donation

CDonation

DNone of theseHint:Donation

Question 22

Non-trading institutions prepareAProfit & Loss A/cHint:Income & expenditure A/c

BManufacturing A/cHint:Income & expenditure A/c

CIncome & expenditure A/c

DNone of theseHint:Income & expenditure A/c

Question 23

Receipts and payments account isANominal accountHint:Real account

BReal account

CPersonal accountHint:Real account

DAn expense accountHint:Real account

Question 24

Goods sent on consignment should be debited by consignor toAConsignment account

BGoods sent on consignment accountHint:Consignment account

CConsignor accountHint:Consignment account

DConsignee accountHint:Consignment account

Question 25

In the absence of an agreement, profits and losses are divided by partners is the ratio ofACapitalHint:Equally

BTime devoted by each partnerHint:Equally

CEqually

DTheir drawingsHint:Equally

Question 26

A new partner may be admitted to partnershipAWith the consent of all the old partners

BWithout the consent of old partnersHint:With the consent of all the old partners

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

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

Question 27

On the retirement of a partner, a reserve should be transferred to the capital accounts ofAAll partners in old profit sharing ratio

BRemaining partners in new profit sharing ratioHint:All partners in old profit sharing ratio

CRemaining partners in old profit sharing ratioHint:All partners in old profit sharing ratio

DNeither 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 ofAPersonal liabilitiesHint:Third party liabilities

BFirm's liabilitiesHint:Third party liabilities

CThird party liabilities

DNone of theseHint:Third party liabilities

Question 29

Non-profit earning companies are mostly formed asACompanies limited by sharesHint:Companies limited by guarantee

BCompanies limited by guarantee

CUnlimited companiesHint:Companies limited by guarantee

DPrivate limited companiesHint:Companies limited by guarantee

Question 30

In case of private company maximum number of members isASixHint:Fifty

BTenHint:Fifty

CSevenHint:Fifty

DFifty

Question 31

The gradual decrease in the value of the fixed assets due to its use in business is calledADepreciation

BDepletionHint:Depreciation

CAmortizationHint:Depreciation

DFluctuationHint:Depreciation

Question 32

The process of writing of intangible assets is calledADepreciationHint:Amortization

BFluctuationHint:Amortization

CDepletionHint:Amortization

DAmortization

Question 33

A private company has to provide in its articlesAFor restricting transfer of sharesHint:For prohibiting transfer of shares

BFor prohibiting transfer of shares

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

DNone of theseHint:For prohibiting transfer of shares

Question 34

Debenture holders areACreditors

BDebtorsHint:Creditors

CCustomersHint:Creditors

DDebtors of the companyHint:Creditors

Question 35

The amount of depreciation charged on machinery will be debited toAMachinery accountHint:Depreciation account

BDepreciation account

CCash accountHint:Depreciation account

DReserve accountHint:Depreciation account

Question 36

Sale of old newspapers should be treated asAIncome

BExpensesHint:Income

CAssetHint:Income

DLiabilityHint:Income

Question 37

Consignor is also calledAAgentHint:Principal

BDebtorHint:Principal

CCreditorHint:Principal

DPrincipal

Question 38

Godown rent paid by consignee is debited toAConsignee's A/cHint:Consignment A/c

BConsignor's A/cHint:Consignment A/c

CConsignment A/c

DNone of theseHint:Consignment A/c

Question 39

Income and expenditure account record the transactionARevenue nature

BCapital natureHint:Revenue nature

CThese bothHint:Revenue nature

DNone of themHint:Revenue nature

Question 40

Sinking fund investment isAAsset

BLiabilityHint:Asset

CIncomesHint:Asset

DNone of themHint:Asset

Question 41

Discount on issue of shares is a loss ofARevenueHint:Capital

BNone of themHint:Capital

CCapital

DExpenditureHint:Capital

Question 42

In the absence of agreement, the rate of interest on capital isABank rateHint:6%

BNot at allHint:6%

C6%

DNone of theseHint:6%

Question 43

The asset not depreciable isAGoodwillHint:Land

BLand

CPatentHint:Land

DOffice 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 beA8:5Hint:5:11

B5:8Hint:5:11

C5:11

D1 1 :5Hint:5:11

Question 45

In a private company, minimum directors should beA2

B3Hint:2

C4Hint:2

DMore than 4Hint:2

Question 46

Partnership is formed under the Act ofA1984Hint:1932

B1913Hint:1932

C1932

D1962Hint:1932

Question 47

In Private Limited Company minimum numbers of share-holders areASix

BSevenHint:Two

CTenHint:Two

DTwo

Question 48

Assets contributed by the partner are recorded atAFace valueHint:Agreed value

BBook valueHint:Agreed value

CAgreed value

DNone of theseHint:Agreed value

Question 49

Income and expenditure account is prepared onACash basisHint:Accrual basis

BAccrual basis

CBoth basisHint:Accrual basis

DNone of theseHint:Accrual basis

Question 50

Realization account is aANominal A/C

BReal A/CHint:Nominal A/C

CPersonal A/CHint:Nominal A/C

DCash A/CHint:Nominal A/C

Question 51

The activities of non-trading are managed byADirectorHint:Member

BMember

CGoverning BodyHint:Member

DPromoterHint:Member

Question 52

Bad debts written off should be credited toABad debts accountHint:Debtor account

BCreditor accountHint:Debtor account

CDebtor account

DSale accountHint:Debtor account

Question 53

Del credere commission is calculated onATotal sale

BCash saleHint:Total sale

CCredit saleHint:Total sale

DNone of theseHint:Total sale

Question 54

Memorandum of association is prepared byASole proprietorshipHint:Joint stock company

BPartnershipHint:Joint stock company

CJoint stock company

DAll of theseHint:Joint stock company

Question 55

In consignment relation between consignor and consignee isADebtor and creditorHint:Principal and agent

BBuyer and sellerHint:Principal and agent

CPrincipal and agent

DAll of theseHint:Principal and agent

Question 56

The minimum number of members in public limited company isA2Hint:7

B7

C10Hint:7

D20Hint:7

Question 57

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

BDouble entry systemHint:Single entry system

COriginal entry systemHint:Single entry system

DNone of theseHint:Single entry system

Question 58

Due to fluctuation in the market price the value of an asset mayAIncreaseHint:Not change

BDecreaseHint:Not change

CNot change

DAll of theseHint:Not change

Question 59

Depreciation is provided forAReplacement of the assetHint:Both

BCalculation of true profitHint:Both

CBoth

DNone of theseHint:Both

Question 60

In Pakistan, joint stock companies are formed, under ordinance ofA1973Hint:1962

B1990Hint:1962

C1962

D1984Hint:1962

Question 61

Liability of partners in partnership isAUnlimited

BLimitedHint:Unlimited

CUp to their capitalHint:Unlimited

DNone of theseHint:Unlimited

Question 62

For a firm, interest on capital isAIncomeHint:Expenses

BExpenses

CAssetHint:Expenses

DNone of theseHint:Expenses

Question 63

Loss by an accident is example ofANormal lossHint:Abnormal loss

BNormal loss and abnormal lossHint:Abnormal loss

CAbnormal loss

DNone of theseHint:Abnormal loss

Question 64

A prospectus can be issued only byAA public limited company

BA private companyHint:A public limited company

CPartnership firmHint:A public limited company

DNone of theseHint:A public limited company

Question 65

Equity shareholders are of the companyACreditorsHint:Owners

BOwners

CCustomersHint:Owners

DDebtorsHint:Owners

Question 66

Share application account is the nature ofAReal accountHint:Personal account

BPersonal account

CNominal accountHint:Personal account

DIncome accountHint:Personal account

Question 67

Under straight line method of depreciation, itAIncreases every yearHint:Is constant every year

BIs constant every year

CDecreases every yearHint:Is constant every year

DNone of theseHint:Is constant every year

Question 68

Statement of assets and liabilities prepared under single entry system is calledABalance sheetHint:Statement of affairs

BProfit & loss accountHint:Statement of affairs

CStatement of affairs

DIncome statementHint:Statement of affairs

Question 69

Trial balance is not obtained inADouble entry systemHint:Single entry system

BModern entry systemHint:Single entry system

CSingle entry system

DNone of theseHint:Single entry system

Question 70

The institutions which deal in, activities other than trade are calledATrading concernsHint:Non-trading concerns

BManufacturing concernsHint:Non-trading concerns

CNon-trading concerns

DNone of theseHint:Non-trading concerns

Question 71

The figure of the credit purchase can be worked outATotal debtor accountHint:Total creditor account

BTotal creditor account

CCash bookHint:Total creditor account

DBalance sheetHint:Total creditor account

Question 72

The excess of total assets over total liabilities of a concern is calledASurplusHint:Capital fund

BDeficitHint:Capital fund

CCapital fund

DProfitHint:Capital fund

Question 73

Receipt and payment is a summary ofACash book

BBalance sheetHint:Cash book

CTrial balanceHint:Cash book

DProfit and lossHint:Cash book

Question 74

Cash paid to creditor can be worked out fromADebtor a/c

BCreditor a/cHint:Debtor a/c

CBalance sheetHint:Debtor a/c

DNone of theseHint:Debtor a/c

Question 75

Share Capital in the Balance Sheet is known asAAssetHint:Liabilities

BLiabilities

CIncomeHint:Liabilities

DReserveHint:Liabilities

Question 76

The liability of the shareholder of a public limited company isAUnlimitedHint:Limited

BLimited

CCompulsoryHint:Limited

DNone of theseHint:Limited

Question 77

Joint Stock Company is an artificial person created byALaw

BFederal GovernmentHint:Law

CRegistrarHint:Law

DNone of theseHint:Law

Question 78

In the books of consignor, the balance of consignment stock account would be shownAAs an asset in balance sheet

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

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

DIn profit and loss accountHint:As an asset in balance sheet

Question 79

In the books of consignee, the expenses incurred by him on consignment are debited toAConsignment accountHint:Consignor's account

BCash accountHint:Consignor's account

CConsignor's account

DConsignee's accountHint:Consignor's account

Question 80

In the absence of agreement, partners shallABe paid salariesHint:Not be paid salaries

BNot be paid salaries

CGet more profitHint:Not be paid salaries

DEqual salariesHint:Not be paid salaries

Question 81

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

BPartner's capital accountsHint:Revaluation account

CCash accountHint:Revaluation account

DNone of theseHint:Revaluation account

Question 82

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

BOnly the retiring partnersHint:All partners

COnly the remaining partnersHint:All partners

DOnly the creditorsHint:All partners

Question 83

Unrecorded liability when paid on dissolution of a firm is debited toARealization account

BPartner's capital accountsHint:Realization account

CLiability accountHint:Realization account

DNone of theseHint:Realization account

Question 84

Outstanding subscription representsAAsset

BLiabilityHint:Asset

CExpenseHint:Asset

DAsset and expenseHint:Asset

Question 85

Donation received in advance is calledAExpenseHint:Liability

BIncomeHint:Liability

CLiability

DAssetHint:Liability

Question 86

If debit side of income and expenditure account is greater than credit side it representsALossHint:Deficit

BProfitHint:Deficit

CDeficit

DIncomeHint:Deficit

Question 87

Capital fund of non-trading concern is calculatedAAssets - Liabilities

BLiabilities - AssetsHint:Assets - Liabilities

CLiabilities + AssetsHint:Assets - Liabilities

DExpenditure - IncomeHint:Assets - Liabilities

Question 88

Admission fee is calledAExpenseHint:Income

BIncome

CAssetHint:Income

DLiabilityHint:Income

Question 89

Consignment account is prepared byAConsignor

BBuyerHint:Consignor

CConsigneeHint:Consignor

DSellerHint:Consignor

Question 90

A remuneration paid by consignor to consignee for sale of goods is calledAWagesHint:Commission

BSalaryHint:Commission

CBonusHint:Commission

DCommission

Question 91

Normal loss representsARoutine lossHint:All of these

BNatural lossHint:All of these

CUnavoidable lossHint:All of these

DAll of these

Question 92

The consignee is also calledAAgent

BDebtorHint:Agent

CCreditorHint:Agent

DOwnerHint:Agent

Question 93

In partnership, number of partners should not exceed thanA15Hint:20

B20

C30Hint:20

D50Hint:20

Question 94

A partner who has not attained the age of maturity is calledAJunior partnerHint:Minor partner

BSenior partnerHint:Minor partner

CMinor partner

DYoung partnerHint:Minor partner

Question 95

Partners contribution to the firm is calledAShareHint:Capital

BCapital

CDebentureHint:Capital

DAssetHint:Capital

Question 96

A profit is distributed among shareholders is calledADividend

BGiftHint:Dividend

CRemunerationHint:Dividend

DSalaryHint:Dividend

Question 97

Depreciation is calledAExpense

BIncomeHint:Expense

CLiabilityHint:Expense

DAssetHint:Expense

Question 98

Goodwill is anAAsset

BLiabilityHint:Asset

CExpenseHint:Asset

DIncomeHint:Asset

Question 99

The liability of members of a company is generallyALimited

BUnlimitedHint:Limited

CContingentHint:Limited

DOutstandingHint:Limited

Question 100

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

BWhole sellingHint:Consignment

CRetail sellingHint:Consignment

DProprietorshipHint:Consignment

Question 101

Partners in, a partnership, collectively known asAPartnersHint:Firm

BFirm

CAgentsHint:Firm

DShareholdersHint:Firm

Question 102

Additional commission paid to a consignee who guarantees the payment in case of credit sale is calledABonusHint:Del credere commission

BCommissionHint:Del credere commission

CDel credere commission

DCredit commissionHint:Del credere commission

Question 103

The powers of company are governed byAShareholdersHint:Memorandum of association

BMemorandum of association

CProspectusHint:Memorandum of association

DArticles of associationHint:Memorandum of association

Question 104

Institutions with activities other than trade are known asAManufacturing concernsHint:Non-trading concerns

BNon-trading concerns

CTrading concernsHint:Non-trading concerns

DBanking concernsHint:Non-trading concerns

Question 105

Newly admitted partner in partnership is calledASalaried partnerHint:Incoming partner

BIncoming partner

CJunior partnerHint:Incoming partner

DMinor partnerHint:Incoming partner

Question 106

For a firm, interest on capital isAIncomeHint:Expense

BLiabilityHint:Expense

CAssetHint:Expense

DExpense

Question 107

The assets having bodily substance are termed asAIntangible assetsHint:Tangible assets

BTangible assets

CCurrent assetsHint:Tangible assets

DFictitious assetsHint:Tangible assets

Question 108

Depreciation on machinery will be debited toAMachinery A/CHint:Depreciation A/C

BDepreciation A/C

CCash A/CHint:Depreciation A/C

DNone of themHint:Depreciation A/C

Question 109

The directors of the company areAOwnersHint:Employees

BEmployees

CDebtorsHint:Employees

DCreditorsHint:Employees

Question 110

In absence of agreement the rate of interest onA6% p.a

BBank rateHint:6% p.a

CNot at allHint:6% p.a

DNone of themHint:6% p.a

Question 111

Normal losses due toAAvoidableHint:Unavoidable

BUnavoidable

CContingentHint:Unavoidable

DNone of themHint:Unavoidable

Question 112

For the firm interest on capitalAIncomeHint:Expense

BAssetHint:Expense

CExpense

DLiabilityHint:Expense

Question 113

Credit sale can be obtained byACash bookHint:Debtors

BDebtors

CCreditorsHint:Debtors

DNone of theseHint:Debtors

Question 114

Collectively partners are calledAMembersHint:Firm

BFirm

CWorkersHint:Firm

DNone of themHint:Firm

Question 115

Subscription received in advance isAAn income

BAn assetHint:An income

CA liabilityHint:An income

DAn expenditureHint:An income

Question 116

Joint Stock Company is an artificial person created byALawHint:Federal Government

BFederal Government

CRegistrarHint:Federal Government

DEmployeesHint:Federal Government

Question 117

Sale of old newspaper should be treated asAIncome

BExpendituresHint:Income

CAssetHint:Income

DLiabilitiesHint:Income

Question 118

Single entry system is a mixture ofASingle entryHint:All these

BDouble entryHint:All these

CNo entryHint:All these

DAll these

Question 119

In net worth method of single entry, net profit is ascertained byAPreparing a tradingHint:Comparing opening and closing balances of capital

BProfit and loss accountHint:Comparing opening and closing balances of capital

CComparing opening and closing balances of capital

DNone of theseHint:Comparing opening and closing balances of capital

Question 120

Opening balance of capital is ascertained by preparingACash accountHint:Opening statement of affairs

BOpening statement of affairs

CTotal creditors accountHint:Opening statement of affairs

DCapital accountHint:Opening statement of affairs

Question 121

In accounting, consignment signifiesAGoods forwarded by a person to anotherHint:Goods forwarded by owner to his agent for the purpose of sale

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

CGoods forwarded by owner to his agent for the purpose of sale

DNone of theseHint:Goods forwarded by owner to his agent for the purpose of sale

Question 122

In single entry it is not possible to prepareATrial balance

BTrading accountHint:Trial balance

CProfit and loss accountHint:Trial balance

DBalance sheetHint:Trial balance

Question 123

Consignment account is in the nature ofAReal accountHint:Nominal account

BNominal account

CPersonal accountHint:Nominal account

DNone of theseHint:Nominal account

Question 124

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

BJunior partnerHint:Outgoing partner

CSenior partnerHint:Outgoing partner

DMinor partnerHint:Outgoing partner

Question 125

Object of partnership isATo earn profit

BNot to earn profitHint:To earn profit

CThe welfare of publicHint:To earn profit

DNone of theseHint:To earn profit

Question 126

A prospectus can be issued only byAA public company

BA private companyHint:A public company

CPartnership firmHint:A public company

DNone of theseHint:A public company

Question 127

An ordinary partnership firm cannot haveALess than 7Hint:Less than 2

BLess than 2

CLess than 10Hint:Less than 2

DLess than 20Hint:Less than 2

Question 128

Fixed asset is aACashHint:Building

BBuilding

CInvestmentHint:Building

DNone of themHint:Building

Question 129

Outstanding rent isAAssetHint:Liability

BLiability

CIncome by preparingHint:Liability

DNone of themHint:Liability