Accounting For Business Decisions MCQ With Answers PDF: Why do business owners care about accounting? Businesses that successfully generate income are those which take accurate and timely decisions. By taking timely and accurate decisions the cost of running a business will be under control. Many such decisions involve the financial data of the company. Although in most cases it might look easy but actually a very tough task is to create a business plan, formulate pricing strategies, undertake financial analysis, etc. These tasks need a lot of research work, skill, and expertise. Thus accounting plays an important role in taking these decisions accurately and timely.

Given below are Accounting for Business Decisions MCQ with answers for MBA, BBA, B Com, M Com, MMS, and other management students. These Accounting for Business Decisions multiple-choice questions and solutions also can be used for SET, UGC NET, UPSC, MPSC entrance & competitive exams.

A Brief Description About Accounting For Business Decisions MCQ With Answers PDF

Accounting For Business Decisions MCQ With Answers

1. Pricing is one of the most important decision areas of ________.

a) Marketing

b) Accounting

c) Human Resource Management

d) Production

Answer: Marketing

2. Factors that make influence of firms decision to buy a part rather than produce it internally includes

a) lack of in-house expertise

b) small volume requirements

c) desire for multiple sourcing

d) All of the above

Answer: All of the above

3. If the margin of safety is _______, the form can withstand a fall in sales and can continue to be in some profit.

a) small

b) zero

c) long

d) large

Answer: large

4. Fixing ________ is a major decision taking function of any enterprise.

a) Low price

b) High price

c) Appropriate price

d) None of the above

Answer: Appropriate price

5. If the price is _______ the seller may not find enough number of consumers to buy his product.

a) quite low

b) quite high

c) zero

d) dynamic

Answer: quite high

6. If the price fixed is ________, the seller may not be able to cover his cost.

a) too low

b) too high

c) more than cost

d) dynamic

Answer: too low

7. A pricing decision is one of the __________ decision that the firm has to make.

a) most easy and important

b) most crucial and difficult

c) time taking but simple

d) important but avoidable

Answer: most crucial and difficult

8. Pricing decisions have ________ importance in any enterprise.

a) tactical

b) policy

c) strategic

d) minimal

Answer: strategic

9. Internal user of accounting information for decision making is ________

a) government

b) management

c) creditor

d) Owne

Answer: management

10. The main aim of management accounting is to help management in its functions of _________.

a) planning

b) directing

c) controlling

d) all of the above

Answer: all of the above

11. _______ is the act of choosing between manufacturing a product in house or purchasing it from an external supplier.

a) Pricing decision

b) Make or buy decision

c) Budgeting decision

d) EOQ

Answer: Make or buy decision

12. In a make or buy decision, the most important factor(s) to consider is ________.

a) cost of production

b) availability of production capacity

c) marketing of the product

d) Both A & B

Answer: Both A & B

13. GAAP in financial accounting stands for _______

a) Globally Accepted Accounting Principles

b) Globally Accepted Accounting Practices

c) Generally Accepted Accounting Principles

d) Generally Accepted Accounting Provisions

Answer: Generally Accepted Accounting Principles

14. An enterprise may decide to purchase the product rather than producing it if is _________.

a) cheaper to buy than make

b) cheaper to make than buy

c) costlier to buy than make

d) Both B & C

Answer: cheaper to buy than make

15. A ________ is the catalog of items one should sell at their business.

a) Price mix

b) Product Mix

c) Distribution mix

d) Promotion Mix

Answer: Product Mix

16. Optimizing product mix can ________ the profits.

a) minimize

b) stagnant

c) maximize

d) neither minimize nor maximize

Answer: maximize

17. Advantages of break even analysis includes ______.

a) optimum level of profit

b) self production

c) payment of dividend

d) all of the above

Answer: all of the above

18. A budget is a ________ financial plan.

a) Backward

b) Upward

c) Forward

d) All of the above

Answer: Forward

19. The excess of actual or budgeted sales over the break even sales are called ________.

a) margin of safety

b) factor of safety

c) profit

d) margin of exposure

Answer: margin of safety

20. The size of ________ is an important indicator of the strength of business.

a) cost of production

b) marketing activity

c) margin of safety

d) employees

Answer: margin of safety

21. Carriage outward is charged to

a) Debit side Profit & Loss a/c

b) Debit side Trading a/c

c) Credit side of Profit & Loss a/c

d) Credit side of trading a/c

Answer: Debit side Profit & Loss a/c

22. Cash Purchases:

a) Increases assets

b) Results in no change in the total assets

c) Decreases assets

d) Increases liability

Answer: Decreases assets

23. Purchases of goods on credit from A is recorded as:

a) Debit purchases a/c; credit cash a/c

b) Debit A a/c ;credit purchases a/c

c) Debit purchases a/c ; credit A a/c

d) Debit A a/c ; credit stock a/c

Answer: Debit purchases a/c ; credit A a/c

24. Which of the following is not an example of real a/c:

a) Machinery

b) Building

c) Cash

d) Creditor

Answer: Creditor

25. Payment received from debtor:

a) Decreases the total assets

b) Increases the total assets

c) Results in no change in total assets

d) Increase the total liabilities

Answer: Results in no change in total assets

26. Payment of salary is recorded by:

a) Debiting salary a/c; crediting cash a/c

b) Debiting cash a/c; crediting salary a/c

c) Debiting employee a/c ; crediting cash a/c

d) Debiting employee a/c ; crediting salary a/c

Answer: Debiting salary a/c; crediting cash a/c

27. Cost of asset should always be equal to the cost of the liabilities. This concept is

a) Double Entry Bookkeeping

b) Matching Concept

c) Consistency

d) Money measurement Concept

Answer: Matching Concept

28. Which of the following is not a fixed asset?

a) Building

b) Bank Balance

c) Plant Patents

d) Goodwill

Answer: Bank Balance

29. The basic concepts related to p& l a/c are:

a) Realization Concept

b) Matching Concept

c) Cost Concept

d) Both a and b above

Answer: Both a and b above

30. P& l a/c is prepared for a period of one year by following:

a) Consistency concept

b) Conservatism concept

c) Accounting period concept

d) Cost Concept

Answer: Accounting period concept

31. Insurance prepaid is shown as:

a) Current assets

b) Current liabilities

c) Fixed asset

d) Fixed liability

Answer: Current assets

32. Outstanding salary is shown as:

a) An asset in the balance sheet

b) A liability

c) By adjusting it in the P & L a/c

d) Both b and c

Answer: Both b and c

33. Reserve for doubtful debts appearing in the trial balance should be:

a) credited to P & L a/c

b) Shown as liability side in balance sheet

c) Reduced from related asset in the balance sheet

d) Both a and c

Answer: Both a and c

34. All those to whom business owes money are:

a) Debtors

b) Investors

c) Creditors

d) Shareholders

Answer: Creditors

35. According to which concept business is treated as a unit apart from owner

a) Dual concept

b) Divider concept

c) Entity concept

d) Landlord concept

Answer: Entity concept

36. Authorized capital, also known as

a) Nominal capital

b) Paid up capital

c) Issues capital

d) None of these

Answer: Nominal capital

37. True & fair profit and loss a/c of a company know by

a) Preparing trial balance

b) Preparing respective ledger of account

c) Preparing trading a/c

d) Preparing trading & profit & loss a/c

Answer: Preparing trading & profit & loss a/c

38. Credit balance of profit & loss a/c shown on

a) Asset side of balance sheet

b) Liability side of balance sheet

c) Not shown in balance sheet

d) Half on asset side and half on liability side

Answer: Liability side of balance sheet

39. Under which concept it is assumed that the enterprises has neither the intention nor the necessity of liquidation or of curtailing materiality the scale of operation

a) Revenue realization concept

b) Matching cost concept

c) Going concern concept

d) None of these

Answer: Going concern concept

40. Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount is an example for which concept

a) Conservatism concept

b) Continuity concept

c) Realization concept

d) All of these

Answer: Conservatism concept

41. Financial accounting use data

a) Projected data

b) External data only

c) Historic data

d) Manager data only

Answer: Historic data

42. Payment received from Debtor

a) Decreases the Total Assets

b) Increases the Total Assets

c) Results in no change in the Total Assets

d) Increases the Total Liabilities

Answer: Results in no change in the Total Assets

43. Bookkeeping is an……………………of correctly recording of business transition.

a) Art and Science

b) Art

c) Science

d) Art or Science

Answer: Art

44. Journal Entries are known as book of ………………Entry.

a) Original

b) Duplicate

c) Personal

d) Nominal

Answer: Original

45. What comes in is to be debited, what goes out is to be credited.

a) Rules of Personal

b) Rules of Real

c) Rules of Nominal

d) All of these

Answer: Rules of Real

46. Which of the following account balance will be shown on debit side of Trial Balance?

a) Outstanding expenses

b) Cash a/c

c) Short term loan

d) creditors

Answer: creditors

47. The reduction in the value of the fixed assets which can arise due to time factor is

a) Discount

b) Depreciation

c) Reduction

d) None of the above

Answer: Depreciation

48. If closing stock appears in the trial balance, it should be

a) Credited to the trading account

b) Credited to the profit and loss account

c) Deducted from the purchases in the trading account

d) Shown on the liability side of the Balance sheet

Answer: Credited to the trading account

49. Outstanding expenses are charged to

a) Asset side of balance sheet

b) Liability side of balance sheet

c) Not charged to balance sheet

d) None of these

Answer: Liability side of balance sheet

50. liabilities in balance sheet include the following items

a) Long term loan

b) Short term loan

c) Owner’s fund

d) All of these

Answer: All of these

51. Prepaid expense is treated as

a) Current asset

b) Current liability

c) Short term liability

d) None of these

Answer: Current asset

52. Cost accounting aims at ascertain ………………. of product

a) Cost

b) Net profit

c) Gross profit

d) Selling price

Answer: Cost

53. The purpose of financial accounts is reporting to

a) Management only

b) Government only

c) Investor only

d) All of these

Answer: All of these

54. Accounting does not record non-financial transactions because of:

a) Accrual concept

b) Cost concept

c) Continuity concept

d) Money measurement concept

Answer: Money measurement concept

55. Proposed dividends” is shown in the Balance Sheet of a company under the head:

a) Provisions

b) Reserves and Surplus

c) Current Liabilities

d) Other Liabilities

Answer: Provisions

56. Fixed assets and current assets are categorized as per concept of:

a) Separate entity

b) Going concern

c) Consistency

d) Time period

Answer: Going concern

57. Proprietor (owner) is treated as creditor of business due to:

a) Periodicity concept

b) Materiality Principle

c) Entity Concept

d) Consistency concept

Answer: Entity Concept

58. Which financial statement represents the accounting equation

ASSETS = LIABILITIES + OWNER’S EQUITY

a) Income Statement

b) Cash Flow Statement

c) Balance Sheet

d) Fund Flow Statement

Answer: Balance Sheet

59. Which of the following is a liability?

a) Loan from Mr.Y

b) loan to Mr.y

c) Both (a) (b)

d) None of these

Answer: Loan from Mr.Y

60. Which of the following are correct?

(i) Account to be debitedAccount to be credited

(ii) Bought office wooden table for cash office wooden table cash

(iii) Ramesh sold goods on credited to Ram sales cash

(iv) Introduce capital by cheque capital Bank

(v) Paid to creditor Sita by cheque Sita Bank

a) (ii) (iii)(i)

b) (iii)(iv)(ii)

c) (i)(iii)(iv)

d) (i)(iv)

Answer: (i)(iv)

61. Accounting does not record non-financial transactions because of:

a) Accrual concept

b) Cost concept

c) Continuity concept

d) Money measurement concept

Answer: Money measurement concept

62. Fixed assets and current assets are categorized as per concept of:

a) Separate entity

b) Going concern

c) Consistency

d) Time period

Answer: Going concern

63. Which of the following is correct

a) Profit does not alter capital

b) Capital can only come from profit

c) Profit reduces capital

d) Profit increases capital

Answer: Profit increases capital

64. Which of the following best describes a trial balance?

a) It is a list of balances on the books

b) It is a special account

c) Shows the financial position of a business

d) Shows all the entries in the books

Answer: It is a list of balances on the books

65. Net profit is calculated in

a) Trading a/c

b) Balance sheet

c) Profit & loss a/c

d) Trial balance.

Answer: Profit & loss a/c

66. The concept of separate entity is applicable to which of following types of businesses?

a. Sole proprietorship

b. Corporation

c. Partnership

d. All of them

Answer: All of them

67. Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?

a) Fiscal year

b) Calendar year

c) Accounting period

d) Accrual period

Answer: Accounting period

68. Interest, rent, electricity bill are types of account

a) Personal a/c

b) Impersonal a/c

c) Real a/c

d) Nominal a/c

Answer: Nominal a/c

69. Which of the following should not be called sales?

a) Good sold on credit

b) Office fixtures sold

c) Sale of item previously included in purchase

d) Good sold for cash

Answer: Office fixtures sold

70. Material concept tell about

a) Disclosure of loss

b) Disclosure of profit

c) Disclosure of all information which are important for investor

d) Disclosure of all information which are important for management

Answer: Disclosure of all information which are important for investor

71. Which of the following is not regarded as the fundamental accounting concept?

a. The going concern concept

b. The separate entity concept

c. The prudence (conservatism) concept

d. Correction concept

Answer: Correction concept

72. Using “lower of cost and net realisable value(Market Value)” for the purpose of inventory valuation is the implementation of which of the following concepts?

a) The going concern concept

b) The separate entity concept

c) The prudence concept

d) Matching concept

Answer: The prudence concept

73. The concept of separate entity is applicable to which of following types of businesses?

a) Sole proprietorship

b) Corporation

c) Partnership

d) All of them

Answer: All of them

74. The revenue recognition principal dictates that all types of incomes should be recorded or recognized when

a) Cash is received

b) At the end of accounting period

c) When they are earned

d) When interest is paid

Answer: When they are earned

75. The allocation of owner’s private expenses to his/her business violates which of the following?

a) Accrual concept

b) Matching concept

c) Separate business entity concept

d) Consistency concept

Answer: Separate business entity concept

76. The going concern concept assumes that

a) The entity continue running for foreseeable future

b) The entity continue running until the end of accounting period

c) The entity will close its operating in 10 years

d) The entity can’t be liquidated

Answer: The entity continue running for foreseeable future

77. Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?

a) Fiscal year

b) Calendar year

c) Accounting period

d) Accrual period

Answer: Accounting period

78. Showing purchased office equipments in financial statements is the application of which accounting concept?

a) Historical cost convention

b) Materiality

c) Prudence

d) Matching concept

Answer: Materiality

79. Information about an item is __ if its omission or misstatement might influence the financial decision of the users taken on the basis of that information

a) Concrete

b) Complete

c) Immaterial

d) Material

Answer: Material

80. “Financial information should be neutral and bias free” is the dictation of which one of the following?

a) Completeness concept

b) Faithful representation Concept

c) Objectivity Concept

d) Duality Concept

Answer: Objectivity Concept

81. Accounting principles are divided into two types. These are —

a) Accounting Concepts

b) Accounting Conventions

c) Accounting Standards

d) Accounting Concepts &Accounting Conventions

Answer: Accounting Concepts &Accounting Conventions

82. Which of the following is not related with Money Measurement Concept?

a) All business transaction should be expressed only in money

b) The transactions which cannot be expressed in money, will not be recorded in accounting books

c) Business is treated as separate from the proprietor

d) None of These

Answer: The transactions which cannot be expressed in money, will not be recorded in accounting books

83. Which of the following equation is related with Dual Aspect Concept?

a) Total Assets = Total Liabilities

b) Total Assets = Capital + Outsider’s Liabilities

c) Capital = Total Assets – Outsider’s Liabilities

d) All of the above

Answer: All of the above

84. If the total assets of the company amount to Rs 1,50,000 and owner’s equity is Rs 70,000, the amount of liabilities will be –

a) Rs 70,000

b) Rs 80,000

c) Rs 90,000

d) Rs 1,00,000

Answer: Rs 80,000

85. Profit from sale of assets is example for –

a) Revenue Profit

b) Capital Profit

c) Loss

d) None of these

Answer: Capital Profit

86. Depreciation is a charge against –

a) Profit

b) Assets

c) Company

d) Books of A/c

Answer: Profit

87. Which expenses is a Capital Nature?

a) Depreciation

b) Wages

c) Salary

d) Stationary

Answer: Depreciation

88. Balance Sheet is a statement of

a) Assets

b) Liabilities

c) Capital

d) All of these

Answer: All of these

89. Accounting is the process of matching

a) Benefits & Costs

b) Revenues & Costs

c) Cash Inflow & Cash Outflow

d) Potential & Real Performance

Answer: Revenues & Costs

90. Which one of the following is not an example of Intangible Assets?

a) Patents

b) Trade Marks

c) Copyright

d) Land

Answer: Land

91. The prime function of accounting is to

a) To record economic data

b) Provide the information basis of action

c) Classifying and recording business transaction

d) Attainment of economic goal

Answer: Classifying and recording business transaction

92. The basic function of financial accounting is to

a) Record all business transaction

b) Interpret financial data

c) Assist the management in performing function effectively

d) None of these

Answer: Interpret financial data

93. Management Accounting provides invaluable services to management in performing

a) All management function

b) Interpret financial data

c) Controlling function

d) None of these

Answer: All management function

94. Book keeping is mainly concerned with

a) Recording of financial data relating to business operation

b) Designing the systems in recording classifying, summarizing the recorded data

c) Interpreting the data for internal and external users

d) None of these

Answer: Recording of financial data relating to business operation

95. Accounting principles are generally based on

a) Practicability

b) Subjectivity

c) Convenience in recording

d) None of these

Answer: Practicability

96. The system of recording transaction based on dual aspect concept is called

a) Double account system

b) Double entry system

c) Single entry system

d) None of these

Answer: Double entry system

97. The practice of appending notes regarding contingent liabilities in accounting statement is pursuant of

a) Convention of consistency

b) Money measurement concept

c) Convention of conservatism

d) Convention of disclosure

Answer: Convention of conservatism

98. According to the money measurement concept the following will be recorded in the books of accounts of the business

a) Health of the managing director of the company

b) Quality of company goods

c) Value of plant and machinery

d) Health of labour in factory

Answer: Value of plant and machinery

99. The convention of conservatism when applied to the balance sheet result in.

a) Understand the asset

b) Understand the liabilities

c) Overstatement of capital

d) None of these

Answer: Understand the asset

100. The convention of conservatism is applicable a)

In providing for discount on creditors

b) In making provision for bad doubtful debts

c) Providing depreciation

d) None of these

Answer: In making provision for bad doubtful debts

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