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Alhamd Islamic University12 Questions

Principles of Accounting MCQs

Practice Principles of Accounting multiple-choice questions for Alhamd Islamic University competitive exams. Each question includes the correct answer and a short explanation, and past-paper questions are marked so you can revise both repeated and fresh material in one place.

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Income Statement
Cash Flow Statement
Balance Sheet
Retained Earnings Statement
ExplanationThe Balance Sheet lists assets, liabilities, and equity to show what a company owns and owes at a specific date.
Assets = Liabilities + Owner's Equity
Assets + Liabilities = Owner's Equity
Assets = Liabilities - Owner's Equity
Revenue - Expenses = Assets
ExplanationThis fundamental equation must always remain in balance, representing the dual entry nature of accounting.
Matching Principle
Going Concern Principle
Revenue Recognition Principle
Cost Principle
ExplanationThe matching principle requires that costs incurred to produce revenue be recognized in the same accounting period as the revenue.
Debit Cash, Credit Supplies
Debit Supplies, Credit Accounts Payable
Debit Accounts Payable, Credit Supplies
Debit Supplies, Credit Cash
ExplanationPurchasing supplies increases an asset (Debit) and increases a liability (Credit) when purchased on credit.
Accounts Payable
Accumulated Depreciation
Prepaid Insurance
Common Stock
ExplanationAccumulated depreciation is a contra-asset account that reduces the book value of a fixed asset.
To prove that total debits equal total credits
To calculate net income
To determine the value of assets
To list all business expenses
ExplanationThe Trial Balance is a report listing all ledger account balances to ensure the accounting equation remains in balance.
Assets
Liabilities
Equity
Revenue
ExplanationThe fundamental accounting equation is Assets = Liabilities + Equity. Revenue affects equity over time but is not a component of the base equation.
Consistency Concept
Going Concern Concept
Matching Principle
Accrual Concept
ExplanationThe Going Concern concept assumes the business will remain in operation for the foreseeable future and not liquidate.
Debit Cash, Credit Revenue
Debit Accounts Receivable, Credit Cash
Debit Cash, Credit Accounts Receivable
Debit Revenue, Credit Cash
ExplanationSince the service was already provided, the debt was previously recorded as Accounts Receivable. Collecting cash removes this asset and adds Cash.
To list every transaction chronologically
To summarize all accounting transactions by account
To verify the math of the balance sheet
To record non-financial business events
ExplanationThe General Ledger is a record of all accounts used by a business, showing the balance of each individual account.
Cash
Prepaid Rent
Accounts Payable
Office Equipment
ExplanationLiabilities, like Accounts Payable, increase with credits and have credit balances.
Valuing an asset at market price
Allocating the cost of a tangible asset over its useful life
Reducing the cash balance of a firm
Paying off a long-term loan
ExplanationDepreciation is the systematic allocation of the cost of a fixed asset over the period it is expected to be used.

Frequently Asked Questions

Are these Principles of Accounting MCQs free?

Yes. Every Principles of Accounting MCQ on this page is free to practice, including the correct answer and explanation.

Do these include past-paper questions?

Yes — questions sourced from past papers are clearly marked with a "Past Paper" badge, alongside fresh practice questions.

Which exams do these Principles of Accounting MCQs help with?

They are aimed at Alhamd Islamic University and related Pakistani competitive exams that test Principles of Accounting.

How should I practice subject-wise MCQs?

Attempt each question first, then reveal the answer and read the explanation. Short, focused sessions on one subject work better than long unstructured reading.

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