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a) Fill in the Blanks:

1. Discount allowed column appears in _______ side of the cash


book.
2. In the triple column cash book, when a cheque is received the
amount is entered in the _______ column.
4. Discount received column appears in _____ side of the cash
book.
5. A cheque received and paid into the bank on the same day is
recorded in the ______ column of the three column cash book.
6. When a cheque received from a customer is dishonoured, his
account is ________.
7. Cash Book is one of the _______ books.

[Answers : 1. debit, 2. cash, 4. credit, 5. bank, 6. debited 7. subsidiary]

8. The cash book records


a) all cash payments b) all cash receipts
c) all cash receipts & payments
10. When goods are purchased for cash, the entry will be recorded
in the
a) cash book b) purchases book
c) journal
11. The balance of cash book indicates
a) net income b) cash in hand
c) difference between debtors and creditors
12. In triple column cash book, cash withdrawn from bank for office
use will appear in
a) debit side of the cash book only
b) both sides of the cash book.
c) credit side of the cash book only.
13. If a cheque sent for collection is dishonoured, the debit is given
to
a) suppliers A/c b) bank A/c
c) customers A/c
14. If a cheque issued by us is dishonoured the credit is given to
a) supplier’s A/c b) customer’s A/c
c) bank A/c
[Answers : 8 (c), 10. (a), 11. (b), 12. (b), 13. (c), 14. (a)]

a) Fill in the blanks:


15. Sub division of the journals into various books for recording
transactions of similar nature are called ________.
16. The total of the ________ book is posted to the debit of
purchases account.
17. The person who prepares a bill is called the ________.
18. Days of grace are ________ in number.
[Answers : 15. subsidiary books, 16. purchases, 17. drawer, 18. three]
b) Choose the correct answer :
19. Purchase of machinery is recorded in
a) sales book b) journal proper
c) purchases book
20. Purchases book is kept to record
a) all purchases b) only cash purchases
c) only credit purchases
21. Credit sales are recorded in
a) sales book b) cash book
c) journal proper
22. Goods returned by customers are recorded in
a) sales book b) sales return book
c) purchases return book

[Answers : 19. (b), 20.(c), 21.(a), 22. (b)

a) Fill in the blanks:


23. Ledger is the _________ book of account.
24. The process of transferring entries from Journal to the Ledger
is called _________.
25 When is the suspense account created
Ans. When the debit and credit side of the trial balance do not match
26. What treatment is given to the net profit or net loss which arises from P/L a/c?
Ans. Net profit is added to the liability side of
Balance sheet and net loss is added to assets side.
27. Debiting an account signifies recording the transactions on the
_________ side.
28. The left hand side of an account is known as _________and
the right hand side as _________.
29. Credit Balance means _________ is heavier than _________.
30. Real accounts cannot have _________ balance.
31. Account having debit balance is closed by writing _________.
32. L.F. column in the journal is filled at the time of _________ .
[Answers: 23. principal, 24. posting, 27. debit side, 28. debit
side; credit side, 29. credit total; debit total, 30. credit, 31. By
Balance c/d, 32. posting]

b) Choose the correct answer :


33. Ledger is a book of :
a. original entry b. final entry
c. all cash transactions.

34. Personal and real accounts are:


a. closed b. balanced
c. closed and transferred

35. The column of ledger which links the entry with journal is
a. L.F column b. J.F column
c. Particulars column

36. Posting on the credit side of an account is written as


a. To b. By
c. Being

37. Nominal account having credit balance represents


a. income / gain b. expenses / losses
c. assets
38. Nominal account having debit balance represents
a. income / gain b. expenses / losses
c. liability

39. Real accounts always show


a. debit balances b. credit balances
c. nil balance.

41. Account having credit balance is closed by writing


a. To Balance b/d b. By Balance c/d
c. To Balance c/d

42. When the total of debits and credits are equal, it represents
a. debit balance b. credit balance
c. nil balance

43. The balances of personal and real accounts are shown in the
a. profit and loss account b. balance sheet
c. both.
[Answers: 33(b), 34 (b), 35. (b), 36 (b), 37 (a), 38 (b), 39 (a), 41 (c), 42 (c),
43 (b)]

I. Objective Type:
a) Fill in the Blanks :
44. The source document gives information about the nature of the
_________.
45. The accounting equation is a statement of _________ between
the debits and credits.
46. In double entry book-keeping, every transaction affects at least
two _________.
47. Assets are always equal to liabilities plus _________.
48. A transaction which increases the capital is called _________.
49. The journal is a book of _________.
50. Recording of transaction in the journal is called _________.
51. The _________ column of journal represents the place of posting
of an entry in the ledger account.
52. _________ account is debited for the amount not recovered from
the customer.
53. The assets of a business on 31st December, 2002 were worth
Rs.50,000 and its capital was Rs.35,000. Its liabilities on that
date were Rs. _________.

[Answer : 44. transactions, 45. equality, 46. accounts, 47. capital,


48. revenue or income, 49. original entry, 50. journalising,
51. L.F, 52. bad debts, 53. Rs.15,000]

54. What are the 2 factors due to which we consider depreciation?

Ans. 1. Wear & Tear


2. Efflux of Time

55. What is capital maintenance concept?

Ans. Unless Capital is maintained profit is not possible. This is the capital maintenance
concept

56. What is Salvage?

Ans. The estimated scrap value after particular period

57. What is average profit?

Ans. Sum of all the profits of all the years divided by the number of years

58. How is Goodwill calculated by taking average profit into consideration?

Ans. Average Profit * No. of years of purchases

59. What are the 3 types of Goodwill?

Ans. CAT,RAT and DOG Goodwill

CAT- depends on loacation. Eg.mall

DOG- attached to owner

RAT- hidden goodwill, cant track

60. What are the various types of errors in a trial balance?

Ans. Error of Commission, Error of Omission, Error of Principle, Compensating Error

(Miscellaneous Questions)

. Tell about GAAP?


The common set of accounting principles, standards and procedures that
companies use to compile their financial statements. GAAP are a combination of
authoritative standards (set by policy boards) and simply the commonly accepted
ways of recording and reporting accounting information.
GAAP are imposed on companies so that investors have a minimum level of
consistency in the financial statements they use when analyzing companies for
investment purposes. GAAP cover such things as revenue recognition, balance
sheet item classification and outstanding share measurements.

. What are the headings in a balance sheet?


Liabilities
Share holder’s Funds
Secured & Unsecured loans
Current liabilities & provisions
Assets
Short term & long term investments
Current Assets, loans & advances
Fixed Assets
Miscellaneous expenses

-Here Share holder’s funds include Share capital & Reserves & Surplus

4. What is the difference between ledger and journal?


Journal is the daily record of the transactions of the business. Ledger is the
book where the entries are posted from the ledger to find the balances of
individual accounts.

5. What is COGS?
COGS reflect the cost of the product or good that a company sells to
generate revenue, appearing on the income statement as an expense unto it. COGS
also referred to as "cost of sales".
It is essentially a cost of doing business, such as the amount paid to
purchase raw materials to manufacture them into finished goods

6. Talk about Ratios.


Ratios are mainly calculated from the balance sheet of companies to
analyze the company’s performance and to forecast the future prospects of the
company. This will be more useful for company’s existing and potential stake
holders to invest on company’s stock. These ratios are also more helpful to banks,
government organizations, and lenders and public.

7. Why is closing stock absent in Trial Balance?


It is an adjustment item which will appear in Profit & Loss account and
Balance Sheet as it does not come under the double entry system having
corresponding debit and credit entries. Hence it does not appear in the trial
balance. And the stock valuation happens only after 31st march so it will not
appear.

8. What is the effect of depreciation in cash flow and P & L?


Effect in P/L – The expenses is boosted and the profit is reduced due to
depreciation.
Effect in Cash Flow – Deprecation is not a Cash expense and therefore it does not
result in a cash outflow.

9. Where will goodwill come? P&L or B/S?


Goodwill will come in the balance sheet

11. Explain on inventory valuation?


Three methods are used – FIFO, LIFO, WAM,HIFO.
LIFO is not used now. Usually WAM method is used when the company
wants to pay less tax and show low profit
.
12. Explain Inventory management
Inventory Management is an ongoing process of keeping track of
everything needed to run your operation and keep it running. Proper Inventory
Management will keep your business flowing from the time an order is placed
right down to the point your product gets into your customer's hands. Track your
materials, your products during manufacturing, your ready to ship products, and
your products in transit and on store shelves.

16. What is Net worth?


It is the amount by which a company or individual's assets exceed their
liabilities. For a company, this is the shareholder's (or owner's) equity and is
determined by subtracting liabilities on the balance sheet from assets.

17. How will u calculate the working capital required of a firm?


To estimate the cash requirement for working capital, one may follow a 2
step process
i) estimate the cash cost of various current assets required by the firm
ii) Deduct the spontaneous current liabilities from the cash cost of
current assets.

18. Which of the following books should be used to record purchase of furniture on
credit?

a. cash book b. journal proper c. purchases book

19. Which of the following accounts is increased by debit entries

a.machinery accounts b.purchases return account

c.discount received accounts

20. The credit balance in the bank accounts is

A liability

21. Return outward book makes a record of

Goods returned to the supplier (purchases returns)

22. Sales book is kept to record

Credit Sales