IMPORTANT QUESTIONS FOR 2016 EXAMINATION

ACCOUNTING XI COMMERCE
Choose the correct answer for each from the given options:
1. This is a merchandising business:
a) Motor workshop.
b) Estate agency.
c) Medical store.
d) Beauty parlour.
2. This is not an asset:
a) Accounts receivable.
b) Cash.
c) Unearned commission.
d) Unexpired rent.
3. Normally, this account has a debit balance:
a) Loan to Ahmed.
b) Loan from Ali.
c) Bank overdraft.
d) Purchase discount.

4. Assets are equal to the sum of liabilities plus:

a) Profit.
b) Owners equity.
c) Expenses.
d) Revenue.
5. The right of outsiders on assets of business is called:
a) Capital.
b) Liability.
c) Asset
d) expense
6. Unearned revenue is a/an:
a) Liability.
b) Asset.
c) Owners equity.
d) Income.
7. Accrued income appears in balance sheet as a/an:
a) Liability.
b) Capital.

c) Contra asset.
d) Asset.
8. Ending inventory in balance sheet is shown as:
a) Liability.
b) Income.
c) Asset.
d) Capital.
9. Unsold goods at end are called:
a) Purchases.
b) Cost of goods sold.
c) Closing inventory.
d) Opening inventory.
10. The arithmetic accuracy of accounts is verified by:
a) Balance sheet.
b) Income statement.
c) Journal.
d) Trial balance.
11. This is not shown in balance sheet:
a) Cash.
b) Inventory.
c) Building.
d) Rent expense.
12. The process of recording transaction in journal is called:
a) Posting.
b) Balancing.
c) Footing.
d) Journalizing.
13. Advertisement paid in advance is debited to the account for:
a) Prepaid advertisement.
b) Advertisement expenses.
c) Accrued advertisement
d) Selling expense
14. The act of recording transaction in journal is called:
a) Posting.
b) Reconciling.
c) Closing.
d) Journalizing.

15. An outstanding expense is a/an:

a) Current asset.
b) Current liability.
c) Owners equity.
d) Expense.
16. This account normally has credit balance:
a) Purchases.
b) Sales return and allowances.
c) Sales discount.
d) Sales.
17. Commission received in advance is a/an:
a) Income.
b) Liability.
c) Asset.
d) Owners equity.
18.Cost of goods sold is equal to sales minus:
a) Purchases.
b) Merchandise inventory.
c) Operating expenses.
d) Gross profit.
19. The financial position of a business is shown by:
a) Income statement.
b) Cash book.
c) Balance sheet.
20.If assets and liabilities of business are Rs.180,000 and Rs.50,000 respectively, its
owners
equity will be Rs.:
(a) 230,000.
(b) 180,000.
(c) 130,000.
(d) 50,000.

THEORY
(i) State the accounting equation
(ii) Give rules of debit and credit
(iii)List in sequence steps involved in accounting cycle
ACCOUNTING EQUATION

For each of the following determine the underlined missing item:The liabilities of a business entity having assets of Rs.400,000 and owners
equity of Rs.180,000.
The assets of business entity having liabilities of Rs.100,000 and owners
equity of Rs.200,000.
The owners equity of business having assets of Rs.200,000 and liabilities of
Rs.70,000.
The revenues of business entity having expenses of Rs.120,000 and net
income of Rs.30,000.
The expenses of a business entity having revenues of Rs.180,000 and net
loss of Rs.16,000.
Sales revenue of a business entity having cost of goods
sold Rs.210,000 and gross loss of Rs.10,000
ADJUSTING ENTRIES
Selected balances are taken from the Trial Balance of Keyaan company as on
December 31,2014
Prepaid Rent Rs
Salaries Expense Rs
Prepaid Advertising
Rs
48000
70000
12000
Supplies
Rs
10% Investment Rs
Unearned commission Rs
8000
60000
30000
Unexpired
Insurance
Rs 9000
Additional Information:
(i) salaries are accrued Rs 4000
(ii) Commission earned Rs 25000
(iii)Rent Expired Rs 20000
(iv)
Interest on investment is accrued
(v) Insurance expired Rs 8000
(vi)
Supplies were used Rs 6000
Required:
Give adjusting entries in general Journal.
GENERAL LEDGER
Balances :

Opening

Closing

Accounts payable
Accounts receivable

Rs 25000
Rs 10000

Rs 15000
Rs 20000

For the period ended on dec 31, 2014 following transactions took place:
a) Cash Sales Rs 50000
b) Cash purchases Rs 30000
c) Collection from customers on account Rs 80000
d) Payments to suppliers on account Rs 60000
Required:

Set-up accounts for accounts payable and accounts receivable make posting from
the above transactions and determine:
a) Credit sales
b) Total sales
c) Credit purchases
d) Total purchases

BANK RECONCILIATION STATEMENT

Following is the information provided by Muqeem Co. at April 30, 2015 for
preparation of bank reconciliation statement:
i.
On April 30, bank statement showed overdraft balance of Rs.8,500 and cash
book had a balance of Rs.13,650.
ii.
Deposit in transit Rs.80,000.
iii.
A debit memo for Rs.1,500 accompanied the bank statement for locker rent.
The bank had erroneously charged this to Muqeem Co. instead of Muqeem
Bros.
iv.
The bank charged Rs.100 for services.
v.
Outstanding cheque Rs.48,000.
vi.
A direct remittance in bank account Rs.8,000 by a customer.
vii.
Dividend collected by the bank on behalf of the company Rs.3,000 but not
recorded in cash book.
viii.
A cheque for Rs.720 of Azeem deposited in the bank was erroneously
recorded in cash book Rs.270.
REQUIRED
Prepare bank reconciliation statement
SPECIAL JOURNAL
The following are selected transactions of Liaquat & Company for April 2015:
April 01:
Sold merchandise on account to Mr. Ahmed Rs.4,000.
April 04:
Sold merchandise on account to Mr. Basit Rs.5,000
April 08:
Merchandise returned by Mr. Ahmed Rs.100.
April 10:
Sold the old typewriter by cash Rs.500.
April 12:
Sold merchandise on account to Mr. Mubeen Rs.2,000.
April 16: Merchandise returned by Mr. Basit Rs.800.
April 19:
Sold merchandise for cash Rs.3,000.
April 23:
Sold merchandise to Mr. Ahmed on account for Rs.6,000.
April 30:
Returned merchandise from Mr. Mubeen Rs.700.
REQUIRED
Record the above transactions as the case may be in:
i.
ii.

Sales journal.
Sales return and allowances journal.

iii.

Prepare in the running balance form the accounts of Mr. Ahmed in account
receivable subsidiary ledger.

TRIAL BALANCE
The following balances appeared in the accounts of Raza Traders on April 01, 2015:
Bank Rs.220,000; Office supplies Rs.2,000; Office equipment Rs.32,000; Advertising
payable Rs.2,000; Raza Capital Rs.?
The transactions completed during the month were as follows:
Apr. 01: Purchased office equipment on credit from A.B. & Co.Rs.10, 000.
Apr. 05: Returned office equipment purchased on 1 st April Rs.2, 000.
Apr. 15: Issued cheque in payment of accounts payable Rs.5, 000.
Apr. 20: Received consulting fee income and deposited in bank Rs.1, 900.
Apr. 25: Issued cheque against advertising payable Rs.1, 500.
REQUIRED
(a)Compute Raza capital on April 1.
(c) Prepare trial balance on April 30.

(b) prepare general journal and ledger

CORRECTION OF ERRORS
The following errors were made by a book-keeper and were discovered before
closing the books:
i.
Purchase of furniture for Rs.9,000 was debited to purchase account.
ii.
Return of defective goods worth Rs.2,000 to the supplier was credited to
purchase account.
iii.
Ordinary repair costing Rs.1,000 to office equipment was debited to office
equipment account.
iv.
Depreciation was overcharged by Rs.3,000 through the allowance for
depreciation account.
v.
Purchase of office supplies on credit for Rs.10,000 was recorded as Rs.1,000.
vi.
Drawings of Rs.1,000 for personal use of the proprietor was recorded twice.
REQUIRED
Give entries in General Journal to correct each of the above errors
FINANCIAL STATEMENTS
Account
Title
Cash
Office supplies
Prepaid rent
Office equipment
Allowance for depreciation (Office
Unearned
commission
equipment)
Capital
Drawings
Commission income

Debit
Rs.45,000
14,000
24,000
46,000

Credit

Rs.10,000
24,000
50,000
5,000
70,000

Salaries expense

i)
ii)
iii)
iv)
v)

20,000

Office supplies unused

Prepaid rent expired
Depreciation on fixed asset for the period
Accrued salaries
Unearned commission amounted to

Rs.4,000
Rs.8,000
Rs.1,000
Rs.5,000
Rs.9,000

Prepare any two of the following:

a. Adjusting entries and adjusted trial balance.
b. Income statement and closing entries.
c. Balance sheet and opening entries.
GENERAL JOURNAL
During the month of March of the current year Mr. Tia, a sole business consultant
completed the following transactions:
March 1. Tia started his business with the cash investment of Rs.25,000.
March 2. Bought Rs.6,000 supplies for his office.
March 3. Paid Rs.5,000 rent for the month of March for the office.
March 5. Purchased office equipment for Rs.12,000. This amount was to be paid
in three equal installments at the end of March, April and May.
March 16. Receipt from consultation service was Rs.8,250.
March 30. Payment of salary to the assistant was Rs.3,600.
March 31. Paid the first installments on equipment.
March 31. Receipt from the service rendered during the last two weeks ended March
31, amounted to Rs.9,300.
March 31. Tia withdrew Rs.8,000 cash for his personal use.
REQUIRED
Prepare General Journal entries to record the above transactions, giving explanation
below each
entry.
PETTY CASH BOOK
A firm completed the following petty cash transactions during December of the
current
year:
December 01. Drew a Rs.1,500 cheque, cashed it, and gave it to the petty cashier.
December 03. Purchased computer paper for Rs.288.
December 06. Paid Rs.56 delivery expenses and Rs.30 wages on merchandise
purchased.
December 09. Paid Rs.75 parcel post charges.

December
use.
December
December
Rs.75.
December
December
December

10. Paid Rs.200 to the son of the proprietor from petty cash for personal
18. Paid Rs.95 delivery charges on merchandise purchased.
22. Paid a service station for servicing the personal car of the proprietor
25. Paid delivery expenses Rs.155.
30. Paid Rs.445 for the repair of computer.
31. Paid for entertainment Rs.55.

REQUIRED
i.
Prepare Petty Cash Book having five categories of accounts: Office supplies,
Delivery expenses, Postage, Withdrawals, and Miscellaneous expenses
ii.
Prepare journal entries to record:
a. Establishment of Petty Cash Fund.
b. Disbursement of Petty Cash Fund.
c. Replenishment of Petty Cash Fund.
CASH BOOK
Rahat & Co. uses a three column Cash Book. On April 1, 2003 the balances of cash
on hand and cash at bank were Rs.2,000 and Rs.3,940 respectively. The following
are the transactions for the month of April, 2003:Apr.2: Cash sales Rs.12,000.
Apr.3: Cash deposit in bank Rs.7,000.
Apr.8: Received cheque of Rs.1,950 for Junaid in full settlement of his account of
Rs.2,000. Apr.12: Issued a cheque of Rs.890 to Shakeel in full settlement of his
account of Rs.900.
Apr.15: Deposited a cheque of Junaid in the bank.
Apr.18: Advice received from the bank that a customer Atif had made direct deposit
in the bank Rs.5,000.
Apr.22: Withdrew from bank Rs.4,000 for private use and Rs.6,000 for office use.
Apr.24: Paid salaries by cheque Rs.7,000.
Apr.28: Paid office rent Rs.3,000 cash.
Apr.30: Purchased equipment for cash Rs.8,000.
REQUIRED
a. Enter the opening balances and record the above transactions in the Cash
Book.
b. Balance the Cash Book on April 30, 2003 bringing down the cash and bank
balances on May 1, 2003.
c. Set up T accounts for sales discount and purchase discount in the Ledger
and post the totals of discount columns of the Cash Book.