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100+ Free CA Foundation Accounting Practice Questions

Prepare for the ICAI CA Foundation Paper 1: Accounting exam with instant access — no signup required.

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2026 Statistics

Key Facts: CA Foundation Accounting Exam

100 marks

Paper 1 Total Marks

ICAI Foundation New Scheme

3 hours

Exam Duration

ICAI Foundation New Scheme

40%

Minimum Per Paper

ICAI Passing Criteria

50%

Aggregate Across 4 Papers

ICAI Passing Criteria

Subjective

Paper 1 Format

ICAI Foundation New Scheme

4 papers

CA Foundation Level

ICAI Foundation New Scheme

CA Foundation Paper 1 Accounting is a 100-mark, 3-hour subjective (descriptive) paper under the ICAI New Scheme of Education and Training introduced in 2023. To pass the Foundation level, a candidate must score at least 40% in each paper and a 50% aggregate across all four papers. Paper 1 spans the theoretical framework of accounting, accounting process, bank reconciliation, inventories (AS 2), depreciation (AS 10), bills of exchange, final accounts of sole proprietors, not-for-profit organisations, accounts from incomplete records, partnership and LLP accounts, and company accounts under Schedule III of the Companies Act, 2013. This free bank offers 100 MCQs for knowledge prep.

Sample CA Foundation Accounting Practice Questions

Try these sample questions to test your CA Foundation Accounting exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1According to the accounting concept that a business is treated as separate and distinct from its owners, how should a proprietor's personal car purchased from business funds for private use be recorded?
A.As a fixed asset of the business
B.As a current liability of the business
C.As a business expense in the profit and loss account
D.As drawings reducing the owner's capital
Explanation: The business entity (separate entity) concept treats the business as distinct from its proprietor. Personal use of business funds is not a business asset or expense; it is recorded as drawings, which reduces the owner's capital.
2The accounting convention that requires anticipating all possible losses but not anticipating profits is known as:
A.Consistency
B.Materiality
C.Conservatism (prudence)
D.Full disclosure
Explanation: The convention of conservatism (prudence) requires that anticipated losses be provided for, while gains are recognised only when realised. This is why inventory is valued at cost or net realisable value, whichever is lower.
3Expenditure incurred to acquire a new delivery van for a trading business is classified as:
A.Revenue expenditure
B.A contingent liability
C.Deferred revenue expenditure
D.Capital expenditure
Explanation: Capital expenditure provides a benefit extending beyond one accounting period and is incurred to acquire fixed assets. A delivery van is a long-term asset, so its purchase cost is capitalised and depreciated over its useful life.
4Under the accrual concept, rent of 12,000 paid for the year but covering 3 months of the next accounting period should be treated in the current year as:
A.Full 12,000 expense with no adjustment
B.3,000 expense and 9,000 prepaid expense
C.12,000 expense and 3,000 outstanding liability
D.9,000 expense and 3,000 prepaid expense (asset)
Explanation: The accrual (matching) concept recognises expense in the period to which it relates. Of 12,000, three months (3,000) relates to next year and is carried forward as prepaid rent (an asset); the remaining 9,000 is the current year's expense.
5Which qualitative characteristic of financial statements requires that information be free from material error and bias and faithfully represent transactions?
A.Reliability
B.Comparability
C.Understandability
D.Timeliness
Explanation: Reliability means information is free from material error and bias and can be depended upon to faithfully represent what it purports to show. It is a primary qualitative characteristic in the ICAI conceptual framework.
6The fundamental accounting equation is best expressed as:
A.Assets = Liabilities − Capital
B.Capital = Assets + Liabilities
C.Assets = Capital + Liabilities
D.Liabilities = Capital + Assets
Explanation: The accounting equation states that Assets = Capital (owner's equity) + Liabilities. Every transaction keeps the equation in balance because of the dual aspect concept, which underlies double-entry bookkeeping.
7A contingent liability is:
A.A confirmed present obligation recorded in the balance sheet
B.A provision charged against profit
C.An asset that may be realised in future
D.A possible obligation depending on a future uncertain event, disclosed in notes
Explanation: A contingent liability is a possible obligation arising from past events whose existence depends on uncertain future events not wholly within the entity's control. It is not recognised in the books but is disclosed by way of a note to the accounts.
8Which accounting standard issued by ICAI deals with the valuation of inventories?
A.AS 1
B.AS 10
C.AS 6
D.AS 2
Explanation: AS 2, Valuation of Inventories, prescribes that inventories be valued at the lower of cost and net realisable value. AS 1 deals with disclosure of accounting policies, and AS 10 deals with property, plant and equipment.
9The money measurement concept implies that:
A.Only transactions expressed in monetary terms are recorded
B.All events affecting the business must be recorded
C.Money has constant purchasing power over time
D.Non-monetary qualities like management skill are recorded as assets
Explanation: The money measurement concept states that only transactions and events measurable in money are recorded in the books of account. Qualitative factors such as employee morale or management skill, though important, are not recorded because they cannot be expressed in money.
10Goods worth 5,000 purchased on credit from Ram are recorded by debiting:
A.Ram's account and crediting Purchases account
B.Purchases account and crediting Cash account
C.Cash account and crediting Purchases account
D.Purchases account and crediting Ram's account
Explanation: For a credit purchase of goods, Purchases account (an expense/nominal account) is debited because the business receives goods, and the supplier Ram's account (personal) is credited because he is the giver. No cash is involved.

About the CA Foundation Accounting Exam

ICAI CA Foundation Paper 1: Accounting is the entry-level accounting paper of the Chartered Accountancy course under the New Scheme of Education and Training, carrying 100 marks over 3 hours and covering the theoretical framework, accounting process, final accounts, not-for-profit, incomplete records, partnership, LLP, and company accounts.

Assessment

Question count not published by the exam provider

Time Limit

3 hours

Passing Score

40% in Paper 1 plus 50% aggregate across all four Foundation papers

Exam Fee

Part of the consolidated ICAI CA Foundation registration and examination fees; ICAI does not price Paper 1 separately (Institute of Chartered Accountants of India (ICAI))

CA Foundation Accounting Exam Content Outline

Foundational

Theoretical Framework

Meaning and scope of accounting, concepts, principles and conventions, capital and revenue items, contingent liabilities, accounting policies, measurement, and Indian Accounting Standards basics.

High

Accounting Process

Journal, ledger, subsidiary books, cash book, trial balance, rectification of errors, suspense account, special transactions, average due date, and account current.

Moderate

Bank Reconciliation Statement

Reasons for difference between cash book and passbook, treatment of unpresented and uncredited cheques, bank charges, interest, and statement preparation.

Moderate

Inventories

AS 2 valuation at lower of cost and net realisable value, cost formulas FIFO and weighted average, inclusions and exclusions, and inventory record systems.

Moderate

Depreciation and Amortisation

Concept of depreciation, straight-line and written-down value methods, change of method under AS 10/AS 5, sale and disposal of assets, and accounting treatment.

Moderate

Bills of Exchange and Special Transactions

Bills of exchange, due dates and grace days, discounting, dishonour, noting charges, renewal, consignment, del credere commission, and goods on sale or return.

High

Final Accounts of Sole Proprietors

Trading and profit and loss account, balance sheet, closing entries, adjustments such as outstanding and prepaid items, depreciation, and provisions for doubtful debts.

Moderate

Not-for-Profit Organisations

Receipts and payments account, income and expenditure account, balance sheet, subscriptions, life membership, honorarium, and capital fund treatment.

Moderate

Accounts from Incomplete Records

Single-entry system, net worth (statement of affairs) method, conversion method, and ascertaining credit sales and purchases from total debtors and creditors accounts.

High

Partnership and LLP Accounts

Partnership Act defaults, fixed and fluctuating capitals, appropriation, admission, retirement, death, goodwill, revaluation, dissolution, Garner v. Murray, and LLP features.

High

Company Accounts

Issue, forfeiture and reissue of shares, securities premium, bonus shares, debentures, minimum subscription, and financial statements under Schedule III of the Companies Act, 2013.

How to Pass the CA Foundation Accounting Exam

What You Need to Know

  • Passing score: 40% in Paper 1 plus 50% aggregate across all four Foundation papers
  • Assessment: Question count not published by the exam provider
  • Time limit: 3 hours
  • Exam fee: Part of the consolidated ICAI CA Foundation registration and examination fees; ICAI does not price Paper 1 separately

Keys to Passing

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CA Foundation Accounting Study Tips from Top Performers

1Practice numerical chapters like partnership, company accounts, and final accounts daily because Paper 1 is descriptive and rewards step-by-step working.
2Memorise the key Partnership Act defaults, such as 6% interest on a partner's loan and equal profit sharing without a deed.
3Learn AS 2 (lower of cost and NRV) and AS 10 (depreciation methods) thoroughly, as theory and sums both appear.
4Build a journal-entry drill for share issue, forfeiture, reissue, and debentures under the Companies Act, 2013.
5Reconcile cash book and passbook items methodically, knowing which items to add and subtract from each balance.
6Use this MCQ bank to test concepts quickly, then practise full-length descriptive problems from ICAI study material.

Frequently Asked Questions

How many questions are on CA Foundation Paper 1 Accounting?

ICAI does not publish a fixed number of questions. Paper 1 is a 100-mark subjective (descriptive) paper of 3 hours. This OpenExamPrep bank provides 100 MCQs for knowledge prep across all chapters of the New Scheme syllabus.

What is the passing mark for CA Foundation Accounting?

A candidate must score at least 40% in Paper 1 individually and an aggregate of 50% across all four Foundation papers. Both conditions must be met simultaneously to clear the Foundation level.

Is CA Foundation Paper 1 objective or subjective?

Under the New Scheme, Papers 1 (Accounting) and 2 (Business Laws) are subjective (descriptive), while Papers 3 (Quantitative Aptitude) and 4 (Business Economics) are objective with negative marking.

What chapters are in CA Foundation Accounting?

Paper 1 covers the theoretical framework, accounting process, bank reconciliation, inventories, depreciation, bills of exchange and special transactions, final accounts of sole proprietors, not-for-profit organisations, incomplete records, partnership and LLP accounts, and company accounts.

Which accounting standards are tested in CA Foundation Paper 1?

Foundation Accounting introduces standards such as AS 1 on disclosure of accounting policies, AS 2 on valuation of inventories, and AS 10 on property, plant and equipment, alongside Schedule III of the Companies Act, 2013.

Who conducts the CA Foundation examination?

The Institute of Chartered Accountants of India (ICAI), a statutory body under the Chartered Accountants Act, 1949, conducts the CA Foundation examination through its Board of Studies.

What is the New Scheme for CA Foundation?

ICAI notified its New Scheme of Education and Training in 2023, restructuring the CA course. The Foundation level retains four papers of 100 marks each: Accounting, Business Laws, Quantitative Aptitude, and Business Economics.

Can I retake CA Foundation if I fail Accounting?

Yes. Candidates who do not clear the Foundation examination may re-appear in later ICAI examination cycles, subject to the validity of their registration and ICAI regulations.