Accounting Equation MCQs with solved Answers

Accounting Equation MCQs with solved Answers (Question 1-5)

1. Which accounting equation is correct out of the following ?
(a) Assets=Liabilities-Capital
 (b) Liabilities =Assets+Capital
(c) Capital=Liabilities-Assets
(d) Assets=Liabilities+Capital

2. Which accounting equation is incorrect out of the following ?
(a) Assets=Liabilities+Capital
 (b) Liabilities =Assets-Capital
(c) Assets=Liabilities-Capital
(d) Capital=Assets-Liabilities 

3. Equation represents the mathematical relationship between the assets, liabilities,and owner’s equity(Capital) of a business enterprise is called….
(a) Simple Equation
(b) Compound Equation
(c) Accounting Equation
(d) None of these
4. Accounting Equation is also called….
(a) Financial Sheet Equation
(b) Balance Sheet Equation
(c) a and b Both
(d) None of these
5. An Accounting equation is based on the…
(a) Single Entry concept of accounting
(b) Dual aspect concept of accounting
(c) a and b both
(d) None of these

Note: Answers are given below at the end.

ISC Commerce 12 Banking Latest Trends MCQs with Solved Answers

Accounting Equation MCQs with solved Answers (Question 6 to 10)

6. Opening Capital ₹ 5,50,000, Opening Assets ₹ 9,50,000, Opening Liabilities ₹ 4,00,000, Closing  Assets ₹ 12,50,000, Closing Liabilities ₹ 4,50,000, Find out closing capital.
(a) ₹ 8,00,000
(b) ₹ 8,50,000
(c) ₹ 6,50,000
(d) ₹ 7,50,000

7. The Accounting Equation is connected with…
(a) Assets only
(b) Liabilities Only
(c) Capital Only
(d)  Assets,Liabilities and capital

8. The liabilities of a business are ₹ 2,30,000; the capital of the proprietor is ₹ 8,70,000. The total assets are:
(a) ₹ 6,40,000
(b) ₹ 11,00,000
(c) ₹ 4,40,000
(d) None of these

9. The liabilities of a business are ₹ 2,70,000; and Assets are  ₹ 8,70,000. Owner’s Equity will be…..
(a) ₹ 6,60,000
(b) ₹ 11,40,000
(c) ₹ 6,00,000
(d) None of these

10. Which of the following transaction affecting Liability side of the equation?
(a) Goods purchased for cash ₹ 2,60,000
(b) Machinery purchased for cash ₹ 1,00,000
(c) Cash received from Debtors ₹ 80,000
(d) Salary outstanding ₹ 18,000

Note: Answers are given below at the end.

Accounting Equation MCQs with solved Answers(Question 11 to 15)

11. Which of the following transactions affecting Assets side of the equation?
(a) Goods purchased for cash ₹ 2,60,000
(b) Machinery purchased for cash ₹ 1,00,000
(c) Cash received from Debtors ₹ 80,000
(d) All of these

12. Which of the following transactions affecting both sides of the equation?
(a) Business Started for cash ₹ 2,60,000
(b) Machinery purchased On credit ₹ 1,00,000
(c) Goods purchased on credit cash ₹ 2,60,000
(d) All of these

13. Mr. MOON Business Started for cash ₹ 5,00,000, effect of the transaction would be ……. 
(a) Decrease in Assets ,Decrease in Capital
(b) Decrease in Assets ,Increase in Capital
(c) Increase in Assets ,Increase in Capital
(d) Increase in Assets ,Decrease in Liability

14. Goods purchased on credit  ₹ 2,60,000, effect of the transaction would be ……. 
(a) Decrease in Assets ,Decrease in Capital
(b) Decrease in Assets ,Increase in Capital
(c) Increase in Assets ,Increase in Liability
(d) Increase in Assets ,Decrease in Liability

15. Furniture purchased for cash ₹ 60,000, effect of the transaction would be ……. 
(a) Furniture Decrease ,Cash Increase
(b) Furniture Increase ,Cash Decrease
(c) Furniture Decrease, Cash Decrease
(d) Increase in Assets ,Decrease in Liability

Note: Answers are given below at the end.

Accounting Equation MCQs with solved Answers (Question 16 to 21)

16. Cash  withdrawn for Personal use by proprietor  ₹ 60,000, effect of the transaction would be ……. 
(a) Cash Decrease ,Owner’s capital decrease
(b) Cash Increase ,Capital Decrease
(c) Cash Increase ,Capital Increase
(d) Increase in Assets ,Decrease in Liability

17. What does accounting equation signifies 
(a) Assets of Business is equal to Capital and Liability
(b) Liability of Business is equal to Capital and Assets
(c) Capital of Business is equal to Assets and Liability
(d) None of these

18. Retained earing and the amount invested by owners in the business are representated by: 
(a) Owner’s equity
(b) Investment
(c) Assets
(d) None of these

19. Purchase of building for cash: 
(a) Decrease total assets
(b) Keep total assets unchanged
(c) Increase in total assets
(d) None of these

20. Assets and liability increase: 
(a) By purchase of goods on credit
(b) By Drawing
(c) By Profit
(d) By Loss

21. Machinery Purchased on credit from Bharat Machinery house Rs. 2,00,000, effect of the transaction would be ……. 
(a) Cash Decrease ,Owner’s capital decrease
(b) Assets Increase in form of Machinery, Liabilities Increase in form creditors for machinery.(c) Assets Increase ,Capital Increase
(d) Increase in Assets ,Decrease in Liability

Note: Answers are given below at the end.

Accounting Equation MCQs with solved Answers

Answer – Question Number 1 To 5

1.Answer-(d) Assets=Liabilities+Capital

2.Answer-(c) Assets=Liabilities-Capital

3.Answer-(c) Accounting Equation

4.Answer-(b) Balance Sheet Equation

5.Answer-(b) Dual aspect concept of accounting

Answer – Question Number 6 To 10

6.Answer-(a) ₹ 8,00,000

7.Answer-(d)  Assets, Liabilities and capital

8.Answer-(b) ₹ 11,00,000

9.Answer-(c) ₹ 6,00,000

10.Answer-(d) Salary outstanding ₹ 18,000

Answer – Question Number 11 To 15

11.Answer- (d) All of these

12.Answer-  (d) All of these

13.Answer- (c) Increase in Assets ,Increase in Capital

14.Answer-(c) Increase in Assets ,Increase in Liability

15.Answer- (b) Furniture Increase ,Cash Decrease

Answer – Question Number 16 To 21

16.Answer-  (a) Cash Decrease ,Owner’s capital decrease

17.Answer- (a) Assets of Business is equal to Capital and Liability

18.Answer- (a) Owner’s equity

19.Answer- (b) Keep total assets unchanged

20.Answer- (a) By purchase of goods on credit

21.Answer-(b) Assets Increase in form of Machinery, Liabilities Increase in form creditors for machinery.

Accounting Equation MCQs with solved Answers

Also read : ACCOUNTING EQUATION Class 11