Dear aspirants, prepare for JKSSB FAA 2026 with these Most Important MCQs on Balance Sheet, specially prepared by Exam Waves. Practice key questions on assets, liabilities, Balance Sheet methods, and Statement of Affairs to strengthen your Accountancy preparation.
Q1. Which of the following statements correctly describe a Balance Sheet?
- It is a statement of the financial position of a business at a given time.
- It is not an account.
- It is prepared from Real and Personal Accounts that have not been transferred to Trading A/c or P/L A/c.
- Its main headings are Assets and Liabilities.
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q2. Consider the following statements regarding a Balance Sheet:
- The left side represents Liabilities.
- The right side represents Assets.
- It is a summary of all ledger accounts that have not been closed by Trading A/c and P/L A/c.
- It shows the financial position of a business at a given time.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q3. Match List I with List II and select the correct answer:
| List I | List II |
|---|---|
| A. Permanency Preference Method | 1. Assets and liabilities shown in order of liquidity |
| B. Liquidity Preference Method | 2. Assets and liabilities shown in order of permanence |
| C. Left side of Balance Sheet | 3. Assets |
| D. Right side of Balance Sheet | 4. Liabilities |
A) A-2, B-1, C-4, D-3
B) A-1, B-2, C-3, D-4
C) A-2, B-3, C-1, D-4
D) A-4, B-1, C-2, D-3
Answer: A
Q4. Under the Permanency Preference Method, which of the following correctly represents the example given for the order of items?
A) Liabilities: Bills Payable; Assets: Cash in Hand
B) Liabilities: Capital and Long-term Loan; Assets: Goodwill and Patent
C) Liabilities: Outstanding Expenses; Assets: Closing Stock
D) Liabilities: Bank Overdraft; Assets: Bills Receivable
Answer: B
Q5. Assertion (A): Under the Liquidity Preference Method, assets and liabilities are shown in the order of their liquidity.
Reason (R): In the given example, Bills Payable appears under Liabilities and Cash in Hand appears under Assets.
Choose the correct answer:
A) Both A and R are true, and R is the correct explanation of A
B) Both A and R are true, but R is not the correct explanation of A
C) A is true, but R is false
D) A is false, but R is true
Answer: B
Q6. Which of the following groups contains only Current Assets as shown in the Balance Sheet classification?
A) Cash in Hand, Cash at Bank, Bills Receivable, Sundry Debtors, Prepaid Expenses, Closing Stock and Accrued Income
B) Cash in Hand, Bills Receivable, Land & Building, Closing Stock and Patent
C) Cash at Bank, Sundry Debtors, Preliminary Expenses, Closing Stock and Goodwill
D) Bills Receivable, Sundry Debtors, Bills Payable, Prepaid Expenses and Accrued Income
Answer: A
Q7. Which of the following statements correctly classify the items shown in the Balance Sheet?
- Bills Payable, Outstanding Expenses and Bank Overdraft are Current Liabilities.
- Long-term Loans are Non-current Liabilities.
- Land & Building is a Non-current Asset.
- Preliminary Expenses, Discount on Issue of Shares and Deferred Revenue Expenditure are shown as Fictitious Assets.
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q8. Match the following items with their correct classifications:
| List I | List II |
|---|---|
| A. Bills Payable | 1. Non-current Asset |
| B. Long-term Loan | 2. Current Liability |
| C. Land & Building | 3. Fictitious Asset |
| D. Preliminary Expenses | 4. Non-current Liability |
| E. Closing Stock | 5. Current Asset |
A) A-2, B-4, C-1, D-3, E-5
B) A-4, B-2, C-1, D-5, E-3
C) A-2, B-1, C-4, D-3, E-5
D) A-3, B-4, C-2, D-1, E-5
Answer: A
Q9. Which of the following statements correctly describe a Statement of Affairs?
- It shows the financial position of a company at a specific point of time.
- It emphasises Current Assets and Current Liabilities.
- It provides information on cash flow.
- It can be prepared for a specific purpose.
- It is prepared under the Single Entry System.
- It is not reliable because it is based on incomplete records.
A) 1, 2 and 3 only
B) 1, 2, 3 and 4 only
C) 2, 3, 4, 5 and 6 only
D) 1, 2, 3, 4, 5 and 6
Answer: D
Q10. Consider the following statements about Balance Sheet and Statement of Affairs:
- A Balance Sheet shows the financial position of a business at a given time.
- A Balance Sheet is a statement and not an account.
- Assets and Liabilities are its main headings.
- Under the Permanency Preference Method, items are arranged according to permanence.
- Under the Liquidity Preference Method, items are arranged according to liquidity.
- A Statement of Affairs is prepared under the Single Entry System and is based on incomplete records.
Which of the statements given above are correct?
A) 1, 2, 3 and 4 only
B) 1, 2, 3, 4 and 5 only
C) 2, 3, 4, 5 and 6 only
D) 1, 2, 3, 4, 5 and 6
Answer: D
