XI MCQs Prepared by Experts

Introduction to Accounting
Q.1 Assertion: Accounting is a way to facilitate the communication of information

to users of accounting information.
Reason : Each step of Accounting provides information which is communicated to
the users.
In the context of the above two statements, which of the following is
correct?
Code:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(C) Only (R) is correct.
(D) Both (A) and (R) are wrong.
Ans. : (A)
Q.2 Which qualitative characteristics of accounting information is reflected when

accounting information is clearly presented?
a. Understandability
b. Relevance
c. Comparability
d. Reliability
Ans. A
Q.3 Which of the following is not a limitation of Accounting?
(a) Based on Accounting conventions.
(b) Evidence in legal matters
(c) Incomplete information
(d) Omission of Qualitative Information
Q.4. Which of the following is/are incorrect for Double entry system?
I. Any transaction will be recorded twice
II. Any transaction will have only effect on two accounts only
III. Any transaction will have equal effect on debit and credit
IV. Any transaction will be recorded at least in two accounts
Select from the following options: -
(a) (I) and (III) are correct
(b) (II) correct only
(c) (I) and (II) are incorrect
(d) All are correct
Q.5 Which of the following is an incorrect statement:
a) accounting records financial transactions.
b) Recorded transactions are posted to ledger.
c) The quality of management is duly recorded in accounts.
d) Trial balance is prepared from ledger balances. Ans (c)
Q:6 A businessman shows all his personal petrol bills, restaurant bills as business
expenses thereby reducing his business income so as to avoid taxation. Which
limitation of Accounting does it refer to?
i) Accounting is not fully exact. ii) Window dressing iii) Accounting ignores price
level changes. iv) Accounting ignores qualitative elements
Q.7 On 31st March 31, 2022 after sale of goods worth ₹2,000, there is closing
stock of ₹10,000. This is:
a. An event
b. A transaction
c. A transaction as well as event
d. Neither a transaction nor an event
Ans. a. An event
Q.8 Which of the following is not a qualitative characteristics of accounting

information:
a. Reliability
b. understandability
c. comparability
d. materiality
ANS . materiality
Q.9 It is process of grouping the transactions of one nature at one place so to put
information in compact and usable form..
(A) Recording
(B) Classifying
(C) Summarising
(D) Interpretation of results
Answer : (B) Classifying
Q.10 It is that subfields of accounting which is helpful to fix the selling price of product.:
(A) Financial Accounting
(B) Tax Accounting
(C ) Cost Accounting
(D) Human Resources Accounting
Answer: (C ) Cost Accounting
Q.11 It involves presenting the classified data in such a manner so that it can be easily
understandable and useful for internal as well as external user of accounting. ..
(A) Recording
(B) Classifying
(C) Summarising
(D) Analysis and Interpretation of results
Answer : (C) Summarising
Q.12 It is that subfields of accounting which is helpful for management in decision

making and making forward planning.:
(A) Financial Accounting
(B) Tax Accounting
(C ) Cost Accounting
(D) Management Accounting
Answer: (D ) Management Accounting
Q.13 Which of the following transaction will be recorded in books of accounts?.

:
(A) Order received from customer for supply of goods of Rs. 50,000
(B) Purchases a Scooter of Rs. 20,000 for personal use and paying amount
from personal saving account.
(C ) Personal LED sold for Rs. 12,000 and given that money as advance to
suppliers for
supply of goods.
(D) Conducting interview and selecting Ramesh as an accountant on monthly
salary of Rs. 42,000.
Answer : (C ) Personal LED sold for Rs. 12,000 and given that money as advance
to suppliers for supply of goods
Q.14 Aashi and Akshat both brother and Sister took commerce after their
Secondary Examination . Aashi said she is influenced how accounting helps in
budgetary control along with planning and Controlling
While Akshat focused her direction, while doing so many firms do not think about
management and worker relationship. He further added he is motivated how basic
study enables a firm to have in depth Knowledge About other firms
a. Which Type of user is Focused by Akshat
a.External users b. Internal Users c. Both a and b d. None of the Above
Ans c
b. Name the Branch of Accounting Focused by Aashi ?
a. Cost Accounting b. Financial Accounting c. Management Accounting d.
Fund Accounting
Ans c
Q.15 Choose the correct sequence
a) Identifying, Summarising, Classifying, Recording
b)Identifying, Recording,Summarising, Classifying,
c)Identifying,, Recording,, Classifying, Summarising.
d)Identifying, Summarising, Recording,Classifying,
Ans: c)Identifying,, Recording,, Classifying, Summarising
Q.16 Creditors of the business want to know:

(A) Profitability of the business
(B) Capability of the business to pay higher salaries
(C) Creditworthiness of the business
(D) Employment
opportunities Ans. (C)
Q.17 Which of the following transaction will not be recorded in financial

accounting?
• Goods withdrawn by proprietor for personal use
• Proprietor sold his household furniture and bring the money in
business
• Goods gifted to the maternal uncle
Sold personal car and deposited the money in his personal bank A/c (CORRECT)
Q.18 Which of the following is the qualitative characteristic of Accounting?
a. Recording
b. Classifying
c. Relevance (CORRECT)
d. All of the above
Q.19
Match characteristics of accounting information with their explanation:
Column A Column B
I Reliability (i) Clear presentation of accounting
II Comparability information
III Relevance (ii) Use of common format and common
IV Understandability unit
(iii) Verifiable and free from personal
bias
(iv) Availability of information on time
a. I-(iii) ; II – (ii) ; III- (iv) ; IV –(i)

b. I-(i) ; II – (ii) ; III- (iii) ; IV –(iv)
c. I-(ii) ; II – (i) ; III- (iv) ; IV –(iii)
d. I-(iii) ; II – (iv) ; III- (i) ; IV –(ii)
Q.20 Consider the following statements about the limitations of accounting and
identify the correct statements
i. It contains only that information which can be expressed in terms of
money
ii. It may be affected by window dressing i.e. manipulation in accounts
iii. It help owners to compare one year’s results with those of other years to
locate the factors which leads to changes
iv. It is not free from personal bias and personal judgment of the people
dealing with it
(a) (i) &(ii)
(b) (i), (ii) & (iii)
(c) (i), (ii) & (iv)
(d) (ii), (iii) & (iv)
Ans. c
Q21. A language of business is known as:
(a) Accountancy
(b) Accounting
(c) a and b both
(d) All of these Ans: Accounting
Q22. Who is the father of accounting?

(a) Luca Pacioli
(b) Charles Babeje
(c) Henry Fayol
(d) F. W. Tailor Answer: Luca
Pacioli
Q.23 i) Double entry system can minimize the possibilities of frauds and mis-
appropriations.
ii) Every debit must have its corresponding credit
iii) single entry system is the complete system of maintaining records of the
financial transaction
iv) The arithmetic accuracies can be checked by preparing the trial balance in the
single-entry system
a) Option (i) and option (ii) are the correct statement.
b) Option (ii) and option (iii) are the correct statement
c) Option (i) and option (iii) are the correct statement
d) Option (iv) and option (ii) are the correct statement
Ans. A
Q.24 Direction: The following items consist of two statements, Statement I and
Statement II. Examine these two statements carefully and select the correct answer
Statement I: Business Organization involves economic events.
Statement II: A transaction is any event or condition, such as buying or selling that
must be recorded in the financial records of a business.
a) Both the statements are correct
b) Both the statements are incorrect
c) Statement I is correct but Statement II is incorrect
d) Statement II is correct but Statement I is incorrect
Answer:(a)
Q.25 Assertion: Accounting records only those transactions and events which can be
measured in terms of money
Reason: The Quality of staff or skills of management are ignored.
a) A and R are true and R is the correct explanation of A
b) A and R are true and 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: (a)
1. Which of the following statement is not true about Book Keeping?

a. Book keeping is the basis for Accounting
b. Book keeping is to be performed by a trained staff
c. Book Keeping is mechanical in nature
d. Book Keeping is a routine job.
Answer: Book keeping is to be performed by a trained staff
Q.26 In Book keeping:
a) All transactions are recorded in primary books
b) Posting is done in the ledger from the primary books
c) Total of ledger accounts and balance of those accounts are calculated
d) All the above
1. Double entry accounting requires that :

a) All transactions that create debits to asset accounts must create credits to
liability or capital account;
b) A transaction that requires a debit to a liability account require a credit to
an asset account;
c) Every transaction must be recorded with equal debits and credits
None of the above
Q:27 A businessman shows all his personal petrol bills, restaurant bills
as business expenses thereby reducing his business income so as to
avoid taxation.
Which limitation of Accounting does it refer to?
i) Accounting is not fully exact.
ii) Window dressing
iii) Accounting ignores price level changes.
iv) Accounting ignores qualitative elements.
Basis Terms
Q.1 Which of the following is not a Revenue Expenditure?
1. Purchase of raw materials
2. Purchase of office furniture
3. Payment of salary
4. Repair of Machinery
Ans. 2
Q.2 What will be the amount of profit in case of following, under cash basis of
accounting? Income received in advance ` 50,000; Accrued Income ` 3,000; Salaries
paid ` 70,000 (including ` 5,000 of previous year) and Total sales (30% on credit
basis) ` 1,00,000
(a) ` 70,000
(b) ` 53,000
(c) ` 1,20,000
(d) ` 50,000
Q.3 Assertion :advertisement expenditure is a fictitious asset.

Reason :fictitious assets are losses not written off in the year in which they are
incurred but in more than one accounting.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct
explanation of Assertion (A).
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) is False but Reason (R) is True. Ans (a)
Q:4 A Bill Receivable for Rs 10,000 received from Ramesh, discounted from the
bank gets dishonoured. This amount of Rs 10,000 will be treated as: i) Bad debt ii)
Dues recoverable from Ramesh. iii) Dues towards bank. iv) Bad debt recovered.
Q.5 Building having book value of ₹10,00,000 is sold for ₹12,00,000. ₹2,00,000
will be recorded in which account and termed as what?
a. Sales A/c; Profit
b. Profit and Loss A/c; Gain
c. Building A/c; Profit
d. Sales A/c; Gain
Ans. b. Profit and Loss A/c; Gain
Q.6 Amount paid or payable against purchase of goods is

a. Revenue expenditure
b. capital expenditure
c. both A and B
d. none of these
ANS. Revenue expenditure
Q.7 Current assets do not include
(A) Debtors
(B) Motor Car
(C) Bank Balance
(D) Prepaid Expenses
Ans. (B)
Q.8 On 31/03/2020 after selling of goods , unsold goods valued by businessmen Rs.
40,000.
It is treated as :
(A) An Event
(B) A Transaction
(C ) A transaction as well as an event
(D) Neither transaction nor event
Answer : (A) An Event
Q.9 Rs. 50,000 spent on travelling expenses by proprietor on a trip abroad for purchase
a latest machinery will be treated as :
(A) Revenue Expenditure.
(B) Capital Expenditure
(C ) Deferred Revenue Expenditure
(D) Prepaid Expenses
Answer : (B) Capital Expenditure .
Q.10 Consider the following items:

(I). Loan from Bank
(2). Bank Balance
(3). Bank Overdraft
Q.11 Current Liabilities includes:
(A) Both (1) and (2)
(B) Both (2) and (3)
(C ) Only (1)
(D) Only (3)
Answer : (D) Only (3)
4Q.12 Building book value Rs. 8,00,000 sold for Rs. 9,20,000. So, Rs. 1,20,000 will be
treated as:::
(A) Profit
(B) Income
(C ) Revenue
(D) Gain
Answer : (D) Gain
Q.13 As Per Discussion with Public relation Team on Account of Festivals Like
Dussehra , Diwali etc Haldiram should offer a discount bulk purchase . This would
enable generation of much Profits
Name the type of Discount discussed above :-
a. Rebate b. Trade Discount c. Cash Discount d. Stock Clearance
discount
Ans :- b
1. Find the odd one out
(a) Sundry Creditors (b) Bills Payable (c) Overdraft (d) Debentures
Ans: (d) Debentures

Q.14 Find the odd one out:
a. Patent
b. Computer Software
c. Goodwill
d. Investment
Q.15 Assertion (A): Capital expenditure is incurred for the purpose of acquiring
fixed asset.
Reason (R): Capital expenditure item is shown in the asset side of the Balance
Sheet.
(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) If A is true but R is false
(d) If A is false but R is true
Ans: (c)
Q16. Inventory valued at:

(a) Cost price
(b) Market price
(c) Cost price or Market price, whichever is less
(d) Cost price or Market price, whichever is more
Answer: Cost price or Market price,
whichever is less
Q.17 A) The money measurement concept states that only the money related
transactions can be
recorded in the books of accounts.
R) The creativity of the employee that contributes to the profit in the Research
Department can be recorded under the money measurement Concept.
a) Option (i) is the correct Statement
b) Option (ii) is the correct Statement
c) Both Option (i) and (ii) are the correct Statement
d) None of the Option is the correct Statement
Ans.1
Q.18 The rent paid for11 months is ₹11,000 for the premises used for one year. Identify
the term used for rent to be paid for one month:
a) Prepaid expense
b) Accrued Expense
c) Outstanding expense
d) None of the above
Answer: (c)
Q.19 Amisha started business with cash ₹ 5,00,000, loan from friend. ₹ 2,00,000 and
assets ₹7,00,000. Calculate the amount of Internal liability for her?
a. ₹12,00,000
b. ₹14,00,000
c. ₹5,00,000
d. ₹2,00,000
Answer: (a)
Q.20 Match the following:
a. Salary A/c i. Personal A/c
b. Outstanding rent A/c ii. Nominal A/c
c. Building A/c iii. Real A/c
d. Loan A/c iv. Representative
personal A/c
A. a(i)b(ii)c(iii)d(iv)
B. a(ii)b(iv)c(iii)d(i)
C. a(iii)b(ii)c(i)d(iv)
D. a(iv)b(ii)c(iii)d(i)
Answer: ( B)
Q.21 Assertion (A): Trade discount improves sales by encouraging the purchaser to
buy large quantities.
Reason (R): Trade discount is not shown separately but purchases or sales is
recorded at value after Trade discount.
a. A & R are true and R is the correct explanation of A.
b. A & 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: A & R are true but R is not the correct explanation of A.
Q:22 A Bill Receivable for Rs 10,000 received from Ramesh,
discounted from the bank gets dishonoured. This amount of Rs
10,000 will be treated as:
i) Bad debt
ii) Dues recoverable from Ramesh.
iii) Dues towards bank.
iv) Bad debt recovered.
CASE STUDY
Mr sunrise started a business for buying and selling of stationery with Rs 5,00,000 as an
initial investment. Of which he paid Rs 1,00,000 for furniture Rs 2,00,000 for buying
stationery items. He employed a salesperson and clerk. At the end of the month, he paid Rs
5,000 as their salaries. Out of the stationery bought he sold some stationery for Rs
1,50,000 for cash and some other stationery for RS 1,00,000 on credit basis to Mr Ravi.
Subsequently he bought stationery items of Rs 1,50,000 from Mr Peace. On suggestion of
his son, he bought a printer cum scanner also for Rs 2,00,000. In the first week of next
month there was a fire accident and he lost Rs 30,000 worth of stationery. A part of the
furniture which cost Rs 40,000 was sold for Rs 45,000
From the above answer the question Number 3to 5:
1.Total value of fixed assets in the business now is :
a) Rs 60,000
b) Rs 6,60,000
c) Rs 5,60,000
d) Rs 2,60,000
2. The expenses in the business are
a) Rs 3,55,000
b) Rs 5,000
c) Rs 55,000
d) Rs 35,000
3. What is the gain earned by Mr Sunrise
a) Rs 5,000
b) Rs 55,000
c) Rs 50,000
d) Rs 25,000
Theory base of Accounting

Q.1 Assertion : Interview for the post of Finance Manager is recorded in the books of Accounts.
Reason : All transactions measurable in money terms are recorded in the books of Accounts.

correct?
Code:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(C) Only (R) is correct.
Ans. : ©
Q.2 A concept that a business enterprise will not be sold or liquidated in the near future is
known as :
(a) Going concern (b) Economic entity (c) Monetary unit (d) None of the above
Ans. (a)
Q.3 The owner of the firm records his medical expenses in the firms income statement.
Indicate the principle that is violated.

(a) Cost principle
(b) Prudence
(c) Full Disclosure
(d) Entity concept
Cost of Machinery: ` 10,00,000
Installation Charges: ` 1,00,000
Market value on 31.3.2016 ` 12,00,000
Q.4 While finalizing the accounts, if the company values its machinery at ` 12,00,000. Which
concept is violated by company?
(a) Conservatism
(b) Realisation
(c) Going concern
(d) Cost concept
Q.5 Possibility of creation of secret reserve relates to which of the following accounting concept
a) historical cost principle
b) prudence principle
c) matching concept
d) money Measurement Concept
Q:6
Case Study: The Proprietor of a business wants to buy a car. But his family members don’t
approve him to buy as the month of Shrad has begun. The Proprietor finds out a way. He buys
the car, makes half the payment and the bill is made in his name but he asks the vendor to keep
the car in the showroom itself and he will take delivery only after Shrad. In the meantime, a fire
broke out in the showroom destroying the car.
When should the vendor assume Revenue be recognised?
i) At the time when the bill is made in the name of the buyer.
ii) No Revenue should be recognised as the money has to be
returned back.
iii) When rest half of the payment will be received.
Iv) When the claim from the Insurance Company will be received
Q.7 A proprietor, Mr. X has reported a profit of ₹1,25,000 at the end of the financial year after
taking into consideration the following amount:
(i) The cost of an asset of ₹25,000 has been taken as an expense.
(ii) Mr. X ia anticipating a profit of ₹ 10,000 on the future sale of a car shown as an asset in his
books.
(iii) Salary of ₹7,000 payable in the financial year has not been taken into account.
Q.8 On the basis of the above facts, which concept should be followed in statement (ii) and (iii):
a. Historical cost; Conservatism
b. Materiality; Accrual
c. Accrual; Conservatism
d. Conservatism; Accrual
Ans. d. Conservatism; Accrual
Q. 9 Sale is recognised on the basis of cash memo or invoice. Name the accounting concept
involved:
a. Revenue recognition
b. Matching concept
c. Verifiable objective concept
d. None of the above
ANS. Verifiable objective concept
Q.10 ASSERTION (A): As per the Prudence Principle ‘Closing Stock is valued at cost price or
its net realizable value whichever is less.
REASONING (R): So that a business firm cannot show the better picture than what it actually is.
a) Both Assertion and Reason are correct and Reason is the correct explanation of the
Assertion.
b) Both Assertion and Reason are correct but Reason is not the correct explanation of the
Assertion
c) Only Assertion is correct
d) Only Reason is correct
ANS.(a) Both Assertion and Reason are correct and Reason is the correct explanation of
the Assertion.
Q11. Best Stationeries Mart purchased a goods of Rs. 30,00,000 and sold 2/3 of the
goods amounting Rs. 25,00,000. Direct Expenses during the year Rs. 1,50,000:
The accountant of the firm calculated the profit of business Rs. 4,00,000. Which of the
accounting concept was followed by him?
(A) Matching Concept
(B) Going concern Concept
(C ) Revenue recognition Concept
(D) Objectivity Concept
Answer : (A) Matching Concept
Q.12 Everything a firm owns , it also owes out to somebody. This co-incidence is
explained by the ----------------Concept. :
(A) Business Entity
(B) Money Measurement
(C ) Prudence
(D ) Dual Aspect
Answer : (D) Dual Aspect
Q.13 Due to which accounting concept/convention “Provision for discount on creditors is

not created” ::
(A) Convention of Materiality
(B) Objectivity Concept
(C ) Convention of Full Disclosure
(D) Convention of Prudence
Answer (D ) Convention of Prudence
Q.14 Alfa Furniture House purchased a building for Rs. 50,00,000. After a period of 3
years the total depreciation charged Rs. 15,00,000. However due to boom in property
market, the current market value of property is now Rs. 80,00,000. State the value and
Accounting concept on the basis of which building should be recorded in books.:
(A) Rs. 80,00,000 and Going Concern Concept
(B) Rs. 50,00,000 and Cost Concept
(C ) Rs. 35,00,000 and Historical Cost Concept
(D) Rs. 80,00,000 and Realization Concept
Answer : (C ) Rs. 35,00,000 and Historical Cost Concept
Q.15 Sale is recognized as revenue: :

(A) When the contract for sale is entered into..
(B) when title of goods transfer
(C ) when money collected from customers
(D) after the expiry of credit period allowed to customers
Answer : (B) when title of goods transfer .
Q.16 Claim of Rs. 5,00,000 made by a worker in court due to major injury at the time of
working in factory” it will be shown as foot note in Balance Sheet as per:
(A) Matching Concept
(B) Going concern Concept
(C ) Revenue recognition Concept
(D) Full Disclosure Concept
Answer : (D) Full Disclosure Concept
Q.17 Mr. Mohan commenced business on 01/01/2020 with capital of Rs. 1,00,000 and
he will get interest on capital @ 10% p.a. Calculate interest on capital on 31/03/2020
and according to which accounting concept interest allowed to Mr. Mohan as he is
owner of his business.
(A) Rs. 10,000 and Money Measurement Concept
(B) Rs, 10,000 and Matching Concept
(C ) Rs. 2,500 and Business Entity Concept
(D ) Rs. 5,000 and Accrual Concept
Answer : (C ) Rs. 2,500 and Business Entity Concept
Q.18 Due to which accounting concept/convention “Expenditure are classified into
Revenue Expenditure and Capital expenditure” ::
(A) Convention of Materiality
(B) Going Concern Concept
(C ) Convention of Full Disclosure
(D) Convention of Prudence
Answer (B ) Going Concern Concept
Q.19 Beta Furniture House purchased pens and calculators of Rs. 780. These had all
been issued to employees and were still in use at the end of year. Accounting to which
accounting concept it will be treated as stationeries expenses and transfer to debit side
of profit and loss account.:
(A) Going Concern Concept
(B) Cost Concept
(C ) Materiality concept
(D) Realization Concept
Answer : (C ) Materiality Concept
Q.20 Accounting Standards are formulated by: :
(A) Company Act
(B) Central Government
(C ) Finance Ministry
(D) Institute of Chartered Accountant of India
Answer : (D) Institute of Chartered Accountant of India
Q.21 Accounting Standards are useful:

(a) For Investors (b) For Outside Parties
(c) For Auditors (d) For all of the above

Ans: (d) For all of the above
Q.22 Ind-AS are a set of accounting standards notified by:: :
(A) Company Act, 2013
(B) Central Government
(C ) Finance Ministry
(D) RBI
Answer : (A) Company Act 2013
Q.23 Assets =Liabilities + Capital is developed with the help of ...........concept

a) Business entity concept (b)Matching principle
(c)Going concern concept (d) Dual aspect concept

Ans: (d) Dual aspect concept
Q.24 Assertion (A): An accountant has recorded advance received against sale of
goods as ‘advance against sale’ and not sales.
Reason (R):Revenue is considered to have been recognised when a transaction has been
entered into and the obligation to receive the amount has been established
Ans: (a)
Q.25 “ There should be complete and understandable reporting on the financial
statements of all significant information relating to the economic affairs of the entity.”
Name the relevant accounting principle
a) Matching
b) Historical cost
c) Full disclosure
d) Materiality
Answer: (c)
Q.26 Match the Following
Column I Column II
A. Entire Life if a business should be I Consistency Concept

divided into time intervals
B. Provision for Bad debts to made ii Materiality

consistently over the Years
C. Exception to Full Disclosure Iii Prudence Principle
D. Closing Stock is valued at realisable value Iv . Accounting Period
A B C D
(a) iv ii i iii
(b) iv iii ii i
(c) iv i ii iii
(d) iv i iii ii
Ans A(iv)B(i)C(ii)D(iii) ..c

Q.27 A building was purchased for Rs.500000 The market value of the building is Rs.6,00000. The
cost that should be recorded in books of accounts is .......
(a) Rs.500000 (b)600000 (c)1100000 (d) 100000
Ans: (a) Rs.500000
Q.28 Sara, proprietor of Bhasin Stores, has withdrawn some goods from business for her personal
use. Which accounting principal insists that drawing made by proprietor should be recorded in the
accounting books of business?
a. Money Measurement
b. Accounting period
c. Business Entity
d. Full disclosure
Q.29 ASSERTION (A) : According to Accrual assumption, transactions are recorded when they are
entered into whether amount is exchanged or not.
REASON (R) : Accordingly, Expense is regarded as incurred when the goods or services are
purchased or availed and an obligation to pay for them is assumed.

Answer: A & R are true and R is the correct explanation of A.
Q.30 ASSERTION (A) : Transactions and events that can be measured in money terms are
recorded in the books of account.
REASON (R) : Good industrial relations cannot be recorded in the books.
Answer: A & R are true and R is the correct explanation of A.
Q.31 ASSERTION (A) : Convention of Conservatism takes into account all prospective losses but
leaves out prospective profits.
REASON (R) : All expenses of a period are deducted from revenues of the same period for
calculation of income due to Matching principle.
d. A is false but R is true
Answer: A & R are true and R is not the correct explanation of A
Q.32 Raghav charged depreciation during the year 2016-17, 2017-18 at straight line
method and for next year at diminishing method. Again, in the year 2019- 20 he shifted to
straight line method. The principal violated here is
a) Principle of consistency
b) Principle of conservatism
c) Full disclosure principle
d) Materiality principle
Case Study:
The Proprietor of a business wants to buy a car. But his family members
don’t approve him to buy as the month of Shrad has begun. The
Proprietor finds out a way. He buys the car, makes half the payment and
the bill is made in his name but he asks the vendor to keep the car in the
showroom itself and he will take delivery only after Shrad. In the
meantime, a fire broke out in the showroom destroying the car.
When should the vendor assume Revenue be recognised?
i) At the time when the bill is made in the name of the buyer.
ii) No Revenue should be recognised as the money has to be returned back.
iii) When rest half of the payment will be received.
Iv) When the claim from the Insurance Company will be received
Basis of Accounting
CASE STUDY
Nitin, a dealer in stationery, earned Rs. 6,00,000 during the financial year 2020-21 out of which
Rs.4,30,000 was received in cash. He purchased stationery for Rs.2,00,000 in cash and for
Rs.1,00,000 on credit. He used stationery of Rs.10,000 for personal purposes. He received an
order to supply stationery of Rs.50,000 for which he received Rs.15,000 as advance. Stationery
was to be supplied during April 2021. He paid Rs.18,000 to Kumar & Sons in advance for
stationery to be supplied in May 2021.
On the basis of above case study, answer the following questions:
1. According to Accrual basis , Expense during the year amounted to :
A. Rs.2,90,000
B. Rs.3,00,000
C. Rs.3,08,000
D. Rs.3,18,000
Ans. A
2. According to cash basis, revenue is:
A. Rs.6,00,000
B. Rs.4,30,000
C. Rs.1,70,000
D. Rs.3,10,000
Ans. B
Q.1 Under the Companies Act, all companies are required to maintain their accounts according
to-
(a) Accrual Basis (b) Cash Basis
(c) Either Cash or Accrual Basis (d) None of these

Ans: (a) Accrual Basis
Q.2 Which of the following is not an advantage of accrual basis of accounting

a) it makes complete record of all cash as well as credit transaction.
b) it ascertains correct profit or loss.
c) This basis is recognised under Companies Act 2013.
d) it is more simple as compared to cash basis. Ans (d)
Q:3 Assertion: Accrual basis of Accounting forms the basis of Revenue Recognition Principle.
Reason: Revenue is assumed to be recognised when the bill is made in the name of the buyer
and he is under an obligation to pay the amount. i) Both Assertion and reason are correct and
reason is the correct explanation of the assertion. ii) Both Assertion and reason are correct and
reason is not the correct explanation of the assertion. iii) Assertion is correct but reason is
wrong.
iv) Assertion is correct but reason is wrong.
Q.4 Ajay, a consultant, during the year 2021-22 earned ₹4,00,000 (out of which 80% is received).
He incurred expenses of ₹2,50,000 (out of which 40% is due). During the year, he also received
consultancy fee of ₹80,000 relating to 2020-21 and also paid expenses of ₹30,000 of last year.
You are required to determine his income for the year ended 2021-22, if he follows accrual basis
of accounting:
a. ₹ 1,90,000
b. ₹ 1,50,000
c. ₹ 1,70,000
d. ₹ 2,20,000
Ans. b. ₹ 1,50,000
Q.5 In Cash Basis of Accounting Income of profit is calculated with the help of :
(A) Receipts and Payments Account
(B) Receipts and Expenditure Account
(C ) Income and Expenditure Account
(D) Income and Payment Account
Answer : (A) Receipts and Payments Account
Q.6 The following are the information of a legal firm during the year 2019-20.
Fees earned during 2019-20 7,00,000 ( Only 80% yet received)
Salary to staff 4,50,000( out of which 20,000 advance)
Rent of Building 42,000 (Still unpaid)
What will be income of firm if using Cash Basis of Accounting. :
(A) Rs, 1,08,000
(B) Rs. 68,000
(C ) Rs. 1,10,000
(D) Rs. 2,28,000
Answer : (C) Rs. 1,10,000
Q.7 Accrual Basis of accounting
a. Accrual Basis of accounting gives a true and fair view of profit and Financial Position
b. Accrual Basis of accounting does not gives a true and fair view of profit and Financial
Position
c. Records on Cash aspects
d. None of the Above
Ans :- a
Q.8 During 2020-21; the cash sales of M/s Bhatia and bros. was amounted to Rs. 5,00,000
whereas the credit sales were Rs. 3,00,000. The expenses of Rs. 4,00,000 were made during the
year and expense of Rs. 50,000 is still outstanding. What would be the income of M/s Bhatia and
Bros. for the year ended 31st March 2021, if accounts were prepared following the Accrual Bases
of Accounting?
e. 3,50,000 (CORRECT)
f. 1,00,000
g. 4,00,000
d. 50,000
Q.9 Assertion (A) : Cash Basis of Accounting doesn’t ascertain the correct amount of profit or
loss.
Reason (R) : Under cash basis of accounting only cash transactions are recorded irrespective of
their time period.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are false and R is not the correct explanation of A.
c. A is true, but R is false
d. A is false, but R is true
Q.10 i) According to cash basis the receipt or payment due are ignored.
ii) As per the accrual basis the revenue and costs are recognized when incurred
iii. Office Rent for the month of Dec’20 paid in Jan’21 is recorded in Jan’21
(a) Option (i),(ii) and (iii) is the correct statement

(b) Option (i) and (iii) is the correct statement
(c) Option (ii) and (iii) is the correct statement
(d) Option (i) and (ii) is the correct statement
Ans: (d)
Q.11 i) According to cash basis the receipt or payment becomes due are ignored.
ii) As per the accrual basis the revenue and costs are recognized when it occurred
iii. Office Rent for the month of Dec’20 paid in Jan’21 is recorded in Jan’21.
a) Option (i) and (ii) is the correct statement

b) b) Option (i), (ii) and (iii) is the correct statement
c) Option (i) and (iii) is the correct statement
d) Option (ii) and (ii) is the correct statement
Ans. B
Q.12 Which of the following is a true statement?

a) Accrual Basis is more complicated than Cash basis.
b) Cash basis of accounting records only cash transactions whereas Accrual basis records
only credit transactions.
c) Cash basis is more reliable than Accrual Basis.
d) Accrual basis is not recognised by Indian Companies Act 2013
Q.13 Assertion: Accrual basis of Accounting forms the basis of Revenue
Recognition Principle.
Reason: Revenue is assumed to be recognised when the bill is made in

the name of the buyer and he is under an obligation to pay the amount.
i) Both Assertion and reason are correct and reason is the correct explanation of the
assertion.
ii) Both Assertion and reason are correct and reason is not the correct explanation of the
assertion.
iii) Assertion is correct but reason is wrong.
ACCOUNTING EQUATION
Q.1 Assertion : Accounting equation signifies that the assets of a business are always equal to
the capital (owner’s equity).
Reason : At any point of time resources of the business entity must be equal to the claims of
those who have financed these resources.

correct?
Codes:
(A) (A) is correct, but (R) is wrong.
(B) Both (A) and (R) are correct.
(C) (A) is wrong, but (R) is correct.
Ans. : ©
Q.2 Sale of goods on credit to Ram for ` 3,000 will bring about what changes in the accounting
equation?
(a) Debtor’s Account will decrease by ` 3,000, goods will increase by ` 3,000
(b) Debtor’s Account will increase by ` 3,000 while goods will decrease by ` 3,000
(c) Debtor’s Account will increase by ` 3,000 while Cash will increase by ` 3,000.
(d) Debtor’s Account will increase by ` 3,000 while Cash will decrease by ` 3,000.
Q.3 X commenced business on 1st April 2013 with the capital of rupees 100000. Find out the
capital after providing interest on capital and charging interest on drawings interest on capital
allowed is Rs. 5,000 and interest on drawing charged is Rs. 2000.
a) 1,00,000
b) 1,05,000
c) 98,000
d) 1,03,000 Ans (a)
Q:4 Assertion: A transaction in which there is an increase in one asset with a corresponding
decrease in capital (only) is not possible.
Reason: Accounting Equation establishes the Equality between the sum of Assets and the Sum of
Liabilities and Capital.
assertion.
assertion.
ii) Assertion is correct but reason is wrong
iv) Assertion is correct but reason is wrong
Q.5 Calculate Owner's Equity (Capital) as on 31.03.2021 from the following information: Total
Assets as on 31.03.2020 ₹ 2,00,000; Outside Liabilities as on 31.03.2020 ₹ 50,000. During the
year 2020-21, discount allowed ₹ 5,000 and Bad Debts recovered ₹ 7,000. Additional Capital
introduced during the year ₹ 40,000 and withdrawls for personal use during the year ₹ 10,000.
a. ₹ 1,82,000
b. ₹ 1,50,000
c. ₹ 180,000
d. ₹ 1,75,000
Ans. a. ₹ 1,82,000
Q.6 Depreciation charged on assets will result in:
a) Decrease in assets, increase in liability
b) Decrease in assets, decrease in owner’s capital
c) Increase in assets, increase in liability
d) Increase in liability, increase in assets.
ANS. b) Decrease in assets, decrease in owner’s capital
Q.7 Payments to Creditors is an example of :.

(A) Increase in Assets and Decrease in Liabilities
(B) Decrease in Assets and Decrease in Liabilities
(C ) Increase in Assets and Increase in Liabilities
(D) Decrease in Assets and Increase in Liabilities
Answer : (B) Decrease in Assets and Decrease in Liabilities
Q.8 Sohan industry has incurred Rs. 8,000 for repairs out of which Rs. 5000 paid. It will
be shown in accounting equation as: :.
(A) Decrease in Assets by 5000 and Decrease in capital by 5000
(B) Decrease in Assets by 8000 and Decrease in capital by 8000
(C ) Decreases in Assets by 5000 and Increase in Liabilities by 3000 with
decrease in ` capital by 8000
(D) Decreases in Assets by 5000 and Decrease in Liabilities by 3000 with
increase in ` capital by 8000
Answer : (C ) Decreases in Assets by 5000 and Increase in Liabilities by 3000 with

decrease in capital by 8000
Q.9 Find the Value of Account receivable from the following CAsh Rs 48,000, Account
Payable Rs 33,000, Furniture Rs21,000 and Equity Rs 77,000
a. Rs 41,000
b. Rs 24,000
c. Rs 21,000
d. Rs 15,000
Ans :- a
Q.10 Purchase of machine by cash means:

(A) Decrease is assets and decrease in liability
(B) Increase in assets and decrease in assets
(C) Decrease in assets and decrease in liability
(D) Decrease in assets and increase in capital
Ans. (B)
Q.11 State which of the following transaction will result in “Increase in one Asset, Decrease in
one Asset and Increase in Capital” while preparing an Accounting Equation.
• Cash received from a debtor
• Sold goods for cash
• Sold goods at a loss
• Sold goods at a profit (CORRECT)
Q.12 Which of the following transaction will Decrease the Assets and Increase the liability?
a. Purchased goods in cash.
b. Sale of an asset in cash
c. Purchase of an asset on credit
d. Cash deposited into Ban
Q.13 Goods destroyed by fire costing Rs1500 selling price Rs 2000____
(a) Increase in stock by 2000 and increase in cash by 2000
(b) Decrease in stock by 1500and decrease in capital by 1500
(c) Increase in stock by 2000 and increase in stock by 2000
(d) Increase in stock by 1500 and decrease in creditor by 1500
Ans: (b)
Q.14 Match items in List I with terms in List II using the codes given below the lists-
Description (List -I) Option (List II)

1- Increase in assets, decrease in another assets A- Creditors paid in cash
2- Increase in one liability, decrease in another B- Goods purchased on credit
3- Decrease in assets, Decrease in liability C- Loan converted into capital
D- Cash Received from Debtors
1-D; 2-C; 3-A
Q.15 Amit purchased a car₹6,00,000 for his personal use for which he took a loan of
₹4,00,000 from the bank. How will you treat it in the accounting equation?
a) Decrease in cash ₹2,00,000, decrease in capital ₹6,00,000 and increase in
liabilities ₹4,00,000
b) Decrease in cash ₹2,00,000, increase in car ₹6,00,000 and increase in
c) Decrease in cash ₹6,00,000, increase in car ₹6,00,000
d) Increase in cash ₹2,00,000, increase in capital ₹6,00,000 and decrease in
Answer: (a)
Q.16 What will be the treatment of Unearned Income in accounting equation?

a. Add in capital and show on asset side
b. Add in cash and show on liabilities side
c. Deduct from cash and show on assets side
d. Deduct from capital and show on asset side
Answer: Add in cash and show on liabilities side
Q.17 A creditor of Rs 9,500 is settled by a final payment of Rs 9,000. How will it affect the
capital?
a) Increase by Rs 9,500
b) Decrease by Rs 500
c) Increase by Rs 500
d) Decrease by Rs 9,500
JOURNAL AND LEDGER

Q.1 The journal entry to record purchase of Furniture for ₹ 1,00,000 cash and a balance of `
4,00,000 due in 45 days include:
(a) Debit Furniture for ₹ 1,00,000 and Credit cash ₹ 1,00,000.
(b) Debit Furniture for ₹ 5,00,000 and Credit cash ₹ 1,00,000 and creditors ₹ 4,00,000.
(c) Debit Furniture ₹ 1,00,000 and Credit debtors ₹ 4,00,000.
(d) Debit Furniture ₹5,00,000 and Credit cash ₹ 5,00,000.
Ans. B
Q.2 The ledger folio column of journal is used to:
(a) Record the date on which amount posted to a ledger account.
(b) Record the number of ledger accounts to which information is posted.
(c) Record the number of amounts posted to the ledger account.
(d) Record the page number of the ledger account.
Ans. (d)
Q.3 Total of these transactions is posted in purchase account :
(i) Purchase of furniture (ii) Cash and credit purchase (iii) Purchases return (iv) Purchase of
stationery
(a) (i) and (iii)
(b) (ii) and (iii)
© (ii) only
(d) (ii) and (iv)
Ans. ©
Q.4 Which of the following is known as principal book of Accounting
(a) Journal
(b) Ledger
(c) Trial Balance
(d) Balance sheet
Q.5 Tanish who owed us Rs 8000 became insolvent and paid us 60% in full settlement . Posting
will be made to Tanish a/c
(a) 8000 on debit side
(b) 8000 on credit side
(c) 4800 on debit side
(d) 4800 on credit side
Q.6 An amount of ` 30,000 is appearing on the credit side of Machinery account. Which of the
following options are not possible for this amount?
(a) Depreciation
(b) Machinery purchased
(c) Machinery Sold
(d) Machinery damaged by fire
Q.7. Sold goods worth list price of ` 8,000 at 10% trade discount and 2% cash discount. 25%
received at the time of transaction only. The amount posted to discount account will be:
(a) ` 36 on Debit side
(b) ` 144 on Credit side
(c) ` 144 on Debit side
(d) ` 400 on Credit side
Which of the following is not a personal account
a) accrued Commission
b) bank
c) interest received
d)Sundry creditors
Q.8 Assertion (A): Goods purchased are debited to purchase account.
Reason(R): Goods is real account and real account rule is " Debit
what comes in and credit what goes out".
(A) Assertion and reason both are correct and reason is correct explanation of assertion.
(B) Assertion and reason both are correct and reason is not correct explanation of assertion.
(C) Assertion is correct but Reason is incorrect.
(D) Reason is correct but assertion is incorrect.
Ans.(C)
Q.9 Assertion (A) The Journal entry for goods returned to a creditor when they were originally
sold at discount is:
Creditor A/c Dr.
To Purchase Return
To Discount Received
Reason (R): If the goods sold at trade discount are returned by the customer, the amount of trade
discount is again deducted from the list price of the returned goods.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of
Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of
Assertion (A).
(d) Assertion (A) is False but Reason (R) is True. Ans (d)
Q.10 Vijay who owed us 1,000 became insolvent only 60 paisa in a rupee could be recovered
from his estate. Posting will be made in bad debts account:
a) 600 on the debit side
b) 1000 on the credit side
c) 400 on the debit side
d) 400 on the credit side Ans (c)
Q.11 The Proprietor takes away an asset belonging to the firm. This will lead to a
_____________ to Capital Account. i) Debit ii) Credit iii) Neither Debit nor credit iv) Either debit
or Credit
Q 12 Case Study:
Raman a serviceman lets her wife start a new business of gift items. He invested some capital for
buying fixed assets and initial expenses for opening the shop but is unable to pay more amount
as capital at that moment but agrees to provide capital whenever expenses will arise. The shop is
hired at a monthly rent of Rs 10,000. Mrs Raman had sold goods worth Rs 6,000. She used this
amount to pay rent and asks Raman to pay for rest of the amount which he pays. What will be
the Journal Entry for payment of rent?
i) Rent A/c …. Dr 10,000
To Cash A/c 10,000
ii) Rent A/c …. Dr 10,000
To Capital A/c 10,000
iii) Rent A/c… Dr 10,000
To Cash A/c 6,000
To Capital A/c 4,000
Q.13
Cash BOOK
Date Particulars JF Amount Date Particulars JF Amount
1/4/21 By Suresh 9,900
Discount Received A/c

1/4/21 By Suresh 100
Suresh
1/4/21 To Cash A/c 9,900 1/4/21
1/4/21 To Discount 100
Received A/c
Assuming particulars given in the above ledgers form one transaction,

suggest Journal entry for the transaction.
i) Suresh … Dr 10,000
To Cash A/c 9,900
To Discount Received A/c 100
ii) Cash A/c … D 9,900
Discount Received A/c Dr 100
To Suresh 10,000
Q.14 Institute of Cost Accountants of India is an example of:

a. Natural Personal Account
b. Artificial Personal Account
c. Real Account
d. Representative Personal Account
Ans. b. Artificial Personal Account
Q.15 Goods costing ₹20,000 are sold at a profit of 20% on cost and Trade discount is allowed @
10% and also cash discount is allowed at 10 %. Half the payment is received at the time of sale.
What is the amount of cash received at the time of sale?
a. ₹10,800
b. ₹11,800
c. ₹9,720
d. ₹9780
Ans. c. ₹9,720
Q.16 Mr. Kapil, a debtor of Rs. 20,000 was declared insolvent 6 months ago. Suddenly, he came
and paid Rs. 18,000 in settlement. Which of the following account will be credited to record this
transaction?
h. Kapil A/c by Rs. 18,000
i. Kapil A/c by Rs. 20,000
j. Bad Debt Recovered A/c by Rs. 18,000 (CORRECT)
k. Bad Debt Recovered A/c by Rs. 20,000
Q 17 Arrange the following in sequence in accounting equation-
Transactions
a. Claim Received from Insurance company of Rs 24,000
b. Goods Purchased of Rs 50,000 on credit from Creditors
c. Goods Lost By fire of Rs 30,000 and insurance company accepted 80% claim.
Ans. B-C-A
Q.18 Direction: The following items consist of two statements, Statement I and
Statement II. Examine these two statements carefully and select the correct answer
Statement I: Assets accounts normally have a credit balance.
Statement II: Plant & Machinery is a type of Fixed Assets account.
a) Both the statements are correct
b) Both the statements are incorrect
c) Statement I is correct but Statement II is incorrect
d) Statement II is correct but Statement I is incorrect
Answer:(d)
Q.19 Rent Received in advance is ______________________ account and Rent paid in advance
is _______________ account
a. Personal , Personal
b. Personal, Real
c. Nominal , Personal
Real , Real
Q.20 Rs 5,000 recieved from Mohan whose account was written off as bad in
the previous year should be credited to:
(A) Mohan's A/c
(B) Bad-debts A/c
(C) Bad-debts recovered A/c
(D) None of these
Ans. (C)
Q.21 Which of the following account does not have a debit balance?
a) Carriage Inward
b) Commission received
c) Carriage Outward
d) Commission paid.
ANS. b) Commission received
Q.22 Journal entry for “Goods costing Rs.80,000 sold to Diya for Rs 1,00,000.” will be with:
a. Rs.80,000
b. Rs.1,00,000
c. Rs.20,000
ANS.Rs.1,00,000
Q.23 What type of accounts will have debit balance only

a. Personal account
b. nominal account
c. real account
d. all of these
ANS. Real account
Q.24 Assertion (A): Rules of debit & credit are same for Capital & Liabilities
Reason (R): Debit what comes in & credit what goes out
Ans: (b)
Q:25 Assertion: A transaction in which there is an increase in one

asset with a corresponding decrease in capital (only) is not
possible.
Reason: Accounting Equation establishes the Equality between the sum

of Assets and the Sum of Liabilities and Capital.
assertion.
assertion.
iii) Assertion is correct but reason is wrong.
Q:26 The Proprietor takes away an asset belonging to the firm. This will lead to a to
Capital Account.
i) Debit
ii) Credit
iii) Neither Debit nor credit
iv) Either debit or Credit
Q.27 Read the following statements carefully and select the correct option: (1) Ledger is prepared
from Journal; (2) Sales made to Alan should be debited to Cash A/c; (3) Opening entry is passed
for the first transaction of each day; (4) Withdrawl of money by the owner is not an expense for
the business.
a. Statements 1, 2 & 3 are correct
b. Statements 1 & 4 are correct
c. Statements 1, 3 & 4 are correct
d. Statements 1, 2 & 4 are correct
Ans. b. Statements 1 & 4 are correct
Q.28 Consider the following:

(I). Salary Account is a Nominal Account
(2). Outstanding Salary Account is a Nominal Account
(3). Prepaid Salary is a Personal Account.
Which are corrects::
(A) Both (1) and (2)
(B) Both (2) and (3)
(C ) Both (1) and (3)
(D) All (1), (2) and (3)
Answer : (c) Both (1) and (3)
Q.29 Goods costing 40,000 supplied to Amritraj at a profit of 20% on sales price less
trade discount @ 10 %will be credited to Sales account with :
(A) Rs 48,000
(B) Rs. 43,200
(C) Rs. 52,800
(D) Rs. 45,000
Answer : (D) Rs. 45,000
Q.30 An old furniture having book value Rs. 8,000 was sold for Rs. 2,000 and new
furniture was purchased for Rs. 14,000. In journal entry furniture account will be
credited with ________
(A) Rs. 8,000
(B) Rs, 2,000
(C ) Rs. 14,000
(D) Rs. 6,000
Answer (A) Rs. 8,000
Q.31 Amit who owes Rs. 12,000 become insolvent and only 60 paise in a rupees
received from his estate. While passing journal entry Amit account:
(A) will be credited by Rs. 12,000
(B) will be credited by Rs. 7200
(C ) will be debited by Rs. 7,200
(D) will be debited by Rs. 12,000
Answer (A) will be credited by Rs. 12,000
Q.32 The word “To Balance b/d” and “By Balance b/d” are recorded in the particular
column at the time of posting of ---------------
(A) Opening Entry

(B) Closing Entry
(C ) Transfer Entry
(D) Adjustment Entry
Answer ; (A ) Opening Entry
Q.33 While preparing account of Rajan Watch company the total of debit side is Rs.
5,39,000 and total of credit side is Rs. 3,97,000, it indicate:
(A) Debit balance of Rajan Watch Company Rs. 5,39000

(B) Credit balance of Rajan Watch company Rs. 3,97,000
(C ) Debit balance of Rajan Watch Company Rs. 1,42,000
(D) Credit balance of Rajan Watch company Rs. 9,42,000
Answer : (C ) Debit balance of Rajan Watch Company Rs. 1,42,000

Q.34 For Which of the Following transaction assets and Capital will decrease by the same
amount ?
a. Goods sold for Cash
b. Fixed assets purchased on credit
c. Goods sold on profit
d. Depreciation on Fixed assets
Ans :- d
Q.35 What will be Journal Entry for Payment of Outstanding salary of Rs50,000 out of Rs 80,000.
a. Salary 50,000
To Outstanding Salary 50,000
b. Salary a/c 50,000
To CAsh 50,000
c. Outstanding Salary 50,000
To CAsh 50,000
Q.36 Assertion: A Journal is also known as Book of Original Entry.

Reason: A Journal is also known as Book of Original Entry as Journal is a book of primary
entry or a book of original entry in which transactions are first recorded in a chronological
order i.e., in the order or sequence they are entered.
(a) Both A and R are individually true and R is the correct explanation of A
(b) Both A and R are individually 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
Ans: (a) Both A and R are individually true and R is the correct explanation of
Q.37 Assertion: Drawings A/c will always have a debit balance.
Reason: Increase in expense will be debited and decrease in expense will be credited.
l. Assertion and Reason both are correct, and reason is the correct explanation of
Assertion.
m. Assertion and Reason both are correct, but reason is not the correct explanation
of Assertion. (CORRECT)
n. Assertion is correct, Reason is incorrect.
o. Assertion is incorrect, Reason is correct.
Q38 Purchased goods ₹70,000 from Aman for cash. Which of the following entry is
correct to record the above transaction?
a) Dr Purchases A/c ₹70,000, Cr Aman ₹70,000
b) Dr. Purchases A/c ₹70,000, Cr. Cash A/c70,000
c) Dr Cash A/c ₹70,000 Cr Purchases A/c ₹70,000
d) Dr Aman ₹70,000, Cr Purchases A/c ₹ 70,000
Answer: ( b)
Q.39 Assertion: Purchases Account always shows Debit Balance

Reason: Purchases Account is a Real / Asset Account
Choose the correct option:
a) Assertion and reason both are correct
b) Assertion is correct but reason is wrong
c) Assertion and reason both are correct but reason is not the correct
explanation of assertion.
d) Reason is correct but assertion is not correct
Q.40 Rent paid to Amar will be recorded in journal as

a) Amar Dr; Cash account Cr
b) Cash Account Dr; Amar Cr
c) Rent Account Dr; Cash Account Cr
d) Cash Account Dr; Rent Account Cr
Q.41 The book in which all accounts are maintained is known as:
a) Cash Book
b) Journal
c) Purchases Book
d) Ledger
Q.42 Goodwill Account is _______________ account.

a. Personal
b. Real
c. Nominal
None of the above
Q.43 Sanya purchases goods from Ajay amounting to Rs. 1,00,000 at a trade discount of 10% and
cash discount of 10%. How much amount will be paid by Sanya?
a. Rs. 1,00,000
b. Rs. 80,000
c. Rs. 90,000
Rs. 81,000
Q 44 Fill in the following assuming GST rate is 12%.
Purchases a/c Dr. _______

Input IGST a/c Dr. 30,000
To shyam’s a/c _________
(Purchased goods from Ram)
1) Purchases 60,000, Shyam 1,20,000

2) Purchases 2,50,000, Shyam 2,80,000
3) ) Purchases 2,80,000, Shyam 2,50,000
Q.45 What do you mean by Representative personal account?

a. These accounts include the accounts of corporate bodies
b. These accounts represent a certain person or group of persons
c. These accounts represent institutions which are recognized as persons in business
dealings.
d. Accounts of a limited company
Answer: These accounts represent a certain person or group of persons
Q.46 Ledger book is popularly known as
(a) subsidiary books of accounts
(b) secondary book of accounts
(c) principal book of accounts
(d) none of these.
Ans: (c)
Q.47 Ledger is a Principal Book in which ?

a. Only personal accounts are kept
b. Only Real accounts are kept
c. Only Nominal Accounts are Kept
d. All accounts are kept
Ans :d
Q.48 Assertion: The rule “Debit all expenses and losses and credit all gains and incomes” is
applicable to Personal Account.
Reason: Nominal Accounts are the accounts relating to expenses, losses, incomes and
gains Expenses and Losses are debited while incomes and gains are credited.
Ans: (d) A is false but R is true
Q.49 Assertion: Balancing of Ledger is necessary.
Reason: After posting the transactions, accounts are balanced every year or after a
certain period. Balancing an account means that the two sides of an account are totalled
and the difference in total of the two sides is written on the side whose total is similar.
1. Ans: (a) Both A and R are individually true and R is the correct explanation of A
Q.50 What is the nature of Accrued Rent as per Modern Approach of Accounting?
a. Asset (CORRECT)
b. Liability
c. Revenue
d.Expense
Q.51 Balancing of account means:
a. Total of debit side
b. Total of credit side
c. Difference between debit and credit side
Q.52 Ledger is also called as:
a. Book of Prime entry
b. Book of Original entry
c. Book of Secondary entry
d. Book of final entry
Answer: Book of final entry
CASE STUDY
Passage based question:
Namit started business with a capital of Rs.10,00,000. He took an office on rent
@Rs.24,000/month in an office complex close to his place of residence. Instead of buying
furniture for his office he paid Ramit Rs.10,000 as wages for construction of office furniture.
His friend Risha advised him to buy a truck for delivery of goods rather than using a transporter as
she regularly faced issues transporting her goods. Therefore, to make smooth delivery of his goods
he bought a delivery truck of Rs.15,00,000 from Tata Motors and financed the same from SBI
bank @12%pa.
Being new to the business Namit approached an established seller Sakshi Ltd., which sold, goods
with a list price of Rs.1,25,000; with scheme of 20% Trade Discount and 2% Cash Discount on
Immediate payment. Namit was very happy with this scheme and paid 40% of the amount by
cheque and availed the Discount.
Due to a recent fire in his locality Namit decided to take an insurance policy for his business and
paid by cheque Rs.12,000 as fire insurance premium for a period of 12 months starting 1 st October
2020. Namit usually makes all his payments on time and never forgets to pay any bills but this
time he forgot to pay his house electricity bill of Rs.10,000 and therefore paid it along with his
office electricity bill of Rs.15,000 by cheque.
Munish being Namit’s best friend placed a huge order with him and paid Rs.10,000 as advance
against the order. Namit on a later date supplied goods worth Rs.50,000 against the advance
received from him. Munish loved the products and promised to buy more from him. He also
promised to recommend the products to al his family and friends.
Answer the following questions based on the passage above:
Q 1. Financial year closes on 31st March every year. The following Account will be
debited/credited on 1st Oct. 2020 pertaining to the insurance for office
(a) Insurance Premium A/c will be Debited with Rs.12,000
(b) Drawings A/c will be Debited with Rs.12,000
(c) Advance Insurance Premium A/c debited by Rs 6,000 & Insurance Premium A/c
will be credited with Rs.6,000
(d) Insurance Premium A/c will be debited with Rs.6,000 & Advance Insurance
premium A/c will be debited with Rs.6,000
Ans: (d)
Q2 Journal entry for wages paid to Ramit for construction of office furniture will be :
(a) Wages A/c Debited to Cash a/c
(b) Furniture & Fittings A/c Debited to Ramit
(c) Ramit Debited to Cash A/c
(d) Furniture & Fittings A/c Debited to Cash A/c
Ans: (d)
Q3 For goods sold by Sakshi the amount posted to discount A/c will be
(a) Rs. 800 on Credit side
(b) Rs. 2,000 on Credit Side
(c) Rs. 800 on Debit side
(d) Rs. 2,000 on Debit Side
Ans: (a)
Q4 For the supply of goods to Munish against advance The account to be debited are:
(a) Sales A/c with Rs. 40,000 & Advance Against Sales A/c 10,000
(b) Munish’s A/c 50,000
(c) Sales A/c with Rs. 40,000 & Munish’s A/c 10,000
(d) Advance Against Sales A/c with Rs.10,000 & Munish’s A/c 40,000
Ans: (d)
Q5 For the electricity expense paid by cheque the account to be debited will be :
(a) Electricity Expenses A/c Rs.30,000
(b) Drawings A/c Rs.30,000
(c) Electricity Expenses A/c Rs.20,000 & Drawings A/c Rs.10,000
(d) Electricity Expenses A/c Rs.20,000 & Cash A/c 10,000
Ans: (c)
VOUCHERS
Q.1 Rajesh has returned goods worth rupees 30000 as he found them defective.
Which document will be prepared by Rajesh?
a) credit voucher
b) invoice
c) debit note
d) credit note Ans (c)
Q:2 A seller by mistake charged higher price in the invoice. For rectifying the
mistake, which source document will be made by the seller? i) Debit Note ii) Credit
Note iii) Pay in slip iv) Purchase Invoice
Q.3 You are working as an accountant in Mircro Industry. Salary paid to staff for the
month of july Rs. 7,36,000. For that you will prepare _________
(A) Debit Note
(B) Debit Voucher
(C) Credit Note
(D) Credit Voucher
Answer : (B) Debit Voucher
Q.4 Sumit purchased goods of Rs. 80,000 from Mohan. Sumit return the goods of Rs.
4,000 to Mohant as he found it defective. The documents prepared by:Sumit and
Mohan:
(A) Mohan will prepare Invoice and Sumit will prepare Debit Note
(B) Sumit will prepare Invoice and Mohan will prepare Debit Note
(C) Mohan will prepare cash memo and Sumit will prepare Credit Note
(D) Sumit will prepare cash memo and Mohan will prepare Credit Note
Answer : (A) Mohan will prepare Invoice and Sumit will prepare Debit Note
Q.5 Debit Notes received from suppliers are entered in which Subsidiary Book?
(a) Purchases (b) Returns Outward (c) Returns Inward (d) Sales
Ans. (b) Returns Outward
Q.6 Assertion (A) Auditors can easily vouch the vouchers and use them as Documentary
evidence in future
Reason ( R) A Serial number is put on each voucher and the relative source documents are
attached with each voucher
Ans :-Both A and R are True and reason is Correct explanation of Assertion
Q.7 A debtor who returned goods and a note is sent by the Seller. The note is called:-
(a) Debit Note (b) Credit Note (c) Refund Note (d) Return Note
Ans: (b) Credit Note

Q.8 “Goods returned by Mr. Lalit”. Which source voucher will be prepared in this transaction?
p. Debit Note
q. Credit Note (CORRECT)
r. Debit Voucher
Credit Voucher
Q.9 When Insurance Claim of Rs 1,00,000 is accepted by Insurance company on loss of goods by
fire costing Rs 1,50,000 a month ago, one of the following vouchers is prepared
a) Credit Voucher Rs 1,00,000
b) Credit voucher Rs 1,50,000
c)Transfer Voucher Rs. 1,00,000
d)Transfer Voucher Rs 1,50,000
(C)
Q.10 Which of the following statement is not true?

(a) Vouchers are prepared with the help of supporting documents.
(b) Cash-memo, Invoice are the examples of supporting documents.
(c) Debit note and Credit note are not the examples of supporting documents.
(d) To record credit transaction a transfer voucher is prepared.
(C)
Q.11 ____________ is made out evidencing that credit has been granted to a debtor.
a) Debit Note
b) Credit Note
c) Cash memo
d) Bill
Answer: (b)
Q.12 Assertion (A): Cash vouchers are categorized into Debit and Credit vouchers.
Reason (R): Credit vouchers are prepared when cash is received whereas Debit vouchers
are prepared when payment is made.
Answer: A & R are true but R is the correct explanation of A.
4. Voucher is prepared for:
a) Cash received and paid
b) Cash/Credit sales
c) Cash/Credit purchase
d) All of the above
Q.13 A seller by mistake charged higher price in the invoice. For

rectifying the mistake, which source document will be made by the
seller?
i) Debit Note
ii) Credit Note
iii) Pay in slip
iv) Purchase Invoice
GST
Q.1 What amount should be debited to bank account if the goods are sold for 50000 less 10%
trade discount plus cgst and sgst@9 percent each and the payment is received through cheque.
a) 45000
b) 49050
c) 53100
d) 50000 Ans (c)
Q.2 Fill in the missing figures assuming CGST and SGST @ 6% each.
a.Sales A/c, Input CGST A/c, Input SGST A/c, ₹ 2,00,000, ₹ 12,000, ₹ 12,000
b. Purchase A/c, Output CGST A/c, Output SGST A/c, ₹ 2,00,000, ₹ 12,000, ₹ 12,000
c. Sales A/c, Output CGST A/c, Output SGST A/c, ₹ 2,00,000, ₹ 12,000, ₹ 12,000
d. None of the Above
Ans. c. Sales A/c, Output CGST A/c, Output SGST A/c, ₹ 2,00,000, ₹ 12,000, ₹ 12,000
Q.3 Goods purchased for cash Rs.20,000 plus 12% IGST. Purchase a/c
will be debited by (A) Rs.20,000
(B) Rs.22,400
(C) Rs.22,000
(D) None
of these
Ans.(B)
Q.4 Consider the following :

(1) GST is a Comprehensive Direct Tax
(2) GST is a Destination Based Tax
(3) GST is a Value Added Tax
: (A) Only (1) and (2) are correct..

(B) Only (2) and (3) are correct...
(C ) Only (1) and (3) are correct
(D) All (1), (2) and (3) are correct...
Answer : (B) Only (2) and (3) are correct
Q.5 Sold goods costing 40,000 to Amit at a profit of 25% on cost less 20% trade
discount plus IGST 18% . Cash discount 2% on sales value. 75% amount
received in cash. In journal entry :
(A) Discount allowed account will be debited by 600.
(B) Discount allowed account will be debited by 708.
(C ) Discount received account will be credited by 600.
(D) Discount received account will be credited by 708.
Answer : (A) Discount allowed account will be debited by 600.
Q.6 What is the Entry Passed for sales return of intra state sale of Goods on which GST is Levied
a. Sales Return a/c
Output CGST a/c
Output SGST a/c
To Cash a/c
b. Sales Return a/c
Output IGST a/c
To Cash a/c
c. Sales Return a/c
Output SGST a/c
To Cash a/c
Ans a
Q.7 For GST paid on inter-state of goods, which of the following account is credited:
(a) Output CGST A/c (b) Output IGST A/c

(c) Input IGST A/c (d) Output SGST A/c
Ans: (b) Output IGST A/c
Q.8 In case of inter-state sale of goods:
s. Input CGST and SGST will be charged
t. Input IGST will be charged
u. Output CGST and SGST will be charged
v. Output IGST will be charged (CORRECT)
Q.9 Karan Ltd Delhi sold goods worth ₹1,00,000 to Krish ltd Jhansi (UP) charging
IGST@12% ie ₹12,000. For Karan Ltd IGST charged is ___________ and for
Krish Ltd it is ______________.
a) Output IGST and Input IGST
b) Input IGST and Output IGST
c) Input CGST and Input SGST
d) Output IGST and Input SGST
Answer: (a)
Q.10 Subhas of Sahibabad sold goods to Alif and company Delhi , of list price Rs 1,00,000 less
trade discount 20% Cash discount is 2%. Alif and company paid the amount at the time of sale.
Rate of IGST is 12%. Invoice prepared by Subhash will be of
a) Rs 87,808
b) Rs 78,400
c) Rs 88,480
d) Rs 73,104
CASH BOOK
Q.1 A Petty Cashier was being given ` 10,000 on 1st October, 2017 and he spent ` 7,800 during
the month of October. The remaining balance of ` 2,200 kept with petty cashier is (i)
___________ for the concern and he will be given (ii) ________on 1St November if the firm is
following Imprest system.
(a) (i) Assets; (ii) ` 10,000
(b) (i) Assets; (ii) ` 7,800
(c) (i) Liability; (ii) ` 10,000
(d) (i) Liability; (ii) ` 7,800
Q.2 Cheque received not yet deposited in the bank:

i) will be recorded in the debit column of cash.
ii) will be recorded in the debit column of bank.
iii) will be recorded in the credit column of bank.
iv) will not be recorded in cash book. Ans (iv)
Q.3 A firm is maintaining all its subsidiary books including Cash Book and
Journal Proper. What will be the entry in the Journal Proper for the
following transaction:
Rent paid in cash Rs 10,000
i) Rent A/c… Dr 10,000
To Cash A/c 10,000

ii) No Entry
Q.4 The X Traders maintains a double column cash book. It received a cheque amounting to
₹1,000 from Y Traders. The cheque was not deposited into bank account on the same date on
which it was received. The amount of the cheque would be written:
a. in the bank column on the debit side of the cash book
b. in the bank column on the credit side of the cash book
c. in the cash column on the debit side of the cash book
d. in the Journal Proper
Ans. d. in the Journal Proper
Q.5 ASSERTION(A): Cash column of cash book cannot have a credit balance.
REASON (R) : At the most the cash column of cash book can show nil balance when cash
payments are equal to cash in hand.
Assertion.
Assertion
ANS.(a) Both Assertion and Reason are correct and Reason is the correct explanation of
the Assertion.
Q.6 Imprest system is associated with:

(A) Two Column Cash Book
(B) Petty Cash Book
(C ) Return Inward Book
(D) Return Outward Book
Answer : (B) Petty Cash Book
Q.7 Cash Book is a :::

(A) Journal
(B) Ledger
(C) Both Journal and Ledger
(D) Neither Journal nor ledger,
Answer : (C) Both Journal and ledger
Q.8 Salary due for the month of March 2020 will recorded in cash Book.
(A) Receipts side
(B) Payments side
(C ) Contra
(D ) Not recorded
Answer : (D) Not recorded
Q.9 Encashed a cheque of Rs. 7000 from bank will be recorded in two column cash
book:
(A) Debit side cash column only
(B) Debit side bank column only
(C ) Debit side cash column and credit side bank column as contra entry
(D) Debit side bank column and credit side cash column as contra entry
Answer : (C ) Debit side cash column and credit side bank column as contra entry
Q.10 Cash Book is a :

(A) Subsidiary Book
(B) Principal Book
(C) Both Subsidiary Book and Principal Book
(D) Neither Subsidiary Book nor Principal Book,
Answer : (C) Both Subsidiary Book and Principal Book
Q.11 Which Method is followed in Preparing Petty CAsh book
a. Financial System
b. Ordinary System
c. Imprest system
d. Both a and B
Ans :- c
Q.12 Assertion: Cash column in the Cash Book cannot have credit balance whereas Bank column
may have credit balance.
Reason: Cash Column in the Cash Book cannot have credit balance because credit balance
means amount spent is more than the Cash Balance. Whereas, Bank Column of the Cash
Book may have credit balance (Overdraft balance) meaning bank is overdrawn.
Ans: (a) Both A and R are individually true and R is the correct explanation of
Q.13 A cheque of Rs. 40,000 was received on 20th January 2021 from Mr. Rahul and discount of
Rs. 2,000 was allowed. This cheque was deposited in the bank on 23 rd January 2021. While
preparing subsidiary books, the transaction of 20th January 2021 will be recorded in
_______________ and 23rd January 2021 will be recorded in _______________.
a. Cash Book; Cash Book
b. Cash Book; Journal Proper
c. Journal Proper; Cash Book (CORRECT)
d. Journal Proper; Journal Proper
Q.13 The balance of petty cash is:
a. Expenses
b. Profit
c. Asset
d. Liability
Q.14 If nature of cash balance is not mentioned in cash book then it will be :
(a) Credit balance
(b) Overdraft balance
(c) Debit balance
(d) Unfavourable Balance
Ans: (c)
Q.15 Bank issued a demand draft for Rs. 15,000 in favour of Mayank . Bank charged RS. 50 for
issuing the draft. Amount will be shown on ____ side and in _____ column of cash book:
a. Receipt, cash
b. Payment, bank
c. Receipt, bank
d. Payment, cash
[B]
Q.16 “Received a cheque of ₹1,000 from Rama whose account of ₹1,500 was written off
as bad debts earlier. The cheque was deposited immediately.”
Mention which column in the cash book the transaction will be recorded
a) Cash
b) Bank
c) Cash and bank
d) None of these
Answer: (b)
Q.17 Assertion (A): Cash column in the Cask Book cannot show credit balance.
Reason (R): Cash Column in the Cash Book can show overdraft balance when cash
payments are less than the cash in hand.
Answer: A is true, but R is false.
Q.18 Contra entry is an entry in which
a) There are cash and bank accounts involved
b) There are Cash and bank accounts, both being debited
c) There are Cash and Bank accounts, one is debited and other is credited.
d) None of these
SPECIAL PURPOSE BOOKS
Q.1 Goods returned from a debtor will be recorded in:
(a) Returns Inwards Book
(b) Returns Outward Book
(c) Sales Book
(d) Purchases Book
Q.2 M/s. Runa & Co ..Delhi are dealers in stationery. Their accountant had to enter a
transaction “Sale of old newspapers for ₹62.” Identify the correct book to record the
transaction.
a) Sales Book
b) Journal Proper
c) Cash Book
d) None of these
Answer: (c)
Q.3 Which of the following transactions will not be recorded in journal proper:
a) outstanding salary rupees 10000
b) received in advance rupees 4000
c) purchase goods on credit rupees 5000
d) depreciate furniture by 8000 Ans (c)
Q.4 Kamal sells goods of Rs. 1,00,000 to Sushil for cash. In which book this transactions would
be recorded by Kamal?
a. Purchase Book
b. Sales Book
c. Journal Proper
d. Cash Book
Q.5 Furniture sold on credit by Rama computer Mart will be recorded in :
(A) Sales Book
(B) Cash Book
(C) Purchases Book
(D) Journal proper
Answer : (D) Journal Proper
Q.6 At the end of the year the drawings account are closed by transferring to capital
account and an entry passed in the books:
Capital A/c Dr
To Drawings A/c
The above entry is known as:
(A) Opening Entry

(B) Closing Entry
(C ) Transfer Entry
(D) Adjustment Entry
Answer ; (C ) Transfer Entry
Q.7 The transactions in the Purchase ledger will be posted from

i) Purchase Book
Ii)Cash Book
iii) Journal Proper
iv)All of the above
Q.8 Assertation (A) All Credit Sales of Goods are recorded in Sales Journal
Reason (R) Cash Sale of Goods are recorded in Cash Book
Ans :-Both A and R are True and reason is Correct explanation of Assertion
Q.9 Goods amounted to Rs. 50,000 were sold to us by M/s Sharma & Co. This transaction will be
recorded in which subsidiary book?
a. Purchases Book (CORRECT)
b. Sales Book
c. Purchases Return Book
d. Sales Return Book
Q.10 If ledger is prepared following the subsidiary books; which one of these ledger accounts
will not be prepared?
w. Purchases A/c
x. Sales A/c
y. Cash A/c (CORRECT)
z. Cheque-in-hand A/c
Q.11 Sohan has returned goods worth Rs. 5,000 to Saurabh as he found it defective. Which
document will be prepared by Saurabh.
a. Credit Note
b. Credit Voucher
c. Debit Note
d. Invoice / Bill
Q.12 Total of the sales book for March indicates:

(a) Total sales for the month
(b) Total Credit sales for the month
(c) Total cash sales for the month
(d) Total sales less sales return
Ans: (b)
Q.13 Provision for doubtful debts created @ 6% on debtors with book values of Rs. 12,000. This
transaction will be recorded in:
a. Purchases book
b. Sales book
c. Cash book
d. Journal proper
[D]
Q.14 Which of the following transaction is not recorded in the Sales Book?
a. Credit sales of goods
b. Credit sales of Fixed Asset
c. Credit sales of goods that are traded in regularly by the owner
d. Credit sales related to core business operations
Answer: Credit sales of Fixed Asset
Q.15 Assertion: Sales Book and Sales Account both are same, there is no difference between
these.
Reason : Both are used to record sales transactions.
Choose the correct option:
a) Assertion and reason both are correct
b) Assertion is correct but reason is wrong
c) Assertion and reason both are correct but reason is not the correct explanation of
assertion.
d) Reason is correct but assertion is not correct.
Q:16 A businessman instead of buying a car in his name, buys it in the name of the firm. This is
done in order to get the benefit of :
i) Input GST credit on purchase of car.

ii)claim depreciation and repair expenses
iii)Both i) and ii)
iv)Neither i) nor ii)
Q.17 The weekly or monthly total of the Purchases Day Book is

(a) Posted to the credit side of Trial balance
(b) Posted to the debit of the Sales Account
(c) Posted to the credit of the Purchases Account
(d) Posted to the debit of the Purchases Account
Ans. d. Posted to the debit of the Purchases Account
Q.18 Credit purchase of furniture shall be recorded in-

(a) Purchase book
(b) Journal Proper
(c) Cash book
(d) None of these
Ans. Journal proper
TRIAL BALANCE
Q.1 Trial balance is:
(a) An account. (b) A statement. (c) A subsidiary book. (d) A principal book.
Ans. : (b)
Q.2 A Trial balance is prepared:
After preparation of financial statement. (b) After recording transactions in subsidiary books. (c)
After posting to ledger is complete. (d) After posting to ledger is complete and accounts have
been balanced. Ans. : (d)
Q.3 Identify the purposes for the preparation of Trial Balance:
a. To describe accounts in brief
b. To check arithmetical accuracy of accounts
c. To facilitate preparation of final accounts
d. All of the above
Q.4 Assertion: If the book are arithmetically accurate, debit balances of a trial balance equal to
the total of all credit balances.
Reason: Double entry system each transaction is recorded two times, once on the debit side of an
account again on the credit side of another account.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of
Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of
Assertion (A).
(d) Assertion (A) is False but Reason (R) is True. Ans (a)
Q.5 If the total of debit and credit is equal in a trial balance; it ensures:
a. There is no error in recording
b. There is no error in classification
c. There is no arithmetical error (CORRECT)
d. All of the above
Q.6 Interest on capital indicates balance in trial balance.
a) Debit
b) Credit
a) Both
c) None of them Answer: ( a)
Q.7 Identify the limitation of Trial Balance from the following.

1. Recording only single aspect of a transaction
2. Posting correct amount on the correct side but in the wrong account
3. Correct application of the principle of accounting
4. Recording both aspects of a transaction thrice in the books of account
Answer: Posting correct amount on the correct side but in the wrong account
PROVISION and RESERVES
Q.1 In the context of the following two statements, which of the following code is correct?
Codes:
(A) A is correct, but (R) is wrong.
(B) Both (A) and (R) are correct.
(C) (A) is wrong, but (R) is correct.
1. ASSERTION : Provisions are created by crediting the profit and loss account.
REASON : Amount of provision for expense is a charge against the revenue of the current
period.
Ans. (B)
2. ASSERTION : Reserves are the appropriations of profit to strengthen the financial

position of the business.
REASON : Retention of profits in the form of reserves reduces the amount of profits available
for distribution among the owners of the business.
Ans.: (A)
Q.2 Which of the following is not true about Reserves?

(a) Reserves can be created for general and specific purposes
(b) Reserves are charges against profits
(c) Reserves are created to strengthen the financial position of the firm
(d) Reserves are shown in liability side of Balance sheet
Q.3 Which of the following is not an objective of creating general reserves:
a) for meeting unforeseen losses
b) for a ascertaining true financial position of the business.
c) for the strengthening of financial position of business.
d) expansion of business through internal resources. Ans (b)
Q.4 X Ltd was running a manufacturing business . there was a suit going on against X Ltd for
defective goods supplied worth Rs 1,00,000. X Ltd deliberately shows this as a real liability in the
Balance Sheet so as to undertake its profits. This is done in order to:
i) Avoid tax
ii) Show a better financial position.
iii) Create secret reserve
iv) None of the above.

Q.5 Like Debenture Redemption Reserve is a type of Revenue reserve, ___________ are types of
Capital reserve.
i. Revaluation Reserve
ii. Contingency Reserve
iii. Profit on forfeiture of shares
iv. Profit on sale of asset
a. Both iii and iv
b. i, ii and iii
c. i, iii and iv
d. ii, iii and iv
Ans. c. i, iii and iv
Q.6 Secret Reserve can be created by showing :

(A) assets at lower figure and liabilities at higher figure
(B) assets at higher figure and liabilities at lower figure
(C ) Overvaluation of closing stock
(D) Revenue Expenditure as Capital expenditure
Answer : (A) assets at lower figure and liabilities at higher figure
Q.7 Which of the following statement s are correct about Reserve?
(i) Reserve are charge against profit
(ii) Reserve are created only out of profits
(iii) Reserve are created to meet unknown liability
(A) (i) and (ii) only
(B) (ii) and (iii) only
(C) (i) and (iii) only
(D) All (i) (ii) and (iii)
Answer : (B) (ii) and (iii) only

Q.8 Dividend Equalisation Reserve is
a. Specific Reserve
b. Secret Reserve
c. General Reserve
d. None of these
Ans :- a
Q.9 Which one of the following is not a feature of reserve?
a. It cannot be used for distribution dividend
b. It is an appropriation of profit.
c. It strengthens the financial position of the firm
d. It has no effect on taxable profit
Q.10 Complete the following series

Reserve : Appropriation of profit
Provision : .............................
(a) Assets (b) Charge against profits
(b) (c) Both (a) and (b) (d) None of these
Ans: b) Charge against profits

Q.11 The amount of reserve when invested in outside securities the reserve is termed
as________________.
a) Reserve Fund
b) Reserve Securities
c) Securities
d) Reserve
Answer: (a)
Q.12 Identify the true statement with relation to the meaning of reserve.
a. Reserves are accumulated profits
b. Reserves are made to account anticipated losses
c. Reserves cannot be used for distribution of dividends
d. Reserves are debited to Profit & Loss A/c
Answer: Reserves are accumulated profits
BANK RECONCILIATION STATEMENT

Q.1 . Bank Reconciliation statement is:
(a) A part of Pass book
(b) A statement prepared by bank
(c) A cash book related to cash column
(d) A statement prepared by customers
Q.2 The Cash Book showed an overdraft of Rs. 1500 but the pass book made up to same date
showed that cheques of Rs. 100,Rs. 50 and Rs. 125 had not been presented for payment and a
cheque of Rs. 400 had not been cleared. The balance as per Pass Book will be:
(a) Rs. 1100
(b) Rs. 1625
(c) Rs. 2175
(d) Rs. 1375
Q.3 Bank balance is always considered as positive, if it is :

(A) Balance as per Cash Book (B) Debit Balance as per Cash Book
(C) Credit Balance as per Pass Book (D). All of the above Ans (d)
Q.4 deposit of Rs 10,000 in the bank has been shown by the bank by mistake as a withdrawal of
Rs 1,000. If the cash Book had a balance of Rs 50,000. What will be the balance of Pass Book as
per Bank Reconciliation statement?
i) Rs 40,000
ii)Rs 39,000
iii)Rs 60,000
iv)Rs 61,000
Q.5 A firm has calculated Adjusted Purchases by applying the formula: Adjusted Purchases=
Opening Stock+ Purchases – Closing Stock
Now what items will be shown in the trial Balance?
1.Only Adjusted Purchases
2.Adjusted Purchases and Opening stock
3.Adjusted Purchases and Closing Stock
4.Adjusted Purchases, Opening Stock and Closing Stock
Q.6 Current account shows ₹1,000 as overdrawn. When bank statement is received, it was
identified that one of the debtors has deposited ₹400 into the account and the bank charges ₹20
had been debited to the account. Bank Statement balance is:
a. ₹1,420 (Dr.)
b. ₹4,300 (Cr.)
c. ₹620 (Dr.)
d. ₹1,700 (Dr.)
Ans. c. ₹620 (Dr.)
Q.7 Find out the Cash Book balance as on 31-03-2020.

(1) Overdraft as per Pass book 5,200
(2) On 26-03-2020 cheques amounting to Rs. 15,600 were drawn but
encashed before 31-03-2020 amounting to Rs. 12,700
(3) A cheque of Rs. 9300 received from customer and recorded in cash book
bank column but omitted to be sent to bank.
(A) Overdraft As per Cash book 1,200

(B) Dr. Balance as per Cash book 1,200
(C ) Overdraft as per Cash Book 17,400
(D) Dr. Balance as per Cash book 17,400
Answer : (B) Dr. Balance as per Cash book 1,200
Q.8 Find out the Pass Book balance as on 31-03-2020.

(1) Overdraft as per cash book 5,600
(2) Wrongly debited by bank 80
(3) Credit side of cash book over cast by Rs.6,200
(A) Overdraft As per Pass book 5,20

(B) Cr. Balance as per Pass book 520
(C ) Overdraft as per Pass book 11,880
(D) Cr. Balance as per Pass book 11,880
Answer : (B) Cr Balance as per pass Book 520
Q.9 Find out the Cash Book balance as on 31-03-2020.

(1) Dr. Balance as per Pass book 8,600
(2) On 20-03-2020 cheques amounting to Rs. 18,900 deposited into bank out
of which cheques of Rs. 6,400 credited by bank on 06-04-2020.
(3) A cheque of Rs. 4300 drawn on saving bank account but wrongly entered in
cash book bank column.
(A) Overdraft as per Cash book 6,500
(B) Dr. Balance as per Cash book 6,500
(C ) Overdraft as per Cash Book 19,300
(D) Dr. Balance as per Cash book 19,300
Answer : (A) Overdraft as per Cash book 6,500
Q.10 Find out the Pass Book balance as on 31-03-2020.

(1) Credit balance as per cash book 9,400
(2) Bank charges Rs. 80 entered in cash book twice
(3) A bank draft of Rs. 12,000 issued in favour of a Rama and sons, bank
charge Rs. 40 commission for that. However in cash book entry for 12000 are recorded
only.
(A) Overdraft As per Pass book 9,360
(B) Cr. Balance as per Pass book 9,360
(C ) Overdraft as per Pass book 21,480
(D) Cr. Balance as per Pass book 21,480
Answer : (A) Overdraft as per pass Book 9360
Q.11 A Cheque of Rs 10,000 received from a debtor was recorded in Cash Book but not
deposited in the bank for collection . How it will be treated in BRS
a. Rs 10,000 will be deducted from balance as per Cash Book
b. Rs 10,000 will be deducted from balance as per Pass Book
c. Rs 10,000 will be Added from balance as per Cash Book
d. Rs 10,000 will be added from balance as per Pass Book
Ans :-a
Q.12 Debit balance of passbook shows.......
(a)Cash in hand b) Cash at Bank c) Overdraft a) None of these.

Ans: c) Overdraft
Q.13 The balances of Cash Book and Passbook differ from each other. One of the reason for this
difference was “a customer deposited Rs. 20,000 directly into the bank A/c and did not
intimate”. What will be the effect of this transaction while preparing Bank Reconciliation
Statement if “Balance as per Passbook is given”.
d. Minus Rs. 20,000 (CORRECT)
e. Plus Rs. 20,000
f. Minus Rs. 40,000
g. Plus Rs. 40,000
Q.14 Consider the following statements regarding the accounting treatment of various
accounts:
i. Interest allowed by bank or credited by the bank
ii. Interest charged or debited by the bank
iii. Bank charges & commission charged by the bank or debited by the bank
iv. Money deposited into the bank received from a customer or debited by bank
(a) (i) (ii) & (iii)

(b) (i), (ii) & (iv)
(c) (i), (iii) & (iv)
(d) (ii), & (ii)
Ans: (a)
Q.15 Cash Book of a trader shows a debit bank balance of Rs. 6400. While comparing it with
Pass-Book, it was found that a cheque of Rs. 7200 issued was recorded on the debit side of Cash-
Book. The Pass-Book balance at this point of time would be:
(A) Nil
(B) Rs. 8000 Cr.
(C) Rs. 8000 Dr.
(D) None of above
(D)
Q.16 Choose an item that will increase the credit balance of Pass Book but Cash Book Balance
will remain unaffected till information is not received
a) Interest allowed by Bank
b) Directly deposited by customer into Bank
c) Rent Collected by Bank on our behalf
d) All of above
(D)
Q.17 Assertion (A): Wrong credit given by the bank increases the balance of Bank Pass book but
not that of Cash Book.
Reason (R) : In order to bring the balance of Bank Pass Book (given) at par with the
balance as per Cash Book, the amount of wrong debit given by the bank is added.
Q.18 Assertion (A): Wrong credit given by the bank increases the balance of Bank Pass book but
not that of Cash Book.
Reason (R) : In order to bring the balance of Bank Pass Book (given) at par with the
balance as per Cash Book, the amount of wrong debit given by the bank is added.
e. A & R are true and R is the correct explanation of A.
f. A & R are true but R is not the correct explanation of A.
g. A is true, but R is false.
h. A is false but R is true.
Q.19 If Cash book (Bank Column) shows a balance of Rs. 10,000 and following were observed
while comparing it with Pass Book:
A cheque of Rs. 1,000 deposited in Bank and collected by bank but not recorded in
Cash-Book and the payment side of Cash-Book was under cast by Rs. 100. The
balance as per Pass-Book would be:
a) Rs. 11,000
b) Rs. 10,900
c) Rs. 9,100
d) Rs. 8,900
Case Study
Priya and Bhavya are friends. Priya is a business-women who deals in buying and
selling computer parts whereas Bhavya is working as a manager in SBI Bank.
Priya deals with a lot of customers daily and receives money from them as her
transactions are mostly on cash basis. She also deals with different suppliers and
has to make frequent payments to them. As it becomes difficult from him to
manage cash daily, her friend Bhavya advised her to open a bank account in SBI
Bank. Now, Priya has her account with SBI, Delhi. According to her Cash Book,
her bank balance on 31st March, 2021 was ₹75,200. Though she had sent the
cheques for ₹90,500 to her bank for collection but cheques amounting to ₹51,000
were not collected by the bank by that date. During the year for her business
transactions, she had issued many cheques to clear off her payments of her debts
but cheques worth ₹30,400 were not presented.
Answer the following Questions ( 9-12) based on the above case:
1.Priya is facing problems due to the above discrepancies. Identify the statement which
will assist her in solving the same.
a) Bank statement
b) Financial statement
c) Income statement
d) Bank reconciliation statement
Answer: (d)
2. The differences in Priya’s cash-book and bank pass-book is caused by:
a) Timing differences on recording of the transactions.
b) Errors made by the business
c) Errors made by the bank
d) All of the above
Answer: (a)
3. Priya had sent the cheques for ₹90,500 to her bank for collection but cheques
amounting to ₹51,000 were not collected by the bank by that date. Mention the
correct treatment to Priya.
a) ₹49,500 should be increased to reconcile
b) ₹49,500 should be decreased to reconcile
c) ₹51,000 should be increased to reconcile
d) ₹51,000 should be decreased to reconcile
Answer: ( b)
4. Priya had issued many cheques to clear off her payments of her debts but
cheques worth ₹30,400 were not presented. Mention the treatment to correct the
difference to Priya.
a) ₹30,400 should be increased to reconcile
b) ₹30,400 should be decreased to reconcile
c) ₹90,800 should be increased to reconcile
d) ₹90,800 should be decreased to reconcile
Answer: (a)
DEPRECIATION
Q.1 M/s Shyam Enterprises acquired a Machine for ₹ 90,000 on July 01, 2020 and spent ₹ 10,000
on its transport and installation. Another machine for ₹40,000 was purchased on January 01,
2021. Depreciation is charged at the rate of 10% on written down value. How much depreciation
will be calculated during the year 2021-22?
(a) ₹14,000
(b) ₹8,500
(c) ₹13,150
(d) ₹12,600

correct?
Code:
(E) Both (A) and (R) are correct and (R) is the correct reason of (A).
(F) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(G) Only (R) is correct.
(H) Both (A) and (R) are wrong. Ans. ©
Q.2 Depreciation:
a) Can be provided only in case of profits
b) Cannot be provided in case of loss
c) Is to be provided irrespective of the fact whether there are profits or losses
d) Need not be provided if the market value of the asset exceeds the cost of the asset.
Q.3. On 1st April, 2012, a machine was purchased for ` 1,00,000 and in the same year on 1st
October, another machine was purchased for ` 50,000. Depreciation on the machinery is charged
by straight line method @ 10% At what amount, the machine should be shown in the books on
31st March 2014.
(a) ` 1,33,500
(b) ` 1,37,500
(c) ` 1,42,500
(d) ` 1,10,500
Q.4 Param Limited purchased machinery for Rs. 40,000 on Ist October, 2015. Depreciation is
provided @ 10 % p.a. on the Diminishing Balance Method. On Ist January, 2018, one-fourth of
Machinery was found unsuitable and disposed off for Rs. 6,000.
1. The depreciation charged in the first year is
(a) Rs. 2000
(b) Rs. 4000
(c) Rs. 3000
(d) Rs. 1000 Ans (a)
Q.5 The book value of one -fourth of the machinery sold the date Of sale is :
a) 7909
b) 8550
C) 6000
d) 10000 Ans (a)
Q.6 Machinery balance with the firm as on 01/04/21 is Rs 2,43,000. Depreciation is provided @
10% pa on WDV Method. What was the value of Machine as on 01/04/2019?
Q.7 Luxury Furnishers Ltd. purchased a plant on 1st April, 2016 for ₹40,000. Depreciation is
provided @15% p.a. on Original cost. On 1st April, 2018, one-fourth of Machinery was found
unsuitable and was disposed at ₹7,000. Calculate the Profit/ Loss on sale and the book value of
plant on 31st March, 2019.
a. Profit/ Loss on sale- ₹100 Profit; Book Value of plant on 31st March, 2019 ₹20,500
b. Profit/ Loss on sale -No profit, no loss; Book Value of plant on 31st March, 2019 ₹16,500
c. Profit/ Loss on sale- ₹1000 Loss; Book Value of plant on 31st March, 2019 ₹22,000
d. Profit/ Loss on sale-₹1000 Profit; Book Value of plant on 31st March, 2019 ₹15,000
Q.8 On which fixed-tangible assets deprecation is not charged? :

(A) Plant and Machinery
(B) Furniture and Fixtures
(C ) Office equipment
(D) Land
Answer : (D ) land
Q.9 When provision for depreciation account is maintained the balance of fixed assets
shows:
(A) Written down value of fixed assets
(B) original cost of fixed assets
(C) Scrap value of fixed assets
(D) Realisable value of fixed assets
Answer : (B) Original cost of assets
Q.10 ASSERTION (A): Depreciation is fall in the value of a Fixed Tangible Asset because of
usage, passage of time and accident etc.
REASONING (R): Depreciation can be charged on all fixed assets whether they are tangible or
intangible.
Assertion.
Assertion
ANS. C) Only Assertion is correct
Q.11 What will be the rate of depreciation under Straight line method.
Cost of machinery 14,00,000
Installation charges on machinery 1,00,000
Salvage value after 9 years 1,50,000
Repairs charges in 4th year 50,000
(A) 10%
(B) 11.11%
(C ) 9.9%
(D) 9%
Answer : (A) 10%
Q.12 Depreciation is calculated from the date of :
(A) Assets Purchases
(B) Assets installed
(C ) Assets put to use
(D) Receipts of assets in business premises
Answer : (C) Assets put to use
Q.13 Extraction of coal from coal mine reduce the available quantity of coal stock, it is
know as:
(A) Depreciation
(B) Amortisation
(C ) Obsolescence
(D) Depletion
Answer : (D ) Depletion
Q.14 Depreciation means decrease in ------------- of fixed tangible assets.

(A) Market value
(B) Book value
(C) Scrap value
(D) Realisable value
Answer : (B) Book value
Q.15 Following balances appear in books of Dinesh as on 01/04/2019

Machinery Account 14,00,000
Provision for depreciation account 3,10,000
On 01/07/2019 a machinery which was purchased on 01/04/2017 for Rs. 3,00,000 was
sold for Rs. 82,000.and same day another machinery purchased for Rs. 4,00,000.
Depreciation 10% p.a. by original cost method and accounts are closed on March 31
every year.
What will be the balance of machinery account on 31-03-2020.
(A) 15,00,000
(B) 11,00,000
(C ) 18,00,000
(D) 14,00,000
Answer : (A) 15,00,000
Q.16 When Provision for Depreciation account is maintained and assets sold then in
the year of sale -------------of assets transfer from assets account to assets disposal
account. :
(A) Original cost
(B) Written down value
(C ) Scrap value
(D) Sale value Answer : (A) Original Cost
Q.17 A machinery is purchased on 01-04-2017. Depreciation is charged 10% pa. by
straight line method and accounts are closed on march 31 every year.. Book value of
machinery on 31- 03-202020 was Rs. 5,10,300. What was cost on machinery on 01-
04-2017.
(A) Rs. 7,00,000
(B) Rs. 7,29,000
(C ) Rs. 6,00,000
(D) Rs. 8,39,000 Answer : (B) Rs. 7,29,000
Q.18 On Ist Oct 2017 , Disha Purchase a second hand machinery for Rs 1,80,000 and spent Rs
20,000 on its repairs
On 30th September 2020 the machinery was sold for Rs 1,40,000 and an amount of Rs 4,000
was paid as dismantling charges . The books re closed on 31st march every year and
depreciation is charged @ 10% pa WDV
(1)What is the total amount of depreciation charged ?
a. Rs 53,795
b. Rs 60,000
c. Rs 50,000
d. Rs 49,795 Ans a
(2)What is Profit or loss the Machinery was Sold
a. Rs14,205
b. Rs10,205
c. Rs 8,205
d. Rs 15,000 Ans b
Q.19 The objective of providing depreciation is to:
(a) Show correct profit for the year
(b) Show the true financial position in the balance sheet
(c) Reduce tax burden
(d) Comply with legal requirements
Ans: (a) Show correct profit for the year
Q.20 The value of an asset as on 31st March 2021 was Rs. 2,80,000 which was purchased three
years ago. The depreciation was charged @ 10% p.a. by Straight Line Method. What would be
the Historical Cost of the asset?
a. 3,64,000
b. 3,80,000
c. 4,00,000 (CORRECT)
d. 5,00,000
Q.13 Find the odd one out:
a. Depreciation is a charge to profit.
b. Depreciation is a process of allocation of cost.
c. Depreciation is a process of valuation
d. Depreciation decreases the value of asset.
Q.14 Which of the following is not a feature of written down value method of depreciation?
a) The book value of the asset becomes zero at any one point of time
b) The depreciation is calculated on the book value of assets and not on the cost
c) The amount of depreciation charged on a specific asset reduces every year
d) There is no need to estimate the residual value and estimated life at the time of deciding
the amount of depreciation
Ans: (a)
Q.15 In the books of Vandana Ltd. the machinery account shows a debit balance of Rs.48,000
as on April 1, 2013.The original cost of which was Rs.75,000. The Machinery was sold on
September 30, 2015 for Rs.42,000. The company charges depreciation @20% p.a. on Straight
line Method. The depreciation for 2013-2014 is :
a. Rs. 15,000
b. Rs. 9,600
c. Rs. 4,800
d. Rs.7,500 (Ans. D)
Q.16 If an asset costing Rs.1,20,000 is depreciated by Straight Line Method @ 10% p.a., it will
be zero after
a) 8 years
b) 12 years
c) 10 years
d) 6 years (Ans. C)
Q.17 The book value of machinery on the date of sale is Rs. 45000. The original price of it was
Rs. 85,000. The company sold it at a profit of Rs.7,000. What is the sale proceed?
a) Rs.92,000
b) Rs.78,000
c) Rs.52,000
d) Rs. 38,000 (ans. C)
Q.18 The balance of machinery on March31,2021 is ₹1,60,000. The machinery was

purchased on April 1, 2019. Depreciation is charged @ 10% p.a. by Straight Line
Method. The cost price of the machine as on April1, 2019 is
₹. _________.
a) ₹2,00,000
b) ₹3,00,000
c) ₹1,92,000
d) ₹2,60,000
Answer: ( a)
Q.19 Provision for depreciation account is opened when:
a. An Asset is shown at its depreciated value
b. An Asset is shown at its original cost
c. An Asset is shown at its market value
d. An Asset is shown at its resale value
Answer: An Asset is shown at its original cost
Q.20 On 1st Oct,2019 Roopa purchased a machinery for Rs 1,80,000 and spent Rs 20,000 for its
installation. Depreciation is charged at the rate of 10% per annum on original cost every year.
Books are closed on 31st March every year. The first year’s depreciation will be:
a) Rs 20,000
b) Rs 10,000
c) Rs 5,000
d) Rs 18,000

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Introduction to Accounting

Q.1 Assertion: Accounting is a way to facilitate the communication of information

Q.2 Which qualitative characteristics of accounting information is reflected when

Q.8 Which of the following is not a qualitative characteristics of accounting

Q.12 It is that subfields of accounting which is helpful for management in decision

Q.13 Which of the following transaction will be recorded in books of accounts?.

Q.16 Creditors of the business want to know:

(B) Capability of the business to pay higher salaries

(C) Creditworthiness of the business

opportunities Ans. (C)

Q.17 Which of the following transaction will not be recorded in financial

a. I-(iii) ; II – (ii) ; III- (iv) ; IV –(i)

Q22. Who is the father of accounting?

1. Which of the following statement is not true about Book Keeping?

1. Double entry accounting requires that :

Which limitation of Accounting does it refer to?

i) Accounting is not fully exact.

ii) Window dressing

iii) Accounting ignores price level changes.

iv) Accounting ignores qualitative elements.

Q.3 Assertion :advertisement expenditure is a fictitious asset.

Ans. b. Profit and Loss A/c; Gain

Q.6 Amount paid or payable against purchase of goods is

Q.10 Consider the following items:

Ans: (d) Debentures

(a) Both, A and R, are true and R is the correct explanation of A

Q16. Inventory valued at:

Theory base of Accounting

In the context of the above two statements, which of the following is

Indicate the principle that is violated.

Ans. d. Conservatism; Accrual

Q.13 Due to which accounting concept/convention “Provision for discount on creditors is

Q.15 Sale is recognized as revenue: :

Q.21 Accounting Standards are useful:

(c) For Auditors (d) For all of the above

Q.23 Assets =Liabilities + Capital is developed with the help of ...........concept

(c)Going concern concept (d) Dual aspect concept

A. Entire Life if a business should be I Consistency Concept

B. Provision for Bad debts to made ii Materiality

C. Exception to Full Disclosure Iii Prudence Principle

D. Closing Stock is valued at realisable value Iv . Accounting Period

Ans A(iv)B(i)C(ii)D(iii) ..c

a. A & R are true and R is the correct explanation of A.

When should the vendor assume Revenue be recognised?

ii) No Revenue should be recognised as the money has to be returned back.

iii) When rest half of the payment will be received.

(c) Either Cash or Accrual Basis (d) None of these

Q.2 Which of the following is not an advantage of accrual basis of accounting

(a) Option (i),(ii) and (iii) is the correct statement

a) Option (i) and (ii) is the correct statement

Q.12 Which of the following is a true statement?

Reason: Revenue is assumed to be recognised when the bill is made in

iii) Assertion is correct but reason is wrong.

iv) Assertion is correct but reason is wrong.

In the context of the above two statements, which of the following is

Q.7 Payments to Creditors is an example of :.

Answer : (C ) Decreases in Assets by 5000 and Increase in Liabilities by 3000 with

Q.10 Purchase of machine by cash means:

Description (List -I) Option (List II)