Online Test — Introduction to Accounting
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
Accounting is best described as the:
Language of business
Law of the land
Art of selling
Study of machines
Explanation: Accounting communicates financial information — the language of business.
Question 2 of 15
The routine recording of day-to-day transactions is called:
Book-keeping
Auditing
Costing
Budgeting
Explanation: Book-keeping is only the recording part of accounting.
Question 3 of 15
Arrange from widest to narrowest:
Book-keeping > Accounting > Accountancy
Accountancy > Accounting > Book-keeping
Accounting > Accountancy > Book-keeping
All equal
Explanation: Accountancy is the body of knowledge, accounting the process, book-keeping the recording.
Question 4 of 15
Which is NOT an objective of accounting?
Keeping systematic records
Ascertaining profit or loss
Increasing the owner's personal fame
Showing financial position
Explanation: Accounting serves financial information needs, not personal fame.
Question 5 of 15
Which of these is an internal user of accounting information?
A bank
The tax department
The management
A supplier
Explanation: Management is inside the business — an internal user.
Question 6 of 15
Investors and lenders are ____ users.
Internal
External
Imaginary
Government
Explanation: They are outside the business, so external users.
Question 7 of 15
The branch that prepares the profit & loss account and balance sheet for outsiders is:
Cost accounting
Management accounting
Financial accounting
Tax planning
Explanation: Financial accounting prepares the statements used by external users.
Question 8 of 15
Amount invested by the owner in the business is called:
Drawings
Capital
Liability
Expense
Explanation: The owner's investment is capital.
Question 9 of 15
Goods bought for resale are recorded as:
Assets
Purchases
Capital
Drawings
Explanation: Goods bought for resale are purchases.
Question 10 of 15
A person who owes money to the business is a:
Creditor
Debtor
Owner
Banker
Explanation: A debtor owes money to the business.
Question 11 of 15
A person to whom the business owes money is a:
Debtor
Creditor
Customer
Investor
Explanation: We owe a creditor.
Question 12 of 15
Which is a limitation of accounting?
It keeps a permanent record
It records only money-measurable items
It helps assess tax
It helps compare performance
Explanation: Ignoring non-monetary facts is a real limitation.
Question 13 of 15
Two qualities that make accounting information useful are:
Reliability and relevance
Length and colour
Speed and noise
Size and weight
Explanation: Information should be reliable and relevant (also understandable, comparable).
Question 14 of 15
Cash withdrawn by the owner for personal use is:
An expense
Drawings
A liability
Revenue
Explanation: Owner's withdrawals are drawings.
Question 15 of 15
Manipulating accounts to look better than reality is called:
Window dressing
Posting
Balancing
Casting
Explanation: Presenting a misleadingly favourable picture is window dressing.