AS Level Accounting MCQs with answers
Practise AS Level Accounting (9706) with 254 exam-style MCQs, each with the answer and a short explanation. Every test is marked the moment you finish and shows your score chapter by chapter, so you know what to revise next. It is free and needs no sign-up.
254 questions · 2 chapters · 28 Cambridge past papers · 5 mock exams
What each chapter covers 2 chapters
The questions follow the syllabus chapter by chapter. You can test the whole subject or one chapter at a time.
- Financial accounting 193 questionsTypes of business entity, The accounting system, Accounting for non-current assets, Reconciliation and verification, Preparation of financial statements, Analysis and communication of accounting information
- Cost and management accounting 61 questionsCosts and cost behaviour, Traditional costing methods
Sample AS Level Accounting MCQs with answers 12 questions
12 questions from the test, one or two from each chapter. Try each one, then open the answer.
1. An irrecoverable debt of $400 was written off in the customer's account in the sales ledger, but no entry was made in the sales ledger control account or in the irrecoverable debts account. What is the effect on the financial statements of correcting this?
- A
profit decreases by $400 and trade receivables decrease by $400
- B
profit increases by $400 and trade receivables decrease by $400
- C
profit decreases by $400 and trade receivables increase by $400
- D
profit is unchanged and trade receivables decrease by $400
Show answer
Answer: A. The correction debits irrecoverable debts (an expense, so profit falls) and credits the sales ledger control account, whose balance is the trade receivables figure in the statement of financial position.
2. Factory rent of $48,000 is apportioned on the basis of floor area. The floor areas are: Machining 1,200 m2, Assembly 800 m2 and Stores 400 m2. How much rent is apportioned to Machining?
- A
$24,000
- B
$16,000
- C
$28,800
- D
$8,000
Show answer
Answer: A. Total floor area = 1,200 + 800 + 400 = 2,400 m2, so Machining’s share = 48,000 × 1,200 ÷ 2,400 = $24,000. The stores is a service cost centre but still occupies space, so it must be included; leaving it out gives 28,800.
3. The owner of a business decides to close it next month and sell all its assets. Which accounting concept will no longer apply when its final statement of financial position is prepared?
- A
business entity
- B
duality
- C
going concern
- D
money measurement
Show answer
Answer: C. Going concern assumes the business will continue for the foreseeable future, which is why assets are normally shown at cost less depreciation. When the business is about to close, assets are valued at the amounts they are expected to raise.
4. How is closing inventory of finished goods valued under marginal costing?
- A
at selling price less the normal profit margin
- B
at full production cost, including fixed production overheads
- C
at total cost, including selling and administration costs
- D
at variable production cost only
Show answer
Answer: D. Marginal costing treats all fixed costs, including fixed production overheads, as period costs charged in full in the period, so inventory carries only variable production cost. Absorption costing adds a share of fixed production overheads.
5. A partnership has no partnership agreement. Which applies under the Partnership Act 1890?
- A
a partner who works full time in the business is entitled to a salary
- B
each partner receives interest at 5% a year on their capital
- C
profits and losses are shared in the ratio of the capitals invested
- D
a partner’s loan to the firm earns interest at 5% a year
Show answer
Answer: D. Without an agreement the Act provides that profits and losses are shared equally, with no interest on capital, no salaries and no interest on drawings. Partners’ loans to the firm earn interest at 5% a year.
6. A company has spare capacity. Its product normally sells for $50 per unit, and has a variable cost of $32 and a fixed cost of $10 per unit. A new customer offers to buy 1,000 units at $38 each. Fixed costs will not change. What will be the effect on profit of accepting the order?
- A
an increase of $6,000
- B
a decrease of $4,000
- C
a decrease of $12,000
- D
an increase of $38,000
Show answer
Answer: A. With spare capacity and unchanged fixed costs, the order adds its contribution: 1,000 × (38 − 32) = $6,000. Charging the $10 fixed cost per unit (a full cost of $42) wrongly suggests a loss of 4,000.
7. A cash sale of $300 was debited to the sales account and credited to the cash account. Which type of error is this?
- A
error of principle
- B
error of original entry
- C
error of commission
- D
complete reversal of entries
Show answer
Answer: D. The correct accounts and amount were used, but the debit and credit were made on the wrong sides. Each side still totals $300, so the trial balance agrees; the correction is double the amount, $600, in each account.
8. Which is an advantage of absorption costing compared with marginal costing?
- A
it avoids the need to apportion and absorb overheads
- B
profit is not affected by changes in the level of inventory
- C
it shows clearly the contribution earned by each product
- D
inventory includes production overheads, as IAS 2 requires
Show answer
Answer: D. IAS 2 requires inventory in published financial statements to include production overheads, which absorption costing does. It is marginal costing that shows contribution and whose profit does not depend on inventory changes.
9. Which document from an external source can be used to check the balance of a supplier's account in the purchases ledger?
- A
the supplier's statement of account
- B
the purchases journal
- C
the trial balance
- D
the list of purchases ledger balances
Show answer
Answer: A. The statement is prepared by the supplier from its own records, so agreeing it with the ledger account gives independent evidence. The other three are all internal records of the business.
10. A department’s budgeted overheads were $108,000 and its budgeted machine hours were 12,000. Overheads are absorbed on a machine hour basis. Actual overheads were $106,000 and actual machine hours were 11,500. What was the under- or over-absorption of overheads?
- A
under-absorbed by $4,500
- B
over-absorbed by $2,500
- C
under-absorbed by $2,500
- D
over-absorbed by $2,000
Show answer
Answer: C. Absorption rate = 108,000 ÷ 12,000 = $9 per machine hour. Overheads absorbed = 11,500 × 9 = 103,500, which is less than the actual 106,000, so overheads are under-absorbed by $2,500. Absorbed overheads are compared with actual overheads, not budgeted with actual.
11. A small trader who keeps only a cash book is considering keeping full double-entry records. Which is an advantage of doing so?
- A
the records will take less time and cost less to keep up to date
- B
no documents such as invoices will need to be kept
- C
statements are easier to prepare, and errors or fraud are more likely to be found
- D
the trader will no longer need to count the inventory held at the end of each year
Show answer
Answer: C. Full records give complete ledger accounts and a trial balance, so statements are quicker to prepare, balances owed to and by the business are known, and errors can be traced. They take more time, not less, and inventory must still be counted.
12. A business has budgeted sales of 9,000 units and a break-even point of 6,000 units. What is the margin of safety as a percentage of budgeted sales?
- A
150.0%
- B
50.0%
- C
66.7%
- D
33.3%
Show answer
Answer: D. Margin of safety = 9,000 − 6,000 = 3,000 units, and 3,000 ÷ 9,000 × 100 = 33.3% of budgeted sales. Dividing by break-even sales gives 50.0%, and 66.7% is break-even as a share of budgeted sales.
Try 242 more questions
Ways to practise 7 ways
- Quick check. 10 questions drawn fresh each time, about 10 minutes.
- By chapter. 10 questions from one chapter, for the topic you are revising now.
- Full paper. A full-length timed paper across the whole syllabus.
- Past papers. 28 Cambridge multiple-choice papers, answered on screen and marked for you.
- Mock exams. 5 full papers of our own questions in the style of the real paper.
- Practice mode. See the right answer and an explanation after every question, with no clock.
- Exam mode. Timed like the real paper, with no going back.
When you get a question wrong, a short note called "The idea behind this" explains the topic it belongs to, with the rules to remember and a worked example.
Common questions
Is this AS Level Accounting test free?
Yes. Every test and every explanation is free, and you do not need an account. If you sign in, your results are kept across your devices.
Are these past paper questions?
The 254 MCQs are our own, written to the syllabus in the style of the exam. The 28 Cambridge past papers are listed separately inside the test.
How is the test marked?
Instantly. You get your score, the right answer and an explanation for every question, and a list of the topics to work on.
More help with AS Level Accounting
