MCQs of Accounting Equation with answers Class 11

Which equation is correct out of the following;

(a) Assets = Liabilities – Capital
(b) Assets = Capital – Liabilities
(c) Assets = Capital + Liabilities
(d) Assets = Net Worth – Liabilities

Which accounting equation is incorrect out of the following?

(a) Liabilities = Assets – Capital
(b) Assets = Liabilities – Capital
(c) Capital = Assets – Liabilities
(d) Assets = Liabilities + Capital

Which equation is correct out of the following:

(a) Liabilities = Assets + Capital
(b) Assets = Liabilities – Capital
(c) Capital = Assets – Liabilities
(d) Capital = Assets + Liabilities

Which of the following is correct?

Which equation is incorrect out of the following:

(a) Assets = Liabilities + Capital
(b) Capital = Assets – Liabilities
(c) Liabilities = Assets – Capital
(d) Assets = Liabilities – Capital

Amount withdrawn by proprietor for personal use will ____ Cash and Capital.

(a) Increase
(b) Decrease
(c) Not Change
(d) None of these

Main elements of accounting equation are:

(a) Capital, Creditors and Bills Payable
(b) Assets, Liabilities and Capital
(c) Cash, Stock and Debtors
(d) Bank balance, Investments and Bills Receivable

A firm purchased machinery in cash. Identify the correct statement in context of this.

(a) There is an increase in total assets.
(b) There is an increase in owner’s equity
(c) There is a decrease in total assets
(d) There is no effect on total assets

As a result of the following transactions, the total of accounting equation will be __ .

(i) Started business with cash ₹ 2,00,000.
(ii) Purchased furniture ₹ 25,000.
(iii) Purchased goods on credit ₹ 60,000.

(a) ₹ 2,85,000
(b) 2,25,000
(c) ₹ 2,35,000
(d) ₹ 2,60,000

Liabilities of a firm are ₹ 30,000; Capital of the proprietor is ₹ 70,000. Total assets are

(a) ₹ 70,000
(b) ₹ 1,00,000
(c) ₹ 40,000
(d) None of these

Capital increased when:

(a) Goods purchased
(b) Rent paid
(c) Commission received
(d) Goods lost by fire

As a result of the following transactions, the total of accounting equation will be __ .

(I) Started business with Cash ₹ 5,00,000
(ii) Goods purchased for cash ₹ 2,00,000.
(iii) Goods costing ₹ 1,50,000 sold for ₹ 1,60,000 on credit:

(a) ₹ 4,60,000
(b) ₹ 7,10,000
(c) ₹ 5,10,000
(d) ₹ 6,60,000

‘X’ commenced business on 1st April, 2024 with a capital of ₹ 6,00,000. On 31st March, 2025, his assets were worth ₹ 8,00,000 and liabilities ₹ 50,000. Find out his closing capital.

(a) ₹ 7,50,000
(b) ₹ 2,00,000
(c) ₹ 5,50,000
(d) None of these

Sale of fixed assets for cash would:

(a) Reduce Current Assets and Fixed Assets
(b) Keep Current Assets unchanged and Decrease Fixed Assets
(c) Increase Current Assets and Decrease Fixed Assets
(d) Increase Current Liabilities and Decrease Fixed Assets

Due to the following transactions, the total of accounting equation will be:

(i) Commenced business with cash ₹ 4,00,000
(ii) Purchased goods on credit ₹ 1,75,000
(iii) Goods costing ₹ 1,00,000 sold at a profit of 20% for cash
(iv) Rent paid ₹ 5,000

(a) ₹ 4,90,000
(b) ₹ 5,90,000
(c) ₹ 4,40,000
(d) ₹ 3,40,000

An increase in one asset is accompanied by

(a) Decrease in another asset
(b) Increase in a liability
(c) Increase in capital
(d) All of these

Which of the following Accounting Equation is correct?

(a) Assets + Capital = Liabilities
(b) Assets – Liabilities = Capital
(c) Assets + Liabilities = Capital
(d) All are correct

What will be the effect of outstanding rent on the accounting equation?

(a) Deduct from cash and capital
(b) Add in capital and outstanding expenses
(c) Deduct from capital and add in outstanding expenses
(d) Deduct from cash and add in outstanding expenses

Decrease in one liability may lead to

(a) Decrease in an asset
(b) Increase in another liability
(c) Either (a) or (b)
(d) None of these

Goods withdrawn from business for personal use:

(a) Increase in stock and increase in capital
(b) Decrease in stock and decrease in capital
(c) Increase in stock and decrease in cash
(d) Decrease in stock and increase in cash

Purchase of equipment by cash means

(a) Decrease in asset and decrease in liability
(b) Increase in asset and decrease in asset
(c) Increase in asset and decrease in liability
(d) Decrease in asset and increase in capital

Payment to a creditor means:

(a) Increase in asset and decrease in liability
(b) Decrease in asset and decrease in liability
(c) Decrease in asset and increase in liability
(d) Increase in asset and increase in liability

A firm repays its bank Loan. in the light of this statement, all the following statements are correct except one. Identify the incorrect statement.

(a) There is decrease in assets
(b) There is decrease in liability
(c) There is no effect on owner’s equity
(d) There is increase in equity

Opening capital ₹ 10,000. Profit earned during the year ₹ 5,000. Drawing ₹ 2,000. Additional capital introduced ₹ 1,000. Closing Capital will be

(a) ₹ 14,000
(b) ₹ 16,000
(c) ₹ 18,000
(d) ₹ 20,000

Closing capital ₹ 20,000. Loss during the year ₹ 1,000. Drawings ₹ 3,000. Additional Capital introduced ₹ 4,000. Opening Capital will be

(a) ₹ 22,000
(b) ₹ 24,000
(c) ₹ 20,000
(d) ₹ 25,000

Opening capital ₹ 1,00,000. Closing Capital ₹ 2,10,000. Drawings ₹ 20,000. Additional capital introduced ₹ 1,00,000. Profit during the year will be

(a) ₹ 30,000
(b) ₹ 70,000
(c) ₹ 1,30,000
(d) ₹ 1,50,000

Opening capital ₹ 50,000; Closing capital ₹ 25,000; Profit during the year ₹ 12,500. Additional capital introduced ₹ 2,500. Drawing will be

(a) ₹ 40,000
(b) ₹ 45,000
(c) ₹ 57,500
(d) ₹ 62,500

Opening capital ₹ 30,000, Closing capital ₹ 15,000. Loss during the year ₹ 8,000. Drawing ₹ 7,000. Additional Capital introduced will be

(a) NIL
(b) ₹ 8,000
(c) ₹ 16,000
(d) ₹ 23,000