Professional Documents
Culture Documents
06. Balance of bank account as per cash book is Rs.35,000 (Dr) while balance as per bank
statement is Rs.32,500 (Cr). Difference is explained as Uncleared lodgements of Rs.2,500 not
included in the bank statement. What is the amount of bank balance to be reported in
Statement of financial Position?
(a) Rs.35,000 Cash at bank
(b) Rs.35,000 Overdraft
(c) Rs.32,500 Cash at bank
(d) Rs.32,500 Overdraft
07. A business is in process of reconciling its cash book with banks statement. Which of the
following item require entry in cash book?
(a) Bank service charges
(b) Deposits credited by the bank after the date of the bank statement
(c) Cheque of another account erroneously credited by bank
(d) Cheques presented by suppliers after the date of bank statement
12. If it was found that the receipt side of the cash book has been under-casted, then in
preparing bank reconciliation statement, it should be:
(a) Deducted from balance as per cash book
(b) Added in balance as per bank statement
(c) Added in balance as per cash book
(d) Deducted from balance as per bank statement
14. Which of the following require deduction from cash book balance while preparing bank
reconciliation statement?
(a) Direct deposit by a customer into bank but entered in cash book
(b) Standing orders paid by the bank not yet entered in cash book
(c) Unpresented cheques not yet paid by bank
(d) Bank debits interest Rs. 2,500 instead of Rs. 5,200
28. An amount of Rs. 1,000 is debited twice in the bank statement. When overdraft as per
the cash book is the starting point?
(a) Rs. 1,000 will be added
(b) Rs. 1,000 will be deducted
(c) Rs. 2,000 will be deducted
(d) Rs. 2,000 will be added
30. A discount of Rs. 20,000 was given to a supplier on his prompt repayment of debt but
the cashier entered the gross amount in cash book. What should be the adjustment in cash
to work out the correct balance of cash book?
(a) Rs. 20,000 will be debited in cash book
(b) Rs. 20,000 will be credited in cash book
(c) Rs. 40,000 will be debited in cash book
(d) Rs. 40,000 will be credited in the cash book
33. Bank inadvertently charged your bank account for another company's bank fees
(a) Add to cash book balance
(b) Deduct from cash book balance
(c) Add to bank balance
(d) Deduct from bank balance
34. A company had a receipt of Rs.989,000 and correctly prepared its bank deposit slip for
Rs.989,000. However, the company recorded the receipt in its Cash account as Rs.998,000.
How is the difference of Rs.9,000 handled on the bank reconciliation?
(a) Add to cash book balance
(b) Deduct from cash book balance
(c) Add to bank balance
(d) Deduct from bank balance
Rectification of Errors
01. Amna wrongly credited return inwards of Rs. 3,500 to returns outward although
Receivable Account was correctly credited. What will be the difference in trial balance
prepared at the year end?
(a) Total of trial balance on the debit side will be Rs. 3,500 more than total of credit side
(b) Total of trial balance on credit side will be Rs. 3,500 more than the total of debit side
(c) Total of trial balance on the debit side will be Rs. 7,000 more than total of credit side
(d) Total of trial balance on credit side will be Rs. 7,000 more than the total of debit side
04. Zahid granted an early settlement discount of Rs. 1,500 to one of its customers. The
discount amount was correctly entered in the account receivable control account but it was
wrongly credited to discount received account. In order to balance the trial balance at year
end, what should be the balance of suspense account in trial balance?
(a) Rs. 3,000 Cr
(b) Rs. 3,000 Dr
(c) Rs. 1,500 Dr
(d) Rs. 1,500 Cr
05. The suspense account shows a debit balance of Rs. 500. Which of the following errors
could be the cause of suspense?
(a) Overstatement of salaries expense by Rs. 500
(b) Overcasting sales account by Rs. 500
(c) Undercasting of sales by Rs. 500
(d) Payment to supplier Rs. 500 was wrongly omitted from records
06. Interest expense of Rs. 100 has been wrongly debited to stationery expense. What entry
is required to correct the error?
(a) Dr Interest expense Rs. 100; Cr Suspense Account Rs. 100
(b) Dr Interest expense Rs. 100; Cr Stationery expense Rs. 100
(c) Dr Suspense Account Rs. 100; Dr Interest expense Rs. 100 Cr Stationery expense Rs. 200
(d) Dr Suspense Account Rs. 100, Cr Stationery expense Rs. 100
07. Which of the following errors will not affect a trial balance?
(a) Rs. 5,000 utility expenses were entirely omitted from recording
(b) Rent paid Rs. 2,500 has been recorded as Rs. 1,500 in rent account.
(c) Discount allowed Rs. 100 has been credited to Discount received and credited to
Accounts payable
(d) Cash paid Rs. 3,000 for repair of equipment was credited to repairs account
09. The correction of which error requires an entry in the suspense account?
(a) A cheque, Rs. 2,000, paid to Asif had been debited to Arif’s account.
(b) A purchase of stationery, Rs. 80, had been debited to the purchases account.
(c) Commission income, Rs. 120, had been debited to a loan interest account.
(d) Salaries account had been undercast by Rs. 300 and the entertainment account had
beenovercast by Rs. 300.
11. The credit side of a business trial balance is Rs. 2,000 more than the debit side. Which
one of the following could be the reason for that?
(a) Credit purchase of Rs. 6,000 was recorded in Purchase day book as Rs. 4,000
(b) Cash paid to supplier Rs. 2,000 was omitted from books
(c) Overpayment of Rs. 2,000 was received from a customer
(d) Credit sales of Rs. 7,000 was posted to account receivable control account as Rs. 5,000
while it was correctly entered in sales account
13. Trial balance of a business did not agree and a suspense account was created. On
investigation it was revealed that while posting insurance expense was posted as Rs.
254,000 instead of Rs. 245,000. What entry is required to correct the error? (a) Dr Suspense
a/c Rs. 9,000 a/c Cr Insurance a/c Rs. 9,000 (b) Cr Suspense a/c Rs. 9,000 Dr Insurance a/c
Rs. 9,000 (c) Dr Insurance a/c Rs. 245,000 Cr Cash a/c Rs. 245,000 (d) Cr Insurance Rs.
245,000 Dr Suspense Rs. 245,000
14. A sales return of Rs. 400 has been wrongly posted to the credit of the purchases return
account, but has been correctly entered in the customer’s account. Which of the following
will be the effects of the error?
(a) Profit for the year will be overstated by Rs. 400
(b) Profit for the year will be overstated by Rs. 800
(c) Credit side of the trial balance will be Rs. 400 more than debit side
(d) Debit side of the trial balance will be Rs. 800 more than credit side
22. If an effect of an error is cancelled by the effect of some other error, it is commonly
known as
(a) Errors of principle
(b) Errors of omission
(c) Compensating errors
(d) Errors of commission
23. Goods of Rs.100,000 purchased from Abbas Traders were recorded in sales book, the
rectification of this error will
(a) Increase the gross profit
(b) Reduce the gross profit
(c) Have no effect on gross profit
(d) None of the given options
24. What would be the total of the trial balance if a purchase return of Rs.84,000 has been
wrongly posted to the debit of the sales return account, but had been correctly entered in
the suppliers account?
(a) The credit side to be Rs.84,000 more than debit side
(b) The debit side to be Rs.84,000 more than credit side
(c) The credit side to be Rs.168,000 more than debit side
(d) The debit side to be Rs.168,000 more than credit side
25. When opening stock is overstated, net profit for the accounting period will be
(a) Overstated
(b) Understated
(c) No effect
(d) None of the above
26. Difference of totals of both debit and credit side of the trial balance is transferred to
(a) Difference account
(b) Trading account
(c) Miscellaneous account
(d) Suspense account
27. Goods purchased from supplier worth Rs.200,000, no entry made in purchases book is
an example of
(a) Error of posting
(b) Error of omission
(c) Error of principle
(d) Compensating errors
28. Purchase of fuel for the car is capitalised to motor vehicles. It is a type of
(a) Error of posting
(b) Error of omission
(c) Error of principle
(d) Compensating errors
29. The Company incorrectly recorded a deposit of daily credit sales of Rs. 45,000 as Rs.
54,000. What is the appropriate entry, the company should follow regarding the error of Rs.
9,000?
(a) Add Rs. 9,000 to its Cash account
(b) Sales (Dr) and Account Receivable (Cr) with Rs. 9,000
(c) Account Receivable (Dr) and Sales (Cr) with Rs. 9,000
(d) None of the above
30. Which of the following account(s) will be affected, while rectifying the error of Carriage
paid Rs. 50,000 for the newly purchased machinery mistakenly debited to carriage account?
(a) Only machinery account
(b) Only carriage account
(c) Both carriage and machinery account
(d) Only cash account
31. If a cash sale is made for Rs. 400,000 and posted as follows:
Account Debit Credit
Sales 400,000
Cash 400,000
What would be the correcting entry?
(a) Sales (debit) = Rs. 800,000 and Cash (credit) = Rs. 800,000
(b) Cash (debit) = Rs. 400,000 and Sales (credit) = Rs. 400,000
(c) Cash (debit) = Rs. 600,000 and Sales (credit) = Rs. 600,000
(d) Cash (debit) = Rs. 800,000 and Sales (credit) = Rs. 800,000
Which of the following accounts are not closed at the end of an accounting period?
A. Revenue accounts
B. Expense accounts
C. Drawing accounts
D. Asset accounts
A transaction caused a Rs. 10,000 decrease in both assets and total liabilities. This transaction could
have been:
A. Purchase of furniture for Rs. 10,000
B. An asset costing Rs.10, 000 was destroyed by fire
C. Repayment of bank loan Rs. 10,000
D. Collection of an Rs.10, 000 account receivable