Please refer to Chapter 2 Theory Base of Accounting MCQ Class 11 Accountancy with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 11 Accountancy. Students should refer to MCQ Questions for Class 11 Accountancy with Answers to score more marks in Grade 11 Accountancy exams. Students should read the chapter Theory Base of Accounting and then attempt the following objective questions.

MCQ Questions Class 11 Accountancy Chapter 2 Theory Base of Accounting

Theory Base of Accounting MCQ Class 11 Accountancy provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. Salary paid to partner should be:
(a) Debited to his current account
(b) Credited to his current account
(c) Credited to profit & loss appropriation A/c
(d) None of these

Question. Capital Expense from %
(a) Decrease Asset
(b) Decrease Liabilities
(c) Increase Asset
(d) None of these

Question. Expense on installation of new machinery %
(a) Capital Expense
(b) Capital Loss
(c) Revenue Expense
(d) Revenue Loss

Question. Under ___ method, the balance of the capital account fluctuates from year to year.
(a) Fixed capital account
(b) Current account
(c) Fluctuating capital account
(d) Floating capital account

Question. Which of the following account will be credited when interest on capital is charged against the distribution of profit?
(a) Interest account
(b) Partner`s capital account
(c) Profit & loss account
(d) Profit & loss appropriation account

Question. Debit word is %
(a) French Language
(b) Latin Language
(c) Hindi Language
(d) English Language

Question. What is the amount of Interest on drawings for Ram at 10% p.a. for the Year ended 31st March 2018, if he withdrew Rs 6000 in the middle of each quarter.
(a) Rs 1500
(b) Rs 1200
(c) Rs 900
(d) None of these

Question. Is given to businessman when clear his payment before certain period ?
(a) Cash Discount
(b) Special Discount
(c) Trade Discount
(d) None of these

Question. Appropriations are the transactions that happen between firm and partners in the capacity of ___________
(a) Partner
(b) Outsider
(c) Either A or B
(d) None of these

Question. The primary qualities that make accounting information useful for decision-making are
(a) Relevance and freedom from bias
(b) Reliability and comparability
(c) Comparability and consistency
(d) None of the above

Question. The primary qualities that make accounting information useful for decision-making are
(a) Relevance and freedom from bias
(b) Reliability and comparability
(c) Comparability and consistency
(d) None of the above

Question. A concept that a business enterprise will not be sold or liquidated in the near future is known as :
(a) Going concern
(b) Economic entity
(c) Monetary unit
(d) None of the above

Question. As per Income Tax Act, accounting period is :
(a) From 1st January to 31st December
(b) From 1st April to 31st March
(c) From 1st July to 30th June
(d) From Diwali to Diwali

Question. A liability arises because of:
(a) Credit transaction
(b) Cash transaction
(c) None of the options
(d) Cash and credit transaction

Question. As per Income Tax Act, accounting period is :
(a) From 1st January to 31st December
(b) From 1st April to 31st March
(c) From 1st July to 30th June
(d) From Diwali to Diwali

Question. Among the following assets, which one is fictitious asset?
(a) Debit balance of Profit &loss A/c
(b) Goodwill
(c) Patents
(b) Oil wells

Question. Goods means :
(a) Commodity to be bought and sold
(b) Commodity to be used as an asset
(c) Commodity to be bought but not to be sold
(d) None of these

Question. Current Assets is %
(a) Land
(b) Building
(c) Machinery
(d) Stock

Question. Current Liabilities is %
(a) Creditors
(b) Debentures
(c) Long-term Loan
(d) None of these

Question. Which of the following is not a current asset ?
(a) Prepaid Expenses
(b) Debtors
(c) Furniture
(d) Bills Receivable

Question. Repair charge of office old furniture is %
(a) Revenue Expense
(b) Capital Expense
(c) Both Revenue & Capital Expense
(d) None of these

Question. Capital profit is profit %
(a) Profit & Loss A/c of Business
(b) Sale of fixed asset
(c) Sale of goods
(d) None of these

Question. Which of the following is not a tangible asset ?
(a) Motor Car
(b) Goodwill
(c) Stock
(d) Building

Question. Working Capital is %
(a) Current Assets – Current Liabilities
(b) Current Assets + Current Liabilities
(c) Current Assets + Fixed Assets
(d) None of these

Question. Building A/c is related to %
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) None of these

Question. Interest A/c is %
(a) Nominal A/c
(b) Real A/c
(c) Personal A/c
(d) None of these

Question. Trade discount is :
(a) Allowed at the time of receiving payment
(b) Allowed at the time of sale of goods
(c) Both ‘A’ and ‘B’
(d) Allowed in all the cases)

Question. Cash discount is :
(a) Allowed at the time of sale of goods
(b) Received at the time of making payment
(c) Received at the time of purchase of goods
(d) All the above

Question. Non-current Assets is %
(a) Building
(b) Stock
(c) Debtors
(d) Prepaid Expense

Question. Arun is a Book-seller, which item will be goods for his business ?
(a) Purchase of Computer
(b) Purchase of Fan
(c) Purchase of Furniture
(d) Purchase of Stationery

Question. What change does profit makes to capital?
(a) All of these
(b) Profit gets added to the capital
(c) Profit has no change to capital
(d) Profit gets reduced from capital

Question. During the lifetime of an entity accounting produce financial statements in accordance with which basic accounting concept:
(a) Conservation
(b) Matching
(c) Accounting period
(d) None of the above

Question. Salary A/c is related to %
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) Capital A/c

Question. Investment A/c is related to %
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) None of these

Question. Formula of Liquid Assets %
(a) Current Assets – Stock + Prepaid Expense
(b) Current Assets – Current Liabilities
(c) Current Assets + Stock + Prepaid Expense
(d) None of these

Question. Under this method, only 1 account i.e. partner`s capital account is maintained. This method is :
(a) .Normal
(b) Floating
(c) Fixed
(d) Fluctuating

Question. Long-term Liabilities %
(A) Debentures
(B) Bills Payable
(C) Creditors
(D) Outstanding Expenses

Fill In The Blanks

Question. Outstanding and prepaid expenses are adjusted according to _______ basis of accounting.

Question. A Ltd. had shown a contingent liability of Rs 2,00,000 as footnote after it’s Balance Sheet. After analysing Balance Sheet of A Ltd., B Ltd. purchased this running business without any further enquiry. A Ltd. had prepared it’s books by strictly following ________________ convention.

Question. IASB stands for ________.

Question. GAAP stands for _______.

Question. A business purchased goods for Rs 2,00,000 and sold 75% of the goods during accounting year ended 31st March, 2019. The market value of remaining goods was Rs 48,000. He valued closing stock at cost. While recording he violated ____________ concept. 

Question. The closing stock is valued at cost price or market price whichever is _________.

Question. Aman and Raman are creating 5% provision for doubtful debts keeping in mind ___________ principle of accounting.

Question. Devdhar keeps record of his assets according to market value, probably he does not know about _________ concept.

Question. Small business organizations follow _____________ entry system of accounting.

Question. A charitable institution follows _________ basis of accounting.

Question. Posting into Ledger comes under _____________ step of accounting process.

Question. X Ltd. produces its financial statements on 31st March every year in accordance to ____________ concept.

Question. Depreciation is charged under __________ basis of accounting.

Question. Salary paid Rs 55,000 and outstanding Rs 5,000. At the time of passing journal entry Rs __________ amount will be debited in Salary A/c due to accrual concept.

Question. Anant charged depreciation on his Fixed Assets of Rs 8,50,000 @ 10% p.a. in year 2018. He then charged depreciation in year 2019 at the rate of 12% p.a. Management is facing problem in comparing the data in consecutive years. To solve this problem, Anant should learn about _____ Assumption of accounting.

Question. “Do not anticipate any profit but provide for all losses” the statement justify the ______________ concept.

True /False

Question. Accounting Principles are static in nature.

Question. A firm recorded the market value of asset in the financial statement has violated one of the principle of Accounting.

Question. Single entry system is a complete, accurate and most reliable system of maintaining records of financial transactions.

Question. Due to Dual Aspect Principle, the contingent Liabilities are shown as a foot note in the Balance Sheet.

Question. Can a Business firm record 10 chairs, 10 tables, a building have 10 rooms?

Question. To uniform Accounting policies and procedures almost all countries have agreed to apply IFRS. But the name of IFRS has been converged as Ind AS.

Question. A firm sold goods on credit of Rs 50,000 in the month of January and collected the amount in the month of April. Accountant record this sale in the month of April following Accrual basis of Accounting. Is he correct in doing so.

Question. According to Matching Concept, Expense of Rs 20,000 incurred in financial year 2017-2018 but paid in the year 2018-19 considered expense for the year 2017-2018.

Question. During the Financial year 2018-2019 ABC firm had Cash sales Rs 1,00,000 and Credit sales Rs 20,000. His expenses for the year were Rs 50,000 out of which Rs 30,000 is still to be paid. So according to Cash Basis of Accounting income of ABC firm is 70,000.

Question. Machinery was purchased for Rs 50 lakh. An amount of Rs 1, 00,000 was spent on transporting the machinery to factory site, Rs50, 000 spent on its installation. The total amount at which the Machinery will be recorded is 51, 50,000.

Question. Due to consistency Concept, accounting practices once selected and adopted, should be applied year after year.

Question. Under Dual Aspect, every transaction has two aspects one Debit and another Credit.

Question. A firm was charging depreciation on its asset according to SLM now changed to WDV but firm did not disclose this information in its financial statements. This has violated the Materiality principle of accounting.

Question. Due to consistency Concept, accounting practices once selected and adopted, should be applied year after year.

Question. Since the life of business is assumed to be indefinite the financial statement of the business should be prepared only when it goes into liquidation.

Question. As per Dual Aspect Principle Capital = Assets + Liabilities.

Question. The market value may vary from person to person and from place to place, thus objectivity cannot be maintained if such value is adopted for accounting purpose. 

Question. The full form of Indian AS is Indian Accounting Services,

Match The Following

Question .

1. It records only Cash transactions	a) Cash Basis
2. It records both cash and credit transactions	b) Accrual Basis

Question .

1. It may or may not give true and fair view of the business	a) Cash Basis
2. It is a Scientific method and gives true and fair view of the business	b) Accrual Basis

Question.

1. Accounting policies and practices must be consistently followed	a) Business entity concept
2. It records the transactions between Owner and business	b) Consistency
	c) Matching concept
	d) Prudence concept

Question.

1. It facilitates intra firm comparisons.	a) Consistency
2. It is based on Accrual Concept	b) Matching Principle
	c) Business Entity principle

Question.

1. It anticipates and provides for all possible losses	a) Money measurement principle
2. It does not records the quality of manpower	b) Conservatism concept
	c) Verifiability Objective
	d) Consistency concept

Question.

1. Unearned Commission recorded in the books	a) Accrual basis
2. Accrued commission	b) Cash basis

Question.

1. Contingent liabilities to be recorded as a foot note.	a) Conservatism concept
2. Closing stock is valued at a cost or market price whichever is lower.	b) Matching principle
	c) Verifiability Objective
	b) Matching principle

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