Sri Ram School Pariwaar 11th Accountancy Paper PDF

OBJECTIVE QUESTIONS
FINANCIAL ACCOUNTING CLASS - 11TH
Accounting : Meaning and Objects

I. Multiple Choice Questions
1. Qualitative characteristics of Accounting Informations are :
(a) Reliability (b) Relevance
(c) Understandable (d) All of the above
2. Accounting cycle includes :
(a) Recording (b) Classification
(c) Summarising (d) All of the above
3. Which of the following statements is not an objective of accounting ?
(a) To keep systematic records
(b) To ascertain the operational profit or loss
(c) To provide information of the personal assets liabilities of the owner of
an enterprise
(d) To ascertain the financial position of the business
4. Which of the following events represent business transaction:
(a) Machinery is purchased for cash
(b) Goods are ordered for delivery next month
(c) The owner of the firm dies
(d) An employee is dismissed from this job
5. Book-Keeping is mainly concerned with :
(a) Recording of financial data relating to business operations
(b) Designing the systems in recording, classifying the recorded data
(c) Interpreting the data for internal and external users
(d) Preparation of final accounts
6. The main objective of accounting is to see concern
(a) Financial position of the concern
(b) Position of the cash book
(c) Position of purchases
(d) Position of sales
7. Which of the following transactions will be entered in the books of Mr. X, a
cloth merchant ?
(a) He receives a shirt as a gift on his birthday
(b) He buys a shirt for his son
(c) He sells cloth to one of his customers
(d) None of the above
II. Matching Questions
1. Part - A Part - B
(i) Accountancy (a) Where the work of Book-Keeping ends
(ii) The work of Accounting begins (b) Influenced by personal judgements
(iii) The limitations of Accounting (c) Not fully Accurate
(iv) Accounting Statements (d) Types of Accounting
(v) Management Accounting (e) Aet and Science both
(i) Accounting cycles includes (a) Proof in court
(ii) Advantages of Accounting (b) Calculation of Profit and Loss
(iii) Functions of Accounting (c) Financial Transactions
(iv) Relevance (d) Recording
(v) Accounting Record (e) QualitativecharacteristicsofAccountingInformations
G-106, P.C. Colony K. bagh, Patna-20 -1- Contact : 9386313659
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(i) Meaning of Book-Keeping (a) All transactions are recorded in primary books
(ii) Characteristics of Accounting (b) Purchased machinery for cash
(iii) In Book-Keeping (c) Accounting Business Transactions
(iv) Business Transactions (d) Cost Accounting
(v) Types of Accounting (e) Recording and Classifications
III. Multiple Choice Questions : More than one correct type Questions
1. Accounting means
(a) Accounting is a Science as well as an Art both
(b) Accounting provides financial informations to efficient conduct and evaluation
of the activities of any organisation
(c) An employee dismissed from the job is known as an accounting transaction
(d) Accounting explains the qualitative aspects of trade
2. The characteristics of Accounting are :
(a) A perspective employee is interviewed
(b) According to accounting tradition all the assets which are in the possission
of business are called goods.
(c) Recording of Financial Transactions only
(d) recording in terms of money
3. In Book-Keeping :
(a) All the business transactions are recorded in the Primary Books
(b) Posting is done from the Primary Books
(c) Book-Keeping is not dependent on Accounting
(d) Trial Balance is prepared
4. In Accountancy :
(a) Business transactions are recorded
(b) Accounts of Adjustments and Rectification of errors are include
(c) Final Accounts are included
(d) Special knowledge and ability is necessary
5. Objects of Accounting are :
(a) To keep systematic records
(b) Calculation of Profit and Loss
(c) To ascertain the financial of the business
(d) Receiving a huge order for export
6. The advantages of Accounting are :
(a) Compliment of Memory
(b) Comprative Study
(c) Proof in Court
(d) Helpful in determination of Tax-liability
7. The types of Accounting are :
(a) Purchase Accounting (b) Sales Accounting
(c) Financial Accounting (d) Cost Accounting
8. The limitations of Accounting are :
(a) Influenced by Personal Judgements (b) Incomplete Information
(c) Source of Information (d) Accounts of Rectification of Errors
9. The internal users of Accounting Informations are :
(a) Management at the top level (b) Creditors
(c) Government (d) Middle and low level Mngt.
10. The external users of Accounting Informations are :
(a) Management at all levels (b) Tax Authorities
(c) Customers (d) Labour Unions
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Objective Questions / 3
11. The sub-systems of Accounting Information System are :
(a) Cash sub-system
(b) Purchase and Accounts payable sub-system
(c) Sales and Accounts Receivable sub-system
(d) Employees sub-system
12. Advantages of Accounting Informations are :
(a) Accounting Information is historical in nature
(b) It provides to users the information regarding the earning capacity of Enterprise
(c) it provides information useful for making economic decisions
(d) If reflects the current financial position of a business
13. Qualitative characteristics of Accounting Informations are :
(a) Reliability (b) Relevance
(c) Understandability (d) Comparability
IV. Assertion-Reason Type Questions
Following are two given statements. Read both the statements and choose
the correct alternative :
(A) Both statements are true and Statement-II is the correct explanation of
statement-I
(B) Both statements are true but statement-II is not the correct explanationof
statement-I
(C) Statement-I is true, but statement-II is false
(D) Statement-II is true, but statement-I is false
1. Statement-I “Accountancy starts where book-keeping ends.”
Statement-II “Accountancy refers to the entire body of the theory and practice
of Accounting.”
2. Statement-I “Book-Keeping is the language of business.”
Statement-II “Book-Keeping is an Art or Science.”
3. Statement-I “Assets are future economic benefits, the rights which are owned
or controlled by an organisation or individuals.”
Statement-II “Assets are valuable resources owned by a business which were
acquired at a measurable money cost.”
4. Statement-I “Book-Keeping is primary stage.”
Statement-II “Accounting is secondary stage Accounting starts where book-
keeping ends.”
5. Statement-I “Accountant is not required to possess analytical skill.”
Statement-II “Book-keeper is not required to possess analytical skill.”
V. Comprehension/Paragraph based Questions

Only those transactions and events are recorded in accounting which are of a
financial character. There are so many transactions in the business which are very
important for business but which cannot be measured and expressed in terms of money
and hence such transactions will not be recorded. For example, the quarrel between
the Production Manager and the Sales Manager, resignation by an able and experienced
manager, strike by employees and starting of a new business by the other competitor
etc. Though these events affect the earnings of the business adversely but as no one
can measure the effect of such events in terms of money, these will not be recorded in
the books of the business
1. What type of transactions are recorded in accounting ?
(a) Only Financial transactions are recorded
(b) Financial and non-financial transactions
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(c) All types of transactions are recorded.

(d) Accounting of all of the above
2. Which of the following are not recorded in accounting ?
(a) Quarrel between production manager and sales manager
(b) Establishment of all most same business
(c) Resignation by cashier
(d) All of the above
3. What type of work is performed by accountant:
(a) Analytical nature (b) Order type work
(c) Understanding work (d) Work of own choice
Basic Accounting Terms

1. Assets are :
(a) Fixed Assets (b) Floating Assets
(c) Fictitious Assets (d) All of the above
2. Liabilities are :
(a) Fixed Liabilities (b) Current Liabilities
(c) Contigent Liabilities (d) All of the above
3. Capitals are
(a) Fixed (b) Floating
(c) Working (d) All of the above
4. Goods includes :
(a) Purchase of all the commodities
(b) Purchase of all the Assets
(c) Purchase of those commodities which are purchased for re-sale purpose
(d) Purchase of liquid commodities only
5. A person who owes money to the firm is called a :
(a) Creditor (b) Debtor
(c) Proprietor (d) None of these
6. A person to whom money is owned by the firm is called a :
(a) Creditor (b) Debtor
(c) Employee (d) None of the above
7. Live Stock includes :
(a) Plant and Machinery (b) Animals
(c) Stock (d) Life Insurance Policy
8. Dead Stock includes :
(a) Land and Building (b) Debtors
(c) Creditors (d) Investments
9. Debentures are :
(a) Short-term Liability (b) Contigent Liability
(c) Long-term Liability (d) Liquid Liability
10. Bank Loan is
(a) Current Liability (b) Current Asset
(c) Liquid Asset (d) None of the above

(i) Fixed Asset is (a) Long-term loan
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(ii) Floating Asset is (b) Creditors

(iii) Current Liability is (c) Building Construction Expenses
(iv) Capital Exopenditure is (d) Cash and Bank Balance
(v) Fixed Liability is (e) Land and Building
(i) Revenue expenditure is (a) Land and Building
(ii) Live Stock is (b) Cash Discount
(iii) Allowed at the time of sales of goods (c) Horses
(iv) Allowed at the time of receipt of payment (d) Trade Discount
(v) Dead Stock includes (e) Wages of Workers
(i) Bank Loan is (a) Creditor
(ii) Debentures are (b) Debtor
(iii) A person to whom money is (c) Amount withdraw for personal use
owned by the firm is called a (d) Long-term liability
(iv) A person whoomes money to (e) Current liability
the firm is called a
(v) Drawings is treated
1. Features of business transactions are :
(a) Economic Activity (b) Non-banking Activity
(c) Change in financial position of business (d) Change in measureable in terms of money
2. Features of assets are :
(a) Assets are limited (b) Assets must be valuable
(c) Assets must not be owned by the business
(d) The Assets must not be owned by the business.
3. The types of assets are :
(a) Fixed Assets (b) Floating assets
(c) Fictitious assets (d) Tangible and intangible assets
4. Fixed assets are :
(a) Cash (b) Debtors
(c) Land and Buildings (e) Plant and Machinery
5. Current assets are :
(a) Bank balance (b) Furniture
(c) Investments (d) Closing stock
6. Fictitious assets are :
(a) Bills Receivable (b) Motor Car
(c) Preliminary Expenses (d) Promotion Expenses of business
7. Wasting assets are
(a) Mines (b) Patent rights
(c) Trade Marks (d) Goodwill
8. Tangible assets are :
(a) Stock (b) Discount
(c) Cash (d) Land and Building
9. Intangible assets are :
(a) Loss (b) Goodwill
(c) Trade Marks (d) Cash at Bank
10. Fixed liabilities are :
(a) Creditors (b) Bills Payable
(c) Long Term Loans (d) Debentures
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11. Current liabilities are :

(a) Bank Overdraft (b) Short Term Loans
(c) Capital (d) Creditors
12. The types of capital are :
(a) Fixed capital (b) Fluctuating capital
(b) Working capital (d) Fictitious capital
13. The types of expenditure are
(a) Daily expenditure (b) Useless expenditure
(c) Capital expenditure (d) Revenue expenditure
14. The types of stock are :
(a) Live Stock (b) Dead Stock
(c) Stock of Raw Material (d) Stock of Closing Stock
15. The types of profit are :
(a) Gross Profit (b) Operating Profit
(c) Net Profit (d) Good Profit
16. The types of discount are :
(a) Useless Discount (b) Good Discount
(c) Trade Discount (d) Cash Discount

statement-I
statement-I
1. Statement-I “Liabilities are debts, they are amounts owed to creditors.”
Statement-II “Liabilities = Assets - Capital.”
2. Statement-I “When cash comes it is debited.”
Statement-II “Cash is a Real Account.”
3. Statement-I “Expenses is the cost of the use of things or services for the purpose
of generating revenue.”
Statement-II “Income = Revenue - Expenses.”
4. Statement-I “Cost is the amount of expenditure (actual or national) incurred
on, as attributable to a specified thing or activity.”
Statement-II “Cost can be termed as the amount of resources given up in exchange
for some goods or services. The resources given up are money or money’s equivalent
expressed in terms of money.”
5. Statement-I “The term purchases includes both cash purchases and credit purchases
of goods.”
Statement-II “The term sales includes both cash and credit sales.”
Accounting : Concepts and Principles

1. Types of Accounting Principles are :
(a) Basic Concepts (b) Basic principles
(c) Modifying principles (d) All of the above
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2. Basic concept is
(a) Principle of consistency (b) Current business concept
(c) Verifiable objective evidence concept (d) Cost-Benefit Principle
3. Basic Principles is :
(a) Principles of Revenue Realisation (b) Moneymeasurement concept
(c) Principle of industrial practice (d) Principle of consistency
4. Modifying principle is :
(a) Principle of revenue realisation (b) Principle of full disclosure
(c) Cost-benefit principle (d) Historical cost principle
5. According to the current business concept, a business entity is assumed to have
(a) A long life (b) A short life
(c) An indefinite life (d) None of the above
6. Contingent Liability is shown in the Balance Sheet because of :
(a) Principle of consistency (b) Principle of materiality
(c) Principle of full disclosure (d) Convention of conservation
7. Revenue is considered as being earned when:
(a) Cash is received (b) Production is done
(c) Sale is effected (d) Purchase is effected
8. Accounting does not record non-financial transactions because of :
(a) Business entity concept (b) Money measurement concept
(c) Principle of industrial prectice (d) Cost-benefit principle
9. According to which of the following concepts even the owner of the business
who provides capital is treated as a creditor of the business ?
(a) Business Entity Concept (b) Cost Concept
(c) Money Musurement Concept (d) Principle of Full Disclosure

(i) Names of Accounting Principles (a) There are two aspects in each transactions
(ii) From the point of view of income (b) Current business
Tax Accounting year is (c) Principles of Revenue Realisation
(iii) According to dual aspect concept (d) Concepts
(iv) Basic concepts is (e) 1st April to 31st March
(v) Basic principle is
(i) Accounting principles are (a) On the basis of Development of commerce
(ii) Modifying principle is (b) Accepiable to all
(iii) Basic principle is (c) Cost Benefit Principle
(iv) According to the current business (d) Principal of Revenue Realisation
concept, a business entity is assumed (e) Long Term
to have
(v) Accounting principles are developed
1. Accounting Principles means:
(a) Which are implemented at the time of recording of accounting transactions
(b) Which are implemented at the time of presentation of Financial Statements.
(c) Which are written and certain
(d) Which are generally acceptable

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2. Main features of Accounting Principles are :

(a) Uselessness (b) Usefulness
(c) Feasibility (d) Based on Real Facts
3. The types of Accounting Principles are :
(a) Accounting Concepts (b) Conventions of Accounting
(c) Accounting Aptitude (d) Accounting System
4. Basic Concepts of Accounting are :
(a) Business entity Concept (b) Verifiable objectives evidence concept
(c) Going concern concept (d) Money measurement concept
5. Accounting conventions are :
(a) Convention of full disclosure (b) Principle of consistency
(c) Convention of conservation (d) Accounting year concept
6. As per Dual Aspect Concept
(a) Assets = Liabilities + Capital (b) Assets = Liabilities - Capital
(c) Capital = Assets - Liabilities (d) Capital = Assets + Liabilities
7. Interest on Capital is :
(a) Expense for Business (b) Income for Business
(c) Income for Businessman (d) Expense for Businessman
8. In accounting all business transactions are recroded:
(a) As having Single Aspect (b) As having Dual Aspect
(c) As having Thrice Aspect (d) As having Double Aspect

statement-I
statement-I
1. Statement-I “According to business entity concept, business is treated as a unit
separate and distinct from its owners, creditors, managers and others.”
Statement-II “The owner of a business is always considered as distinct and
separate from the business owners. The proprietor is treated as a creditor of the
business to the extent of capital invested by him in the business.”
2. Statement-I “Accroding to Dual Aspect Concept every business transaction is
recorded as having a dual aspect.”
Statement-II “Every transaction affects alleast two accounts. If one account is
debited, any other accounts must be credited.”
3. Statement-I “Every transaction have two aspects.”
Statement-II “Profit and Loss are two sides of a business.”
4. Statement-I “According to Matching Concept in determining the net profit
from business operations, all costs which are applicable to revenue of the period
should be charged against the revenue.”
Statement-II “Accordingly for matching costs with revenue, first revenues
should be recognised and their cost incurred for generating that revenue should
be recognised.”

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Theory base of accounting consists of principles, concepts, conventions, rules
and guidelines developed over a period of time to bring uniformity and consistency to
the process of accounting in order to enhance its utility to various users of accounting
information. In addition, accounting standards issued by The Institute of Chartered
Accountants of India (ICAI) also constitute the theory base of accounting.
1. Which of the following are included in theory based of accounting ?
(a) Concepts (b) Conventions
(c) Rules and guidlines (d) All of the above
2. Theory base of Accounting includes :
(a) Relevance (b) Accounting Standard
(c) Objectivity (d) Feasibility
3. Which of the following are the kinds of Accounting principles
(a) Accounting Concepts (b) Assumptions
(c) Accounting Conventions (d) All of the above
Accounting Standards

1. AS-13 explains :
(a) Revenue Recognition (b) Earning Per Share
(c) Consolidated Financial Statements (d) Accounting for Investments
2. AS-22 explains :
(a) Accounting for Taxes on Income (b) Interim Financial Reporting
(c) Intangible Assets (d) Leases
3. Accounting Standards are necessary :
(a) For the implementation of certain Policies and Standards
(b) For non-implementation of certain Policies and Standards
(c) For the implementation of policies and standards according to circumstances
4. Accounting Standards Board was established on :
(a) 20th March, 1979 (b) 21st April, 1979
(c) 25th Feb., 1978 (d) 21st May, 1980
5. Accounting Standards are necessary
(a) Due to Reginal Busineas (b) Due to National Business
(c) Due to Globalisation of Business (d) None of the above
6. Accounting Standards Board is established :
(a) For the preparation of Accounting Standards
(b) For the publicity of Accounting Standards
(c) For the issue of directions of Accounting Standards
(d) For all of the above
7. AS-1 explains
(a) Revenue Recognition (b) Disclosure ofAccounting Policies
(c) Accounting for Investments (d) Intangible Assets
8. AS-8 explains :
(a) Accounting for Fixed Assets (b) Accounting for Investments
(c) Accounting for Research and Development
(d) Accounting for Government Grants

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(i) AS-22 explains (a) Accounting for investments
(ii) AS-13 explains (b) Accounting for taxes of income
(iii) AS-10 explains (c) Depreciation Accounting
(iv) AS-6 explains (d) Valuation of inventories
(v) AS-2 explains (e) Accounting for fixed assets
(i) Accounting Standards are useful (a) For the implementation of certain
policies and standards
(ii) Accounting Standards must be (b) For Auditors
(iii) Accounting standards are necessary (c) Disclosure of Accounting policies
(iv) Clear in AS-1 (d) For thepreparationofAccountingStandards
(v) Accounting Standards Board is (e) Simple and Clear
1. Accounting Standards means :
(a) As a mode of conduct imposed on accountants by Professional Body
(b) Ignorance of certain rules
(c) To implement the certain rules
(d) As an policy document
2. The nature of Accounting Standards is :
(a) Proper recording of business transactions
(b) To remove the diverse effects of various accounting policies
(c) Not to disclose the business transactions
(d) To give informations to the users of financial staements that on which
basis these staements have been prepared.
3. The need of Accounting Standards is :
(a) For the uniformity in presentation of Accounts
(b) To maintain the ambiguity in Accounting Terminology
(c) For control on scandal
(d) For the localisation of Business
4. The utility of Accounting Standards is :
(a) For the unreliability of Financial Statements
(b) For the comparability in Financial Statements
(c) To reduce the Manipulations and Frauds
(d) To help the Auditors
5. AS-5 is :
(a) Regarding Net Profit and Loss for the period
(b) regarding discontinuiting operations
(c) Regarding Intangible Assets
(d) Reagrding changes in Accounting policies
6. AS-29 is
(a) Regarding accounting for Investments
(b) Regarding accounting for Taxes on Income
(c) Regarding Provisions
(d) Regarding Contigent Liabilities and Contigent Assets

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statement-I
statement-I
1. Statement-I “Depreciation is charge on fixed assets.”
Statement-II “Depreciation accounting is done according to AS-6.”
2. Statement-I “Disclosure of Accounting policies is done according to AS-1.”
Statement-II “Valuation of inventories is done according to AS-II.”
3. Statement-I “Accounting for construction contracts is done according to AS-7.”
Statement-II “Accounting for Research and Development is done according to
AS-10.”
4. Statement-I “Accounting for Taxes on income is done according to AS-29.”
Statement-II “Accounting for impairment of Assets is done According to As-28.”
5. Statement-I “Accounting for investment is done according to As-13.”
Statement-II “Accounting for Govt. Grant is done according to As-14.”
Process and Bases of Accounting

1. Systems of Accounting are :
(a) Single Entry System (b) Double Entry System
(c) Single and Double Entry System (d) Simple Entry System
2. Defects of Double Entry Systems are :
(a) Expensive System (b) Errors of Principle cannot be traced
(c) Compensatory Errors cannot be traced
3. Books of Accounts used under Double Entry System are :
(a) Purchase Book (b) Sales book
(c) Cash Book (d) All of the above
4. Various stages of Double Entry System are :
(a) Books of Original Entries (b) Classification
(c) Preparation of Final Accounts (d) All of the above
5. Types of Accounts are
(a) Two (b) THree
(c) Four (d) Five
6. The rule of Personal Accounts is
(a) Debit the receiver and Credit the given
(b) Debit the giver and credit the receiver
(c) Debit what comes in and credit what goes out
(d) Debit what goes out and credit what comes in
7. The Rule of Real Account is :
(a) Debit all expenses and credit all incomes
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(b) Debit what comes in and credit what goes out

(c) Debit the Receiver and credit the Gives
(d) Debit the Giver and credit the Receiver
8. The Rule of Nominal Account is :
(a) Debit what comes in and credit what goes out
(b) Debit what goes out and credit what comes in
(c) Debit all expenses and losses and credit all incomes and gains
(d) debit all incomes and gains and credit all expenses and losses
(i) Single Entry System (a) Lucas Pocioli
(ii) Double Entry System (b) Rare Possibility of Error
(iii) Founder of Double Entry System (c) Double Entry effect of business transaction
(iv) Advantages of Double Entry System (d) Scientific
(v) Characteristics of Double Entry System (e) Unscientific
(i) Types of Account (a) Systems of Accounting
(ii) Accounts of Insurance Company (b) Disadvantages of Double Entry System
(iii) Single Entry System (c) In Double Entry System
(iv) Checking the accuracy Account (d) Artificial Personal possible
(v) Principle cannot be traced (e) Artificial Personal Error of Account
1. Systems of Accounting are :
(a) Single Entry System (b) Large Entry System
(c) Small Entry System (d) Double Entry System
2. Characteristics of Double Entry System are :
(a) Single effect of business transactions
(b) Double effect of business transactions
(c) Recording is not made on the basis of certain prescribed rules
(d) Recording of Personal and Impersonal Accounts
3. Merits of Double Entry System are :
(a) Scientific System (b) Complete Record
(c) Preparation of Trial Balance (d) Knowledge of Financial Position
4. Disadvantage of Double Entry System are :
(a) Economical System (b) Expensive System
(c) It is very difficult to locate the error of principle
(d) Useless System
5. Principles of Doubled Entry System are
(a) Two Parties (b) Three Parties
(c) definite rules (d) One Party
6. According to Double Entry System Accounts are:
(a) Personal Accounts (b) Impersonal Accounts
(c) Useless Accounts (d) Nominal Accounts
7. Double Entry System is the best because of :
(a) Account Books are incomplete
(b) It is a Scientific System (c) Less possibility of frauds
(d) Knowledge of Arithmetical accuracy
8. Books of Accounts under Double Entry System are
(a) Single Book (b) Double Book
(c) memorandum or Waste Book (d) Books of original Enteries
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9. Basis of Accounting are :

(a) Cash Basis of Accounting (b) Accrual Basis of Accounting
(c) Purchase Basis of Accounting (d) Sales Basis of Accounting
10. Advantages of Cash Basis of Accounting are :
(a) Easy and Realise (b) It follows Matching Principle of Accounting
(c) It is best for Professional People
(d) It does not require the use of estimates and personal judgements

statement-I
statement-I
1. Statement-I “Balance Sheet is not prepared in Single Entry System.”
Statement-II “Balance Sheet is prepared only in Double Entry System.”
2. Statement-I “Those accounts which are not according to Double Entry System
are imcomplete Records.”
Statement-II “System of book-keeping in which only cash and personal account
are recorded is called single entry system..”
3. Statement-I “Purchase of fixed assets is a capital Expenditure.”
Statement-II “Capital Expenditure are shown in Balance Sheet.”
4. Statement-I “Profit = Closing capital - Opening Capital.”
Statement-II “The difference between closing capital and opening capital is
known as profit in single entry.”
5. Statement-I “The system of Double Entry of Book-Keeping is founded upon
the truth that every transaction affetcs two accounts.”
Statement-II “Every Debit must have correspoding credit.”
Accounting Equations

1. The effect of Computer purchase for the son of the owner of the business will
be ----------------
(a) Decrease in Asset and Capital
(b) Increase in Asset and decrease in liability
(c) Increase in Capital and decrease in liability
(d) Increase in liability and decrease in capital
2. An amount of Rs. 5,000 was spent on a Old machine purchased The effect of
this transaction of business will be ------
(a) Decrease in Asset and Capital
(b) Increase and Decrease in Asset
(c) Increase and Decrease in Liability
(d) Increase and Decrease in capita
3. Due to the following transactions the total of Assets and Liabilities of the business
will be :
(i) Ram started business with cash Rs. 80,000
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(ii) Purchased goods on credit Rs. 18,000

(iii) Purchased machinery Rs. 20,000
(a) Rs. 1,18,000 (b) Rs. 98,000
(c) Rs. 1,00,000 (d) Rs. 80,000
4. Prepare accounting equations on the basis of the following transactions:
(i) Mohan started business with cash Rs. 20,000
(ii) Furniture purchased Rs. 2,000
(iii) Paid Rent Rs. 200
(iv) Purchased goods on credit Rs. 3,000
5. Main elements of accounting equation are :
(a) Cash, Debtors and Machinery
(b) Capital, Creditors and Bills Payable
(c) Assets, Liabilities and Capital
(d) Investments, Bills Receivable and Furniture
6. If the capital of business Rs.1,50,000; creditors of Rs. 50,000 and bills payable
of Rs. 10,000 of a business total assets of the business will be :
(a) Rs, 1,60,000 (b) RS. 2,10,000
(c) Rs. 2,00,000 (d) Rs. 60,000
7. If total assets of a business are Rs. 3,00,000 and capital of Rs. 2,40,000 then
creditors will be :
(a) Rs. 60,000 (b) Rs. 5,40,000
(c) Rs. 2,40,000 (d) Rs. none of the above
8. On the basis of following transactions, the closing capital of the business will be:
(i) Owner’s capital in the beginning Rs. 2,60,000
(ii) Creditors at the end Rs. 40,000
(iii) Income during the year Rs. 1,00,000
(iv) Expenses during the year Rs. 50,000
(a) Rs. 3,60,000 (b) Rs. 1,50,000
(c) Rs. 3,10,000 (d) Rs. 2,60,000
9. Ram’s opening capital was of Rs. 2,00,000 and closing capital of Rs. 3,00,000.
During the year he introduced Rs. 50,000 as his additional capital and withdrawn Rs. 10,00,000
for his private expenses, then his profits will be:
(a) Rs. 5,00,000 (b) Rs. 60,000
(c) Rs. 2,90,000 (d) Rs. 2,40,000
10. Total Assets of Manish as on 31st Dec., 2005 were Rs. 80,000. His liabilities
were : creditors Rs. 20,000; Bank overdraft Rs. 20,000; Bills Payable Rs. 16,000. On
that date his capital will be:
(a) Rs. 60,000 (b) Rs. 24,000
(c) Rs. 40,000 (d) Rs. 64,00
11. If goods is returned to the supplier then we prepare:
(a) Debit Note (b) Credit Note
(c) Receipt (d) Invoice
12. If goods is returned by the customer then trader prepares:
(a) Debit Note (b) Credit Note
(c) Pay-in-slip (d) Bill
13. On receipt payment payer gets :
(a) Credit Note (b) Debit Note
(c) Receipt (d) Pay-in-slip
14. For the deposit of amount into the bank is used :
(a) Cheque Book (b) Pay-in-slip
(c) Pass Book (d) None of the above
th
15. Type of Vouchers are :

(a) Cash Vouchers (b) Transfer Vouchers
(c) Debit and Credit Vouchers (d) All of the above
16. Assets include:
(a) Creditors (b) Bank Loan
(c) Investments (d) All of the above
17. Liabilities include
(a) Debtors (b) Bills payable
(c) Stock (d) All of the above
18. Which of the following is correct equation:
(a) Capital = Assets + Liabilities (b) Assets = Liabilities - Capital
(c) Liabilities = Capital + Assets (d) Capital = Assets - Liabilities
19. If Capital of a business is Rs. 80,000 and Liabilities are Rs. 20,000 then total
Assets of business will be:
(a) Rs. 1,00,000 (b) Rs. 60,000
(c) Rs. 80,000 (d) None of the above
20. If total assets of a business are Rs. 4,00,000 and capital is Rs. 3,50,000 then
creditors will be:
(a) Rs. 4,00,000 (b) Rs. 3,50,000
(c) Rs. 50,000 (d) Rs. 7,50,000

(i) Source Document of Accounting (a) Wrong Equation
(ii) Outstanding Salary (b) Accounting Equation
(iii) Assets = Liabilities + Capital (c) Assets
(iv) Amount of prepaid insurance (d) Invoice and Bill
(v) Assets = Liabilities - Capital (e) Liability
(i) Amount of Accrued Interest (a) Liabilities
(ii) Interest on Investment received in advance (b) Assets
(iii) Salary to Business Manager (c) Assets, Liabilities and paid Capital
(iv) Element of accounting equation Debit (d) Types of Vouchers
(v) Debit and Credit Capital (e) Decrease in Assets and Capital
1. Which of the following statements are correct ?

(a) Cash Memo (b) Invoice and Bill
(c) Debit and Credit Note (d) Pay-in slip and cheque
2. Voucher means :
(a) Written proof of business transactions
(b) Cash Book (c) Purchase Book
(d) Documentary evidence in support of an entry appearing in the books of
accounts
3. Types of Vouchers are :
(a) Profil and Loss Vouchers (b) Depreciation Vouchers
(c) Cash Vouchers (d) Cash Vouchers
4. Advantages of Voucher are :
(a) Recording of partial payments
(b) Verification of the entries relating to a transaction
(c) Control on Cash payment
th
(d) Proper recording of Depreciation

5. Meaning of Accounting Equation is :
(a) Another form of Dual Aspect Concept
(b) Another form of Single Aspect Concept
(c) Double effect of every business transaction
(d) No effect of business transaction
6. According to Accounting Equation :
(a) Assets = Total Equity
(b) Assets = Creditors Equity + Owner’s Equity
(c) Liabilities = Assets - Capital
(d) Liabilities = Capital + Assets
7. According to Accounting Equation:
(a) Both aspect of the equation wil be unequal in every circumstance
(b) Both aspects of the equation will be equal in every circumstance
(c) Cash + Furniture + Goods + Debtors = Creditors + Capital
(d) Cash + Bills Payable - Assets
8. Outstanding Salary for trade is :
(a) Income (b) Asset
(c) Liability (d) Amount Payable
9. Interest on Investments received in advance for trade is :
(a) Liability (b) Asset
(c) Advance Amount received (d) Capital
10. Amount of prepaid insurance for trade is :
(a) Liability (b) Asset
(c) Income (d) Advance payment amount

statement-I
statement-I
1. Statement-I “Accounting equation is true in all cases.”
Statement-II “A Voucher may be defined as documentary evidence in support
of an entry appearing in the books of accounts.”
2. Statement-I “Profit = Closing capital - Opening Capital.”
Statement-II “Assets = Liabilities + Capital.”
3. Statement-I “Debit voucher - For cash payment.”
Statement-II “Credit voucher - For cash receipt.”
4. Statement-I “Cash vouchers are prepared for cash receipts and cash payments.”
Statement-II “Credit vouchers are prepared for such transactions which are
related with cash receipts.”
5. Statement-I “Non-cash voucher or transfer voucher are one and the same.”
Statement-II “In Case the source document is not available for a transaction,
the receipt portion of the debit voucher is filled and is used assource document.”

th
Journal

1. Sale of Old Newspaper shall be credited to :s
(a) Cash Account (b) News-Paper A/c
(c) Sales Account (d) Bank Account
2. Bank overdraft account is :
(a) Personal Account (b) Real Account
(c) Nominal Account (d) Bank Account
3. Repair to building would be debited to :
(a) Repairs Account (b) Building Account
(c) Cash Account (d) None of these
4. Extension to Building would be debited to :
(a) Building Account (b) Repairs Account
(c) Cash Account (d) Personal Account of the Proprietor
5. Goods purchased from Mohan credited to :
(a) Mohan’s Account (b) Purchased Account
(c) Goods Account (d) Cash Account
6. Purchased goods from jitender for Rs. 5,000 for cash less 8% trade discount and
received 2% cash discount, is credited in discount account with Rs.
(a) Rs. 400 (b) Rs. 92
(c) Rs. 100 (d) Rs. 500
7. Received 60% out of a total debts of Rs. 8,000 from Sajal because he has been
declared insolvent, is debited to Bad Debt account for Rs.
(a) Rs. 3,200 (b) Rs. 4,800
(c) Rs. 8,000 (d) Rs. 6,000
8. Received an order from M/S Akash Deep Traders for Rs. 10,000 is debited to :
(a) Sales Account (b) Rs. Purchase Account
(c) Advance Account (d) No entry
9. Purchased goods from Ram for Rs. 2,000 and they paid cartage Rs. 200 is credited
to Ram’s A/c with what amount :
(a) Rs. 2,000 (b) Rs. 2,200
(c) Rs. 200 (d) Rs. 2,400
10. Goods sold to Suresh of list price of Rs. 2,000, Trade Discount @ 10% and
Cash Discount @ 5%. He paid the amount on the same day and availed the cash
discount, is debited to cash account with what amount:
(a) Rs. 1,700 (b) Rs. 1,710
(c) Rs. 1,900 (d) Rs. 1,910
11. Credit note issued to Raman for Rs. 500 for goods damaged in transit, is credited to :
(a) Goods in Transits (b) Raman’s Account
(c) Goods Account (d) Purchases Account
12. Paid for Income Tax and children’s school fees is credited to :
(a) Drawings’s Account (b) Income Tax and Children’s Fees Account
(c) Cash Account (d) Capital Account
13. The origin of Journal word is :
(a) From the word of Italian language
(b) From the word of French language
(c) From the word of Russian language
(d) From the word of English language
14. The Journal of a trader is :
(a) Subsidiary Book (b) Cash Book
(c) Principal Book (d) Purchase Book
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15. The functions of Journal are :

(a) To present the date-wise record of every transactions
(b) To present the detail of debit and credit of every transaction
(c) To give the base of posting for transactions
16. The objects of Journal are :
(a) To provide the convenience in posting
(b) To provide the brief narration of transactions
(c) To help in the solution of trade disputes
17. The advantages of Journal are :
(a) Narration of every transaction
(b) Date-wise entry of every transaction
(c) Reliable proof
18. Trade discount is given :
(a) On the purchase of goods on credit (b) On cash payment
(c) On sale of goods (d) On receipt of cash before time
19. On capital invested by the proprietor in the business will be credited :
(a) Cash Account (b) Capital Account
(c) Proprietor Account (c) Goods Account
20. Recording of transaction in the journal is called :
(a) Posting (b) Casting
(c) Journalising (d) None of the above
21. The purchase journal contains :
(a) All purchases (b) All purchases of goods
(c) Cash purchases of goods (c) Credit purchases of goods
22. Acounts which are related to gains or losses are called as
(c) Nominal Account (d) None of the above
23. Accounts related to property are called:
(a) Real Account (b) Personal Account
24. Interest on Capital
(a) Increase assets and decreases capital
(b) Increase expense and decrease liability
(c) Increase and Decrease Capital
(d) Increase liability and decreases capital
25. Recovery of bad debts previously written off:
(a) Increase Assets and Revenue
(b) Decrease Assets and Expenses
(c) Increase Assets and Capital
(d) Increases Expenses and Assets
26. Which of the following books should be used to record purchase of furniture on credit ?
(a) Cash Book (b) Jourrnal Proper
(c) Purchase Book (c) Furniture Book
27. Which of the following accounts is increased by debit entries?
(a) Machinery Account (b) Purchases Returns Account
(c) Discount Received Account (d) Purchase Account
28. The credit balance in the Bank Account is :
(a) An Asset (b) An Liability
(c) An expense (d) An income
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29. Returns Outward Book makes a record of :

(a) Goods returned by the suppliers (b) Goods returned by the Customers
(c) Goods returned by the proprietor (d) None of the above
30. Amount paid for the life policy of the proprietor will be debited:
(a) In Life Insurance Account (b) In Capital Account
(c) In Drawings Account (d) None of the above

(i) Cash Discount (a) An example of Personal Account
(ii) Goods taken for personal use (b) An example of Nominal Account
(iii) Drawings Account (c) Personal Account
(iv) Discount Account (d) On receipt of cash before time
(v) Bank Overdraft Account (e) Drawings
(i) The Journal of a trader is (a) Increase in Capital
(ii) Credit Purchases (b) A Liability
(iii) Accounts which are related to (c) Principal book
gains or losses are called (d) Nominal Account
(iv) Credit balance of Bank Account is (e) Recorded in purchase Journal
1. Journal means :
(a) Ledger (b) Trial Balance
(c) In which originally business transactions are recorded
(d) It is a main book of trader
2. The feature of Journal are :
(a) it is a book in which all the transactions are recorded, as and when they
take place
(b) It is a book in which all the business transactions are recorded at the last
(c) In it all the transactions are recorded serially and datewise.
(d) In it all the transactions are recorded according to will
3. Objects of Journal are :
(a) It simplifies ledger (b) Recording of both aspects of every transaction
(c) It simplifies the preparation of vouchers
4. Advantages of Journal are :
(a) More possibility or errors (b) Less possibility or errors
(c) It simplifies the posting in different accounts
(d) Incomplete narration of business transactions
5. The Columns in the proforma of Journal are :
(a) Date (b) Particulars
(c) Ledger Folio/L.F. (d) Number of page of Cash Book
6. The rules of journalising are :
(a) Debit the giver and credit the receiver
(b) Debit the receiver and credit the giver
(c) Debit what comes in and credit what goes out
(d) debit all expenses and losses and credit all incomes and gains
7. Classification of Goods is :
(a) Debtors Account (b) Creditors Account
(c) Purchases Account (d) Sales Account
th
8. The types of discount are :

(a) Purchase Discount (b) Trade Discount
(c) Purchase Return Discount (d) Cash Discount
9. Trade discount is which :
(a) Allowed by seller to the customer at a fixed percentage on the printed
price list at the time of sales.
(b) It is allowed to encourage prompt payment
(c) Deducted in the Invoice or Cash Memo
(d) Not deducted in the Invoice or Cash Memo
10. Cash Discount is which :
(a) Not recorded in Books of Accounts
(b) Allowed by the seller to purchaser for prompt payment
(c) Allowed to encourage the prompt payment
(d) Allowed to encourage the sales
statement-I
statement-I
1. Statement-I “Expenses are debited.”
Statement-II “Profit & Loss Account is a nominal account.”
2. Statement-I “Journal is a book of original entry.”
Statement-II “Journal has four columns.”
3. Statement-I “At the time of passing entry in Personal Account rules of debit
the receiver and credit the giver is followed.”
Statement-II “At the time of passing entry in Real Account rules of Debit what
comes in and Credit what goes out is followed.”
4. Statement-I “The book in which all the business transactions are entered systematically
for the first time is known as Jourmal.”
Statement-II “The journal or daily record as originally used was a book of
primary entry in which transactions were copied in order of date, from a memorandum
or waste book. The entries as they were copied. Were (classified into debits and
credits so as to facilitate their being correctly posted afterwards in the ledger.”
5. Statement-I “The process of recording transactions in the Journal is called
Journalising.”
Statement-II “A Journal is called a book of original entry because all transactions
are entered first in this book.”
Books of Original Entry - Cash Book

1. Paid, Rs. 3,000 to Mohan, It will be recorded in the cash-book

(a) In credit side (b) In debit side
(c) In Liability side (d) In Asset side
2. Trade Discount allowed to Ram Rs. 100, will be debited to :
(a) Discount A/c (b) Ram’s A/c
(c) Sales A/c (d) None of the above
th
3. Petty cash-book is kept to record :

(a) Assets of the business (b) Liabilities of the business
(c) Day to day small expenses (d) Stock of goods
4. The characteristics of cash-book are :
(a) Recording of cash transactions (b) Part of ledger
(c) Debit and credit side (d) All of the above
5. Similarities of cash book and ledger are :
(a) Proforma of both is the source
(b) Word “To” and “By” is used in both
(c) Both are balanced in the same way
6. The types of two columnar of cash book are :
(a) Cash and discount columns (b) Bank and discount columns
(c) Cash and Bank columns (d) All of the above
7. Cash discount allowed to Ram Rs. 50. It will be debited to
(a) Ram’s A/c (b) Discount A/c
(c) Cash A/c (d) None of the above
8. Cash discount received. It will be credited to :
(a) Discount A/c (b) Creditors A/c
(c) Debtors A/c (d) Cash A/c
9. Payment made by cheque will be credited to :
(a) Cash A/c (b) Bank A/c
(c) Debtors A/c (d) Creditors A/c
10. Interest allowed by the bank will be credited to :
(a) Bank A/c (b) Cash A/c
(c) Interest A/c (d) Asset A/c
11. Cash withdrawn from the bank for private use will debited to :
(a) Drawings (b) Cash A/c
(c) Bank A/c (d) Asset A/c
12. Income-Tax paid by cheque. It will be credited to :
(a) Income-Tax A/c (b) Cash A/c
(c) Bank A/c (d) Income A/c
13. Ram’s cheque dishonoured. It will be debited to :
(a) Cheque A/c (b) Cash A/c
(c) Ram’s A/c (d) Bank A/c
14. Name the columnthe cash book which is totalled but not balanced:
(a) Discount A/c (b) Cash A/c
(c) Bank A/c (d) Asset A/c
15. Cash Book is a :
(a) Journal (b) Ledger
(c) Journalised Ledger (d) None of the above
16. The advantages of Cash Book are :
(a) There is no need to open the Cash Account separately
(b) Record of Bank transactions
(c) To calculate the Cash Balance (d) All of the above
17. The Balace of Bank overdraft is
(a) Debit Balance (b) Credit Balance
(c) Debit or Credit Balance (d) Neither Debit nor Credit Balance
18. When a firm maintains a Cash Book, it need not maintain:
(a) Sales Journal (b) Purchase Journal
(c) General Journal (d) Cash Account in the ledger
19. Double Column Cash Book records:
(a) Only Cash Transactions (b) All Transactions
(c) Cash Purchase and Cash Sales Transactions
th
19. Double Column Cash Book records:

(a) Only Cash Transactions (b) All Transactions
(c) Cash Purchase and Cash Sales Transactions
(d) Cash and Bank transactions
20. ------------------------ is a contra entry:
(a) Selling goods for cash
(b) depositing cheque into bank which was received the same day
(c) Depositing cheque into bank which was received the previous day
(d) Receiving cash from Mohan and allowed him discount
21. All credit transactions are recorded of the cash book
(a) In debit side (b) In credit side
(c) Either in debit side or in credit side
(d) Neither in debit side nor in credit side
22. ------------------- many have contra entry:
(a) Simple Cash Book (b) Cash and Discount Column Cash Book
(c) Cash and Bank Column Cash Book (d) All Cash Books
23. Cash Book does not record :
(a) Credit Purchases (b) Credit Sales
(c) Outstanding Expenses (d) All the above transactions
24. Bank column of the Cash Book has ---------- balance.
(a) Debit (b) Credit
(c) Outstanding Expenses (d) All the above transactions
25. Double column Cash Book records:
(a) Only cash transactions (b) All transactions
(c) Cash purchases and cash sales transactions
(d) Cash and Bank transactions

(i) Object of maintaining Cash Book is (a) Debit or Credit
(ii) Opening balance of cash is written (b) Total is done
(iii) Note recorded in Cash Book (c) Credit Purchase
(iv) Discount column of Cash Book (d) On the debit of Cash Book
(v) Balance of Bank column of Cash Book (e) To know the cash balance
(i) The balance of Petty Cash Book is (a) Interest given by the Bank
(ii) Petty Cash Book maintain records of (b) Assets
(iii) Interest Account is credited (c) Bank Account
(iv) Payment made by cheque will be credited (d) Cash and Bank transactions
(v) Double column Cash Book Records (e) All Petty Expenses
1. Main subsidiary Books are :
(a) Cash Book (b) Ledger
(c) Purchase Book (d) Sales Book
2. Advantages of subsidiary books are :
(a) Lack of Flexibility
(b) Division of work according to ability
(c) Delay in accounting work
(d) Increase in efficiency
th
3. Cash Book is used :

(a) For cash receipts (b) For cash payment
(c) For outstanding expenses (d) For the provision of Depreciations
4. The characteristics of Cash Book are :
(a) Recording of credit transactions
(b) Recording of Income which are not received
(c) Recording of cash transactions
(d) Recording of bank transactions
5. The Advantages of Cash Book are :
(a) There is no need to open separate cash account
(b) It is necessary to open the cash account separately
(c) Lack of recording of Bank transactions
(d) Knowledge of Cash-n-hand
6. The types of Cash Book are :
(a) Single column Cash Book (b) Double column Cash Book
(c) Three column Cash Book (d) Petty Cash Book
7. The advantages of Petty Cash Book are :
(a) Its preparation is easy (b) It is maintained by Head Cashier
(c) Only petty expenses are recorded in it
(d) Less possibility of errors
8. Essentials of good Imprest System are :
(a) The petty cashier should have isufficient amount for payments
(b) The petty cashier should have sufficient amount for payments
(c) All the receipts obtained by Petty Cashier should be recorded datewise
(d) There is no upper limit of payment to be made by the petty cashier
9. Advantages of the Imprest system are :
(a) Control over petty expenses (b) Control on Head Cashier
(c) Control over misappropriations (d) Misuse of Cash by Petty Cashier

statement-I
statement-I
1. Statement-I “When cash comes it is debited.”
Statement-II “Cash is a Real Account.”
2. Statement-I “Cash Book is subdivision of Journal.”
Statement-II “Journal proper is prepared when Cash Book is used as Journal.”
3. Statement-I “Cash Account is an account in the ledger.”
Statement-II “Cash book is a separate book maintained for recording cash transactions.”
4. Statement-I “Cash Book is a special Journal in which all transactions relating
to cash and bank are recorded directly from source documents.”
Statement-II “Cash Account is an account in the ledger where as Cash Book is
a separate book..”
5. Statement-I “Both Cash and Bank transactions can be entered in the Cash Book.”
Statement-II “Cash Book enables abusiness man to know the balance of cash
in hand and at Bank at nay point of time without waiting for posting from the
ledger .”
th
Books of Original Entry - Other Sibsidiary Book

1. Final balance of Sales account is transferred to :

(a) Purchase Book (b) Purchases Return Book
(c) Trading Account (d) Profit and Loss Account
2. Which account will be credited in giving goods of Rs. 500 in charity:
(a) Sales Account (b) Purchase Account
(c) Charity Account (c) Cash Account
3. On returning the goods purchased the entry will be made in the
(a) Purchases Book (b) Sales Book
(c) Purchases Return Book (d) Sales Return Book
4. Record is made in Purchases Book
(a) Credit Purchase (b) Cash Purchases
(c) Cash and Credit Purchases (c) None of the above
5. Entry for goods taken away by the proprietor of the business for his private use
will be made in:
(a) Purchase Book (b) Return Inward Book
(c) Returns Outward Book (d) Proper Journal
6. The total amount of the sales Return Book is posted to the
(a) Debit side of Sales Account (b) Debit side of Sales Return Account
(c) Credit side of Sales Return Account
(d) Credit side of Sales Account
7. The Debit notes is written by :
(a) Seller to Purchaser (b) Purchaser to seller
(c) Bank to the Purchaser (d) Bank to Seller
8. Credit Note is written by :
(a) A Seller to the buyer (b) The Buyer to the seller
(c) The Bank to the buyer (d) The buyer to the Banks
9. Closing Balance of Purchases A/c is transferred to :
(a) Sales Book (b) Purchase Book
(c) Purchase Return Book (d) Trading Account
10. Record is maintanied in Journal Proper:
(a) Transactions which are not recorded in any subsidiary book
(b) All transactions (c) All cash transactions
(d) All credit transactions
11. Record is maintainedin Sales Return Book:
(a) Property sold or credit (b) Return of all commodities
(c) Goods sold on credit (d) Return of capital
12. Rs. 16,000 goods was sold to Sita on credit. Some part of goods was spoiled in
transit. For it she was allowed a discount of Rs. 1,000. It will be recorded in :
(a) Sales return Book (b) Cash Book
(c) Journal Proper (d) None of the above
13. The record is maintained in Journal Proper:
(a) Opening entries (b) Closing entries
(c) Adjusting entries (d) All of the above
14. Purchases amount is recorded:
(a) After deducting Trade Discount
(b) After adding Trade Discount
(c) After adding the amount of Sales Tax
15. In case lesser amount is written in invoice, then note is sent
(a) Credit Note (b) Debit Note
(c) Cash Note (d) None of the above
16. The balance of Sales Book is always
(a) Credit (b) Debit
(c) Debit or Credit (d) All of the above
th
17. Following transactions were made by a trader. Due to these transactions the
total of Purchase Book will be :
(i) Bought goods from Sharma Rs. 2,000
(ii) Bought goods from S.K. on Cash basis Rs. 3,000.
(iii) Bought goods from Ratan Bros. on credit Rs.1,000.
(a) Rs. 6,000 (b) Rs. 3,000
(c) Rs. 4,000 (d) Rs. 5,000
18. Points to be considered in the preparation of Purchases Book
(a) Trade Discount (b) Sales Tax
(c) Carriage, Packing and Delivery Charges
19. Purchase Book has columns
(a) Date and particulars (b) Invoice Number
(c) Total amount (d) All of the above
20. Bills Receivable Book has columns :
(a) Date (b) from whom received
(c) term and Amount (d) All of the above
21. Sales Book is used for recording :
(a) Cash Purchases of goods (b) Cash sales of goods
(c) Credit purchases of the goods (d) Credit sales of the goods
22. Purchase Return Book is used for recording:
(a) Cash sales of goods (b) Credit sales of the goods
(c) Cash purchases of goods (d) Returns of credit purchases
23. Returns outwards Books total is posted to the :
(a) Credit of Sales A/c (b) Debit of returns outward A/c
(c) Credit of returns outward A/c (d) None of the above
24. The Sales Book is a
(a) Part of Journal (b) Part of Ledger
(c) Part of Profit and Loss A/c (d) Part of Balance Sheet
25. The total of the Purchase Book is posted to the
(a) Debit of the Sales Account (b) Credit in the Sales Account
(c) Debit in the Purchases A/c (d) Credit in the Purchases Account
26. The total Sales Book is posted to the :
(a) Debit of the Sales Account (b) Credit in the Sales Account
(c) Debit in the Purchases A/c (d) Credit in the Purchases Account

(i) Purchases Return Book (a) Credit Note
(ii) Record is maintained in purchases book (b) In purchases book
(iii) Credit purchase is (c) Credit purchase recorded in of property
(iv) record is maintained in Journal Proper (d) After deducting trade discount
(v) In case more amount is written in (e) Subsidiary Book
invoice, then note is sent
(i) Division of work (a) Debit
(ii) The balance of is always (b) Advantages of purchases book Sub
(iii) Record for purchase of building will be made sidiary book.
(iv) The record is maintained in Journal proper(c) For Adjustment Credit entries
(v) The balance if Sales Book is always (d) Credit
(e) In Journal proper

th
1. Subsidiary Books are :
(a) Bills receivable Book (b) Bills Payable Book
(c) Trial Balance (d) Final Account
2. Transactions are recorded in the Purchases Book
(a) Cash Purchases (b) Purchase of Asset
(c) Record of all credit purchases of merchandise goods
(d) All credit purchases of goods
3. The column in the Purchase Book are :
(c) Invoice No.- (d) Total Amount
4. Advantages of Purchases Book are
(a) Knowledge of cash-in-hand (b) Knowledge of credit sales
(c) Knowledge of all credit purchases of goods
(d) Help in the preparation of Trading Account
5. Advantages of sales book are :
(a) Knowledge of value of total credit sales
(b) Knowledge of value of total credit purchases
(c) help in the preparation of Trading Account
(d) Help in the knowing the Bank Balance
6. The causes of Purchase Returns are :
(a) If goods are as per sample (b) If goods are of inferior quality
(c) If goods is in excess of the order placed
(d) If the goods is charged at the accurate price.
7. Entries recorded in Journal Proper :
(a) Opening Entries (b) Cash Transactions
(b) Rectification Entries (d) Adjustment Entries
statement-I
statement-I
1. Statement-I “Non-cash transactions are recorded in other special purpose subsidiary
Books..”
Statement-II “All credit purchases of goods are recorded in the purchases book.”
2. Statement-I “Only the cash transactions are recorded in the Cash Book.”
Statement-II “It is not necessary for every business to maintain all the special
purpose subsidiary books but required books may be kept depending upon the
need of the business.”
3. Statement-I “Cash purchases are not recorded in the purchases book since these
will be recorded in the Cash Book.”
Statement-II “All credit sales of goods are recorded in the sales book because
cash sales are recorded in the Cash book.”
4. Statement-I “Whenever a bill of exchange is received its particulars are entered
in a separate book called bill receivable book.”
Statement-II “Whenevr a bill of exchange is accepted its particulars are entered
in a separate book called bills book.”
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5. Statement-I “There is no difference between Journal and Journal proper.”

Statement-II “After the sub-division of Journal into various subsidiary books,
Journal remains only a residuary book in which only those transactions are
recorded which can not be recorded in any other subsidiary book.”
Classification - Ledger
1. A Ledger is a Book of
(a) Primary entries (b) Final entries
(c) Both of the above (d) None of the above
2. A Ledger contains accounts
(a) Personal Accounts (b) Real Accounts
(c) Nominal Accounts (d) All of the above
3. The Trial Balance of a business is usually prepared from informations obtained from:
(a) Journal (b) Ledger
(c) Cash Book (d) Purchases Book
4. The Process of transferring entries from the books of original entry is called :
(a) Journalising (b) Balancing
(c) Posting (d) None of the above
5. The Nominal Accounts are closed by
(a) By transferring the Balance of P&L A/c
(b) By transferring the balance of Cash A/c
(c) By transferring the Balance to Balance Sheet
(d) By transferring the Balance to Sales A/c
6. A Ledger is a
(a) Books of final entry (b) Books of original entry
(c) Subsidiary Book (d) List of Summarising
7. The main object of keeping the ledger is :
(a) To check the accuracy of accounts
(b) To know the position of the business
(c) To know the collective result of business transactions relating to accounts
(d) To know the Profit and Loss of the business
8. The balance of Drawing A/c is transferred to :
(a) Capital A/c of the trader (b) Profit&Loss A/c
(c) Trading A/c (d) Cash A/c
9. Credit balance of a Personal A/c shows:
(a) Asset of the business (b) Liability of the business
(c) Profit of the business (d) Loss of the business
10. The advantages of maintaining the ledger are :
(a) Knowledge of the value of assets and liability of the business
(b) Knowledge of total Purchases and Sales in a certain period
(c) Checking pf arithmetical accuracy by preparing the trial balance from
ledger balances
11. The posting of accounts written in the debit side Cash Book is done:
(a) In debit side (b) In Credit side
(c) In debit and credit both sides (d) None of the above
12. The posting of accounts written in the credit side of Cash Book is done
(c) In debit and credit both sides (d) None of the above
13. The posting of sellor account on the basis of Purchases Book is done
(c) In Cash A/c (d) In Capital A/c

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14. The posting of Purchase accounts on the basis of Sales Book is done
(c) In Cash A/c (d) In Capital A/c
15. The posting of customer accounts written in the Sales Return Book is done:
(a) In Debit side (b) In Credit Side
(c) In Debit or Credit side (d) In Cash A/c
16. The balance of Purchase Return Book is always:
(c) Debit or Credit (d) All of the above
17. To know the amount of net purchases the amount of Purchases Return is adjusted
in the amount of total purchases:
(a) Deducted (b) Added
(c) Neither deduction nor addition (d) By deduction and addition
18. In cash of machinery purchased, its posting will be:
(a) In the debit side of Purchases A/c
(b) In the debit side of Goods A/c
(c) In the debit side of Machinery A/c
(d) The the credit sides of machinery A/c
19. Ram Lal to whom goods was sold for Rs. 1,075 sends us a cheque for Rs. 1,050
in full settlement. The posting for the same in Ram Lal’s A/c will be :
(a) In Debit Side by Rs. 1,075 (b) In the Credit side by Rs. 1,075
(c) In the Debit side by Rs. 1,050 (d) In the Credit side by Rs. 1,050
20. Ram Commenced business:
Cash Rs. 15,000; Goods Rs. 5,000; Th posting in Ram’s Capital A/c for the same will be:
(a) In the debit side by Rs. 20,000
(b) In the debit side by Rs. 15,000
(c) In the credit side by Rs. 20,000
(d) In the credit side by Rs. 5,000
21. Ram withdrawn for personal use from the business Rs. 2,000. The posting for
the same will be:
(a) In the debit side of Ram’s A/c (b) In the debit side of Drawing A/c
(c) In the credit side of Ram’s A/c (d) In the credit side of Drawing A/c
22. Paid to Mohan Rs. 3,900 in full settlement of Rs. 4,000. The posting for the
same in Discount A/c will be:
(a) In the debit side by Rs. 100 (b) In the Credit side by Rs. 3,900
(c) In the Credit side by Rs. 100 (d) In the credit side by Rs. 4,000
23. The balance of Purchases A/c is to be transferred to :
(a) In the debit side of Trading A/c (b) In the credit side of Trading A/c
(c) In the debit side of P & L A/c (d) In the credit side of P & L A/c
24. The balance of Sales A/c is to be transferred to :
25. The balance of Machinery A/c is to be transferred to :
(a) In Trading A/c (b) In Profit & Loss A/c
(c) In the Assets side of Balance Sheet (d) In the Liability side of Balance Sheet
26. The balance of Direct Expenses Accounts are to be transferred to :
27. The balance of Indirect Expenses Accounts are to be transferred to :
28. The characteristics of ledger books
(a) Posting from subsidiary books
(b) Collection of all the transactions related to a particular account at one place
(c) The accuracy of accounts can be checked preparing trial balance
29. The columns of ledger are :
(c) J.F. and Amount (d) All of the above
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30. The debit balance of Nominal Account shows:

(a) Asset (b) Liability
(c) Income (d) EXpenditure
31. Recording of transaction in theledger is called:
(a) Journalising (b) Posting
(c) Casting (d) All of the above
32. Accounts which are related to gains or losses are known as:
33. Accounts which are related to property are called:
(a) Real Accounts (b) Personal Account
(c) Nominal Account (d) Other Accounts
34. The balance of an Asset Account is :
(c) Either Debit or Credit (d) Neither Debit or Credit
35. The balance of a Personal Account is :
36. Posting is made at the --------------- side of the account appearing at the debit
side of the Cash Book:
37. While preparing Suppliers Account on the basis of of Purchases-Book Posting
is made at the -------------------- side of suppliers Account :
38. While preparing Account appearing in the Sales Return Book posting is made
at their --------------- side:
39. When a firm maintain a Cash-Book, it need not maintain :
40. Posting is made of the -------------- side of accounts appearing at the credit side
of Cash Book.

(i) When all the transactions related to (a) Amount which is to be received from him
one account are collected at one place
(ii) Ledger of atrader is (b) Income
(iii) Debit balance of Real A/c shows (c) Principal book
(iv) Credit balance of Nominal A/c shows (d) Ledger
(v) Debit balance of customer account shows (e) Assets
(i) Debit balance of bank account shows(a) Liabilities and incomes
(ii) Credit balance shows (b) Cash balance in bank
(iii) Debit balance shows (c) Assets Credit
(iv) A ledger is a book of (d) Always Credit
(v) Balance of purchase return book is (e) Final Entries

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1. Ledger means :
(a) First stage of Accounting (b) Second stage of Accounting
(c) Third stage of Accounting
(d) The Book which contains a classified and permanent record of all the
transaction sof a business
2. Necessity of Ledger is because of :
(a) To know that how musch goods is purchased and how much goods is sold
(b) The amount due from each customer or how much amount the firm has to
pay to each of the supplier
(c) Due to recording of all the transactions date wise.
(d) Due to recording all the transactions first of all in this book.
3. Advantages of Ledger:
(a) In it page number of ledger (L.F.) is written
(b) With the help of its balance a trial balance can be prepared easily to
know the arithmetical accuracy of accounts
(c) Full details of all the transactions is given by narration in it
(d) Availability of necessary informations for preparation of Final Accounts
4. The column in Ledger are :
(c) Narration (d) Amount
5. Types of Accounts available in the Ledger :
(a) Personal Accounts (b) Real Accounts
(c) Unnecessary Accounts (d) Nominal Accounts
6. Columns of Ledger maintained by Bank are :
(c) Debit and Credit Amount (d) Balance
7. Sub-division of Ledger is :
(a) Capital Ledger (b) Purchase Ledger
(c) Sales Ledger (d) General Ledger

statement-I
statement-I
1. Statement-I “The book which contains a classified and permanent record of all
the transactions of a business is called the Ledger.”
Statement-II “Full details of transactions (Narration) are recorded in the book
called Ledger.”
2. Statement-I “Final Accounts can be prepared with the help of books of original entry.”
Statement-II “Final Accounts can be prepared with the help of ledger accounts.”
3. Statement-I “The ledger is the chief book of accounts and it is in this book that
all the business transactions would ultimately find their place under their accounts in
a duly classified terms.”
Statement-II “All the transactions are first of all recorded in the books of original
entry, hence, they are also referred to as books of primary entry or journal.”
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4. Statement-I “Each ledger accounts is divided into two equal parts. The left hand
side is known as the debit side and the right-hand side as the credit side.”
Statement-II “As an account is in ‘T’ shape, therefore, sometimes it is called ‘T’
account.”
5. Statement-I “Accuracy of the Ledger Accounts is tested by preparing a Trial
Balance.”
Statement-II “Accuracy of books of original entry cannot be checked.”
Bank Reconcilliation Statement

1. Debit balance if Cash Book is

(a) Positive (b) Negative
(c) Positive or Negative (d) None of the above
2. Credit balance of Cash Book is :
(a) Overdraft (b) Positive
(c) Positive or Negative (d) None of the above
3. In case Bank Reconcilliation Statement is prepared from the Debit balance of
Cash Book, we will get:
(a) Credit Balance or Overdraft as per Pass Book
(b) Overdraft as per Cash Book
(c) Debit balance as per Cash Book
(d) Debit or Credit balance as per Cash Book
4. Overdraft facility is available in :
(a) Saving Account (b) Current Account
(c) Fixed Deposit Account (d) Home Saving Account
5. Bank balance is always treated as positive, if it is :
(a) Cash book balance (b) Credit balance as per Pass Book
(c) Debit balance as per Cash Book(d) Under all the above circumstances
6. Bank Reconciliation Stetement :
(a) To know the causes of difference between Cash Column Bank Column of
the Cash Book
(b) To know thw causes of difference between Cash Column of Cash Book
and Pass Book balance
(c) To know the causes of difference between bank balance as per Bank column
of Cash Book and Pass Book balance
7. The object of preparing a Bank Reconciliation Statement is :
(a) To compare bank balance as per Cash Book cash column and Pass Book
balance
(b) To compare opening bank balance as per pass book with the balance at
the end of the year.
(c) To Compare balance as per pass Book with bank balances as per Cash
Book
8. Bank Pass Book is a Copy of :
(a) Cash Book Cash Column (b) Customer’s account in Bank Ledger
(c) Cash Book Bank Column (d) None of the above
9. Favourable bank balance as per Cash Book means
(a) Debit balance in Cash Book (b) Credit Balance in Cash Book
(c) Debit balance in the Pass Book (d) None of the above
10. Adjusted Cash Book also includes :
(a) Error in the Cash Book (b) Error in the Pass Book
(c) Errors in Cash and Pass Book (d) None of the above
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11. Overdraft of pass Book is :

(a) Debit balance of Pass Book (b) Credit balance of Pass Book
(c) None of the above (d) All of the above
12. Overdraft as per Cash Book is :
(a) Credit balance of Cash Book (b) Debit balance as per Cash Book
(c) None of the above (d) All of the above
13. Pass Book is a copy of
(a) All Cash transactions
(b) In Cash Book all bank transactions are recorded
(c) All receipts and payments of business
(d) Customer’s account prepared by the Bank.
14. Balance taken to prepare Bank Reconciliation Statement :
(a) Balance as per Pass Book (b) Balance as per Cash Book
(c) Cash Book or Pass Book Balance
(d) Neither cash book balance nor pass book balance
15. When Bank Reconciliation Statement is prepared from the Cash Book balance
then we get:
(a) Balance as per Pass Book (b) Balance as per Cash Book and Pass Book
(c) Balance as per Cash Book (d) None of the above
16. Balance as per Cash Book shows:
(c) Debit or Credit (d) Debit and Credit
17. Which of the following balance is true:
(i) Debit balance as per Cash Book Rs. 10,000
(ii) A cheque for Rs. 1,000 deposited but not recorded in the Cash Book
(iii) Te payment side of the Cash Book was undercast by Rs. 100
(a) Rs. 10,900 (b) RS. 11,100
(c) Rs. 9,100 (d) Rs. 8,900
18. Which of the following balace is true:
(i) Overdraft as per Cash Book Rs. 28,000
(ii) Interest charged by the Bank overdraft Rs. 200
(iii) Cheque issued but not presented for payment Rs. 11,200
(a) Rs. 39,400 (b) Rs. 39,000
(c) Rs. 16,600 (d) Rs. 17,000
19. Which of the following is true:
(i) Balance as per Pass Book Rs. 5,000
(ii) Cheque for Rs. 500 issued but not presented for payment ;
(iii) A customer directly deposited Rs.150 into my Bank Account
(a) Rs. 5,650 (b) Rs. 4,650
(c) Rs. 5,850 (d) Rs. 4,350
(i) Overdraft as per Pass Book Rs. 6,580;
(ii) A bill for Rs. 1,000 was retired by the Bank under rebate of Rs. 15 but the
full amount of the bill was credited in the Bank column of the Cash Book
(iii) Cheques ussued but not presented for payment
(a) Rs. 8,075 (b) Rs. 8,105
(c) Rs. 5,085 (d) Rs. 5,055
(i) overdraft as per Pass Book Rs. 1,580
(ii) Cheques paid in to Bank but not credited Rs. 2,170
(iii) Bank Charges Rs. 30:
(a) Rs. 620 (b) Rs. 3,720
(c) Rs. 3,780 (d) Rs. 620
22. According to -------------- “Bank reconciliation Statement is a statement prepared
manily to reconcile the difference between the ‘Bank Balance’ shown by the Cash
Book and Bank Pass Book”
(a) Carter (b) Patil
(c) William Pickles (d) None of the above
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23. Causes for differences in the Cash Book and Pass Book balances are :
(a) Cheques issued by the bank or deposits
(b) Cheques paid into bank for collection but not collected
(c) Interest allowed by the bank on deposits
24. The importance of Bank Reconciliation Statement is :
(a) To ascertain the error of Cash Book or Bank Pass Book
(b) To know the accurate bank balance
(c) To make proper amendment in the Cash Book
25. The balance of Cash Book may be :
(c) Debit or Credit (d) Neither Debit or Credit
26. The balance for Pass Book may be :
(c) Debit or Credit (d) Neither Debit or Credit
27. Bank Reconciliation Statement may be prepared :
(a) By Cash Book Balance (b) By Pass Book Balance
(c) Either Cash Book balance or Pass Book Balance
(d) By the balance of any Asset
28. Questions related to Bank Reconciliation Statement may be :
(a) When debit balance as per Cash Book is given
(b) When credit balance as per Cash Book is given
(c) When credit or debit Balance as per Pass Book is given
29. The Bank balance is treated as plus balance if it is a balance of -----------
(a) Cash Book (b) Credit balance of Pass Book
(c) Debit balance of Cash Book (d) In the all above cases
30. A Bank Reconciliation Statement is prapred so that the difference in the under
mentioned balance is reconciled.
(a) The difference in the balance in the bank and the cash balances
(b) The difference in the balance in the Pass Book in the beginning and at the end
(c) The difference in the Pass Book and Cash Book balances
(d) The difference in the balance in the a Cash Book in the beginning and at
the end.
31. A Bank Reconciliation Statement is prepared with the help of :
(a) Bank Pass Book and Bank Column of Cash Book
(b) Bank Pass Book and Cash Column of Cash Book
(c) Bank Pass Book and Discount Column of Cash Book
(d) Bank Pass Book and Sales Book of the customer

(i) B.R.S. is prepared by (a) A Statement
(ii) Object of preparing bank account (b) Positive
(iii) B.R.S. is (c) Negative
(iv) Debit balance of pass book is (d) By customer having bank account
(v) Credit balance of pass book is (e) To reconcill cash book with pass book
(i) Credit balance of Cash Book is (a) Positive
(ii) Debit balance of Cash Book is (b) Overdraft
(iii) Overdraft facility is a vailable is (c) Customer’s accountmaintained bythebank
(iv) Pass book is a copy (d) Debit or Credit
(v) Balance of pass book (e) Current account

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1. Bank Reconciliation Statement means :

(a) Statement which is prepared for issuing the cheques
(b) Statement which are recorded in the pass-book
(c) The statement which is prepared mainly to reconcile the difference between
the Bank Balance shown by the Cash Book and Bank Pass Book
(d) The statement that is prepared for reconciling the balance shown by Bank
statement and Cash Book balance
2. Causes for difference in the cash book and pass book are
(a) To make the cash payment
(b) Cheques issued but not presented for payment
(c) Withdrawal from the business for private expenses
(d) Cheques sent to bank for collection but not collected
3. The necessity of Bank Reconciliation Statement is :
(a) To know the error of Cash Book or Pass Book
(b) For the payment of cash
(c) To know the accurate Bank Balance
(d) To deposit the cheque into Bank
4. Items to be added at the time preparing Bank Reconciliation Statement by Deposit
balance of Bank column of Cash Book are :
(a) Cheques issued but not presented for payment.
(b) Bank charges and commission charged by
(c) Direct payment made by the Bank
(d) Interest on Deposits allowed by the Bank
5. Items to be deducted at the time of preparing the Bank Reconciliation Statement
by Debit balance of Bank column of Cash Book are :
(a) Interest on Investments and Dividend Collected by the Bank
(b) Cheques paid into Bank for collection but not collected
(c) The amount directly deposited into Bank by customers
(d) Cheques issued but ommitted to be recorded in the Cash Book
6. Items to be added at the time of preparing Bank Reconciliation Statement by
credit balance (Overdraft) of Bank column of Cash Book are :
(a) Bank charges and commission charged by the Bank
(b) Direct payments made by the Bank
(c) Interest allowed by the Bank on deposits
(d) Interest on Investments and Dividend collected by the Bank
7. Items to be deducted at the time of preparing Bank Reconciliation Statement by
credit balance of Bank column of Cash Book are :
(a) Direct payment into Bank by a customer
(b) Cheques issued but ommitted to be recorded in the Cash Book
(c) Any wrong entry in the credit side of the Pass Book
(d) Any wrong entry on the receipt side of Cash Book
8. Bank Reconciliation Statement is prepared by :
(a) By Trader (b) By the Bank
(c) By the Creditor (d) By the customers of a Bank

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statement-I
statement-I
1. Statement-I “Bank Reconciliation Statement is prepared by the balance of any asset.”
Statement-II “Bank Reconciliation Statement is prepared with the help of Bank
2. Statement-I “The balance of Pass Book may be both debit or credit.”
Statement-II “The balance of Cash Book is only debit.”
3. Statement-I “The debit balance of Pass Book is an overdraft.”
Statement-II “The difference in the Cash Book and Pass Book balance is also
due to the interest allowed by the bank on deposits.”
4. Statement-I “Bank Pass Book is a copy of customers account in the bank ladger.”
Statement-II “Adjusted Cash Book includes the errors in the Pass book..”
5. Statement-I “Bank Reconciliation Statement is a statement prepared mainly to
reconcile the difference between the ‘Bank Balance’ shown by Cash Book and
Bank Pass Book.”
Statement-II “Reconciliation Statement is prepared when an account boldes
gets the duly completed pass book from the bank. To tally the two balances a
reconciliation statement is prepared.”

A reconciliation statement is prepared when an account holder gets the duly
completed pass book from the bank. Immediately on receiving the pass book, he tallies
the bank balance shown by the cash book with the balance shown by the pass book
and, in case of any difference, items appearing in the pass book are checked an d
ticked with the items appearing in the cash book. Unticked items in both the books
will be the points of difference. These will be noted on a piece of paper and then, with
the help of these causes of difference, a statement of reconciliation will be prepared.
A bank reconciliation statement can be prepared by taking the balance either as per
cash book or as per pass book as a starting point. If the statement is started with the
balance as per bank column of the cash book, the answer arrived at in the end will be
the balance as per pass book. Alternatively, if the statement is started with the balance
as per pass book, the answer arrived at in the end will be the balance as per cash book.
1. If Cash Book balance is given in the question at the start, but is not clearly
stated that this balance is debit or credit, it will be treated as :
(a) Credit balance (b) Debit balance
(c) Debit or Credit (d) None of the above
2. Balance as per ledger balance means :
(a) Balance as per Cash Book (b) Balance as per Pass Book
(c) Ledger balance (d) None of the above
3. A bank reconciliation statement can be started in which of the following balance:
(a) Dr. balance as per Cash Book (b) Cr. balance as per Cash Book
(c) Debit or Credit balance as per Pass Book
(d) Any of the above balance

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Trial Balance and Errors

1. Trial Balance is a
(a) Real Account (b) Nominal Account
(c) Personal Account (d) Not a Ledger
2. Compensating error effects
(a) Effects the total of Assets and Liabilities of the Balance Sheet
(b) Effects the total of Debit and Credit of Trial Balance
(c) Neither (a) nor (b) (d) (a) or (b) above
3. Ledger posting of goods sold for Rs. 48 is posted as Rs. 84
(a) error of Omission (b) Error of Commission
(c) Error of Principle (d) Compensating error
4. Balance of which account is shown on the Debit of Trial Balance
(a) Cash Account (b) Capital Account
(c) Bank Overdraft (d) Creditors Account
5. out of the following errors trial balance fails to disclose:
(a) Errors in books of original entry
(b) Errors of principle (c) Compensating errors
6. Preparation of Trial Balance is :
(a) Voluntary (b) Compulsory
(c) Neither (a) or (b) (d) (a) or (b) above
7. Trial balance is a --------------------
(a) Statement (b) A Ledger
(c) Summary (d) An Information
8. Errors not disclosed by the Trial Balance are :
(a) Errors of Omission (b) Errors of Principle
(c) Compensating Errors (d) All of the above
9. Errors disclosed by the Trial Balance
(a) Error of Totalling (b) Error of Posting on the wrong side
(c) error of omitting any Account in the Trial Balance
10. Error of commission arises when :
(a) A transaction is recorded fundamentally wrong
(b) A transaction is recorded partly or fully wrong
(c) A transaction ommitted to record
11. Error of omission arises when
(a) A transaction ommitted to record
(b) A transaction is recorded fundamentally wrong
(c) A transaction is recorded partly or fully wrong
12. Error of Principle arises when :
(a) A transaction is recorded fundamentally wrong
(b) A transaction is recorded partly or fully wrong
(c) A transaction is ommitted to record
13. Errors which affect only one Account may be
(a) Errors of Commission (b) Errors of Principle
(c) Errors of Posting (d) None of the above
14. The form listing the balances and the tittle of the accounts in the ledger on a
given date is the :
(a) Income Statement (b) Balance Sheet
(c) Profit and Loss Account (d) Trial Balance

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Objective Questions / 37
15. A Trial Balance is a :
(a) Real Account (b) Personal Account
(c) Nominal Account (d) List of Balances
16. The arithmetical accuracy of accounts may be ascertained :
(a) Form the Ledger (b) From the Trial Balance
(c) From the Profit and loss Account (d) From the Balance sheet
17. The main characteristics of Trial Balance are :
(a) It is prepared on a particular date
(b) It includes the balance of every ledger account
(c) Its both sides should be equal
18. The need of Trial Balance is :
(a) To receive the summary of ledger accounts
(b) To check the arithmetical accuracy of ledger accounts
(c) To prepare the Final Accounts
19. Final Accounts are prepared :
(a) from Journal (b) from the Ledger
(c) from the Cash Book (d) from the Trial Balance
20. The columns in Trial Balance are :
(a) Name of Ledger Account (b) Ledger Folio
(c) Debit and Credit amount (d) All of the above
21. The methods of preparing Trial Balance are :
(a) Balance Method (b) Balance Amount Method
(c) Balance and Total Amount Method (d) All of the above

(i) Trial Balance is (a) Credit side
(ii) Trial Balance is prepared (b) Debit side
(iii) Difference of trial balance is transferred (c) Not a ledger
(iv) Trial Balance does not include (d) All ledger accounts
(v) Name the suitable method of preparing Trial Balance (e) Voluntary
(i) Assets are shown on the (a) After ledger
(ii) Liabilities are shown on the (b) Balance Method
(iii) Trial Balance shows balances (c) Closing Stock
(iv) Trial Balance is a (d) In Suspense Account
(v) Preparation of Trial Balance is (e) A Statement
1. Trial Balance means :

(a) Trial Balance is the list of debit and credit balances, taken out from ledger
(b) It is an Account
(c) A list of balances which is prepared at a particular date
(d) Second form of Ledger
2. Essentials of Trial Balance are :
(a) It is prepared at a particular date
(b) There are Journal balances in it
(c) its both sides should be equal
(d) Knowledge of arithmetical accurracy of accounting by it
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3. Objects of preparing Trial Balance are :

(a) To know the accuracy of Journal
(b) To make more efficiant to Managers
(c) For preparing the Final Accounts
(d) To know the arithmetical accurracy of Ledger
4. The columns of Trial Balance are :
(a) Name of Ledger Account (b) Ledger Folio or L.F
(c) Debit Amount (d) Credit Amount
5. Methods of preparing Trial Balance are :
(a) Balance Method (b) Bank Method
(c) Total Amount Method (d) Balance and Total Method
6. Points to remeber while preparing Trial Balance are :
(a) There are credit balances of Assets
(b) There are debit balances of Capital and Liabilities
(c) There are Debit balances of all the expenses and losses
(d) There are Credit balances of all the incomes and gains
7. Errors not disclosed by the Trial Balance are :
(a) Errors of principle (b) Compensating Errors
(c) Errors of Totalling (d) Errors of posting on the wrong side
8. Errors disclosed by the Trial Balance are :
(a) Errors of Omission (b) Errors of writing the wrong amount
(c) Error of Double Posting in one Account
(d) Errors of wrong entries in the Books of Original Records
9. The types of Errors are :
(a) Errors of principle (b) Compensating Errors
(c) Profitable Errors (d) Useless Errors

statement-I
statement-I
1. Statement-I “Error of principle effects Trial Balance.”
Statement-II “Trial Balance is the proof of accuracy.”
2. Statement-I “Trial Balance is summary of Ledger account.”
Statement-II “Trial Balance is prepared to detect errors.”
3. Statement-I “Trial Balance is a Real Account.”
Statement-II “Liabilities are always shown on the credit side of trial balance.”
4. Statement-I “Trial Balance is prepared by balance and total method.”
Statement-II “The balance of Capital A/c is shown in the debit side of trial balance.”
5. Statement-I “Trial Balance is a list of balance of all ledger accounts on a particular
date.”
Statement-II “Trial Balance is a part of Book-Keeping.”

th
Rectification of Errors
1. A credit item of Rs. 83 had been debited to a Personal Account as Rs. 38. In
rectifying entry personal account will be ----------- with what amount
(a) Debited for Rs. 76 (b) Debited for Rs. 38
(c) Credited for Rs. 121 (d) Credited for Rs. 38
2. Error disclosed by trial balance is :
(a) Compensating error (b) Error of Principle
(c) Error of Omission (d) Posting on a wrong side of an account
3. A sale of goods to Ram for Cash should be debited to :
(a) Ram (b) Cash
(c) Sales (d) Purchase
4. The monthly total of the purchases Book are posted to :
(a) On the Debit of Purchases Account
(b) On the Debit of Sales Account
(c) On the Credit of Purchases Account
(d) On the Debit of Cash Account
5. The preparation of Trial Balance helps to detect:
(a) Error of Omission (b) Error of Commission
(c) Error of Principle (d) Compensating Error
6. Goods worth Rs. 500 given away as charity, should be credited to :
(a) Charity A/c (b) Sales A/c
(c) Purchases A/c (d) Cash A/c
7. Goods sold to Babu Ram for Rs. 1,350 were entered in the sales Book as Rs. 1,530.
In rectifying entry Sales Account will be ------------- by what amount?
(a) Debited by Rs. 180 (b) Credited by Rs. 180
(c) Debited by Rs. 1,350 (d) Credited by Rs. 1,530
8. An amount of Rs. 200 was received from S. Ray but wrongly entered into the
debit of M. Ray Entry in cash book was correctly posted , In rectifying entry -----
account will be debited by Rs. ------------
(a) M. Ray Rs. 400 (b) Suspense A/c Rs. 400
(c) S. Ray Rs. 400 (d) M. Ray Rs. 200
9. Instead of crediting Rs. 512 in Mohan’s account, Rs. 215 have been debited to
his account. In rectifying entry Mohan’s account will be ------------ by Rs. ----------
(a) Credited by Rs. 727 (b) Debited by Rs. 727
(c) Debited by Rs. 215 (d) Debited by Rs. 515
10. Discount allowed to Ramesh Rs.41 has been posted to his account as Rs. 14
only. The rectifying entry will be :
Rs. Rs.
(a) Suspense A/c Dr. 27
To Ramesh 27
(b) Suspense A/c Dr. 41
To Ramesh 41
(c) Ramesh Dr. 27
To Suspense A/c 27
(d) Ramesh Dr. 41
To Suspense A/c 41
11. Rent paid in advance Rs. 150 omitted to be carry forward. The rectifying entry
will be
Rs. Rs.
(a) Prepaid Rent A/c Dr. 150
Suspense A/c 150
(b) Prepaid Rent A/c Dr. 150
To Rent 150
(c) Prepaid Rent A/c Dr. 150
To Cash A/c 150
(d) Rent A/c Dr. 150
Prepaid Rent A/c 150
th
12. In the sales book total of page no.4 was carried forward to page no. 5 as Rs. 1,000
instead of Rs. 1,200 and total of page no.8 was carried forward to page no. 9 as Rs. 5,600
instead of Rs. 5,000. The rectifying entry will be:
Rs. Rs.
(a) Sales A/c Dr. 400
To Suspense A/c 400
(b) Sales A/c Dr. 600
To Suspense A/c 600
(c) Suspense A/c Dr. 400
To Sales A/c 400
(d) Suspense A/c Dr. 600
To Sales A/c 600
13. Received from Arun one bill for Rs. 500, passed through bills payable book.
Now Bills Payable account will be ----------------- for Rs. --------------.
(a) Credited for Rs. 500 (b) Debited for Rs. 500
(c) Debited for Rs. 1,000 (d) Credited for Rs. 1,000
14. Goods of Rs. 300 were sold to Mahesh, but it was recorded in Purchases Book.
The rectifying entry will be:
(a) Suspense A/c Dr. 600
To Sales A/c 300
To Purchases A/c 300
(b) Mahesh Dr. 600
To Sales A/c 300
(c) Suspense A/c Dr. 300
Mahesh A/c Dr. 300
To Sales A/c 300
(d) Sales A/c Dr. 300
Purchases A/c Dr. 300
To Mahesh 600
15. The total of Return Inward book was overcast by Rs. 475. In rectifying entry
Suspense Account will be ------------- by Rs. --------------:
(a) Credited by Rs. 475 (b) Debited by Rs. 475
(c) Debited by Rs. 950 (d) None of the above
16. Goods sold to Ramesh for Rs. 117 but recorded in Sales Book as Rs. 171. The
rectifying entry will be :
(a) Ramesh Dr. 54
To Sales A/c 54
(b) Sales A/c Dr. 54
To Ramesh 54
(c) Sales A/c Dr. 171
To Ramesh 171
(d) Sales A/c Dr. 117
To Ramesh 117
17. Rs. 2,600 paid as wages for erecting a machine should be debited to :
(a) Wages Account (b) Machinery Account
(c) Capital Account (d) None of the above
18. On purchase of old furniture, the amount of Rs. 1,000 spent on its repairs should
be debited to :
(a) Repairs Account (b) Furniture Account
(c) Cash Account (d) None of the above
th
19. Good worth Rs. 100 given as charity should be credited to :

(a) Charity Account (b) Sales Account
(c) Purchases Account (d) None of the above
20. Goods worth Rs. 500 taken by the proprietor for domestic use should be credited to :
(a) Sales Account (b) Proprietor’s Account
(c) Expenses Account (d) Purchases Account
21. Rs. 400 received from Shyam whose account was previously written off as Bad
Debts should be credited to :
(a) Bad Debts Recovered Account (b) Shyam’s Account
22. Purchase of office furniture worth Rs. 1,500 has been debited to General Expenses
Account, it is
(a) A clerical error (b) An error of principle
(c) An error of omission (d) A compensatory error
23. Goods destroyed by fire should be credited :
(a) To Purchases Account (b) To goods lost by Fire Account
(c) To Sales Account (d) None of the above
24. Sale of office furniture should be credited :
(a) To Sales Account (b) To Office Furniture Account
(c) To Cash Account (d) To Goods Account
25. Debiting wages account for wages paid for the construction of building is :
(a) Error of omission (b) Errors of comission
(c) Errors of principle (d) Compensating errors
26. The difference in the trial balance is transferred to :
(a) Capital Account (b) Difference Account
(c) Suspense Account (d) Profit and Loss Account
27. Suspense Account in the trial balance will be entered in the :
(a) Trading Account (b) Profit and Loss Account
(c) Balance Sheet (d) Manufacturing Account
28. Errors detected before the preparation of trial balance will be rectified:
(a) by opening suspense account (b) whithout opening suspense account
(c) by transferring to profit and loss account
(d) by transferring to trading account
29. Salaries paid to Mahan amounting to Rs. 700 will be debited to :
(a) Salaries Account (b) Mohan’s Account
30. Rent paid to landlord amounting to Rs. 70 was credited to rent account with Rs. 700.
In the rectifying entry, rent account will be debited with:
(a) Rs. 700 (b) Rs. 70
(c) RS. 330 (d) Rs. 630
31. A brief case purchased for Rs. 300 for the son of a partner was debited to trade
expenses account with Rs. 30. Drawing account should be debited in the rectrifying
entry with
(a) Rs. 300 (b) Rs. 30
(c) Rs. 330 (d) Rs. 270
32. Ram and sons, the dealer in furniture, debit furniture account for purchasing
furniture on credit. It is an error of :
(a) Omission (b) Principle
(c) Compensation (d) Commission
33. Repair to Plant will be debited to :
(a) repair account (b) plant account
(c) wages account (d) machinery account
th
34. Which of the following errors will not affect the Trial Balance?
(a) Wrong balancing of an account
(b) Writing an amount in the wrong account bu on correct side
(c) Wrong totalling of an account
35. Which of the following error is an error of omission ?
(a) Sale of Rs. 500 was written in the purchases journal
(b) Wages paid to Mohan have been debited to his account
(c) The total of the sales journal has not been posted to the sales Account
36. Errors of commission do not allow :
(a) Correct totalling of Balance Sheet
(b) Correct totalling of the Trial balance
(c) The Trial Balance to agree

(i) When trial balance does not tally, (a) Compensating error
difference is written
(ii) Errors disclosed by trial balance is (b) Through suspense account
(iii) The preparation of trial balance (c) Posting of a wrong side of an account
helps to detect
(iv) After closing the accounts rectification (d) In Suspense Account
of one sided error is rectified through
(v) One error is compensated by another is called (e) Error of commission
1. Types of errors from the point of view of Rectification are :
(a) One sided error (b) Two sided errors
(c) Three sided errors (d) Four sided errors
2. Meaning of Rectifying Entries is :
(a) Rectification of errors by cutting
(b) No rectification of errors
(c) Rectifying entry for the rectfication of errors
(d) Entries which are passed for the rectification of errors
3. Methods of Rectifying errors are :
(a) Errors in accounts should not be recitified by erasing them
(b) Errors should not be rectified by cutting them
(c) Errors should rectified by erasing them
(d) Errors should be rectofied by cutting them
4. Wages paid for the construction of private house of Shyam will be debited :
(a) Drawings Account (b) Shyam’s Account
(c) Wages Account (d) Capital Account
5. Sale of old Furniture will be credited to :
(a) Sales Account (b) Furniture Account
(c) Cash Account (d) Old Furniture Account
6. Two sides errors which do not affect the Trial Balance are :
(a) Purchase of furniture was debited to Purchases Account
th
(b) Goods sold on credit for Rs. 1,350 were entered in the Sales Book as Rs. 1,530
(c) Mahesh A/c was wrangly debited by Rs. 500 instead of credited Mohan’s A/c
(d) An amount of Rs. 1,730 spent on the extension on Building was erongly
debited to Repairs A/c as Rs. 1,370

statement-I
statement-I
1. Statement-I “Both sided errors do not affect trial balance.”
Statement-II “One sided errors affect the trial balance.”
2. Statement-I “From the transaction point of view errors are of two types.”
Statement-II “Errors of principles are traced by the trial balance.”
3. Statement-I “Error of omission effects the total of trial balance.”
Statement-II “Compensating error does not effect the trial balance.”
4. Statement-I “The balance of suspense account is shown in the Profit and Loss A/c.”
Statement-II “Omission to record a transaction in the subsidiary book will
affect two accounts.”
5. Statement-I “Wages paid on the construction of building will be debited to wages
account.”
Statement-II “The amount of sales of old Typewriter will be credited to Typewriter
Account.”
Depreciation
1. Depreciation arises:
(a) Due to fall in the value of money
(b) Due to physical wear and tear
(c) Due to fall in the market value of Asset
2. Depreciation of asset for business is :
(a) Expense (b) Income
(c) Loss (d) Gain
3. The need for providing depreciation is for
(a) Ascertaining cost of production
(b) Ascertaining true profit and loss
(c) Showing true financial position
4. Points are considered at the time of conputation of depreciation:
(a) Actual Cost of the Asset (b) Estimated working life of the Asset
(c) Estimated scrap value of the asset (d) All of the above
5. Depreciation is the process of :
(a) Allocation of Cost (b) Valuation of Asset
(c) Both of allocation and valuation (d) None of the above
6. Under fixed instalment system of depreciation, if cost of an asset is Rs. 45,000,
scrap value is Rs. 5,000 and depreciation rate is 10%. The amount of depreciation for
the year will be :
th
(a) Rs. 4,500 (b) Rs. 4,000

(c) Rs. 5,000 (d) Rs. 2,000
7. In which of the following methods the amount of depreaciation remains the
same through out :
(a) Fixed Instalment Method (b) Diminishing Balance Method
(c) Fixed and Diminising Balance Methods
(d) Neither Fixed nor Diminising Balance Method
8. Diminishing Balance Method is used for charging depreciation
(a) On the current assets (b) On the fixed assets
(c) On the fictitious assets (d) On the liquid assets
9. Cost price of a machine is Rs. 20,000 and installation charges on its are Rs. 5,000.
Its Scrap value is Rs. 7,000. Its working life is 10 years The amount of depreciation
for the first years will be :
(a) Rs. 2,500 (b) Rs. 2,000
(c) Rs. 2,700 (d) Rs. 1,800
10. Depreciation in the value of Asset it :
(a) Permanent decrease (b) temporary decrease
(c) Permanent increase (d) Temporary decrease
11. The different methods of depreciation are :
(a) Fixed instalment System (b) Diminishing Balance Method
(c) Depreciation Fund method (d) All of the above
12. In case of purchase of an asset is debited to
(a) Purchases A/c (b) Goods A/c
(c) Assets A/c (d) Cash A/c
13. In case of sale of an asset is credited
(a) Sales A/c (b) Asset A/c
(c) Goods A/c (d) Cash A/c
14. On closing of depreciation A/c at the close of the year the A/c is credited:
(a) Depreciation A/c (b) Asset A/c
(c) Profit and Loss A/c (d) None of the above
15. On charging the depreciation at the close of the year will be debited to :
(a) Asset A/c (b) Depreciation A/c
(c) Cash A/c (d) Good A/c
16. On the charging the depreciation at the close of the year will be credited to :
(a) Goods A/c (b) Purchases A/c
(c) Profit and Loss A/c (d) Asset A/c
17. A Machine costing Rs. 10,000 was purchased on 1st April, 2008. Depreciation
is charged at 10% p.a. by Fixed Instalment Method. In the 1st Year, the amount of
depreciation will be :
(a) Rs. 1,000 (b) Rs.750
(c) Rs. 500 (d) None of the above
18. The merits of Diminishing Balance Method are :
(a) Easy in calculation (b) Proper burden on Profit and Loss A/c
(c) The value of Asset never becomes zero
19. In case of preparing the Provision for Depreciation A/c, the amount of Depreciation
will be credited:
(a) Asset A/c (b) Provision for Depreciation A/c
(c) Depreciation A/c (d) Profit and Loss A/c
20. Depreciation is a process of
(a) Valuation (b) Apportionment
(c) Valuation and Apportionment (d) None of the above
th
21. The main object of depreciation is :

(a) To calculate the proper profit (b) To reduce the taxes
(c) to arrange the funds (d) None of the above
22. Depreciation arises because of :
(a) Decrease in the market value of Asset
(b) Physical Depreciation of Asset
(c) Decrease in money
23. In straight line method, depreciation :
(a) Increase in every year (b) Decrease in every year
(c) Constant in every year (d) None of the above
24. According to Diminishing Balance Method depreciation will be ------ @ 10%
p.a. on Rs. 2,000 after 3 years:
(a) Rs. 200 (b) Rs. 180
(c) Rs. 400 (d) Rs. 162
25. Depreciation charged on a machine will be credited to :
(a) Machine Account (b) Cash Account
(c) Depreciation Account (d) Capital Account
26. Depreciation charged on a furniture will be debited to :
(a) Cash Account (b) Profit and Loss A/c
(c) Depreciation Account (d) None of the above
27. The loss on the sale of machine will be debited to :
(a) Sales Account (b) Profit and Loss Account
28. The Diminishing Balance Method means a method by which :
(a) The rate of depreciation falls year by year
(b) The amount on which depreciation is calculated falls years by year
(c) The rate as well as the amount on which depreciation is calculated falls
year by year
29. Depreciation is calculated on ------------- of Assets:
(a) Cost Price (b) Market value
(c) Book value (d) Incoice price
30. Deperciation means ----------
(a) physical wear and tear (b) accidents
(c) fluctuation (d) obsolescene
31. According to diminishing belence method depreciation is charged on ------- of
assets:
(a) Original cost (b) written down value
(c) market value (d) average cost
32. ----------- is maintained for know liabilities
(a) Reserve (b) Provision
(c) Capital Reserve (d) Reserve fund
33. Maintenance of ----- is a must :
(a) General Reserve (b) Sinking fund
(c) Provision (d) Secret reserve
34. Creation of provision is --------------
(a) discretionsry (b) must
(c) must or discretionery (d) None of the above
35. -------------- is created for unknown liability:
(a) Provision (b) Reserve for bad debts
(c) Reserve (d) Provision for taxation
36. Provisions were previously known as ------------
(a) Specific reserve (b) Reserve fund
(c) Contigency fund (d) Capital Reserve

th

(i) Cause of Depreciation (a) Due to physical wear and tear
(ii) Meaning of Depreciation (b) Assets Account
(iii)Method of Depreciation (c) Decrease in the value of asset
(iv) Depreciation arises (d) Straight Line Method
(v) In case of purchase of an asset is (e) Obsolescence
debited to
1. The meaning of Depreciation is :
(a) The gradual and permanent decrease in the value of an Asset from any cause
(b) Increase in the value of an Asset
(c) No decrease or no increase in the value of an Asset
(d) The permanent and continuing diminishing in the value of an Asset
2. Features of Depreciations are :
(a) Increase in the value of an Asset
(b) Decrease in the value of an Asset
(c) Book value is decreased due to the depreciation
(d) Purchase value is decrease due to the depreciation
3. Causes of Depreciation are :
(a) Decrease in the market value of an Assets
(b) Continuous use of an Asset
(c) Obsolescence (d) Accidents
4. Objetcts of providing Depreciation are :
(a) To know the true profit or loss
(b) To know the purchases
(c) To know the sales
(d) To show true financial position
5. Points to be considered at the time of computation of Depreciation are :
(a) Actual cost of the Asset (b) Estimated working life of the Asset
(c) Estimated scrap value of Asset
(d) Market price of Asset
6. Different methods of providing Depreciation are :
(a) Market value Method (b) Purchase Price Method
(c) Fixed Instalment Method (d) Diminishing Balance Method
7. Merits of Fixed Instalment Method are :
(a) Easy Method (b) To consider the market value
(c) Equal amount of depreciation each year (d) To consider the sale value
8. Demerits of Fixed Instalment Method are :
(a) The Book value of an Asset becomes zero though the asset is still used
(b) Difficult method
(c) Not to consider the cost of an Asset
(d) No provision of interest on the investment money of an Asset
9. Merits of Diminishing Balance Method are :
(a) Simple Method (b) The value of Asset does not become zero
(c) The rate of Depreciation is lower in this method
(d) Provision for interest on invested capital
10. Demerits of Diminishing Balance Method are :
(a) To become the value of an Asset upto zero
(b) The rate of Depreciation is high
th
(c) No provision of interest on invested money

(d) No consideration of the cost of an Asset

statement-I
statement-I
1. Statement-I “Depreciation is charged on Plant.”
Statement-II “Depreciation is charged on all fixed assets.”
2. Statement-I “Depreciation is gradual and permanent decrease in the value of an
asset from any cause.”
Statement-II “Depreciation may be defined as the permanent and continuing
diminution in the quality, quantity, or the value of an asset.”
3. Statement-I “Depreciation refers to only tangible fixed assets.”
Statement-II “with the passes of time, the value of assets does not decrease.”
4. Statement-I “There is no help to save the Income Tax by providing the depreciation.”
Statement-II “It is necessary to know the actual cost of asset for providing the
depreciation.”
5. Statement-I “Depreciation is charged on fixed assets.”
Statement-II “Depreciation Accounting is done according to AS-6.”

There is a Paragraph you have to go through the paragraph and mark your answer
from the given options:
On 1st January, 2009 X Ltd. purchased a Machine for Rs. 90,000 and spent Rs. 6,000
on its carriage and Rs. 4,000 on its erection. On the date of purchase, it was estimated
that the effective life of the machine will be 10 years and after 10 years its scrap value
will be Rs. 20,000
1. Machinery Account will be debited by what amount ?
(a) Rs. 90,000 (b) Rs. 96,000
(c) Rs. 1,00,000 (d) Rs. 1,10,000
2. What amount to Depreciation will be charged every year ?
(a) Rs. 8,000 (b) Rs. 10,000
(c) Rs. 11,000 (d) Rs. 9,000
3. What amount will be left after one year in Machine Account after charging
depreciation ?
(a) Rs. 90,000 (b) Rs. 94,000
(c) Rs. 92,000 (d) Rs. 96,000
Reserves and Provisions

1. ------------ According to “Reserve means the amount set aside out of profits and
other surpluses, which are not earmarked in any way to meet any particular liability,
known to exit on the date of the Balance Sheet”
th
(a) William Pickles (b) J.R. Batliboi

(c) Carter (d) None of the above
2. To face the uncertains of future the arrangement is done
(a) Reserves (b) Provisions
(c) Reserves and Provisions (d) None of the above
3. The importance of Reserves is :
(a) Helpful in caseof unknown losses of business
(b) To make better financial position
(c) Filling the special aims
4. The importance of provisions is :
(a) To ascertain the net profit or net loss
(b) For the knowledge of Accurate Financial Position
(c) For the arrangement of future losses
(d) For all of the above
5. As dividend may be distributed :
(a) Provision (b) Reserve
(c) Provision and Reserve both (d) Neither Provision nor Reserve
6. The arrangement Reserve is made
(a) Out of Profit and Loss Appropriation Account
(b) Out of Profit and Loss Account
(c) Out of Trading Account (d) Out of Manufacturing Account
7. The arrangement of Provision is made :
(a) out of Manufacturing Account (b) Out of Trading Account
(c) Out of P&L Account (d) Out of P&L Appropriation A/c
8. The types of Reserves are :
(a) General Reserves (b) Specific Reserves
(c) Capital Reserves (d) All of the above
9. Distribution of Dividend may be :
(a) Out of Revenue Reserve (b) Out of Capital Reserve
(c) Out of Secret Reserve (d) None of the above
10. Secret Reserve is shown
(a) In Manufacturing Account (b) In Trading and Profit and Loss A/c
(c) In Balance Sheet (d) None of the above
11. -------------- is maintained for known liabilities :
(a) Reserve (b) Provision
(c) Capital Reserve (d) Reserve
12. Maintenance of ----- is a must :
(a) General Reserve (b) Provision
(c) Sinking Fund (d) Scret Reserve
13. Provisions were previously known as -----------
(a) Specific Reserve (b) Reserve Fund
(c) Contigency Fund (d) Capital Reserve
(i) The reserve is made (a) out of Capital profit
(ii) Reserve is shown (b) Compulsory
(iii) Capital Reserve is created (c) From Profits and Loss Account
(iv) Provision are created (d) On the liabilities side of Balance Sheet
(v) Creation of provision are (e) To face the future uncertainties
th
1. To face the future uncertantities arrangements are made for :

(a) Profits (b) Reserves
(c) Losses (d) Provisions
2. Reserve means :
(a) The sums set aside out of divisible profits for the purpose of strength
during the financial position of the business.
(b) The amount which is withdrawn for miscellaneous expenses
(c) The amount which is withdraw by the proprietor for his private expenses
(d) The sums set aside out of divisiable profits for meeting unknown liabilities in future
3. Features of Reserves are
(a) There are created out of profits or other surpluses
(b) There are created to increase the working capital
(c) These are craeted to increase the profits
(d) These are created for private expenses
4. The objects of Reserves are :
(a) To increase the profits of the business
(b) To make better financial position of the business
(c) helpful in case of unknown losses of business
(d) Increase in the working capital of business
5. The meaning of provision is :
(a) It is a charge to Profit and Loss A/c and is created to meet any depreciation in
the value of an Asset
(b) The sums which are provided to increase the working capital of business
(c) Provision for such liabilitoes the amount of which cannot be determined
with substantial accuracy
(d) The amount which is provided to increase the profits of business
6. The objects of provision are :
(a) The ascertain accurate Drawings
(b) To ascertain the Net Profit or Net Loss
(c) To ascertain accurate expenses
(d) Knowledge of accurate financial position of the business
7. The features of provisions are :
(a) It is a charge to the Profit and Loss A/c
(b) it is created out of Net Profits or other Surpluses
(c) They are made for contigencies
(d) They are made for the increase of working capital
8. The importance of provisions is :
(a) To know the accurate incomes
(b) To know the accurate expenses
(c) For the arrangement of future losses and expenses
(d) To ascertain the Net Profit or Loss for knowledge of true and fair financial
position of the business
9. Types of Reserves are :
(a) Revenue Reserve (b) Capital Reserve
(c) Secret Reserve (d) Drawings Reserve
10. Objects of creating Secret Reserves are :
(a) Reserve for known losses (b) Reserve for known incomes
(c) To increase working capital (d) Not to disclose the extraordinary losses

th

statement-I
statement-I
1. Statement-I “Secret Reserve is shown in the Balance Sheet.”

Statement-II “Capital Reserve may be created prior to incorporation.”
2. Statement-I “There is difference between Reserve and Provision.”
Statement-II “General Reserve may be created out of security premium.”
3. Statement-I “Distrubution of dividend may be out of Capital Reserve.”
Statement-II “Provisions are necessary to ascertain the Net Profit or Loss.”
4. Statement-I “Provision are created for known loss.”
Statement-II “Reserves are created for unknown loss.”
5. Statement-I “Creation of provision is a legal necessity. Provisions have to be
provided even if there are no profit.”
Statement-II “Creation of Reserve is discretionary. It can be created only if
adequate profits have been earned.”
Bills of Exchange
1. A bill of Rs. 1,000 was dishonoured. Amount of Rs. 15 was paid for noting
charges and it was renewed with Rs. 20 as interest. The amount of new bill will be :
(a) Rs. 1,000 (b) Rs. 1,015
(c) Rs. 965 (d) Rs. 1,035
2. A bill was drawn on 10th Jan, 2009 for 3 months. Its due date will be. Emergency
Holiday on 13th April, 2006
(a) 14th April, 2009 (b) 10th April, 2009
(c) 11th April, 2009 (d) 12th April, 2009
3. On 1st October, 2008 Y sends a bill for 2 months to X. X discounted it with his
banker @ 6% p.a. The amount of discount will be debited in X’s Books
(a) Rs. 60 (b) Rs. 30
(c) Rs. 15 (d) Rs. 10
4. Manuj sold goods to Sanjay for Rs. 10,000 at 10% trade discount and draws a
bill upon Sanjay for the amount due. Sanjay accepted the bill and returned it to Manuj,
On due date the bill was dishonoured and Manuj paid Rs. 40 as nothing charges. In
this case Sanjays’ A/c will be debited by :
(a) Rs. 10,040 (b) Rs. 9,040
(c) RS. 9,960 (d) Rs. 9,000
5. Ram paid @ 75 paise in a rupee for Rs. 5,000. In this case Ram’s A/c will be
credited by :
(a) Rs. 3,750 (b) Rs. 1,250
(c) Rs. 5,000 (d) Rs. 6,250
6. According to ---------- “A Bill to Exchange is an instrument in writing, an
unconditional order signed by the maker directing to pay a certain sum of money only
to or to the order of a certain person or to the bearer to the instrument.”
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(a) Banking Company Act, 1949

(b) Indian Negotiable Instruments Act, 1881
(c) Indian Companies Act, 1956
(d) Indian Partnership Act, 1932
7. The characteristics of Bills of exchange are :
(a) It should be in writing
(b) There is an order for the payment in it
(c) There should be an acceptance of Debtor in it
8. The parties to a Bills of Exchange are :
(a) Drawer (b) Accetor or Drawee
(c) Payee (d) All of the above
9. Bill of Exchange are useful for
(a) Increase the area of the business
(b) these may be discounted from the bank before the expiry of the period
(c) Exsiness of foreign payments
10. The characteristics of a Promissory Note are :
(a) It should be in writing (b) There should be a promise to pay
(c) There should be the signature of drawer on it
11. A Promissory Note is an instrument :
(a) Unconditional (b) Conditional
(c) Unconditional and Conditional (d) Neither Unconditional nor Conditional
12. Payment before maturity of a bill is called :
(a) Discounting of a Bill (b) Retiring of a Bill
(c) Dishonour of a Bill (d) Renewal of a Bill
13. Liability of drawer in case of bill discounted by him from the bank is :
(a) Certain Liability (b) Partial Liability
(c) Contigent Liability (d) No Liability
14. By the debtor is written :
(a) Bill of Exchange (b) Journal
(c) Promissory Note (d) Subsidiary Book
15. Acceptance is necessary :
(a) On the Promissory Note (b) On the cheque
(c) On the Bank Draft (d) On the bill of Exchange
16. Payment of the Bill before maturity is called
(a) Endosement (b) Retiring
(c) Dishonour (d) None of the above
17. Transfer to third party is called :
(a) Endorsement (b) Transfer
(c) Acceptance (d) Dishonour
18. Bill Payable Book is a part of :
(a) Posting (b) Journal
(c) Cash book (d) Trial Balance
19. Bills-Receivable Book is
(a) Subsidiary Book (b) Cash Book
(c) Ledger (d) None of the above
20. In relation of renewal of a bill, the interest will be calculated:
(a) For the period of new bill
(b) For the period of original bill
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(c) For the period of original and new bill

(d) For the period of 3 months
21. The amount of Promissory-Note is paid by :
(a) Maker (b) Creditor
(c) Bank (d) Acceptor
22. A three months bill drawn on 5th April, 2006. Its sue date will be:
(a) 5th July, 2006 (b) 6th July, 2006
(c) 8th July, 2006 (d) 4th July, 2006
23. A bill was drawn on 29th July, 2005 for 2 months. Its due date will be:
(a) 29th September, 2005 (b) 30th September, 2005
(c) 1st October, 2005 (d) 3rd October, 2005
24. Shyam paid @ 60 paise in a rupee out of Rs. 10,000. In this case Bad Debts A/c
will be debited by :
(a) Rs. 4,000 (b) Rs. 6,000
(c) Rs. 10,000 (d) None of the above
25. The main contents of speciment of a Bill of Exchange are :
(a) Date (b) Acceptance
(c) Term (d) All of the above
26. The advantages of Bill of Exchange are :
(a) It can be discounted from the bank
(b) Helpful in foreign payments
(c) It can be endorsed
27. The essentials of a Promisspry Note are :
(a) In Writing (b) Promise to Pay
(c) Without ant conditions (d) All of the above
28. The main contents of a Promossory Note are :
(a) Date (b) Payment to a specific person
(c) Stamped (d) All of the above
29. The copies of Foreign Bill of Exchange are prepared :
(a) One (b) Two
(c) THree (d) Four
30. Days of grace are considered in the calculation of due date of a bill are :
(a) One (b) Two
(c) THree (d) Four
31. If Ram’s accep tan ce wh ich was en d o r s ed b y u s in f av o u r o f Saleem is
dishonoured, then the amount will be debited in our books to :
(a) Saleem (b) Ram
(c) Bills Receivable Account (d) Bills Payable Account
32. A Bill of exchange was drawn on 11th July, 2006; its term was one month. The
due date of this bill will be:
(a) 14th August, 2006 (b) 11th August, 2006
(c) 12th August, 2006 (d) 15th August, 2006
33. A four months bill drawn on 1st January, 2006 will mature for payment on :
(a) 3rd May, 2006 (b) 4th May, 2006
(c) 5th May, 2006 (d) 6th May, 2006
34. The Bill Receivable Book is Part of :
(a) The Journal (b) Ledger
(c) Trial Balance (d) The Profit
35. The rebate on a bill shows that :
(a) It has been dishonoured
(b) It has been paid before the due date of maturity
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(c) It has been paid after the due date of maturity

36. In case of renewal of a bill interest will be calculated for the period to :
(a) Original bill (b) Fresh bill
(c) Original and fresh bill (d) Six months
37. Discount in case of discounting the bill wiil be calculated for the period between
the date of :
(a) Drwing and discounting the bill
(b) Discounting and due date (c) April 1 to March 31
(d) January 1 to December 31
38. A bill was drawn on January 1, 2007 for six months. The drawee cleared the bill
on 4th March, 2007. The drwee should be allowed rebate for ------------- months
(a) Six (b) Four
(c) Three (d) Two
39. Noting charges are paid to the notary public by :
(a) Drawer (b) Bank
(c) Endorsee (d) Either of the three parties
40. For Payment of nothing charges to the notary public will be credited :
(a) Noting Charges Account (b) Bank Account
(c) Notary Public Account (d) Cash Book
41. Bills of exchange is drawn by :
(a) Debtor (b) Creditor
(c) Purchaser (d) Bank
42. A bill for Rs. 1,000 was dishonoured with Rs. 15 as noting charg es. It was
renewed with interest of Rs. 20. The amount of new bill will be :
(a) Rs. 1,000 (b) Rs. 1,015
(c) Rs. 1,035 (d) Rs. 965
43. The entry regarding payment of the bill will be passed in the books of drawer if
the bill is :
(a) Retained by the drawer (b) Discounted
(c) Endorsed (d) Retained or sent to bank for collection
44. Payment of the bill before is die date is known as :
(a) Retiring a Bill under rebate (b) Discounting a Bill
(c) To send the Bill of Collection (d) None of the above
(i) Bills of Exchange is (a) Drawer
(ii) A Promissory note is (b) Creditors
(iii) A bill of exchange is written by (c) Debtors
(iv) A prpmissory note is written by (d) A promise
(v) The payment of promissory note is done by (e) An order
(i) The perties of bill of exchange are (a) Promissory note
(ii) The parties of promissory note are (b) There should be a promise to pay
(iii) A bills of exchange contain an order (c) Two
(iv) The characteristics of a promissory note are (d) Three
(v) By the debtors is written (e) Unconditional

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1. The features of Bills of exchange are :

(a) A Bill of exchange must be in writing
(b) A Bill of exchange must not be in writing
(c) It must contain an order (d) It must contain a request
2. Parties to a Bill of exchange are :
(a) Drawer (b) Acceptor or Draweer
(c) Payee (d) Bank
3. Advantages of Bills of Exchange are :
(a) It is a illegal document (b) It is a legal document
(c) It provides facility to purchasing and selling the goods on credit
(d) It can be endorsed to creditors
4. Features of Promissory Note are :
(a) In writing (b) Not in writing
(c) Promise to pay (d) Without any condition
5. Parties to a Promissory Note are :
(a) Maker (b) Acceptor
(c) Payee (d) Bank
6. Elements of Bills of exchange are :
(a) Place and date of payment (b) No stamp duty
(c) Term of the bill (d) Days of grace
7. Different uses of Bills Receivable are :
(a) Drawer may return it to the acceptor without explaining any cause
(b) Drawer may retain it till the date of maturity
(c) Drawer may discount it from his banker before the date of maturity
(d) Drawer cannot endorse it to the third party
8. The meaning of Accommodation Bills are :
(a) Bills which are drawn for purchase and sales of goods
(b) Bills drawn for mutual and temporary help
(c) Fictitious Bill (d) Useless Bill
9. Features of an Accommodation Bill are :
(a) These bills are drawn and accepted without any consideration
(b) These bills are drawn for certain consideration
(c) These bills are drawn for the mutual help
(d) The acceptor of these Bills is not liable to pay the third party
10. Situations of Accommodation bills are :
(a) Single bill for the accommodation of drawer only
(b) Single bill for mutual accommodation
(c) Two bills for mutual Accommodation
(d) When no bill is drawn for accommodation

statement-I
statement-I
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1. Statement-I “Bills of exchange is a negotiable instrument.”

Statement-II “Negotiable instruments are used in settlement of transaction.”
2. Statement-I “There is an order for payment in bill of exchange.”
Statement-II “In bill of exchange a drawer orders drawee for the payment.”
3. Statement-I “A bill of exchange must be in writing.”
Statement-II “There are two parties to a bill of exchange”
4. Statement-I “Bill of Exchange is a legal document.”
Statement-II “Bill of exchange cannot be endorsed to creditor.”
5. Statement-I “In the determination of date of payment of every bill 3 days of
grace are included.”
Statement-II “Bill of Exchange is written by a debtor.”
Financial Statement-I Final Accounts without Adjustments
1. The balance of Profit and Loss A/c is transferred to :
(a) In Cash A/c (b) In Sales A/c
(c) In Capital A/c (d) In Investment A/c
2. Net Profit is equal to
(a) Gross Profit + Indirect Incomes - Indurect expenses
(b) Indirect incomes - Indirect expenses
(c) Gross Profit + Indirect expenses - Indirect incomes
3. If Credit side of Profit and Loss A/c is more than its debit side, it shows:
(a) Gross Profit (b) Net Profit
(c) Gross Loss (d) Net Loss
4. According to ------- “Balance Sheet is a Classified Statement of Assets and
Liabilities to measure the exact financial position of a business on a particular date”
(a) Palmer (b) Freeman
(c) J.R. Batliboi (d) None of the above
5. Balance Sheet is a part of :
(a) Trading A/c (b) Profit and Loss A/c
(c) Director’s Report (d) Part of Final Accounts
6. Balance Sheet is prepared on :
(a) Diwali (b) Dushehra
(c) Holi (d) A Particular Date
7. Balance Sheet shows :
(a) Gross Profit of the business (b) Net Profit of the business
(c) Financial Position of the business
8. Preparation of Balance Sheet is :
(a) Compulsory (b) Discretionary
(c) Useless (d) None of the above

(i) User of Financial statements (a) In Capital Account
(ii) Trading Account shows (b) In P&L A/c
(iii) Profit and Loss Accounts shows (c) Gross Profit or Gross Loss
(iv) The balance of Trading A/c transferred to(d) Investors
(v) The balance of P&L A/c is transferred (e) Net Profit or Loss
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(i) Trading Accounts is (a) Part of Final Account
(ii) Balance sheet is a part of (b) Part of Profit and Loss Account
(iii) Balance Sheet shows (c) A particular date
(iv) Balance Sheet is prepared as (d) Item of Trading Account
(v) Opening Stock (e) Financial Positions of the business
1. The meaning of Financial Statements is :

(a) Statements which make the trader more efficient
(b) Statements which show the profit ability of the business at the end of
Accounting period
(c) Statements which encourage the investment of capital
(d) Statements which show the financial position of the business
2. Main components of Finantial statements are :
(a) Income statement or Trading and Profit and Loss Account
(b) Statement of Finanvial Position
(c) Purchase statements (d) Sales statements
3. Objects of Financial statements are :
(a) Valuation of Closing stock
(b) To present the statements of purchases and sales
(c) To provide data regarding Net Profit and True and Fair financial position
of the business
(d) To provide sufficient and reliable information to the users of Financial
statements
4. Users of Financial statements are :
(a) Owner and Management of Business
(b) Incestors (b) Creditors of business
(d) Persons who do not want to make any relation with the business
5. The meaning of Trading Account is :
(a) Account which shows the financial results of buying and selling of goods
(b) Account which shows Gross Profit or Gross Loss of the business
(c) Account which shows the capital of business
(d) Account which shows the Assets of business
6. Need of Trading Account is :
(a) To know the capital of business
(b) To ascertain the Gross Profit or Gross Loss of the business
(c) To know the Investments of the busines
(d) To know the Direct expenses of the business
7. Debit items of Trading A/c are :
(a) Opening Stock (b) Closing stock
(c) Purchases (d) Direct expenses
8. Credit items of Trading A/c are :
(a) Total sales (b) Opening stock
(c) Closing Stock (d) Indirect expenses
9. The meaning of Profit and Loss A/c is :
(a) Account which shows the Net Profit or Net Loss of business
(b) Account which shows the excess of incomes over expenditure of errors
of expenditure over incomes
(c) Account which shows the Liabilities of business
(d) Account which shows Drawing of the business

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10. Debit items of Profit and Loss A/c are :

(a) Office expenses (b) Selling and Distribution expenses
(c) Preliminary expenses of business (d) Development expenses of business
11. Credit items of Profit and Loss A/c are :
(a) Gross Profit (b) Drawings
(c) All Income (d) Goodwill

statement-I
statement-I
1. Statement-I “Trading A/c is prepared for calculating the gross profit or gross loss.”
Statement-II “Trading Account is a personal account.”
2. Statement-I “Trading Account is a part of P&L Account.”
Statement-II “There no difference between trial balance and Balance Sheet.”
3. Statement-I “P & L A/c shows the Net Profit or Net Loss of a particular date.”
Statement-II “Goodwill is an intangible asset.”
4. Statement-I “Current Asset include the closing stock.”
Statement-II “Marshalling means showing the assets and liabilities in a proper
order in the Balance sheet.”
5. Statement-I “The preparation of a Balance Sheet is compulsory.”
Statement-II “The balance of P & L A/c is transferred to the capital A/c.”
Financial Statement-II Final Accounts without Adjustments

1. The adjustment of Manager’s Commission will be:
(a) Only on the debit side of Profit and Loss A/c
(b) Shown on the debit side of Profit and Loss A/c and on the Liability side
of Balance Sheet
(c) Only on the credit side of Profit and Loss A/c
(d) Only on the Liability side of Balance Sheet
2. The adjustment of contigent Liability will be :
(a) Only on the Liability side of Balance Sheet as Foot Note
(b) On the asset side of Balance Sheet
(c) On the credit side of Trading A/c
(d) On the credit side of P&L A/c
3. The investments of business are shown :
(a) On the debit side of Trading A/c
(b) On the debit side of P & L A/c
(c) On the asset side of Balance Sheet
4. The balance of Profit and Loss A/c is transferred to :
(a) In Capital A/c (b) In Cash A/c
(c) In Investment A/c (d) In Reserve A/c
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5. Balance Sheet is a part of

(a) Trading A/c (b) Profir and Loss A/c
(c) Final Accounts (d) None of the above
6. Final Accounts are prepared for :
(a) To know the Gross Profit or Gross Loss
(b) To know the Net Profit or LOss
(c) To know the financial position of business
7. Users of Financial Statements are :
(a) Government and Employees
(b) Owner and Management of the business
(c) Investers and creditor
8. Interest received on loan is shown
(a) On the credit side of trading A/c
(b) On the credit side of P & L A/c
(c) On the liability side of Balance Sheet
9. Preparation of Balance Sheet
(a) Discretionary (b) Compulsory
(c) Unnecessary (d) Useless
10. The types of Assets are :
(a) Fixed (b) Current
(c) Fictitious and Intangible (d) All of the above

(i) Adhustment entries means (a) Credit side of Trading A/c and Assets
side in the Balance Sheet
(ii) Objectives of adjustments are (b) Debit of Trading A/c
(iii) Closing stock is written (c) Adding concerned item and in liability
side of B/S
(iv) Opening stock is written (d) To ascertain correct profit and loss
(v) Adjustment of outstanding expenses is (e) Any transactions not recorded in the
books
1. Trading Account is prepared

(a) To ascertain to Gross Profit or Gross Loss
(b) To ascertain the Net Profit or Net Loss
(d) To know the Direct Expenses
2. Profit and Loss Account is prepared
(a) To ascertain the Gross Profit or Loss
(b) To ascertain the Net Profit or Loss
(c) To know the capital of business
(d) To Control the expenses
3. The meaning of Balance Sheet is
(a) Statement which shows the financial position of business
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(b) Statement which can be prepared at any time

(c) It is prepared on a specific date i.e., at the end of an accounting period
(d) It is a statement of Assets and Liabilities
4. Features of Balance Sheet are :
(a) It is a statement, not an account
(b) It is a part of Final Accounts
(c) It is not a part of Final Accounts
(d) It shows the Financial Position of business
5. Need of Balance Sheet is :
(a) To ascertain the Gross Profit or Loss of the business
(b) To ascertain the Net Profit or Loss of business
(d) To know all the Assets and Liabilities
6. Merits of Balance Sheet are :
(a) Knowledge of paying Capacity of Loan by the firm
(b) Knowledge of Gross Profit or Loss
(c) Knowledge of Purchases and Sales
(d) Knowledge of Cash in hand and Bank Balance
7. Similarities between trial Balance and Balance Sheet are :
(a) Both are statements, not Accounts
(b) Generally Trial Balance and Balance sheet both are prepared
(c) Closing stock is shown necessarily in both of the statements
(d) Both consist the record of adjustments
8. Difference between Trial Balance and Balance Sheet are :
(a) The preparation of Trial Balance is Compulsory, whereas, preparation of
Balance Sheet is not Compulsory
(b) Trial Balance is not accepted by the Court as documentary evidence where
as Balance Sheet is accepted by the court as documentary evidence
(c) Closing stock is shown in the Trial Balance, whereas it is not shown in
the Balance Sheet
(d) Trial Balance does not show the financial position of business, where as
Balance Sheet shows it
9. The meaning of Adjustment Entries is :
(a) To correct the entry of that transaction which is omitted to be recorded in
the Books of Accounts
(b) To correct the entry of that transaction which is not correctly recorded in
the Books of Accounts
(c) Entry for providing the Depreciation and other Provisions
(d) Entry to provide the interest on Capital
10. Objects of Adjustments are :
(a) To ascertain the actual Purchases
(b) To ascertain is the actual Sales
(c) To ascertain accurate Profit or Losss
(d) To ascertain the true financial position of the business

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statement-I
statement-I
1. Statement-I “Wages paid to the extension of building is shown in the debit side
of P & L A/c.”
Statement-II “The provision for discount on debtors is calculated after deducting
the provision for bad and doubtful debts from debtors.”
2. Statement-I “Interest on capital is an income for the business.”
Statement-II “goods given as charity is deducted from purchases and is shown
on the debit side of P&L A/c”
3. Statement-I “Life Insurance Prekmium is treated as drawings.”
Statement-II “Interest on drawings is an expense for the business.”
4. Statement-I “Asset side of Balance Sheet represent debot balance.”
Statement-II “Bank overdraft is a contigent Liability.”
5. Statement-I “Sales Tax paid is shown on the debit side of Profit and Loss Account.”
Statement-II “Income Tax paid is shown on the debit side of Profit & Loss
Account

Instructions : There is a paragraph you have to go through the paragraph and
mark your answer from given options:
Extracts of Trial Balance

as on 31st December, 2009 Dr. Dr.
Bad-Debts Account 800
Provision for Doubtful Debts 1-1-2009 2,500
Debtors 80,000
Adjustment : Create a provision for Doubtful Debts @ 5% on debtors Rs. Pass Journal
Entries and show the necessary Ledger Accounts and Balance Sheet
1. What account will be debited in the profit and loss account in the above cases:
(a) Rs. 4,800 (b) Rs. 2,300
(c) Rs. 2,500 (d) Rs. 4,000
2. What account will be shown on the assets side of Balance Sheet in the above
case?
(a) Rs. 76,000 (b) Rs. 84,000
(c) Rs. 80,000 (d) Rs. 78,000
3. With what account reserve for bad debts will be created ?
(a) Rs. 4,000 (b) Rs. 4,800
(c) Rs. 2,500 (d) Rs. 3,500

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Methods of Presenting Financial Statements

1. Meaning of presentation of Financial statements is :
(a) To give right information
(b) To give information to right person
(c) To give information to right time
(d) To give the information of outside business
2. Methods of presenting of Financial statements are :
(a) Profit and Loss A/c Method
(b) Balance Sheet Method
(d) Traditional or Horizontal or T form Method
(d) vertical Form or Single Cloumn Form Method
3. Financial Statements include:
(a) Cash Book (b) Income Statement
(c) Purchase and Sales Book
(d) Statement of Financial Position or Balance Sheet
4. Modern trends of presentation of Financial Statements are :
(a) Booklet Form (b) Copyright Form
(c) Highlight the achievements
(d) Use of Charts, Graphs, Diagrams and Schedules
5. Merits of Vertical Form Single Column Form are :
(a) A Vertical Form the figures are presented in a single manner and therefore,
final account are easily understood
(b) It is easy to Compute the different Ratios
(c) Lack of Comparision (d) Use of modern equipments
II. Assertion-Reason Type Questions

statement-I
statement-I
1. Statement-I “The modern trend of presenting Financial Statement is Horizontal

Form.”
Statement-II “Vertical presentation of financial statements is superior to Horizontal
presentation.”
2. Statement-I “According to vertical form, in preparing the B/S first of all current
Assets are shown.”
Statement-II “The presentation of financial statement in vertical Form in not proper”
3. Statement-I “There are two methods of preparing the Balance Sheet in T form.”
Statement-II “According to vertical form Financial statements are presented in
two columns.”
4. Statement-I “According to Horizontal Form, all incomes and gains are shown
in the debit side of Trading and P & L account.”
Statement-II “According to Horizontal Form Balance Sheet is prepared in ‘T’ Form.”
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Accounts from Incomplete Records

1. Meaning of Single Entry System is :
(a) It is a system in which both aspects are recorded of every transaction
(b) it is a system in which both aspects are not recorded of every transaction
(c) It is incomplete system of Accountancy
(d) It is Scientific system of Accountancy
2. Essentials of Single entry System are :
(a) It is implemented by Small trading organisations
(b) It is a unscientific system of Accountancy
(c) It is a complete system of account keeping
(d) It is a systematic system of Accountancy
3. Advantages of Single Entry System are:
(a) Simple System (b) More Suitable for large businesses
(c) Inflexible System (d) Economical System
4. Demerits of Single Entry system are :
(a) Full control on Assets (b) Easiness in preparing Balance Sheet
(c) Incomplete and Unscientific System
(d) Preparation of Trial Balance is impossible
5. Methods of Ascertainment of Profit by Single Entry System are :
(a) Statement of Affairs Method (b) Cash Method
(c) Purchase-Sales
(d) Conversion of Single Entry System into Double Entry System Method
6. Demerits of Statement of Affairs Methods are :
(a) Lack of arithmetical accuracy
(b) Market Price of Assets and Liabilities
(c) Lack of reliability
(d) Lack of Knowledge of Capital of business
7. Points to be Considered at the time of preparing closing statement of Affairs are:
(a) The ledger balances are taken from Trial Balance
(b) Actual Cash Balance is verified from the Cash Book
(c) Different Assets are valued on the basis of estimations
(d) The balance of debtors and creditors should be taken from personal ledger
8. Steps to be taken be calculate profit made during the year are :
(a) Preparation of Trial Balance
(b) Preparation of Final Accounts
(c) Preparation of opening and closing Statement of Affairs
(d) Add the drawings made by the proprietor in closing capital and deduct
the opening and additional capital introduced during the year
9. In case of conversion of Single Entry System into Double Entry System, main
Accounts are prepared:
(a) Total Debtors Account (b) Total Creditors Account
(c) Bills Receivable Account (d) Bills Payable Account
10. The items of credit side of Total Debtors A/c are :
(a) Sales (b) Casg received from Debtors
(c) Sales Return (d) Cash balance
11. The items of Debit side of Total Creditors Account are :
(a) Purchases (b) Cash paid to Creditors
(c) B/P Dishonoured (d) Purchase Return

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statement-I
statement-I
1. Statement-I “At the time of preparing the Profit/Loss statement drawings are
added in closing capital.”
Statement-II “In single entry system the object of preparing the statement of
affairs is to know the expenses..”
2. Statement-I “Balance sheet is not prepared in single entry system.”
Statement-II “Balance sheet is prepared only in Double Entry System.”
3. Statement-I “Profit = Closing Capital - Opening capital.”
Statement-II “The difference between closing capital and opening capital is
known as profit in single entry.”
4. Statement-I “Those accounts which are nor according to double entry system
are incomplete records.”
Statement-II “System of Book-Keeping in which only Cash and Personal Account
are recorded is called single entry system.”
5. Statement-I “In single entry system, incomplete accounts are maintained.”
Statement-II “Single Entry system is used by large business house..”
III. Comprehension/Paragraph based Questions

Instructions : There is a paragraph you have to go through the paragraph and
mark your answer from given options:
Anurag keeps incomplete records of his business. He gives you the following
information:
Rs.
Capital at the beginning of the year 8,00,000
Capital at the end of the year 6,20,000
Drawings made during the year 2,50,000
Additional Capital introduced during the year 30,000
1. What will be the amount of profit in the above ?
(a) Rs. 40,000 (b) Rs. 30,000
(c) Rs. 80,000 (d) Rs. 70,000
2. In the above if additional capital is not brought in what will be the amount of profit ?
(a) Rs. 40,000 (b) Rs. 70,000
(c) RS. 80,000 (d) Rs. 30,000
ACCOUNTS MADE EASY BY NEERAJ KUMAR


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OBJECTIVE QUESTIONS

FINANCIAL ACCOUNTING CLASS - 11TH

Accounting : Meaning and Objects

II. Matching Questions

V. Comprehension/Paragraph based Questions

(c) All types of transactions are recorded.

Basic Accounting Terms

I. Multiple Choice Questions

II. Matching Questions

(ii) Floating Asset is (b) Creditors

11. Current liabilities are :

IV. Assertion-Reason Type Questions

Accounting : Concepts and Principles

I. Multiple Choice Questions

II. Matching Questions

G-106, P.C. Colony K. bagh, Patna-20 -7- Contact : 9386313659

2. Main features of Accounting Principles are :

IV. Assertion-Reason Type Questions

G-106, P.C. Colony K. bagh, Patna-20 -8- Contact : 9386313659

V. Comprehension/Paragraph based Questions

I. Multiple Choice Questions

G-106, P.C. Colony K. bagh, Patna-20 -9- Contact : 9386313659

II. Matching Questions

G-106, P.C. Colony K. bagh, Patna-20 -10- Contact : 9386313659

IV. Assertion-Reason Type Questions

Process and Bases of Accounting

I. Multiple Choice Questions

(b) Debit what comes in and credit what goes out

9. Basis of Accounting are :

IV. Assertion-Reason Type Questions

I. Multiple Choice Questions

(ii) Purchased goods on credit Rs. 18,000

15. Type of Vouchers are :

II. Matching Questions

1. Which of the following statements are correct ?

(d) Proper recording of Depreciation

IV. Assertion-Reason Type Questions

G-106, P.C. Colony K. bagh, Patna-20 -16- Contact : 9386313659

I. Multiple Choice Questions

15. The functions of Journal are :

29. Returns Outward Book makes a record of :

II. Matching Questions

8. The types of discount are :

Books of Original Entry - Cash Book

1. Paid, Rs. 3,000 to Mohan, It will be recorded in the cash-book

3. Petty cash-book is kept to record :

19. Double Column Cash Book records:

II. Matching Questions

3. Cash Book is used :

IV. Assertion-Reason Type Questions

Books of Original Entry - Other Sibsidiary Book

1. Final balance of Sales account is transferred to :

II. Matching Questions

G-106, P.C. Colony K. bagh, Patna-20 -25- Contact : 9386313659

5. Statement-I “There is no difference between Journal and Journal proper.”

G-106, P.C. Colony K. bagh, Patna-20 -27- Contact : 9386313659

30. The debit balance of Nominal Account shows:

II. Matching Questions

G-106, P.C. Colony K. bagh, Patna-20 -29- Contact : 9386313659

IV. Assertion-Reason Type Questions

Bank Reconcilliation Statement

1. Debit balance if Cash Book is

11. Overdraft of pass Book is :