1. Double entry system refers to

(a) entry in two sets of books
(b) entry for two aspects of the transaction
(c) entry at two dates
(d) none these.



2. Withdrawals by the proprietor would

(a) reduce owner’s equity and increase liability 
(b) reduce assets and increase liabilities
(c) reduce both assets and owner’s equity
(d) no change.


3. Which of the following changes would constitute valid accounting transactions

(a) increase in a liability, increase in an asset
(b) increase in an asset decrease in proprietorship
(c) increase in a liability, decrease in an asset
(d) all of the above.



4. A business transaction affects

(a) at least one account 
(b) maximum of three accounts.
(c) maximum of two accounts 
(d) at least two account 


 5 . Credit signifies

(a) increase in assets 
(b) increase in liabilities
(c) decrease in capital 
(d) none of these.



6. In accounting, transactions and events which are of ———— are recorded.

(a) Financial nature 
(b) Quantitative nature
(c) Qualitative nature 
(d) None of these



7. The objective of accounting information is to provide ——— review of the business.

(a) correct 
(b) true and fair
(c) fair only 
(d) none of these



8. Where ———— ends ———— begins.

(a) book-keeping and accounting
(b) accounting and book-keeping
(c) transaction and accounting
(d) none of these



9. The person to whom goods are sold on credit is known as —————.

(a) creditor 
(b) debtor
(c) borrower 
(d) none of these



10. The person from who goods are bought on credit is known as ———.

(a) creditor 
(b) debtor
(c) borrower 
(d) none of these




More MCQs on Financial Accounting