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Principles of Accounting MCQs

Principles of Accounting MCQs cover the basic concepts of recording and reporting business transactions, including capital, drawings, assets, liabilities, income and the double-entry system. They help commerce students, accounting job applicants and banking test candidates. Every question shows its correct answer instantly, so you can check your understanding of each accounting term.

Question 01 Principles of Accounting

According to the historical cost concept, at what amount is an asset originally recorded in the books?

Correct answer B. The price paid to acquire it

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Question 02 Principles of Accounting

A business has total assets of Rs 500,000 and total liabilities of Rs 180,000. What is the owner’s capital?

Correct answer D. Rs 320,000

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Question 03 Principles of Accounting

Which accounting concept treats a business as separate and distinct from its owner?

Correct answer B. Business entity concept

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Question 04 Principles of Accounting

Which accounting concept assumes that a business will continue to operate for the foreseeable future?

Correct answer B. Going concern concept

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Question 05 Principles of Accounting

Which accounting principle requires that likely losses be provided for but expected profits not be recorded until realised?

Correct answer C. Prudence (conservatism)

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Question 06 Principles of Accounting

Which accounting concept requires expenses to be recorded in the same period as the revenues they help to earn?

Correct answer B. Matching concept

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Question 07 Principles of Accounting

Which accounting concept means that only events that can be expressed in monetary terms are recorded?

Correct answer C. Money measurement concept

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Question 08 Principles of Accounting

An owner starts the year with capital of Rs 200,000, introduces further capital of Rs 20,000, earns a net profit of Rs 50,000 and withdraws Rs 30,000. What is the closing capital?

Correct answer C. Rs 240,000

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Question 09 Principles of Accounting

Which accounting concept states that every transaction has two equal and opposite effects?

Correct answer D. Dual aspect concept

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Question 10 Principles of Accounting

Goods costing Rs 60,000 are sold on credit for Rs 75,000. By how much does the owner’s capital increase?

Correct answer D. Rs 15,000

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Question 11 Principles of Accounting

What is the systematic recording and maintenance of the books of account called?

Correct answer C. Book Keeping

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Question 12 Principles of Accounting

What is the art of recording, classifying and summarising financial transactions in a systematic way called?

Correct answer B. Accounting

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Question 13 Principles of Accounting

What is the systematic recording of financial transactions in the books called?

Correct answer C. Bookkeeping

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Question 14 Principles of Accounting

What are goods returned by customers called?

Correct answer B. Sales return

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Question 15 Principles of Accounting

What is the modern system of bookkeeping called?

Correct answer A. Double entry system

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Question 16 Principles of Accounting

What is the person who buys goods on credit called?

Correct answer C. Debtor

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Question 17 Principles of Accounting

What does the term ‘double entry’ mean?

Correct answer C. Entry for two aspects of the transaction

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Question 18 Principles of Accounting

How is discount received classified?

Correct answer D. Revenue

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Question 19 Principles of Accounting

What are the obligations of a business called?

Correct answer B. Liabilities

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Question 20 Principles of Accounting

What is the amount a proprietor invests to start a business called?

Correct answer A. Capital

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About Principles of Accounting MCQs

This set focuses on foundational accounting vocabulary. Questions ask what to call cash brought in by the owner to start a business, cash withdrawn by the owner for private use, and debts payable within a short period. You will also find items on contingent assets and liabilities, tangible and intangible assets, discount received as an income, and the definition of book-keeping and accounting as the art of recording, classifying and summarising transactions. These basics underpin every later accounting topic and are tested in commerce exams and finance job tests.

Exams that include Principles of Accounting MCQs

Pakistan

Banking job tests
PPSC
FPSC
NTS

India

IBPS Clerk
SSC CGL
UGC NET

Bangladesh

Bank job exams
BCS
Government job tests

Frequently asked questions

What is the accounting equation?

The accounting equation states that assets equal liabilities plus owner's equity (capital). Every transaction affects at least two accounts so that the equation stays in balance. This is the basis of the double-entry system, in which every debit has a matching credit of the same amount.

What are drawings in accounting?

Drawings are cash or goods taken out of the business by the owner for personal use. They reduce the owner's capital and are not a business expense. At the end of the period, drawings are deducted from capital in the balance sheet or capital account.

Last reviewed October 2026