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Question#2
Which is not the part of accounting cycle?
A. Transactions B. Books of prime entry and financial
statements
C. Ledgers and Trial balance D. None
Question#3
Any transaction that has a monetary impact on the business’ accounts is?
A. Cash transaction B. Financial transaction
C. Credit transaction D. Both A and C
Question#4
A business bought machinery for production.
Which type of transaction is this?
A. Capital transaction B. Revenue transaction
C. One-off transaction D. Both A and C
Question#5
Business overhauled machinery used in production.
Which type of expenditure is this?
A. Revenue expenditure B. Normal expenditure
C. Capital expenditure D. Ongoing transaction
Question#6
Printing press incurred minor repairs to its printing machine which is already used in printing.
What is the nature of this expenditure?
A. Revenue expenditure B. Normal expenditure
C. Capital expenditure D. Ongoing transaction
Question#7
Which statement regarding accounting is correct?
Question#8
Financial statements are reports of an entity which provide necessary information to its ________ for
their decision making needs.
A. Shareholders B. Directors
C. Government D. Stakeholders
Question#9
Accounting equation is?
A. Assets = Liabilities + Equity B. Assets = Liabilities - Equity
C. Assets + Liabilities = Equity D. None
Question#10
Which is not an accounting equation?
A. Assets = Liabilities + Equity B. Assets = Liabilities – Equity
C. Assets – Liabilities = Equity D. Both Band C
Question#11
Which of the following is correct?
A. Revenue – Cost of sales = Gross profit B. Revenue + Cost of sales = Gross profit
C. Revenue – Gross profit = Cost of sales D. Both A and C
Question#12
Which of the following is correct?
A. Net profit = Gross profit – Expenses B. Net profit – Expenses = Gross Profit
C. Gross profit – Expenses = Cost of sales D. None
Question#13
How is gross profit calculated?
A. Sales – expenses B. Sales – sales return – cost of goods sold
C. Sales – purchase returns D. Sales – sales return – closing stock
Question#14
Which best describe the capital of the business?
A. Items which the business owns B. Items which business bought for long
term use
C. Cash invested by owner of business D. Items that turn into cash in near future
Question#15
Maaz enterprises income statement showed a gross profit but a loss for the year.
Why this is so?
Question#16
Which best describe the capital of the business?
A. Items which the business owns B. Items which business bought for long
term use
C. Cash invested by owner of business D. Items that turn into cash in near future
Question#17
Which would not appear in balance sheet?
A. Fixed assets B. Gross profit
C. Trade receivables D. Accrued rent expense
Question#18
How the business of beauty parlor can be classified?
A. Service business B. Exchange business
C. Production business D. Manufacturing business
Question#19
Plant and building can be classified into?
A. Assets B. Noncurrent liabilities
C. Noncurrent assets D. Current liabilities
Question#20
Trade payables can be classified into?
A. Assets B. Noncurrent liabilities
C. Non-current assets D. Current liablities
Question#21
Long term bank loan can be classified into?
A. Assets B. Non current liablities
C. Non current assets D. Current liablities
Question#22
Samiullah textiles has incurred following costs for the year ended 30 June 2021:
Extention in factory building : Rs2 Mn
Repairs to factory building : Rs 0.6 Mn
Overhaul to machinery that increased production capacity : Rs1.9 Mn
What is the amount of capital expenditure ?
A. Rs3.9 Mn B. Rs4.5 Mn
C. Rs0.6 Mn D. Rs2.5 Mn
Question#23
Question#24
Samiullah textiles has incurred following costs for the year ended 30 June 2021:
Extention in factory building : Rs2 Mn
Repairs to factory building : Rs 0.6 Mn
Overhaul to machinery that increased production capacity : Rs1.9 Mn
Profit for the year was Rs10.6 Mn .
What will be the profit after incorporating above adjustments ?
A. Rs8.6 Mn B. Rs6.7 Mn
C. Rs8.7 Mn D. Rs10 Mn
Question#25
Yousuf Flour Mills has incurred following costs for the year ended 30 June 2021:
Rs in Mn
Cost of factory building – opening 18
Cost of factory vehicle – opening 9.9
Construction of new building – during the 5
year
Repairs to building – during the year 1.6
Repairs to factory vehicle – during the 0.2
year
What is the cost of building at year end?
A. Rs10.1Mn B. Rs23 Mn
C. Rs24.6Mn D. Rs9.9Mn
Question#26
Yousuf Flour Mills has incurred following costs for the year ended 30 June 2021:
Rs in Mn
Cost of factory building – opening 18
Cost of factory vehicle – opening 9.9
Construction of new building – during the 5
year
Repairs to building – during the year 1.6
Repairs to factory vehicle – during the 0.2
year
What is the cost of factory vehicle at year end?
A. Rs10.1Mn B. Rs23 Mn
Question#27
Owner bought factory vehicle from his personal cash.
How owner’s expenditure is classified?
A. Capital B. Payable
C. Liability D. Asset
Question#28
When a business owner takes goods away for personal use is
A. Drawings B. Sales
C. Capital D. Purchase returns
Question#29
Which is of the following is not current asset.
A. Plant B. Trade recievables
C. Prepaid rent D. Interest recievable on loan
Question#30
Which is of the following is not non-current asset.
A. Trade recievables B. Plant
C. Building D. Factory vehicles
Question#31
What is an asset acoording to IASB ?
A. A present economic resource controlled B. A resource which decreases liablity
by the entity as a result of past events ,
from which future economic benefits
flows to the entity .
C. A present economic resource controlled D. A resource which increases equity .
by the entity as a result of past events.
Question#32
If asset of business is Rs 3.2Mn and liablities is Rs1.2Mn . Then what would be the amount of equity ?
A. Rs2Mn B. Rs4.4Mn
C. Rs3.2Mn D. Rs4Mn
Question#33
At 31 October 2020 Yosuf trial balance included the following balances:
Rs
Machinery 15,840
Inventory 8,990
Question#34
At 31 October 2020 Yosuf trial balance included the following balances:
Rs
Machinery 15,840
Inventory 8,990
Question#35
Which of the following require most detailed financial information from financial statements?
A. Management B. Shareholders
C. Employees D. Government
Question#36
Responsibility to prepare financial statements lies with ?
A. Management B. Lenders
C. Shareholders D. Tax agencies
Question#37
Purchase of factory vehicle for cash
A. Increase Assets B. Total assets remains unchanged
C. Decrease cash D. All of the above
Question#38
Sales made for cash will result in ;
A. Increase in cash B. Increase in cash and decrease in equity
C. Increase in sales D. Both A and C
Question#39
What transaction is presented by the entries: debit Payables, credit Bank?
Question#40
As a rule , a credit entry usually represents increase in;
A. Income and liabilities B. Asset and liabilities
C. Income and expenses D. Liabilities and expenses
Question#41
Kashif enterprises sells Rs. 500,000 worth of goods to a customer, the customer pays Rs. 90,000 in
cash immediately and will pay the remaining Rs. 410,000 in 60 days’ time.
What is the double entry to record the purchase in the customer’s accounting records?
A. Debit purchases Rs. 500,000; credit cash B. Dr. purchases Rs. 500,000; Cr. payables
Rs. 500,000 Rs. 410,000; Cr. cash Rs. 90,000
C. Dr. purchases Rs. 500,000; Dr. payables D. Dr. cash Rs. 90,000; Cr. payables Rs.
Rs. 410,000; Cr. cash Rs. 90,000 410,000; Cr. purchases Rs. 500,000
Question#42
Chemical industry has purchased machinery on credit. Which of the accounts are affected by the
transactions?
A. Purchases B. Cash
C. Trade payables D. Machinery
Question#43
A company buy a vehicle amounting Rs2Mn for business use and made payment from cheque .
What will the double entry ?
A. Vehicle Dr , Bank Cr B. Purchases Dr , Cash Cr
C. Vehicle Dr , Cash Cr D. Purchases Dr , Bank Cr
Question#44
The double entry of rent expense paid through cash is ;
A. Equipment Dr , Cash Cr B. Rent Expense Dr , Cash Cr
C. Equipment Dr , Bank Cr D. Rent Dr , Expense Cr
Question#45
Mr Akram sold goods worth Rs200,000 on credit ; What will be the double entry?
A. Sales Dr , Trade recievables Cr B. Trade payables Dr , Profit Cr
C. Trade recievables Dr , Sales Cr D. Trade payables Dr , Income Cr
Question#46
A business had following balances for its plant and machinery .
Rs in Mn
Opening 2.6
Additions during the year 0.6
Question#47
A business had following balances for its plant and machinery .
Rs in Mn
Opening 3.5
Additions during the year 0.5
Disposals during the year ?
Closing 2.9
What is the amount of disposals during the year?
A. Rs4.0Mn B. Rs6.9Mn
C. Rs1.1Mn D. Rs3.5Mn
Question#48
Business owner made a profit during year of Rs950,000 and made drawings of Rs120,000 .
What is the net impact on equity?
A. Rs950,000 B. Rs830,000
C. Rs120,000 D. Rs1,070,000
Question#49
This is the account of equity of Jamil Textiles as at 30 June 2021.
Rs in Mn
Opening 3.1
Profit for the year 1.2
Drawings 0.6
Closing ?
Calculate the amount of closing equity?
A. Rs4.3Mn B. Rs4.9Mn
C. Rs3.7Mn D. Rs2.5Mn
Question#50
This is the account of equity of Jamal Textiles as at 30 June 2021.
Rs in Mn
Opening 5.9
Profit for the year 4.5
Drawings ?
Closing 8.3
Work out the amount to be posted in drawings?
A. Rs2.1Mn B. Rs9.7Mn
C. Rs18.7Mn D. Rs4.0Mn
Question#2
Records transactions that are not recorded in any of the other books of original entry.
A. Statement of financial position B. Journal
C. Bank book D. Cash book
Question#3
An account which summarizes a large number of transactions.
A. Journal ledger B. Trial balance
C. Control Account D. T-Account
Question#4
The receivables control account and the receivables ledger are ?
A. Not updated at same time B. Updated at the same time
C. Updated when required D. Updated at year end
Question#5
The process of transferring the details of transactions from the books of prime entry to the
accounts in the ledgers is called _________ the transactions.
A. Recording B. Updating
C. Posting D. Booking
Question#6
Electric store has made following sales :
Credit sales: Rs1000
Cash sales : Rs500
Which recording of transaction is correct?
A. Cash receipt book Rs.1500 B. Sales day book Rs.1500
C. Account receivable Rs.1500 D. Sales day book Rs.1000 , Cash receipt
book Rs.500
Question#7
Return inwards are recorded in :
A. Cash book B. Goods dispatch note
C. Sales return D. Purchase return
Question#8
Which is not book of prime entry?
A. Trial balance B. Sales day book
C. Purchase day book D. Sales return day book
Question#9
Credit note is issued when?
Question#10
A debit note is issued when ?
A. Supplier issues goods B. When customer return goods
C. Supplier dispatches goods D. When supplier return goods
Question#11
Receipt from a debtor worth Rs.800,000 be recorded in ?
A. Accounts Receivable B. Petty cash book
C. Cash book D. None
Question#12
Payment to a supplier worth Rs.800,000 be recorded in ?
A. Accounts Receivable B. Cash payment journal
C. Cash book D. Petty cash book
Question#13
Which one is current liability?
A. Accounts receivable B. Accrued salaries
C. Rent prepaid D. Inventory
Question#14
Mr. Mushtaq , being a owner, took goods for his own use , how this will be recorded ?
A. Stock Dr , Drawings Cr B. Drawings Dr , Purchases Cr
C. Drawings Dr , Sales Cr D. Purchases Dr , Drawings Cr
Question#15
Maaz sold goods to Shahab on credit. What entries should Maaz make in his ledger ?
A. Account Receivables Dr , Sales Cr B. Cash Dr , Sales Cr
C. Cash Dr , Income Cr D. Account Receivable Dr , Cash Cr
Question#16
A businessman maintains petty cash book . The amount is Rs. 500. During a month, payments
totaling Rs. 300 were made. How much amount will be reimbursed at the end of the month to
restore the petty cash?
A. Rs 300 B. Rs 200
C. Rs 500 D. Rs 800
Question#17
Which of the following document is prepared by the store keeper on receiving goods in store?
A. Goods Dispatch Note B. Goods Delievery Note
C. Debit Note D. Goods Recieve Note
Question#18
Mr Taha , a trader prepares a ledger account using the running balance method .
Which statement is correct ?
A. Different from traditional T-account B. After each transaction the balance is
shown
Question#19
What is the accounting equation ?
A. Assets + Liabilities = Capital B. Capital + Assets = liabilities
C. Assets – Liabilities = Capital D. Capital-Assets = Liabilities
Question#20
Maaz return goods to Saad which he bought on credit . How is this recorded in Maaz’s books ?
A. Accounts Receivable Dr , Sales Return Cr B. Sales Return Dr , Accounts Receivable Cr
C. Purchase returns Dr , Accounts D. Accounts Receivable Dr , Purchase
Receivable Cr returns Cr
Question#21
A business man provided some information .
Sales Rs 120,000
Cost of Sales Rs 48,000
Expenses Rs 43,000
What is net profit ?
A. Rs 5,000 B. Rs 72,000
C. Rs 29,000 D. Rs 63,000
Question#22
How is capital employed calculated?
A. Fixed assets + current assets + current B. Fixed assets – current assets + current
liabilities liabilities
C. Fixed assets + current assets – current D. Fixed assets – current assets – current
liabilities liabilities
Question#23
A transport company received Rs500,000 from passengers . The sold a van for Rs5,000,000 . How
these receipts are treated?
A. Capital receipts: Rs5,000,000 ; Revenue B. Capital receipts: Rs500,000 ; Revenue
receipts : Rs500,000 receipts : Rs5,000,000
C. Capital receipts: Rs--- ; Revenue receipts D. Capital receipts: Rs5,500,000 ; Revenue
: Rs5,500,000 receipts : Rs---
Question#24
Which does not reduce the owner’s capital?
A. Personal expenses paid from business B. Cash withdrawn from the business bank
account account for personal use
C. Goods taken from inventory for D. Business expenses paid using a personal
personal use cheque
Question#25
A eatery owner spends the following amounts :
Rs
Plates 1,500,000
Food 5,000,000
Cutlery 500,000
Question#26
Businesses use book-keeping and accounting procedures .
What is the purpose of book-keeping?
A. To analyse accounting records B. To record all financial and other
transactions
C. To prepare financial statements D. To record all financial transactions
Question#27
Which would be recorded by a debit entry in an account?
A. Increase in capital B. Decrease in assets
C. Decrease in liabilities D. Increase in liabilities
Question#28
Maaz decides to write off a debt due to him from Saad for goods sold on credit. How is this
recorded in Maaz’s books?
A. Bad debts : Dr , Saad(recievables) : Cr B. Sales : Dr , Bad debts : Cr
C. Bad debts : Dr , Sales : Cr D. Saad(recievables) : Dr , Bad debts : Cr
Question#29
Asma provided the following information at end of her financial year .
Rs
Non current assets at cost 14,000,000
Amount owning by customers 1,250,000
Amount owning to suppliers 850,000
Inventory 1,875,000
Bank overdraft 365,000
What was Asma’s capital?
A. 15,910,000 B. 16,640,000
C. 12,160,000 D. 15,110,000
Question#30
Maaz enterprises provided some information from its records .
Rs
Trade recievables 13400
Provision for doubtful debts b/f 800
Written off bad debts 600
Provision for doubtful debts to be ?
carried forward @ 5%
What is the amount to be included in provision for doubtful debts to be carried forward to next
year?
A. 640 B. 650
C. 700 D. 770
Question#31
Shahab Industries deals in manufacturing and supply of chocolate conching machine and
Question#32
Omar had the following assets and liablities at 1 September 2021 .
Rs
Non current assets 44,000
Non current liablities 10,000
inventory 1,500
Trade payables 3,300
Trade recievables 2,600
What was Omar’s capital?
A. 35,800 B. 44,000
C. 34,800 D. 54,800
Question#33
Kamran made following transactions during a certain month: Credit sales 30,000 out of which Rs.
6,000 were returned by the customers subsequently Cash sales amounting Rs. 16,000 Cash
received from customers Rs. 8,000 What is the total of sales day book for the month?
A. 40,000 B. 46,000
C. 30,000 D. 16,000
Question#34
Naeem runs a business of purchase and sales of furniture. During a particular period Naeem made
following transactions:
Sales to A Rs. 24,000
Sales to B Rs. 20,000 list price and trade discount 3%
Sales returns from A Rs. 6,000. What is the total of sales day book for the period?
A. 38,000 B. 43,400
C. 37,400 D. 44,000
Question#35
A confectionary shop made following transactions during a certain period:
Credit purchases Rs. 28,000; out of which Rs. 5,000 were rejected and subsequently returned to
the supplier. Supplier allowed a discount of 2% on settlement of amount. What is the net amount
of cash paid to the supplier?
A. 23000 B. 22,310
C. 22,540 D. 20,220
Question#36
An Account receivable control ledger account had a closing balance of Rs. 900,000. This control
account receivable ledger contained a contra to the account payable ledger of Rs. 110,000; but it
had been posted to wrong side of control account.
What is the correct closing balance in account receivable control ledger account after correction of
Question#37
A receivable control account contains the following relevant entries for the year ended 31
December 2021:
Rs.
Receiving through bank 170,000
Credit sales during the year 190,000
Discount received 18,000
Contra with payable control account 5,000
Balance c/d as on Dec 31, 2021 25,000
There are no other transactions related to account receivable.
What is the amount of balance b/d of account receivable control account as on 1 January 2021?
A. 408,000 B. 28,000
C. 398,000 D. 358,000
Question#38
Maaz bought goods on credit from Noman Traders (NT). The goods were not according to the
required specifications and therefore returned to NT. Which document should Maaz send to NT?
A. Invoice B. Credit note
C. Receiving acknowledgement slip D. Debit note
Question#39
In which book of prime entry does credit note received worth Rs.800,000 would be recorded?
A. Sales day book B. Return outwards journal
C. Purchase return day book D. Return inwards journal
Question#40
In which book of prime entry does receipt from a debtor worth Rs.600,000 enter?
A. Cash book B. Petty cash book
C. Purchase day book D. Sales day book
Question#41
A business man provided following information
Rs
Cost of sales 80,000
Expenses 7,000
Profit for the year 15,000
What is the revenue?
A.102,000 B.87,000
C.22,000 D.95,000
Question#42
A eatery owner spends the following amounts :
Rs
Plates 1,500,000
Food 5,000,000
Cutlery 500,000
Question#43
Which entry is made when provision for doubtful debts is decreased ?
A. Trade recievables Dr , Provision for B. Provision for doubtful debts Dr , Trade
doubtful debts Cr recievables Cr
C. Provision for doubtful debts Dr , Income D. Income statement Dr , Provision for
statement Cr doubtful debts Cr
Question#44
China toys , a wholeseller had following transactions :
Sold goods worth Rs30,000 on credit .
Received cheque of Rs12,000 from sale of old plant at book value .
How these transactions should be classified ?
A. Revenue receipt 42,000 , Capital receipt B. Revenue receipt 30,000 , Capital receipt
--- 12,000
C. Revenue receipt 12,000 , Capital D. Revenue receipt --- , Capital receipt
receipt 30,000 42,000
Question#45
Younus maintains provision for doubtful debts of 3% of the trade receivables at the end of year .
On 30 June 2020 trade recievables amounted to Rs 70,000 .
On 30 June 2021 trade recievables amounted to Rs 73,000 .
Which double entry should be made by Younus at 30 June 2021 ?
A. Debit : Income statement 2,090 , Credit B. Debit : Provision for doubtful debts
: Provision for doubtful debts 2,090 2,090 , Credit : Income statement 2,090
C. Debit : Income statement 90 , Credit : D. Debit : Provision for doubtful debts 90 ,
Provision for doubtful debts 90 Credit : Income statement 90
Question#46
A motor vehicle having book value of Rs 2700 is sold for Rs 3150 .
How is this transaction is treated ?
A. Capital receipt :2700 , B. Capital receipt :3150 , Revenue receipt :
Revenuereceipt:450 _____
C. Capital receipt :450 , D. Capital receipt :_____ , Revenue receipt
Revenuereceipt:2700 :3150
Question#47
How can purchases be calculated ?
A. Cost of goods sold + closing inventory + B. Cost of goods sold + closing inventory –
opening inventory opening inventory
C. Cost of goods sold – closing inventory + D. Cost of goods sold – closing inventory –
opening inventory opening inventory
Question#48
Which is liablity of a business ?
Question#49
Following information relates to Sales transaction of Nadir during November 2021
Receivables as at 1 November Rs. 75,000
Receivables as at 30 November Rs. 47,000
Receipts during the period (after allowing discount of Rs. 8,000) Rs. 55,000
What is the amount of credit sales during November?
A. 27,000 B. 35,000
C. 102,000 D. 27,800
Question#50
Which of the following items will appear on the debit side of a payable control ledger?
A. Balance b/d B. Refunds from a credit supplier
C. Cash purchases D. Payment to credit supplier
Question#2
The process of classifying amounts from books of prime entry to ledgers is called:
A. Recording B. Posting
C. Booking D. All of above
Question#3
What is the effect on final accounts of providing for a salaries accrual?
A. Net profit : Increase , Current liablities : B. Net profit : Decrease, Current liablities :
Increase Increase
C. Net profit : Increase , Current liablities : D. Net profit : Decrease, Current liablities :
Decrease Decrease
Question#4
What is the purpose for the trial balance?
A. To show transactions B. To confirm that total debit balance agree
with total credit balance
C. To calculate provisional profit D. To ascertain asset and liablities
Question#5
A junior accountant asked senior accountant what is a purpose of trial balance?
A. Summarising transactions B. Provide details for assets and liablities
C. Provide financial information D. It is a useful means of checking for errors
in the accounting system .
Question#6
Which will appear in credit column of trial balance?
A. Cash at bank B. Discounts received
C. Total assets D. Discounts allowed
Question#7
Which will appear in debit column of trial balance?
A. Cash at bank B. Discounts received
C. Accrued rent D. Sales
Question#8
Which error is not shown by trial balance?
A. If a transaction completely omitted from B. Error made while calculating total
Question#9
Why does a trial balance is prepared by business?
A. To calculate amount of total profit B. To calculate amount of total profit , assets
, liablities and equity
C. To calculate amount of total profit , assets D. To check mathematical accuracy of ledger
and liablities
Question#10
By which error totals of trial balance will disagree?
A. Sales made on credit had been credited to B. Fixtures purchased by cheque were not
account of wrong customer recorded
C. Fixtures purchased by cheque were D. Sales made on credit had been debited to
recorded as an asset account of wrong customer
Question#11
Mr Aslam takes goods from business for personal use.
How this will effect profit for the year and current assets?
A. Profit for the year : decrease , Current B. Profit for the year : decrease , Current
assets : No effect assets : decrease
C. Profit for the year : no effect , Current D. Profit for the year : no effect , Current
assets : No effect assets : decrease
Question#12
Which is not the limitation of trial balance ?
A. Errors of omission in the books of original B. Errors of principle (posting on right side of
record wrong account nature wise)
D. Checking for errors in the accounting
C. Incorrect account in the original books (on system.
both sides )
Question#13
Process by which transactions are transferred from journal to ledgers is called?
A. Summarising B. Analysing
C. Recording D. Posting
Question#14
Balance on debit side is 18,000 and balance on credit side is 28,000 . What is the closing balance and
on which side?
A. 46,000 on right side B. 10,000 on right side
C. 46,000 on left side D. 10,000 on left side
Question#15
Question#16
Which one of the following account would usually have a debit balance?
A. Cash B. Accounts payable
C. Owner equity D. Bank loan
Question#17
The recievables account is part of:
A. Sales ledger B. Recievables ledger
C. General ledger D. Purchase ledger
Question#18
A trial balance which shows equal totals for debit and credit columns?
A. Shows that there must be more than one B. Shows that there is only one error within
error within the bookkeeping system the bookkeeping system
C. Shows that the bookkeeping system is D. Shows that the arithmetic is correct , but
free from errors errors may still be present within the
bookkeeping system
Question#19
A business maintains running balance account ledger. A supplier had balance of Rs. 55,000 credit. A
further purchase of Rs. 30,000 was made from him and a business paid Rs. 32,000 by cheque. What
would be his account balance after posting all transactions?
A. Rs53,000 credit B. Rs57,000 credit
C. Rs53,000 debit D. Rs57,000 debit
Question#20
Which of the following accounts normally have credit balance?
A. Return inwards B. Motor vehicles
C. Prepaid rent D. Wages outstanding
Question#21
Each invoice value from purchase journal is posted to:
A. Credit side of individual supplier account B. Debit side of individual supplier account
in payables ledger in payables ledger
C. Credit side of individual supplier account D. Debit side of individual supplier account
in purchase ledger in general ledger
Question#22
Question#23
Talha gives a cash discount of Rs80 toa customer . The discount is credited to the discounts allowed
account . The effect of recording the discount in this way is that profit will be?
A. Understated by 80 B. Understated by 160
C. Overstated by 160 D. None of above
Question#24
The inventory account is part of:
A. Purchase ledger B. Sales ledger
C. Asset ledger D. General ledger
Question#25
Which of the following best describes trial balance?
A. It is a special account B. Shows financial position of business
C. It is the list of total /balances of books D. Shows all entries in the books
Question#26
Balance on debit side is 90,000 and balance on credit side is 55,000 . What is the closing balance on an
account and on which side?
A. 145,000 on right side of account B. 35,000 on left side of account
C. 35,000 on right side of account D. 145,000 on left side of account
Question#27
Balance on debit side is 83,000 and balance on credit side is 105,000 . What is the closing balance on
an account and on which side?
A. 188,000 right side of account B. 188,000 left side of account
C. 22,000 on right side of account D. 22,000 on left side of account
Question#28
Each return outward (debit note issued) from sales return journal is posted to:`
A. Debit side of individual supplier account B. Debit side of individual supplier account
in Recievables Ledger. in Purchase Ledger.
C. Debit side of individual supplier account D. Debit side of individual supplier account
in Payables Ledger. in Payables Ledger.
Question#29
Which one of the following would not be classified as revenue?
A. Income from sale of fixed assets B. Fee from sale of services
C. Sales on credit D. Sales on cash
Question#30
Question#31
Wages paid to workers for the installation of new machine should be debited to?
A. Fixed overheads account B. Factory expenses account
C. Machinery account D. Wages account
Question#32
At the end of accounting period, a company has a profit of Rs500,000 , it shall be transferred to:
A. Debit side of asset account B. Debit side of capital account
C. Credit side of capital account D. None
Question#33
Which of the following statements regarding trial balance is correct?
A. Capital are represented by debit balance B. Every credit balance represents liablity
C. Every debit balance represents an asset . D. Expenses are represented by debit
balances
Question#34
Chart of accounts has following characterstics , identify correct statement .
A. It ensures that all transactions are B. Each account is identified by unique code
recorded according to business and heading
requirement
C. Both A and B D. None
Question#35
A receivable ledger account at 1 September 2020 had balances of Rs. 46,652 debit.
During the year, sales amounting to Rs. 245,000 were made on credit.
Receipts from customers amounted to Rs. 165,900 and cash discounts of Rs. 1,200 were allowed.
What should be the closing balance at 30 September 2020 of account receivable account?
A. 124,892 B. Rs124,552
C. 125,682 D. Rs125,752
Question#36
A payable account of Yosuf Traders contains the following relevant entries for the year ended 30 June
2020:
Rs.
Payment through bank 195,000
Credit purchases during the month 205,600
Discount received 28,900
Question#37
At the end of accounting period, a company has a net loss of Rs650,000 , it shall be transferred to:
A. Credit side of asset account B. Debit side of capital account
C. Credit side of capital account D. None
Question#38
Zara’s account payable ledger has the following balances as at 1 June 2020 :
Rs
Opening balance 138,000
Credit purchases 55,600
Cash purchases 13,900
Cheque issued to credit suppliers ( after discount 100,600
of Rs5,500)
What is the amount of closing balance at 30 June 2020?
A. Rs18,200 B. Rs87,500
C. Rs193,600 D. RS92,900
Question#39
A company had a cash balance of Rs. 250,000 at the start of the month. During the month, the
following transactions occurred.
Rs
Payments to trade payables 58,000
Purchases on credit 98,600
Sales on credit 68,000
Cash from trade recievables 92,000
A. Rs352,000 B. Rs400,000
C. Rs253,400 D. Rs284,000
Question#40
Nasir has extracted the following balances from his general ledger at 30 June 2020:
Rs.
Sales 357,156
Question#41
A recievable account of Younus Traders contains the following relevant entries for the year ended 30
June 2020:
Rs.
Payment in bank 563,890
Credit sales during the month 452,880
Discount allowed 28,900
Contra with payable account 67,580
Balance c/d as on June 30, 2020 350,950
What is the amount of balance b/d of account payable account as on 1 June 2020?
A. Rs490,860 B. Rs558,440
C. Rs423,280 D. RS500,640
Question#42
A total of trial balance has Rs600,500. A machinery was purchased for Rs55,000 on credit but remain
unrecorded. How this will impact both sides of trial balance when machinery is recorded.
A. Rs55,000Dr , Rs55,000 Cr B. Rs55,000 Cr only
C. Rs55,000Dr only D. None
Question#43
A business buys building for Rs40Mn and sells another building for Rs19Mn . At start of year opening
balance on building account was Rs90Mn. What is the amount at year end?
A. Rs130Mn B. Rs111Mn
C. Rs115Mn D. Rs149Mn
Question#44
What is the purpose for the trial balance?
A. To confirm that total debit balance agree B. To ascertain assets and liablities
Question#45
A debit balance is expected to arise when the accounts are balanced at the period end on which of the
following accounts?
A. Rent B. Capital
C. Sales D. Bank loan
Question#46
Running account account balance provides :
A. Upadated balance at period end B. Updated balance at month end
C. Updated balance at year end D. Updated balance after each transactions
Question#47
Which will appear in debit column of trial balance?
A. Prepaid rent B. Accrured rent
C. Trade payables D. Advance rent recieved
Question#48
An entity recorded the following journal entry in its General Journal:
Vehicle Rs. 1,500,000
Maaz Motors (supplier) Rs. 1,500,000
How this would be posted in the ledger account of “Maaz Motors”?
A. On debit side with description “Maaz B. On credit
Motors” and amount Rs. 1,500,000 C. side with description “Maaz Motors” and
amount Rs. 1,500,000
D. On credit side with description “Vehicle” E. On debit side with description “Vehicle”
and amount Rs. 1,500,000 and amount Rs. 1,500,000
Question#49
A credit balance is expected to arise when the accounts are balanced at the period end on which of the
following accounts?
Question#50
Which error is not shown by trial balance?
A. Error made while totaling of credit side B. Error while totaling credit side of trial
balance
C. Only single entry is made for treansaction D. If a transaction completely omitted from
accounting records
Question#2
Mr. Aslam paid Rs 50,000 in advance to Mr Atif for cleaning services.
How this income is classified in Mr Atif books .
A. Accrued income B. Unearned income
C. Prepaid income D. B and C
Question#3
Accrued expense means :
A. Prepaid expense B. Paid expense
C. Unpaid expense D. None
Question#4
Mr Zamir has electricity expense of Rs90,000 which he has not paid . How this expense is classified in
Mr Zamir’s books?
A. Accrued expense B. Advance expense
C. Expense recievable D. Prepaid expense
Question#5
Which of the following statement is correct?
1. Accrued expense in recorded in income statement of business
2. Accrued expense is not recorded as liablity in balance sheet of business .
A. 1 is correct B. 2 is correct
C. 1 and 2 are correct D. none
Question#6
Mr Zahir has paid to landlord rent of six months in advance amounting to Rs150,000.
How is this classified?
A. Prepaid rent B. Accrued rent
C. Accrued expense D. Unearned rent
Question#7
A business provided following information related to its accrued rent account :
Rs
Opening 120,000
Rent for the year 500,000
Amount paid during the year 550,000
Question#8
Mr Daniyal paid Rs25,000 in advance for telephone bill , which entry is correct to record this
transaction .
A. Bill expense 25,000 Dr , Bank 25,000 Cr B. Bill expense 25,000 Dr , Cash 25,000 Cr
C. Prepaid bill 25,000 Dr , Bank 25,000 Cr D. Prepaid bill 25,000 Dr , Bill expense
25,000 Cr
Question#9
On 1 April 2020 , Mr Waseem paid advance rent of Rs120,000 for one year . What is the amount to be
included in income statement and balance sheet at 31 December 2020 .
A. Income statement 120,000 , Balance sheet B. Income statement 30,000 , Balance sheet
00 90,000
C. Income statement 90,000 , Balance sheet D. Income statement 00 , Balance sheet
30,000 120,000
Question#10
Mr Rizwan comes to know that the internet fee he paid for the year for his office includes Rs5,000 in
advance . What is correct year end adjustment to be made for advance rent?
A. Internet Fee 5,000 Dr , Accrued Internet B. Internet Fee 5,000 Dr , Internet Fee
Fee 5,000 Cr Expense 5,000 Cr
C. Internet Fee 5,000 Dr , Advance Internet D. Advance internet fee 5,000 Dr , Internet
Fee 5,000 Cr Fee expense 5,000 Cr
Question#11
On year end a shop owner has outstanding electricity bills of Rs. 27,000. During the year electricity
bills paid are Rs. 220,000. What adjustment will be required to utilities expense account regarding the
outstanding bills?
A. Rs27,000 Cr B. Rs220,000 Cr
C. Rs27,000 Dr D. None
Question#12
While closing accounts at year end Mr Abdullah noticed that he has ignored prepayments of Rs 50,000
and accrued expenses of Rs 40,000 . What will be the impact on profit for the year if he did not
discover the fact .
A. Understated by 10,000 B. Undersated by 40,000
C. Overstated by 10,000 D. Overstated by 40,000
Question#13
On finalizing the draft accounts Abdullah identified that he has Rs. 20,000 rental income receivable.
Rental income received and recorded during the year is Rs. 220,000. What is the correct entry to
record the accrued income?
A. Dr Cash Rs. 220,000 Cr Rental income Rs. B. Dr Cash Rs. 240,000 Cr Rental income Rs.
Question#14
The expense recognition principle matches:
A. creditors with businesses. B. assets with liabilities.
C. expenses with revenues. D. customers with businesses.
Question#15
Which of the following is asset account?
A. Rent payable B. Unearned income
C. Prepaid expense D. Rent payable
Question#16
Which of the following statements is not true?
A. Accruals decrease profit B. A prepayment is an asset
C. Accrued income decreases profit D. All are true
Question#17
Which of the following is liablity account ?
A. Rent payable B. Prepaid expense
C. Rent recieveable D. None
Question#18
On July 1 the Fisher Shoe Store paid Rs24,000 to Acme Realty for 6 months rent beginning July 1.
Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the
adjusting entry to be made by the Fisher Shoe Store is:
A. debit Rent Expense, Rs4,000; credit B. debit Prepaid Rent, Rs4,000; credit Rent
Prepaid Rent, Rs4,000. Expense, Rs4,000.
C. debit Rent Expense, Rs24,000; credit D. debit Rent Expense, Rs24,000; credit
Prepaid Rent, Rs20,000. Prepaid Rent, Rs4,000.
Question#19
A law firm has billed their clients for services performed. They subsequently received payments from
their clients. What entry will the law firm make upon receipt of the payments?
A. Debit Unearned Service Revenue and B. Debit Cash and credit Accounts
credit Service Revenue Receivable
C. Debit Accounts Receivable and credit D. Debit Cash and credit Service Revenue
Service Revenue
Question#20
If a company fails to adjust an Unearned Rent Revenue account for rent that has been recognized,
what effect will this have on that month’s financial statements?
A. Assets will be overstated and revenues B. Liabilities will be overstated and revenues
will be understated. will be understated.
Question#21
If a business have received cash in advance of services performed and credits a liability account , the
adjusting entry needed after the services are performed will be :
A. Dr unearned service revenue , Cr cash B. Dr unearned service revenue , Cr service
revenue
C. Dr unearned service revenue , Cr Prepaid D. Dr unearned service revenue , Cr
expense Accounts recievable
Question#22
Ms Asma paid Rs30,000 as insurance premium for her factory vehicle at 1 March 2019 . What is the
amount to be charged in Income statement and balance sheet at 31 December 2019.
A. Income statement 25,000 , Balance sheet B. Income statement 25,000 , Balance sheet
25,000 5,000
C. Income statement 30,000 , Balance sheet D. Income statement 5,000 , Balance sheet
30,000 25,000
Question#23
Mr Tahir has accrued rent expense of Rs28,000 on rent account at the start of year . During the year
rent expense was Rs45,000 . At the end of year accrued rent expense was Rs35,000 . What is the
amount of cash he paid to landlord during the year?
A. Rs.35,000 B. Rs.28,000
C. Rs.36,000 D. Rs.38,000
Question#24
Mr Yousuf a tenant pays annual rent of Rs. 120,000. Payment is made quarterly in advance on 1
January, 1 April, 1 July and 1 October. Which of the following should be included in his accounts for
the year ended 31 October 2001?
A. Rs20,000 Prepayment B. Rs20,000 accrual
C. Rs10,000 Prepayment D. Rs10,000 accrual
Question#25
Given the data below for a firm in its first year of operation, determine net income under the accrual
basis of accounting.
Rs
Revenue recognized 19,000
Accounts recievable 3,000
Expenses incurred 7,250
Accounts payable (related to expenses) 750
Supplies purchased with cash 1,800
A. 12,200 B. 19,500
C. 14,000 D. 11,750
Question#27
A Company had the following transactions during 20X1.
Sales of Rs900,000 on account
Collected Rs400,000 for services to be performed in 20X2
Paid $265,000 cash in salaries
Purchased airline tickets for Rs50,000 in December for a trip to take place in 20X1
What is the company’s net income using cash basis of accounting.
A. Rs985,000 B. Rs85,000
C. Rs135,000 D. Rs1,035,000
Question#28
In the year to 30 June 2019, Kashif received Rs. 130,500 rental income. The amounts of rent received
in advance and due in arrears were as follows:
30 June 2019 30 June 2018
Rs Rs
Rent received in advance 40,500 35,700
Rent in arrears(accrued) 28,900 19,550
What figure for rental income should be recorded in the statement of profit or loss for the year ended
30 June 2019?
A. Rs130,000 B. Rs135,050
C. Rs130,500` D. Rs155,050
Question#29
What is the treatment of advance income in the Statement of Financial Position of the business?
A. Non current asset B. Current asset
C. Non current liablity D. Current liablity
Question#30
The annual rent expense for a factory building for the period 1 March 2019 to 28 Feburary 2020 is Rs.
690,000, which is 10% more than the previous year. Rent expense is paid on 1 March. What is the
charge of rent expense in the statement of profit or loss for the year ended 31 December 2019?
A. Rs690,000 B. Rs679,546
C. Rs579,546 D. Rs679,446
Question#31
A superstore has sublet part of its warehouse , in the year ended 31 October 2020 the rent receivable
was:
Until 30 June 2020 Rs. 1,200,000 per year
From 1 July 2020 Rs. 1,500,000 per year
Rent was received quarterly in advance on 1 January, April, July, and October each year.
What amount of rent company has recieved for the year ended 31 October 2020?
Question#32
Which of the following statements is true?
A. Accrued income decrease profit B. Accruals increase profit
C. Accrued income increase profit D. Both B and C
Question#33
If an accrual as at the end of Rs1,500 was treated to a prepayment , the net profit for the year would
be?
A. Understated by Rs3,000 B. Overstated by Rs3,000
C. Understated by Rs1,500 D. Overstated by Rs1,500
Question#34
Expenses relevant to the accounting period which remain unpaid by period end should be:
A. Not considered until paid B. Recorded only when paid
C. Recorded as expenses in the income D. Recorded as expenses in the income
statement for the period to which it statement for the period to which it
pertains and recorded as asset in the pertains and recorded as liability in
balance sheet of same period. balance sheet of same period.
Question#35
An accountant has treated prepaid insurance of Rs. 50,000 as accrued expense. What will be the
impact of correction?
A. Profit will be reduced by Rs. 2,000 B. Profit will be reduced by Rs. 1,000
C. Profit will be increased by Rs. 1,000 D. Profit will be increased by Rs. 2,000
Question#36
Which of the following statements is correct?
A. Prepaid insurance is not a current asset B. Accrued income is not a liability
C. Advance income is not a liability D. Prepaid insurance is a non current asset
Question#37
On its Statement of financial position a business would report as a current liability the amounts:
A. It intends to pay immediately after B. It hopes to repay one day.
balance sheet date.
C. It intends to repay within one year of the D. It intends to pay as early as possible but
balance sheet date. not later than a month after the balance
sheet date.
Question#38
A statement of financial position would show prepayments as
A. Current assets B. Non-current assets
C. Current liabilities D. Noncurrent liabilities
Question#40
Which of the following is correct: Where accounting records are maintained on accrual basis:
A. Income should accounted for only when it B. Expenditure should be accounted for only
is received when it is paid
C. Income and expenditure relating to the D. Income should be accounted on accrual
accounting period should be fully basis and expenditure on payment basis .
accounted for even if income is still to be
received and expenditure is yet to be paid
for .
Question#41
The draft year end accounts were prepared without adjusting prepayment for rent of Rs. 5,000. When
the adjustment is made, which of the following would be effect thereof?
A. Profit increased by Rs. 5,000. and assets B. Profit increased by Rs. 5,000. and assets
decreased by Rs. 5,000. increased by Rs. 5,000.
C. Profit decreased by Rs. 5,000. and Liability D. Profit increased by Rs. 5,000. and Liability
increased by Rs. 5,000. increased by Rs. 5,000.
Question#42
A company has taken a loan from a bank. Interest on the loan is payable every quarter on March 31,
June 30, September 30 and December 31. Principal amount of the loan is 1,200,000 and the rate of
interest is 8% per annum. Due to financial problems, two instalments were not paid on September 30
and December 31. What is the amount of the interest liability to be shown in the Statement of
Financial Position prepared as on December 31?
A. Rs96,000 B. Rs24,000
C. Rs48,000 D. Rs64,000
Question#43
Prior to preparing the Statement of financial position as at 31 December 2020 adjustments are needed
for :
Rent income account include Rs80,000 prepaid .
Office supplies remains unused amounting to Rs25,000
As at the year end salary accrued and insurance prepaid amount to Rs22,500 and Rs4,800
respectively
The effect of making these adjustments would be
To include in the Statement of financial position an additional
A. Current asset 29,800 ; Current liablity B. Current asset 29,800 ; Current liablity
102,500 29,800
Question#44
A loan of Rs45,000 at 10% interest per year, was given to a member of staff, in the previous year. No
interest has been received during the year. The accounting entries for accruing interest income are:
A. Debit staff loan account and credit B. Debit cash account and credit interest
interest earnings account earning account
C. Debit interest receivable account and D. Debit interest receivable account and
credit interest earnings account credit staff loan account
Question#45
A retailer paid Rs75,000 as rent and treated the whole amount as expenditure for the year,
overlooking the fact that the amount was for a five year period commencing from the beginning of
that year. The effect of this error would be:
A. Net profit and current assets are B. Net profit and current assets are
understated by Rs 60,000 understated by Rs 75,000
C. Net profit and current assets are D. Net profit and current liablities will be
overstated by Rs 60,000 understated by Rs 75,000
Question#46
A business earns income by renting out properties. During the year ended 31 December 2020 it
received Rs38,400 as rent. This amount includes Rs5,400 received as advance for 2021. During 2021 it
received Rs34.500 as rent and a third of this amount relates to 2016. The financial statements for the
year ended 31 December 2020 should report
A. Rental income Rs44,500 , Rent in arrears B. Rental income Rs49,900 , Rent in arrears
Rs11,500 Rs11,500
C. Rental income Rs49,900 , Rent in arrears D. Rental income Rs38,400 , Rent in arrears :
Rs11,500 None
Question#47
Najma pays rent regularly quarterly in arrears on 31st March, 30th June, 30th September and 31st
December. Annual rent, agreed at Rs240,000, was increased to Rs300,000 from 1st July 2020. The
amount to be expensed in the year to 31st August 2021 and reported as accrued as at that date would
be :
A. Expense Rs 240,000 , Accrued Rs50,000 B. Expense Rs 290,000 , Accrued Rs60,000
C. Expense Rs 200,000 , Accrued Rs60,000 D. Expense Rs 300,000 , Accrued Rs50,000
Question#48
The year-end trial balance as at 31st March 2021 reports a debit balance of Rs9,800 in the Insurance
account. This figure includes Rs6,000 paid on 1st January 2021 as insurance for the year ended 31st
December 2021. Ascertain the amount to be charged in the Income Statement as insurance for the
year ended 31st March 2021.
A. Rs15,800 B. Rs6,000
C. Rs5,300 D. Rs9,800
Question#49
Question#50
A business has a year ended 31 March and receives an invoice for rent of Rs. 750,000 for the six
months to 30 June. What accrual or prepayment is required for the invoice in the year end accounts?
A. Prepaid rent Rs750,000 B. Accrued rent Rs750,000
C. Prepaid rent Rs375,000 D. Accrued rent Rs375,000
Question#2
An accounts receivable that is not collectible are :
A. Bad debts B. Provision for doubtful debts
C. Bad debt expense D. Good debts
Question#3
The figures show a calculation of the provision for doubtful debts.
1 July 2017 30 June 2018
Rs Rs
Trade receivable X 750,000 nil
Trade receivable Y 1,000,000 2,000,000
Trade receivable Z nil 1,500,000
1,750,000 3,500,000
General provision 4,150,000 7,200,000
Total provision 5,900,000 10,700,000
During the period, X was made bankrupt and a final payment of Rs50,000 was received. What is
the charge forthe year to 30 June 2018 for bad and doubtful debts?
A. Rs5,550,000 B. Rs5,500,000
C. Rs5,750,000 D. Rs5,800,000
Question#4
A company increases its provision for bad debts by Rs16,000 from Rs30,000. What will be the effect of
this adjustment on the year-end balance sheet?
A. Net profit will increase by 16,000 and Net B. Net profit will increase by 16,000 and Net
trade receivables is decreased by 46,000 trade receivables is decreased by 16,000
C. Net profit will decrease by 16,000 and Net D. Net profit will decrease by 16,000 and Net
trade receivables is decreased by 46,000 trade receivables is decreased by 16,000
Question#5
The opening balance of “allowance for doubtful debts account” is Rs12,000 whereas the closing
balance of Receivables account is Rs2,300,000. What amount of allowance for doubtful debts should
be charged to statement of comprehensive income using a 4% allowance for doubtful debts for the
current accounting period?
A. Rs92,000 B. Rs80,000
C. Rs104,000 D. Rs88,000
Question#6
Question#7
At the beginning of the year a company has a provision for doubtful debts of Rs1,000. At the end of
the year required provision is Rs2,500. During the year debts of Rs1,500 are written off and Rs100 is
received in respect of a debt written off many years ago. What is the net amount charged to the
Income statement for bad and doubtful debts?
A. Rs2,500 B. Rs2,600
C. Rs2,900 D. Rs3,000
Question#8
At 30 , June , 2020 an entity’s receivable totalled Rs. 700,000 and an allowance for bad and doubtful
debts of Rs. 60,000 had been brought down from last year.
It was decided to write off the debts totalling Rs. 30,000 and to adjust allowance for receivable @ 8%
of the receivable. At what amount receivables are to be shown in statement of financial position as at
30 , June , 2020?
A. Rs616,400 B. Rs617,400
C. Rs620,900 D. Rs556,400
Question#9
A business has closing receivables balance is Rs80,000. It includes one of the accounts receivable
named Zahir, who is going through financial crisis. It is expected that he can pay 60% of his total debt
of Rs10,000. Business has decided to calculate an allowance for doubtful debt at 4%. What is the
amount of allowance to be deducted from receivable in statement of financial position?
A. Rs4,850 B. Rs6,800
C. Rs5,920 D. Rs8,900
Question#10
The writing off of a bad debt is an example of the
A. substance over form concept B. prudence concept
C. matching concept D. going concern concept
Question#11
The table shows information about a business.
Rs
Provision for Doubtful Debts at 1 January 2020 700
Trade receivables at 31 December 2020 (after writing off bad debt of Rs30) 15,000
Charge to Income statement for bad and doubtful debts for the year ended 31 December 200
2020 (including bad debts written off Rs30
What is the percentage provision that has been made for doubtful debts at 31 December 2020?
Question#12
The two methods of accounting for uncollectible accounts are the direct write-off method and the
A. Allowance Method B. Bad Debt Method
C. Net Realizable Method D. Accrual Method
Question#13
Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is
debited
A. when an account is determined to be B. whenever a pre-determined amount of
uncollectible. credit sales have been made.
C. at the end of each accounting period. D. when a credit sale is past due.
Question#14
An aging of a company's accounts receivable indicates that Rs6,000 are estimated to be uncollectible.
If Allowance for Doubtful Accounts has a Rs2,000 debit balance, the adjustment to record bad debts
for the period will require a
A. credit to Allowance for Doubtful Accounts B. debit to Bad Debt Expense for Rs4,000.
for Rs4,000.
C. debit to Allowance for Doubtful Accounts D. debit to Bad Debt Expense for Rs8,000.
for Rs8,000.
Question#15
A debit balance in the Allowance for Doubtful Accounts
A. cannot occur if the percentage of B. indicates that actual bad debt write-offs
receivables method of estimating bad have been less than what was estimated.
debts is used.
C. indicates that actual bad debt write-offs D. is the normal balance for that account.
have exceeded previous provisions for
bad debts.
Question#16
When the allowance method of accounting for uncollectible accounts is used, Bad Debt Expense is
recorded
A. when an account is written off as B. as each credit sale is made.
uncollectible.
C. in the same year as the credit sale. D. in the year after the credit sale is made
Question#17
To record estimated uncollectible accounts using the allowance method, the adjusting entry would be
a
A. debit to Loss on Credit Sales and a credit B. debit to Allowance for Doubtful Accounts
to Accounts Receivable and a credit to Accounts Receivable.
C. debit to Bad Debt Expense and a credit to D. debit to Accounts Receivable and a credit
Question#18
Non-trade receivables should be reported separately from trade receivables. Why is this statement
either true or false?
A. It is false because management can B. It is true because non-trade receivables
decide how to report receivables. do not result from business operations
and should not be included with accounts
receivable.
C. It is false because all current receivables D. It is true because trade receivables are
must be grouped together in one account current assets and non-trade receivables
are long term.
Question#19
Which of the following is the effect on net profit if a business decreases allowance for doubtful debts?
A. It will increase net profit B. It will decrease net profit
C. It will increase net profit and gross profit D. None
Question#20
A firm has not recorded the bad debts by mistake. Which of the following is the effect of bad debts
omission?
A. Net profit would increase B. Net profit would decrease
C. Gross profit would understate D. Gross profit would overstate
Question#21
A trial balance at 30 April 2013, before making end of year adjustments, showed:
Debit (Rs) Credit (Rs)
Trade receivables 17 -
Provision for doubtful debts 800 580
-
At 30 April 2013 it was decided to write off a bad debt of Rs800 and to make a provision for
doubtful debts of 2% of trade receivables. During the year an amount of Rs200 was received from a
customer relating to a debt that was written off in the year ended 30 April 2012.
What was the total bad and doubtful debt expense for the year ended 30 April 2013?
A. Rs1,140 B. Rs940
C. Rs560 D. Rs360
Question#22
The nature of “Allowance for doubtful debt” account is:
A. Liability account B. Expense
C. Asset account D. Contra asset account
Question#23
At the end of accounting period, KL Limited finds out that its total Receivables are Rs. 1,200,000. On
Question#24
At the beginning of the year a business has a provision for doubtful debts of Rs2 600. At the year end
the provision is to be 5% of trade receivables.
The balance on the Trade receivables Control account at the year-end is Rs69 200, before writing off a
bad debt of Rs480. The business operates a separate Bad Debts accounts.
What is the entry in the Income statement for the provision for doubtful debts?
A. Rs860 credit B. Rs836 credit
C. Rs860 debit D. Rs836 debit
Question#25
Which of the following can be most relevant to calculation of allowance for doubtful debts?
A. Total current liabilities B. Total current assets
C. Total credit purchases D. Total credit sales
Question#26
At July 1, 2020 the balance in allowance for receivable showed Rs. 160,000. At the end of the year it is
decided to write off Rs. 90,000 and adjust allowance for receivable to Rs. 180,000. What will be the
effect of this decision on profit for the year?
A. Increase by Rs. 180,000 B. Decrease by Rs. 270,000
C. Decrease by Rs. 90,000 D. Decrease by Rs. 110,000
Question#27
Which of the following Receivables have highest probability to default on trade debts?
A. 30 to 60 days old Receivables B. 60 to 90 days old Receivables
C. Over 100 days old Receivables D. Current month Receivables
Question#28
A business has received an amount of Rs5,000 from a receivable that had been previously written off
as irrecoverable. What is the correct accounting entry to record the transaction?
A. Dr Cash 5,000 Cr Receivables Rs. 5,000 B. Dr Cash 5,000 Cr Bad and doubtful debts
expense a/c Rs. 5,000
C. Dr Statement of comprehensive income D. Dr Statement of comprehensive income
Cr Cash Rs. 5,000 Rs. 5,000 Cr Receivables Rs. 5,000
Question#29
At the end of a financial period, a business has the following balances.
Rs
Total trade receivables balances 10,620
Bad debt not yet written off 260
Question#30
Hamza Enterprises has provided following information;
Rs
Opening receivables 45,000
Credit sales 55,000
Cash sales 10,000
Cash received from customers 35,000
Bad debts written off 2,000
Discount received (separate ledger) 3,000
The business maintains allowance at 2% of receivables each year.
What accounting entry is to be passed to record the increase/ decrease of allowance to the statement
of comprehensive income?
A. Dr Receivables Rs. 360 Cr Bad and B. Dr Bad and doubtful debts expense Rs.
doubtful debts expense Rs. 360 360 Cr Receivables. 360
C. Dr Allowance for doubtful debts Rs. 360 D. Dr Bad and doubtful debts expense Rs.
Cr Bad and doubtful debts expense Rs. 360 Cr Allowance for doubtful debts Rs.
360 360
Question#31
A company has the following balances.
Rs
Trade receivables at 31 December 2013 125,400
Provision for doubtful debts at 1 January 2013 1,800
During the year ended 31 December 2013 bad debts of Rs20 500 were written off. The company
provides for 5% of trade receivables at each year-end.
What is the doubtful debts expense for the year ended 31 December 2013?
A. Rs4 470 B. Rs3 445
C. Rs6 270 D. Rs5 245
Question#32
At year end, the receivable balance on 30 June 2020 is Rs. 93,000. This includes a debt of Rs. 1,800
which needs to be written off.
The business maintains allowance for doubtful debts at 5% of Receivable balance. And this year
allowance has increased by 20% as compared to last year.
What was the balance of Allowance for doubtful debts at 1 July 2019?
A. Rs. 5,476 B. Rs. 3,870
C. Rs. 4,550 D. Rs. 3,800
Question#33
What is the nature of allowance for doubtful debt account?
Question#34
A business makes a provision for doubtful debts equal to 5% of its trade receivables.
At 31 March 2013 net trade receivables were shown in the Balance Sheet as Rs17 100.
At 31 March 2014 the balance on its Sales Ledger Control account was Rs19 000. In the year ended 31
March 2014 a bad debt of Rs800 had been written off.
How much should be debited in the Income statement for the year ended 31 March 2014 for the
provision for doubtful debts?
A. Rs95 B. Rs55
C. Rs50 D. Rs10
Question#35
On 30 September 2015 a manufacturer’s current assets totalled Rs28 000. The next day only two
transactions took place.
Inventory bought for cash. The list price of Rs2 000 was subject to a trade discount of 20% and
a cash discount of 5%. Payment was made immediately.
A bad debt of Rs400 was written off.
What was the total of current assets on 2 October 2015?
A. Rs29 600 B. Rs29 520
C. Rs28 080 D. Rs27 680
Question#36
Is there a difference in bad and double debts?
A. They are synonymous B. Yes, doubtful debt refers to an account
receivable that has been clearly identified
as not being collectible. Whereas a bad
debt is an account receivable that might
become a bad debt at some point in the
future
C. Yes, bad debt refers to an account D. No, they are inter-changeable
receivable that has been clearly identified
as not being collectible. Whereas a
doubtful debt is an account receivable
that might become a bad debt at some
point in the future
Question#37
Bilal has following information available for his business for the year ended 31st December 2017:
Opening allowance for doubtful debts Rs. 6,000
Bad debts written off during the year Rs. 4,000
Bad debts recovered Rs. 1,700
Closing receivables Rs. 95,000
Closing allowance for doubtful debts 6%.
What is the net charge for bad and doubtful debts for statement of comprehensive income?
Question#38
At January 1, 20189 the balance in allowance for receivable showed Rs. 42,000. At the end of the year
it is decided to write off Rs. 22,000 and adjust allowance for receivable to Rs. 35,000. What will be the
charge for bad and doubtful debts for the year?
A. Rs22,000 B. Rs13,000
C. Rs15,000 D. Rs20,000
Question#39
On January 1, Rs. 1,200,000 of goods are sold with credit terms of 1/10, n/30. How much should the
seller expect to receive if the buyer pays on January 8?
A. Rs1,188,000 B. Rs1,111,000
C. Rs1,118,000 D. Rs1,188,800
Question#40
What is the double entry for recording write-off of any of debts?
A. Bad debt expense (debit) and accounts B. Bad debt expense (debit) and allowance
receivable (credit) for doubtful debts (credit)
C. Allowance for doubtful debts (debit) and D. None of them
accounts receivable (credit)
Question#41
Sorting an entity's accounts receivable into classifications such as current, 1-30 days past due, and 31-
60 days past due etc. is known as the?
A. Ratio analysis B. Trend analysis
C. Aging analysis D. Turnover ratio
Question#42
An irrecoverable debt written off two years ago is unexpectedly recovered and entered in the cash
book. What adjustment, if any, will be necessary?
A. No adjustment B. Credit Suspense account
C. Credit Bad debts expense D. Credit Receivables
Question#43
On September 1, Rs. 900,000 of goods are sold with credit terms of 1/10, n/30. On September 4, the
customer returned Rs. 120,000 of the goods. How much should the seller expect to receive if the buyer
pays on September 9?
A. Rs777,220 B. Rs772,200
C. Rs772,000 D. Rs722,200
Question#44
Saima creates allowance for doubtful debts according to the length of time the debt has been
outstanding. At 31 May 2020 the analysis of accounts receivable balances and the associated
allowance was:
Question#45
An increase in the allowance for doubtful debts results in:
A. An increase in net profit B. A decrease in current liabilities
C. A decrease in current assets D. An increase in current assets
Question#46
The turnover in an entity was Rs. 2 million and its accounts receivable were 5% of turnover. The entity
wishes to have an allowance for doubtful debts of 4% of receivables, which would make the allowance
one-third higher than the current allowance. How will the profit for the period affected by the change
in allowance?
A. Profit will be increased by Rs. 1,333 B. Profit will be reduced by Rs. 1,333
C. Profit will be increased by Rs. 1,500 D. Profit will be reduced by Rs. 1,500
Question#47
Which of the following statements concerning an allowance for receivables is INCORRECT?
A. The allowance is usually expected to B. Setting up an allowance for doubtful
increase as the value of sales revenue debts account ensures that receivables
recognized increases as a firm expands are not overstated
C. The receivables account balance is written D. All businesses may create an allowance
off when a specific allowance for doubtful for doubtful debts in case credit sale
debts for that customer is created customers do not pay their debts
Question#48
At 30 June 2019, MPL Traders had an allowance for doubtful debts of Rs. 30,000.
During the year ended 30 June 2020 the MPL Traders wrote off debts totalling Rs. 26,000 and at the
end of the year it is decided that the allowance for doubtful debts should be Rs. 22,000.
What should be included in the Statement of Profit or Loss for bad and doubtful debts?
A. Rs18,000 Debit B. Rs18,000 Credit
C. Rs30,000 Debit D. Rs30,000Credit
Question#49
The allowance for receivables in the accounts at 31 October 2001 was Rs. 9,000. During the year ended
31 October 2002, bad debts of Rs. 5,000 were written off.
The receivables balance at 31 October 2002 was Rs. 120,000 and, based on past experience, the entity
wishes to set the allowance at 5% of receivables.
What is the total charge for bad debts and the allowance for receivables in the statement of
Question#50
A transfer to close the bad and doubtful debts account is to:
A. The allowance for doubtful debts account B. The trading account
C. The Statement of Profit or Loss D. The statement of financial position
Question#2
Assets that have a long useful life and are expected to provide future economic benefits for the entity
over a period of several years are :
A. Assets B. Non current assets
C. Current assets D. None
Question#3
Assets which do not have a physical existence such as patent rights, licensing, software etc are :
A. Tangible current assets B. Tangible non current assets
C. Intangible current assets D. Intangible non current assets
Question#4
Reducing balance method recognizes depreciation:
A. usage basis B. Evenly throughout useful life
C. amount of depreciation, calculated as a D. As amount of depreciation reduces as the
fraction of remaining years and sum of life of the asset progresses
years’ digits, reduces as the life of the
asset progresses
Question#5
Property, plant and equipment can be classified as:
A. Tangible current assets B. Tangible non current assets
C. Intangible current assets D. Intangible non current assets
Question#6
Which of the following can be classified as tangible non current assets ?
A. Small tools and spare parts B. Standby generator expected to be used
for 7 years
C. A trademark D. A plot of land held for resale
Question#7
Expenditure that is made to acquire or improve long term assets that are used by the business can be
classified as :
A. Capital expenditure B. Revenue expenditure
C. Both D. None
Question#9
Which of the following cannot be classified as tangible non-current asset:
A. A printer to be used in factory B. A printer to be used in office
C. A printer held for earning by renting to D. A printer held for resale to customers
customers
Question#10
Adil Biscuits Limited (ABL) used its own staff, assisted by contractors when required, to construct a
new factory for manufacturing chocolate biscuits.
Identify the costs listed below that cannot be capitalized .
A. A proportion of ABL’s administration B. ABL’s own staff wages for time spent
costs, based on staff time spent working on construction
C. Professional surveyor fees for managing D. Clearance of the site prior to
the construction work commencement of construction
Question#11
How the annual depreciation charge is recorded ?
A. Provision for depreciation Dr , Profit and B. Profit and loss Dr , Provision for
loss Cr depreciation Cr
C. Provision for depreciation Dr , Fixed asset D. Fixed asset Dr , Provision for depreciation
Cr Cr
Question#12
A machine was purchased for Rs1,500,000 and depreciation is calculated @15% annually by straight
line method . After 3 years it was sold for Rs450,000 . What is the amount to be included in statement
of profit or loss ?
A. Rs150,000Profit B. Rs260,000Loss
C. Rs250,000 Profit D. Rs375,000 loss
Question#13
A transport company purchased a commercial bus to travel from Karachi to Islamabad amounting to
Rs 1.5Mn. Which is the appropriate depreciation policy to be followed by the transport company to
depreciate its bus .
A. Straight line method B. Reducing balance method
C. Diminishing balance method D. B and C
Question#14
How the loss on disposal of fixed asset is recorded?
A. Profit and loss A/c Dr , Fixed asset Cr B. Profit and loss A/c Dr , Disposal A/c Cr
C. Fixed asset Dr , Profit and loss A/c Cr D. Disposal A/c Dr , Profit and loss A/c Cr
Question#16
A vehicle that originally cost for Rs1,950,000 is now sold for Rs1,200,000 . The balance on provision for
depreciation account for this vehicle is Rs780,000.
What is is the effect of this transaction ?
A. Profit in sale Rs30,000 B. Loss on sale Rs30,000
C. Profit in sale Rs750,000 D. Loss on sale Rs750,000
Question#17
Younus purchased motor vehicle for Rs1,500,000. He estimated the residual value at Rs300,000. He
decided to write-off motor vehicle over 4 years . What is the net book value after 2 years ?
A. Rs800,000 B. Rs750,000
C. Rs1,200,000 D. Rs 900,000
Question#18
What is depreciation?
A. A reserve to finance the purchase of B. An entery to write off the cost of a non
future non current assets. current asset when it is scrapped
C. A system of matching the benefits of D. A reserve to pay for repairs which
using a non current assets with its cost increase with the non current assets’ age
Question#19
What is the main purpose of charging depreciation on fixed assets?
A. To spread the cost of assets over their B. To reduce the cost of repairing assets
useful life
C. To record the assets at their market value D. To provide funds for the replacement of
assets.
Question#20
A plant costing Rs25Mn is depreciated by 25% annually on the reducing(diminishing) balance method .
What is the depreciation charge for second year?
A. Rs0.46875 B. Rs4,687,500
C. Rs46,875 D. Rs468,750
Question#21
Which entry is required to record annual depreciation charge on machinery?
A. Provision for depreciation of machinery B. Machinery at cost account Dr ; Income
account Dr ; Income statement Cr statement Cr
C. Income statement Dr ; Machinery at cost D. Income statement Dr ; Provision for
Question#22
What would occur using he diminishing balance method?
A. Depreciation charge in year 2 is zero B. Depreciation charge in year 2 is same as
year 1
C. Depreciation charge in year 2 is less than D. Depreciation charge in year 2 is greater
depreciation charge in year 1 than year 1
Question#23
Mr Anas purchased machinery for Rs100,000 and depreciate it by 20% per annum usong the straight
line method . After 3 years he sold it for Rs25,000.
What was the profit or loss in sale ?
A. 25,000 loss B. 25,000 profit
C. 15,000 loss D. 15,000 profit
Question#24
A transport company purchased a commercial bus to travel from Karachi to Islamabad amounting to
Rs 1.5Mn.It is to be depreciated on the reducing balance method@25% per annum. What will be the
book value of vehicles after three years?
A. Rs600,500 B. Rs632,813
C. Rs375,000 D. Rs1,125,000
Question#25
A plant is depreciated at 15% per annum using reducing balance method . A plant is sold after 2 years
from the date of acquisition at book value. Original cost of plant was Rs200,000 .
Determine sale price ?
A. Rs140,000 B. Rs144,500
C. Rs170,000 D. Rs145,400
Question#26
An entity purchased a machinery. The invoice for the machinery showed the following items:
Rs
Machinery cost 46,000,000
Delivery cost 800,000
Warranty cost (one year covered) 1,500,000
Amount payable 48,300,000
In addition, the entity incurred Rs.2.9 million in making modifications to its factory so that the
machinery could be installed.
What should be the cost of machinery entity should recognize ?
A. Rs49.7Mn B. Rs51.2Mn
C. Rs4,970,000 D. Rs50.4Mn
Question#27
Which of the following is not a component of cost of an asset?
A. Purchase price B. Delivery cost
Question#28
Which of these cost is capitalized as cost of an asset?
A. Admin overheads B. Abnormal losses
C. Professional fees D. Refundable and non-refundable taxes
Question#29
Construction of Smart super market’s new warehouse began on 1 October 2019. The following costs
were incurred on the construction:
Rs
Freehold land 4,500,000
Architect fees 150,000
Site preparation 200,000
Materials 2,250,000
Direct labor costs 1,120,000
Legal fees 50,000
General overheads 250,000
The construction was completed at 1 April 2020.
What is the amount that should be included as property, plant and equipment.
A. Rs8,170,000 B. Rs8,520,000
C. Rs8,220,000 D. Rs8,270,000
Question#30
A machine costing Rs1,500,000 was delivered incurring delivery charges of Rs49,000 . Installation
charges were Rs150,000 . What is the cost of machine ?
A. Rs1,699,000 B. Rs1,799,000
C. Rs1,650,000 D. Rs1,899,000
Question#31
A company recieved work bill from their contractor of Rs. 690,000 for construction of a new watchman
room and repair of water tank. It is estimated that 10% of total bill relates to repair work. What
amount should be capitalised and/or charged as an expense?
A. Capitalised 690,000 B. Expense 690,000
C. Capitalised 621,000 , Expense 69,000 D. Capitalised69,000, Expense 621,000
Question#32
A business purchased a machinery for Rs90,000 . 60% of the amount was paid immediately and 40% of
the amount was to be paid after a month . What is the correct journal entry ?
A. Machine Dr Rs90,000 , Bank Cr 54,000 & B. Machine Dr Rs90,000 , Bank Cr 54,000 &
Recievable Cr 36,000 Payable Cr 36,000
C. Machine Dr Rs90,000 , Bank Cr 36,000 & D. Machine Dr Rs90,000 , Bank Cr 36,000 &
Recievable Cr 54,000 Payable Cr 54,000
Question#33
A business purchased a machinery for Rs90,000 . 20% of the amount was paid in advance , 40% of the
Question#34
Depreciable amount means
A. Residual value – Cost of an asset B. Cost of an asset – Residual value / useful
life
C. Cost of an asset – Residual value D. Cost of an asset + Residual value
Question#35
What is the net amount an entity expects to obtain from an asset at the end of its useful life?
A. Fair value B. Present value
C. Depreciated value D. Residual value
Question#36
An helicopter engine was acquired for Rs. 65 million and has life of 38000 flying hours. The helicopter
was flown 1600 hours during the year. What amount of depreciation should be charged in profit or
loss?
A. Rs2,736,842 B. Rs2,589,542
C. Rs1,985,652 D. Rs2,128,992
Question#37
A delivery van cost Rs. 900,000. It has an expected residual value after 5 years of Rs. 90,000. If the sum
of the digits method of depreciation is used, what will be the carrying amount of the asset at the end
of Year 2?
A. 420,000 B. 414,000
C. 412,000 D. 416,000
Question#38
Hamza Limited acquired a new office building on 1 November 2016. Its initial carrying amount
consisted of:
Rs
Land 2,000
Building 10,000
Air conditioning system 4,000
16,000
The estimated lives of the building structure and air conditioning system are 25 years and 10 years
respectively.
When the air conditioning system is due for replacement, it is estimated that the old system will be
dismantled and sold for Rs. 500,000.
Depreciation is time-apportioned where appropriate. At what amount will the non-current assets be
shown in Hamza Limited’s statement of financial position as at 30 April 2017?
Question#39
A vehicle cost Rs300,000. The vehicle was later sold for Rs90,000 and the profit on disposal was
Rs15,000 What was the accumulated depreciation of the vehicle on disposal?
A. Rs220,000 B. Rs225,000
C. Rs195,000 D. Rs190,000
Question#40
Kamran enterprises buys a machine for Rs400,000 and depreciates it at the rate of 10% per year using
the reducing balance method What is the depreciation charge for the second year of the machine’s
use?
A. Rs36,000 B. Rs32,500
C. Rs32,000 D. Rs39,000
Question#41
An entity acquired new premises at a cost of Rs.400 million on 1 January 2017. In the period to the
year end of 31 March 2017 the following further costs were incurred.
Rs in 000
Costs of initial adaptation of the building 12,000
Relevant legal cost 2,500
Monthly Cleaning contract 3,400
Cooling system necessary for machinery 28,000
Cost of machinery 12,300
What amount should appear as the cost of premises in the entity’s statement of financial position at
31 March 2017?
A. Rs418,550,000 B. Rs415,500,000
C. Rs415,550,000 D. Rs455,500,000
Question#42
A company uses the straight line method of depreciation for all its non-current assets. On 1 January,
the company bought machinery on hire purchase. The cash price was Rs200, 000 and the interest for
the year is Rs20,000. The estimated useful life of the machinery is five years with no residual value.
What is the charge for depreciation for the year ended 31 December?
A. Rs44,000 B. Rs40,000
C. Rs45,000 D. Rs50,000
Question#43
A car was part exchanged for a new car. The value placed on the old vehicle was Rs540, 000. Which
entries record the Rs540, 000 part exchange?
A. Dr Disposals account , Cr Motor Vehicles B. Dr Motor Vehicles account , Cr Cash
account account
C. Dr Motor Vehicles account , Cr Disposals D. Dr Cash account , Cr Motor Vehicles
account account
Question#45
On 1 March 2019 Jasmine Limited (JL) acquired a machine from Plant under the following terms:
Rs in 000
List price of machine 82,000
Import duty 1,500
Delivery fees 2,050
Electrical installation cost 9,500
Pre-Production testing 4,900
Purchase of a five-year maintenance contract 7,000
with Plant
In addition to the above information ML was granted a trade discount of 8% on the initial list price of
the asset and a settlement discount of 4% on remaining amount if payment for the machine was
received within one month of purchase. JL expected and paid for the plant on 25 March 2019.
On what amount, the plant should be initially measured on acquisition?
A. Rs88,372,400 B. Rs90,372,400
C. Rs89,560,000 D. Rs90,580,000
Question#46
A business sold a non-current asset. The following information is known.
Original Cost 600,000
Accumulated depreciation on date of sale 240,000
Profit on sale 70,000
What is the proceed from the sale of non-current asset?
A. Rs420,000 B. Rs430,000
C. Rs490,000 D. Rs450,000
Question#47
An asset, which would not normally be depreciated, is
A. plant and machinery B. patents
C. land D. building
Question#48
The table shows information relating to a company’s non-current assets.
Rs
Cost at 1 January 2012 100,500
Accumulated depreciation at 1 January 40,900
2012 Purchases for the year ended 31 20,500
December 2012 7,000
Disposals for the year ended 31 December 2012
A. Rs21,772 B. Rs38,725
C. Rs20,450 D. Rs18,275
Question#49
On 1 October 2011 a company purchased machinery for Rs270,000. It was decided to depreciate the
asset using the reducing balance method at a rate of 20% per annum. On 30 September 2013 the asset
was sold for Rs120,000. What is the profit or loss on disposal?
A. Rs55,920 B. Rs52,800
C. Rs165,900 D. Rs160,800
Question#50
Which asset does not need to be depreciated?
A. a revalued property B. a quarry
C. an oil well D. land
Question#2
Generally for these reasons entity maintain inventories :
i. Meeting variation in production demand;
ii. Economies of scale in procurement;
iii. Guarding against price increases and stock outs.
Which of these statements are correct ?
A. Only i) is correct B. ii) and iii) are correct
C. i) and iii) correct D. i) , ii) and iii) are correct
Question#3
Inventories which are in the process of production for finished goods is called ;
A. Finished goods B. Work in process
C. Raw materials D. Both B and C
Question#4
Which of the following will become part of cost of purchase of inventory ?
1) Non-refundable import duties
2) Refundable sales tax
3) Transport and handling costs
4) Discounts and rebates
5) Other costs directly attributable to acquisition
A. 1 , 2 , 3 ,5 B. 2 ,3 ,4 , 5
C. 1 , 3 , 5 D. All of them
Question#5
A company imported raw material for use in production of goods with following details:
Rs
(000)
Invoice value (List price Rs. 1,060,000; trade discount Rs. 40,000) 1,020
Custom duty 170
Federal excise duty 60
Non adjustable income tax 265
Refundable sales tax 55
Carriage 115
Commission paid to agent for clearance of raw materials 1,600
Calculate the cost of purchase on inventories.
A. Rs3,230,000 B. Rs3,280,000
Question#6
Which of the following combination of examples regarding fixed cost is correct ?
A. Depreciation , Admin Expenses , Indirect B. Depreciation , Admin Expenses ,
labour Management cost
C. Depreciation , Admin Expenses , Indirect D. Depreciation , Admin Expenses , Direct
labour , Direct labour labour
Question#7
Which of the following costs are included in conversion costs?
A. Factory supervisor’s wages B. Carriage in
C. Carriage outwards D. Commission of selling staff
Question#8
After preparing draft accounts, Adnan reviews his closing inventory. He discovers that some items
included at cost of Rs. 2,850 can be sold for Rs. 2,790 after incurring selling costs of Rs. 95. What effect
will any required adjustment have on Adnan’s profits?
A. Profit decreases by 155 B. Profit decreases by 95
C. Profit decreases by 195 D. Profit increases by 155
Question#9
Habib Corporation sells three products – A, B and C. The following information was available at the
yearend:
A B C
Original cost ( Rs/unit) 15 13 15
Estimated selling price (ESP) 18 15 13
Selling and distribution costs 2 3 2
Question#10
The closing stock of Daniyal amounts to Rs. 140,400. But later on it was discovered that some
damaged items were included having cost of Rs. 30,000. Total repair cost is expected to be Rs. 7,500.
After repair these could be sold for Rs. 29,000. What is the correct value of Daniel inventory?
A. Rs119,700 B. Rs131,900
C. Rs124,800 D. Rs128,500
Question#11
Which of the following is not allowed to be included as a cost of inventory?
A. Fixed manufacturing overheads B. Shipping
C. Storage costs D. Non-recoverable taxes
Question#13
Which of the following statements define the term ‘net realizable value’?
A. The estimated selling price in the ordinary B. The estimated selling price in the ordinary
course of business plus the estimated course of business less the estimated
costs of completion less the estimated costs of completion and the estimated
costs necessary to make the sale costs necessary to make the sale
C. The estimated cost of completion less D. The estimated costs necessary to make
selling price in the ordinary course of the sale plus selling price in the ordinary
business course of business less the estimated
costs of completion
Question#14
Normal capacity is the production expected to be achieved on average over a number of periods or
seasons under normal circumstances, taking into account the loss of capacity resulting from planned
maintenance.
A. True B. False
C. Either A or B D. None
Question#15
The actual level of production may be used if it __________ normal capacity.
A. equals B. approximates
C. exceeds D. is less than
Question#16
Spurce Limited, imported raw materials from Japan worth Rs.11 million. They paid Rs. 850,000 as
import duties and Rs. 150,000 as import taxes (the import taxes were subsequently refunded by the
government). They paid Rs. 200,000 for transportation of the materials from Japan and another Rs.
250,000 as port handling charges for loading the materials at Japan. Marketing expenses were Rs.
80,000 and the general administrative overheads amounted to Rs. 170,000.
What will be the value of inventories?
A. Rs11,150,500 B. Rs12,300,300
C. Rs11,150,000 D. Rs12,300,000
Question#17
An entity sold goods of worth Rs.1.2 million, the manufacturing cost of the goods were Rs. 550,000.
The carriage outwards are Rs. 60,000 and commission paid to agent were also Rs. 60,000. What is the
gross and net profit?
A. Gross profit = 650,000 and net profit = B. Gross profit = 530,000 and net profit =
530,000 650,000
C. Gross profit = 600,000 and net profit = D. Gross profit = 600,000 and net profit =
Question#18
The following information is related to a laptop dealer about his inventory at year end.
Laptop Cost value (Rs.) Net realisable value (Rs.)
A 50,000 30,300
B 130,000 130,500
C 140,200 130,900
D 140,900 150,000
What value of inventory should be shown in his Statement of Financial Position prepared at the year
end?
A. Rs432,100 B. Rs452,100
C. Rs441,200 D. Rs460,900
Question#19
Any amount of write-down of inventories to net realisable value should?
A. Recognized as a current liability in the B. Recognised as an expense in the
statement of financial position subsequent period in which such write-
down is warranted
C. Recognised as an expense in the period in D. Treated as a deferred expense and
which the write-down occurs written off based on the average
inventory holding period
Question#20
Affan is a computer dealer. His inventory includes a CPU which cost Rs. 158,000. Affan expects to
spend Rs. 7,000 on repairing the CPU which will mean that he will be able to sell it for Rs. 260,000. To
replace the same item of inventory would cost Rs. 255,000. At what value should the CPU be included
in Affan’s inventory?
A. Rs152,600 B. Rs151,500
C. Rs153,500 D. Rs158,000
Question#21
What is impact on closing inventory if an item having cost of Rs. 3,500 and a net realizable value of Rs.
4,000 has been omitted from year - end inventory count?
A. Understated by 3,500 B. Understated by 4,000
C. Overstated by 3,500 D. Overstated by 4,000
Question#22
The estimated selling price in the ordinary course of business less estimated cost of completion and
estimated cost of sale is called
A. Current value B. Net realisable value
C. Fair value D. Market value
Question#23
Hamdani Associates has 40 units of inventory, out of which 10 units are damaged. The cost per unit is
Rs. 2,000 and normal selling price is Rs. 3,000. The damaged units are expected to be sold at 80% of
Question#24
The following information relates to Abdullah Enterprise (AE) for the month of September 2019:
1 September Opening inventory of 400 units @ Rs. 100 each = Rs. 40,000
10 Purchased 100 units @ Rs. 150 each = Rs. 15,000
September
25 Purchased 300 units @ Rs. 200 each = Rs. 60,000
September
No units were sold during September 2019. What would be cost of closing inventory per unit of AE as
at 30 September 2019 valued on weighted average (perpetual)?
A. Rs. 187.5 per unit B. Rs. 150 per unit
C. Rs. 143.75 per unit D. Rs. 110 per unit
Question#25
Which of the following items should be disclosed as per the requirements of IAS 2?
A. Average lead time of procurement for B. Amount of expense recognised due to
major classes of inventories write down of inventories
C. List of major customers to whom the D. Average holding period of inventories of
inventories were sold during the the entity as at the end of the reporting
reporting period period
Question#26
Meta Building Materials used 300 cement bags from inventory for constructing parking area of their
office building. How these 300 cement bags should be accounted for under periodic inventory
recording system?
A. Debit Inventory & Credit Non-current B. Debit Non-Current assets & Credit
assets Purchases
C. Debit Non-Current assets & Credit D. Debit Inventory & Credit Purchases
Inventory
Question#27
Hamdani Associates sold a generator to Ammar Enterprises for Rs. 1,880,000. This price is net of Rs.
80,000 special discount. Jaffer Associates normally sells items at 25% mark-up and uses perpetual
inventory system to record its inventory. Which of the following entry is correct to update the
inventory?
A. Debit Inventory Rs. 1,550,000 & Credit B. Debit Cost of Sales Rs. 1,105,000 & Credit
Cost of sales Rs. 1,550,000 Inventory Rs. 1,105,000
C. Debit Cost of Sales Rs. 1,568,000 & Credit D. Debit Cost of Sales Rs. 1,162,000 & Credit
Inventory Rs. 1,568,000 Inventory Rs. 1,162,000
Question#28
Which one of the following are recognized as expense under IAS 2?
Question#29
Which of the following costs must be expensed?
A. Distribution cost B. Variable production overheads that are
allocated to each unit based on actual
usage
C. Import duties on raw materials that are D. Costs of purchase that are paid to the
paid to the authorities suppliers of raw materials
Question#30
Abdullah Enterprises uses perpetual inventory system, which of the following TWO are correct for
recoding a credit sales transaction?
A. No entry B. Debit Cost of sales & Credit Inventory
C. Debit Cost of sales & Credit Purchases D. Debit Receivables & Credit Sales
Question#31
Which of the following items cannot be included in the cost of inventories?
A. Variable production overheads B. Fixed production overheads
C. The cost of abnormal wastage of D. Irrecoverable import duties payable on
materials and labour the acquisition of inventories
Question#32
The cost formulas permitted by IAS2 are:
A. FIFO and LIFO B. FIFO and AVCO
C. FIFO, LIFO and AVCO D. LIFO and AVCO
Question#33
The net realisable value of inventories is defined by IAS2 as:
A. Cost price B. Selling price less costs of completion and
selling costs
C. Selling price D. Selling price less costs of completion
Question#34
Which of the following items should be included in the cost of inventories?
A. The cost of abnormal wastage of B. Selling costs
materials and labour
C. The cost of storing finished goods D. Conversion costs
Question#35
The FIFO cost formula assumes that:
A. Newer inventory items are sold or B. The inventory items which are sold or
Question#36
On 31 December 2015, a company has partly-completed inventory with a cost to date of Rs26,300. It is
expected that further costs of Rs8,900 will be incurred in order to complete the inventory. It will then
be sold for Rs47,500. Selling costs will be Rs2,000.
The cost and the net realisable value of this inventory at 31 December 2015 are:
A. Rs26,300 and Rs38,600 B. Rs35,200 and Rs47,500
C. Rs26,300 and Rs36,600 D. Rs35,200 and Rs45,500
Question#37
IAS2 states that inventories should be measured at:
A. Cost B. The lower of cost and net realisable value
C. The higher of cost and net realisable value D. Net realisable value
Question#38
If production is abnormally low, the amount of fixed overheads allocated to each unit of production
should be calculated by dividing total fixed overheads by the number of units produced.
A. True B. False
C. Either A or B D. None
Question#39
At the end of an accounting period, the cost of a company's inventory is Rs450,000. This includes
damaged items with a cost of Rs25,000 which are expected to be sold for only Rs10,000 (less selling
expenses of 5%). All other items of inventory have a net realisable value which exceeds cost.
The amount at which the company's inventory should be recognised at the end of the period is:
A. Rs425,000 B. Rs450,000
C. Rs435,000 D. Rs434,500
Question#40
A company's inventories should be measured at the lower of total cost and total net realisable value.
A. True B. False
C. Either A or B D. None
Question#41
A company uses periodic inventory system, which of the following TWO are correct for recoding a
credit sales return transaction?
A. Debit Cost of sales & Credit Inventory B. Debit Sales Return & Credit Receivables
C. Debit Inventory & Credit Cost of sales D. No entry
Question#42
If trial balance includes “purchase” and “purchase return” account, it is an indication of:
Question#43
What is correct entry for goods taken by owner for personal use?
A. Cr Sales account and Dr Drawings account B. Cr Trading account and Dr Drawings
with the sale price of the goods. account with the selling price of the
goods.
C. Cr Opening Inventory account and Dr D. Cr Purchases account and Dr Drawings
Drawings account with cost price of the account with the cost price of the goods.
goods.
Question#44
A company which makes only one type of product incurs fixed production overheads of Rs180,000 for
an accounting year. Actual production during the year was 30,000 units. Normal production is 24,000
units per annum.
The amount of fixed production overheads that should be allocated to each unit of production is:
A. Rs Nil B. Rs7.50
C. Rs6 D. Rs30
Question#45
Maaz had opening inventory of Rs. 1,600,000. Purchases made during the period were Rs. 2,650,000.
Sales during the period were Rs. 4,600,000 and he had closing inventory of Rs. 900,000. Gross profit for
the period was?
A. Rs. 1,350,000 B. Rs. 1,550,000
C. Rs. 1,250,000 D. Rs. 1,650,000
Question#46
Which of the following is NOT a disclosure requirement of IAS 2?
A. Location of each place where entity keeps B. The amount of any write-down of
its inventory inventories recognised as an expense in
the period
C. The cost formula used D. Which of the following is NOT a disclosure
requirement of IAS 2?
Question#47
Which of the following cost models is not permitted under IAS 2?
A. Actual cost B. Weighted Average
C. Last in, First out (‘LIFO’) D. First in, First out (‘FIFO’)
Question#48
An entity had opening inventory of 36,000 units @Rs. 3.9 per unit. During the month it made
purchases of 41,000 units @Rs. 4.5 per unit. Sales were 60,000 units.
What is value of cost of goods sold during the month if the entity uses continuous weighted average
method for inventory valuation?
A. Rs254,900 B. Rs253,200
Question#49
A company uses periodic inventory system, which of the following TWO are correct for recoding a
credit sales transaction?
A. Debit Cost of sales & Credit Inventory B. Debit Receivables & Credit Sales
C. Debit Cost of sales & Credit Purchases D. No entry is required
Question#50
Yousuf flour mills gave 1,600 bags of flour to poor community as a donation. What is correct journal
entry to record this transaction under perpetual inventory method?
A. Debit Drawings & Credit Purchases B. Debit Expenses & Credit Purchases
C. No entry D. Debit Expenses & Credit Inventory
Question#2
How is cost of production is calculated ?
A. Prime cost less factory overheads B. Prime cost plus factory overheads
C. Prime cost less factory overheads less D. Prime cost plus factory overheads less
increase in work in progress increase in work in progress
Question#3
Which one of them is prime cost ?
A. Sum of direct material and direct labour B. Sum of indirect material and direct labour
costs costs
C. Sum of direct material and selling costs D. Sum of direct material and factory
overhead costs
Question#4
A restaurant incurs following cost ?
1) wages of the cooking staff
2) depreciation of cooking equipment
3) costs of ingredients for meals
4) rent paid for the restaurant shop
What are indirect costs for an each meal?
A. 1, 2 and 3 only B. 1, 2, 3 and 4
C. 2 and 4 only D. 1 and 2 only
Question#5
Which one of the following would be included as direct labour?
A. Human resource manager in B. Maintenance manager in a company
departmental store producing bikes
C. Cook at fast food company D. General manager in a cars company
Question#6
Which of the following is most likely to be treated as an indirect cost by a house construction
contractor?
A. Bricks B. Windows
C. Doors and locks D. Glue and adhesives
Question#7
Direct costs are the costs that
A. Are directly charged to department B. Are under the control of managment of
Question#8
How is the factory cost of production is calculated ?
A. Direct material + Direct labour + Direct B. Direct material + Direct labour + Direct
expenses + Total overheads expenses + Factory overheads
C. Direct material + Direct labour + Direct D. Direct material + Direct labour
expenses
Question#9
Which TWO of the following are direct costs for a confectionery producing business ?
A. Butter purchased for cakes B. Hours of cake decorator’s time
C. Rent of shop where confectionery items D. Electricity bill of the shop where
are sold confectionery items are sold
Question#10
Which TWO of the following are indirect costs for a business that produces cushion covers?
A. Foam used in cushion covers B. Surf purchased to wash fabric before
production
C. Lubricant purchased for sewing machines D. white cotton fabric purchased
Question#11
Which of the following costs would be classified as an indirect cost?
A. Steel for making cars B. Rubber for making tyres
C. Tyres installed in car by car manufacturer D. Depreciation of plant used in production
of vehicles
Question#12
Which is a direct cost ?
A. Supervisor’s wages B. Raw materials used
C. Lightening and heating D. Depreciation of machinery
Question#13
A manufacturing business has purchased material costing Rs. 214,000 on credit during the month of
May 2021. At the start of March, there were inventories of raw material of Rs. 25,000. During the
month Rs. 188,000 of direct materials and Rs. 35,000 of indirect materials were issued for production.
What is correct accounting entry to record issue of indirect materials?
A. Dr. Inventory (WIP) Rs. 35,000 and Cr. B. Dr. Production Overheads Rs. 35,000 and
Inventory (Materials) Rs. 35,000 Cr. Inventory (Materials) Rs. 35,000
C. Dr. Inventory (Materials) Rs. 35,000 and D. Dr. Inventory (Materials) Rs. 35,000 and
Cr. Inventory (WIP) Rs. 35,000 Cr. Production Overheads Rs. 35,000
Question#15
Which group only contains indirect cost ?
A. Carriage inwards , factory rent , wages of B. Carriage inwards , raw materials , wages
factory supervisors of machine operators
C. Depreciation of machinery , factory rent , D. Depreciation of machinery , raw materials
wages of factory supervisors , wages of machine operators
Question#16
During the month of March 2020, a manufacturing business payroll totalled Rs. 26.8 million. Rs. 5.2
million of this amount was for indirect wages and the remainder was for direct worker wages.
What is the double entry for the above costs?
A. Dr. WIP Rs. 5.2 m & Dr. Production OH Rs. B. Dr. WIP Rs. 21.6m & Dr. Production OH
21.6m & Cr. Wages Control Rs. 26.8m Rs. 5.2m & Cr. Wages Control Rs. 26.8m
C. Dr. Wages Control Rs. 26.8m & Dr. WIP D. Dr. Wages Control Rs. 26.8m & Cr. WIP Rs.
Rs. 5.2m & Cr. Production OH Rs. 21.6m 21.6m & Cr. Production OH Rs. 5.2m
Question#17
During month, the direct production workers worked for 810 hours including 190 hours of general
overtime. The indirect workers worked for 230 hours, which included 38 hours of general overtime.
The direct production workers have a basis rate of Rs. 790 per hour and the indirect have a basic rate
of Rs. 590 per hour.
A. Rs639,000 B. Rs790,000
C. Rs775,600 D. Rs890,445
Question#18
What entry should be made in the cost accounting system on sale of finished goods?
A. Debit Cost of sales (P&L) & Credit Finished B. Debit Inventory (WIP) & Credit Finished
goods goods
C. Debit Finished goods & Credit Inventory D. Debit Finished goods & Credit Cost of
(WIP) sales (P&L)
Question#19
How is prime cost calculated?
A. Direct materials + direct labour B. Direct materials + direct labour + direct
expenses
C. Direct materials + direct labour + direct D. Direct materials + direct labour + direct
Question#20
A manufacturing business has purchased material costing Rs. 214,000 on credit during the month of
May 2021. At the start of March, there were inventories of raw material of Rs. 25,000. During the
month Rs. 188,000 of direct materials and Rs. 35,000 of indirect materials were issued for production.
What is correct accounting entry to record issue of direct materials?
A. Dr. Inventory (WIP) Rs. 188,000 and Cr. B. Dr. Production Overheads Rs. 188,000 and
Inventory (Materials) Rs. 188,000 Cr. Inventory (Materials) Rs. 188,000
C. Dr. Inventory (Materials) Rs. 188,000 and D. Dr. Inventory (Materials) Rs. 188,000 and
Cr. Inventory (WIP) Rs. 188,000 Cr. Production Overheads Rs. 188,000
Question#21
Which of the following account is most unlikely to be part of factory ledger?
A. Direct Labour (wages control) B. Plant and Machinery (installed in factory
premises)
C. Production overheads D. Inventory (Work in progress)
Question#22
A business has an overhead absorption rate of Rs. 510 per machine hour, based on a budgeted activity
level of 11,990 hours. In the period covered by the budget, actual machine hours worked were 3%
more than the budgeted hours and actual overhead expenditure incurred was Rs. 5,648,900.
What was the budgeted overheads for the period?
A. Rs6,114,000 B. Rs5,114,000
C. Rs6,114,900 D. Rs5,270,000
Question#23
A business has an overhead absorption rate of Rs. 510 per machine hour, based on a budgeted activity
level of 11,990 hours. In the period covered by the budget, actual machine hours worked were 3%
more than the budgeted hours and actual overhead expenditure incurred was Rs. 5,648,900.
What was the total absorbed overheads for the period?
A. Rs6,298,347 B. Rs5,298,300
C. Rs5,598,347 D. Rs. 5,375,400
Question#24
A business has an overhead absorption rate of Rs. 510 per machine hour, based on a budgeted activity
level of 11,990 hours. In the period covered by the budget, actual machine hours worked were 3%
more than the budgeted hours and actual overhead expenditure incurred was Rs. 5,648,900.
What was the total over or under absorption of overheads in the period?
A. Rs.647,447 overabsorbed B. Rs.649,447 underabsorbed
C. Rs.647,447 underabsorbed D. Rs.649,447 overabsorbed
Question#25
A manufacturer provides the following information
Rs
Question#26
A manufacturer provides the following information for his year end .
Rs
Cost of goods manufactured 520,000
Inventory (Finished goods) Opening 245,000
Inventory (Finished goods) Closing 150,000
Calculate the Cost of goods sold during the year.
A. Rs615,000 B. Rs915,000
C. Rs765,000 D. Rs625,000
Question#27
Total manufacturing costs incurred include:
A. direct labor costs. B. raw materials costs.
C. manufacturing overhead. D. All of the above
Question#28
A manufacturer had the following cost
Rs
Raw materials 8,000
Wages of factory workers 4,000
Wages of factory supervisor’s 1,000
Wages of office workers 2,000
Fixed factory overheads 4,500
Fixed office overheads 1,500
What is the factory cost of production ?
A. Rs19,500 B. Rs17,500
C. Rs21,000 D. Rs20,900
Question#29
Hamza Enterprises , a manufacturer provides the following information at the year end
Rs
Prime Cost 550,000
Production overheads 190,000
Selling overheads 85,000
Administrative overheads 75,000
WIP inventory at start and end of the year Nil
Calculate the Cost of goods manufactured during the year.
Question#30
Hamza Enterprises , a manufacturer provides the following information at the year end
Rs
Prime Cost 550,000
Production overheads 190,000
Selling overheads 85,000
Administrative overheads 75,000
WIP inventory at start and end of the year 35,000
Calculate the Cost of goods manufactured during the year.
A. Rs815,000 B. Rs740,000
C. Rs710,000 D. Rs900,000
Question#31
A manufacturer provides the following information
Rs
Direct expenses 7,000
Direct material 21,000
Direct labour 16,000
Office expenses 5,000
Factory heating and lighting 11,000
Selling expenses 9,000
What is the prime cost of production ?
A. Rs64,000 B. Rs55,000
C. Rs70,000 D. Rs44,000
Question#32
Aadil Limited , a manufacturer prepares manufacturing account for its year end and provides following
information
Rs
Cost of direct material consumed 370,000
Direct labour wages 55,000
Depreciation (80% relates to production) 25,000
Royalty paid on number of units of product produced 22,500
Rent and utilities expenses of factory 12,500
Calculate the prime cost ?
A. Rs467,500 B. Rs447,500
C. Rs452,500 D. Rs472,500
Question#33
Aadil Limited , a manufacturer prepares manufacturing account for its year end and provides following
information
Rs
Cost of direct material consumed 370,000
Question#34
Aadil Limited , a manufacturer prepares manufacturing account for its year end and provides following
information
Rs
Cost of direct material consumed 370,000
Indirect labour wages and indirect materials 17,000
Depreciation (80% relates to production) 25,000
Royalty paid on number of units of product produced 22,500
Rent and utilities expenses of factory 12,500
Direct labour 55,000
Calculate the production overheads for the year.
A. Rs497,500 B. Rs497,000
C. 597,500 D. Rs597,000
Question#35
Nails,depreciation,and foreman salaries are examples of:
A. Direct labour B. Manufacturing overhead
C. raw materials D. None
Question#36
A business provides the following information
Rs
Prime cost 290,000
Factory overheads 120,000
Closing work in progress 18,000
What is cost of production?
A. Rs392,000 B. Rs428,000
C. Rs410,000 D. Rs395,000
Question#37
Lumber used in construction of a building is part of:
A. raw material costs. B. Labour cost
C. Manufacturing overhead D. None
Question#38
Direct labor includes the wages of:
A. the shop foreman. B. an hourly worker producing the product.
Question#39
A entity engaged in manufacturing has policy of holding no inventory of any type whether raw
materials, WIP or finished goods. During an accounting period it only produced goods from raw
material purchased by it. Its cost of sales shall be equal to:
A. Prime Cost + Production Overheads B. Direct labour + Production Overheads
C. Prime Cost D. Cost of direct materials consumed
Question#40
Adil Limited is manufacturer of hand bags. Following figures have been provided for the month of
March 2020:
Rs
Raw materials 420,000
Direct labour cost 290,000
Selling and administrative salaries 145,000
Rent for factory 115,000
Depreciation - Factory equipment 75,000
Indirect labour cost 42,000
Factory utilities 25,000
Factory insurance 15,000
Only 50% of the utilities expenses and 50% of the insurance expense apply to factory operations, the
remaining amount should be charged to selling and administrative expenses.
What is the amount of factory overheads for the month?
A. Rs962,000 B. RS692,000
C. RS272,000 D. Rs252,000
Question#41
Manufacturing overhead includes all manufacturing costs:
A. including raw materials. B. including overhead.
C. excluding raw materials and direct labor D. None
Question#42
Which of the following shows over-absorbed overheads?
A. Absorbed overheads > Actual overheads B. Actual overheads > Absorbed overheads
C. Budgeted overheads > Actual overheads D. Actual overheads > Budgeted overheads
Question#43
Which of the followings shows “Absorbed overheads”?
A. Normal capacity x Actual rate B. Actual production x Pre-determined rate
C. Budgeted production x Actual rate D. Budgeted production x Pre-determined
rate
Question#44
The following data relates to Spruce Limited who is in process of preparing manufacturing account for
the year ended June 30, 2019.
Question#45
The following data relates to Spruce Limited who is in process of preparing manufacturing account for
the year ended June 30, 2019.
Rs
Inventory (Materials) 1 July 2018 76,000
Inventory (Material) 30 June 2019 110,000
Purchases of direct materials during the year 425,000
Return outwards during the year 27,000
Calculate the cost of materials consumed during the year.
A. Rs364,000 B. Rs364,400
C. Rs465,800 D. Rs455,900
Question#46
Which one of the following equation is correct for calculating cost of goods manufactured?
A. Factory Cost + Opening inventory (WIP) – B. Factory Cost + Opening inventory (raw
Closing inventory (WIP) material) – Closing inventory (raw
material)
C. =Prime Cost + Opening inventory (WIP) – D. Prime Cost + Opening inventory (raw
Closing inventory (WIP) material) – Closing inventory (raw
material)
Question#47
What entry is made for over absorbed overheads at the end of period?
A. Debit Production Overheads & Credit Cost B. Debit Cost of sales (P&L) & Credit
of sales (P&L) Production Overheads
C. Debit Inventory (WIP) & Credit Production D. Debit Production Overheads & Credit
Overheads Cash / Accrual
Question#48
What entry should be made for under absorbed overheads at the end of period?
A. Debit Production Overheads & Credit Cost B. Debit Cost of sales (P&L) & Credit
of sales (P&L) Production Overheads
C. Debit Inventory (WIP) & Credit Production D. Debit Production Overheads & Credit
Overheads Cash / Accrual
Question#49
What entry is made when overheads are absorbed in production?
Question#50
A manufacturer has provided following information
Rs
Raw materials consumed 450,000
Direct labour cost 300,000
Indirect labour 50,000
Calculate prime cost ?
A. Rs750,000 B. Rs800,000
C. Rs700,000 D. Rs850,000
Question#2
If liablity meets any of the following criteria:
The entity expects to settle the liability in its normal operating cycle.
The liability is held primarily for the purpose of trading. This means that all trade payables are
current liabilities, even if settlement is not due for over 12 months after the end of the
reporting period.
It is due to be settled within 12 months after the end of the reporting period.
The entity does not have the unconditional right to defer settlement of the liability for at least
12 months after the end of the reporting period.
It shall be classified as ?
A. Liablity B. Current liablity
C. Non current liablity D. None of them
Question#3
If a company obtains a five-year bank loan, where none of the loan principal is repayable until the end
of the loan period .
What is status of loan principal at year 4 ?
A. Current liablity B. Non current liablity
C. Current asset D. Non current asset
Question#4
Which is not the part of set of financial statement
A. a statement of changes in equity B. Aging analysis of inventory
C. a statement of comprehensive income D. a statement of financial position
Question#5
Adnan has prepared his trial balance for the year ended 31 December 2019. He has provided following
information relating to drawings:
Rs Debit
Drawings 300,000
Adnan’s son works as the head of administration and received a salary of Rs. 15 thousand per month,
which has been included in drawings.
What is the amount of drawings to be shown in the statement of financial position?
A. Rs120,000 B. Rs130,000
C. RS120,500 D. Rs285,000
Question#7
Akram is in process of preparation of trial balance for the year ended 31 December 2020.
Rs Debit
Purchases 225,000
Akram withdrew goods costing Rs. 125,000 for personal use during the year. However, no entry was
made to record the withdrawal of goods.
What is the amount of purchases to be shown in statement of comprehensive income?
A. Rs100,000 B. Rs225,000
C. Rs125,000 D. Rs350,000
Question#8
Following is the trial balance of Adnan for the year ended 31 December 2020:
Rs in 000 Rs in 000
Debit Credit
Trade discount 240 Sales 36,260
Sales return 1,750
Discount allowed 475
Assistant account has informed that sales was recorded incorrectly on gross amount and trade
discount was debited to correct it.
What is the amount of sales to be shown in statement of comprehensive income?
A. Rs33,795,500 B. Rs3,379,500
C. Rs3,379,550 D. Rs33,795,000
Question#9
Following is the summarized trial balance of an entity at its year end 31 December 2018
Debit Credit
Bank loan 160,000
Interest on bank loan 8,000
The bank loan was acquired on 1 April 2018. The principal amount is repayable in five equal annual
instalments on 31 March each year. Interest is payable at 10% per annum on six monthly basis and is
recorded at the time of payment. What adjusting entry is required to record interest payable as at 31
December 2018?
A. Dr Interest expense Rs. 12,000 Cr Interest B. Dr Interest expense Rs. 8,000 Cr Interest
payable Rs. 12,000 payable Rs. 8,000
Question#10
Which one of the following is not a characteristic of service organization?
A. There is no line item for the cost of goods B. The funds of service companies are
sold in the income statement of service usually tied up towards accounts
companies. receivable
C. A large percentage of assets comprise D. A large percentage of assets comprise
receivable inventory
Question#11
A business has provided following extracts from trial balance as at 30 June 2019;
Admin expenses = 15 Million Debit
Electricity expense of Rs. 0.15 million is outstanding. No adjustment for bill payable has been
recorded. Electricity expense paid during the year have already been included in administration
expenses.
Included in the administration expenses in trial balance advance rent is Rs. 0.12 million.
What is the amount of administration expenses to be shown in statement of comprehensive income?
A. Rs15.0 Million B. Rs15.27 Million
C. Rs15.15 Million D. Rs15.03 Million
Question#12
Following is summarized trial balance of an entity for year ended 30 June 2017
Rs in 000 Debit Rs in 000 Credit
Plant & machinery – cost 6,520
Plant & mach. – Acc. Dep. as at 1 July 2016 2,323
On 1 March 2017, entity paid an advance of Rs. 330,000 for purchase of a machine and debited it to
plant and machinery. The machine was delivered on 1 September 2017.
Entity depreciates its fixed assets from the month of addition. Depreciation is to be charged on
written-down value (WDV) as follows:
Plant and machinery 15%
What is the amount of depreciation to be charged to statement of profit or loss?
A. Rs386,700 B. Rs387,700
C. Rs486,700 D. Rs487,500
Question#13
Following is summarized trial balance of an entity for year ended 30 June 2017
Rs in 000 Debit Rs in 000 Credit
Bank loan 7,500
Interest expenses 825
168,928 168,928
Bank loan was received on 1 July 2016. Interest payable for the month of June 2017 has been credited
to the loan account.
What is the amount of interest payable to be shown in statement of financial position?
A. Rs68,750 B. Rs68,755
Question#14
Universal shoes (US) has prepared a trial for the year ended 31 December 2017:
Rs in 000 Debit Rs in 000 Credit
Miscellaneous income 855
Miscellaneous income includes Rs. 415,000 received against an annual maintenance contract expiring
on 30 April 2018.
What is the amount of Miscellaneous income to be shown in statement of financial position as
unearned income?
A. Rs138,300 B. Rs138,333
C. Rs138,330 D. Rs285,000
Question#15
Following is an extract from the trial balance of Hamdani Enterprises (HE) for the year ended 31
December 2019:
Rs Debit Rs Credit
Stock in trade 31-12-2018 4,500
Cost of sales 24,780
While carrying out the physical inventory count at year-end, following matters were identified:
Goods costing Rs. 1,100 were slightly defective. These can be sold for Rs. 1,280 after incurring
a cost of Rs. 250.
Goods costing Rs. 710 purchased on credit were returned to a supplier on 28 December 2018
but the return was not recorded in the books.
Calculate the “Inventory” amount that would be presented in statement of financial position of HE as
at 31 December 2018.
A. Rs2,690 B. Rs2,510
C. Rs3,720 D. Rs2,560
Question#16
Following is an extract from the trial balance of Hamdani Enterprises (HE) for the year ended 31
December 2019:
Rs Debit Rs Credit
Advances 450
Property, plant and equipment – Cost 12,500
Accumulated depreciation 4,630
Additional information:
A machine costing Rs. 450 was received on 1 October 2019 against 100% advance payment.
The advance has not yet been adjusted due to non-receipt of the invoice.
HE depreciates property, plant & equipment at 15% per annum on reducing balance method.
Calculate “property, plant and equipment” that would be presented in statement of financial position
of HE as at 31 December 2019.
A. Rs6,125 B. Rs7,826
C. RS7,123 D. Rs7,911
Question#18
Draft accounts included a loan due for payment in 20 months’ time, as part of the trade payables.
Which effect will the necessary adjustment have?
A. Reduce net current assets B. No effect on net current assets
C. Increase in net current assets D. Increase in net assets
Question#19
The following debit balance appears on a trial balance at 31 December 2019, after the preparation of
the company’s annual accounts.
Stationery Rs80,000
What is the stationery item?
A. stationery inventory in hand at 31 B. an accrual for stationery at 31 December
December 2019 2019
C. the annual stationery charge for 2019 D. an amount due to the company’s
stationery supplier
Question#20
Following is an extract from the trial balance of Hamdani Enterprises (HE) for the year ended 31
December 2019:
Rs Debit Rs Credit
Other income 1,500,000
Additional information
On 1 August 2019, MT received an amount of Rs. 180,000 as 50% advance against a maintenance
contract covering the period from 1 September 2019 to 31 May 2020 and was credited to other
income. The balance amount would be paid on completion of the contract.
What is the amount of unearned income to be shown in statement of financial position?
A. Rs160,000 B. Rs20,000
C. Rs360,000 D. Rs180,000
Question#21
A business has provided following extracts from trial balance as at 31 December 2018;
Rs Debit Rs Credit
Receivables 100,000
Provision for doubtful debts – 1.1.18 4,000
Bad debts 3,000
Additional information
A customer included in receivables in trial balance above owing Rs. 10,000 gone bankrupt and is
unable to pay anything.
It has been decided to calculate a provision of 5% for the year.
What is the amount of closing balance of provision for doubtful debts account?
Question#22
A business has provided following extracts from trial balance as at 31 December 2018;
Rs Debit Rs Credit
Receivables 100,000
Provision for doubtful debts – 1.1.18 4,000
Bad debts 3,000
Additional information
A customer included in receivables in trial balance above owing Rs. 10,000 gone bankrupt and is
unable to pay anything.
It has been decided to calculate a provision of 5% for the year.
What is the amount of bad and doubtful debts expense in statement of comprehensive income?
A. Rs21,500 B. Rs22,800
C. Rs22,750 D. Rs22,930
Question#23
A business has provided following extracts from trial balance as at 31 December 2018;
Rs Debit Rs Credit
Receivables 100,000
Provision for doubtful debts – 1.1.18 4,000
Bad debts 3,000
Additional information
A customer included in receivables in trial balance above owing Rs. 10,000 gone bankrupt and is
unable to pay anything.
It has been decided to calculate a provision of 5% for the year.
What is the number of receivables to be shown in statement of financial position?
A. Rs82,690 B. Rs82,700
C. Rs82,500 D. Rs82,560
Question#24
Following is summarized trial balance of an entity for year ended 30 June 2017
Rs in 000 Debit Rs in 000 Credit
Plant & machinery – cost 6,520
Plant & mach. – Acc. Dep. as at 1 July 2016 2,323
On 1 March 2017, entity paid an advance of Rs. 330,000 for purchase of a machine and debited it to
plant and machinery. The machine was delivered on 1 September 2017.
Entity depreciates its fixed assets from the month of addition. Depreciation is to be charged on
written-down value (WDV) as follows:
Plant and machinery 15%
What is the amount of Plant & machinery to be shown in statement of financial position?
A. Rs3,490,600 B. Rs3,520,900
C. Rs3,562,000 D. Rs3,480,300
Question#26
A business starts trading on 1 May 2020. The table shows rent paid on the premises.
Date Period Amount
2 May 2020 1 May – 30 Jun Rs1 000
3 Jul 2020 1 Jul – 30 Sep Rs1 500
2 Oct 2020 1 Oct – 31 Dec Rs1 500
4 Jan 2021 1 Jan – 31 Mar Rs1 560
1 Apr 2021 1 Apr – 30 Jun Rs1 560
Which amount should be shown in the accounts for the year ended 30 April 2021 for rent prepayment?
A. Rs1 000 B. Rs520
C. Rs1 560 D. Rs1 040
Question#27
The table shows information from the books of a business at 30 April 2012.
Invoiced Rs
Credit sales invoiced during financial year 79 000
Goods sent to customers on 28 April 2012 and invoiced 4 May 2012 6 100
Goods sent to customers during April 2012 on sale or return basis but not sold by 30 April
2012 8 300
What is the amount to be credited to the Trading section of income statement as sales for the year
ended 30 April 2012?
A. Rs93 400 B. Rs85 300
C. Rs85 100 D. Rs76 800
Question#28
The sales included in the trial balance of a company amounting to Rs880 000. This balance is
made up asfollows:
Cash sales 215 000
Credit Sales 536 000
Goods sent on sale or return awaiting acceptance by the consignees 45 000
Goods sent on sale or return for which customers have accepted 84 000
invoices
Total 880 000
Question#29
The following debit balance appears on a trial balance after preparing the manufacturing
account for the year.
loose tools Rs18 000
What is this item?
A. inventory of loose tools B. a prepayment for loose tools
C. the annual charge for loose tools D. A liability for loose tools
Question#30
Which one of the statement is correct?
A. carriage outward is a debit B. carriage inward is a credit
C. sales return is a credit D. purchases return is a debit
Question#31
Following is an extract from the trial balance of Talib Enterprises (TE) for the year ended 31 December
2019:
Rs Debit Rs Credit
Prepayments and advances 1,340
Accrual and other payables 1,460
Miscellaneous income 1,010
Additional information:
On 1 October 2019, 60% advance received for an annual maintenance contract of Rs. 510 was
credited to miscellaneous income. Remaining amount would be received at the end of the
contract. Services are rendered evenly throughout the contract period.
Maintenance services for Rs. 200 were rendered in December 2019 but income has been
recorded in January 2020 on receipt of the amount.
Calculate “Prepayments and advances” that would be presented in statement of financial position of
TE as at 31 December 2019.
A. Rs1,470 B. Rs1,340
C. Rs1,540 D. Rs1,460
Question#32
Following is an extract from the trial balance of Talib Enterprises (TE) for the year ended 31 December
2019:
Rs Debit Rs Credit
Prepayments and advances 1,340
Accrual and other payables 1,460
Miscellaneous income 1,010
Additional information:
On 1 October 2019, 60% advance received for an annual maintenance contract of Rs. 510 was
credited to miscellaneous income. Remaining amount would be received at the end of the
Question#33
Following is an extract from the trial balance of Talib Enterprises (TE) for the year ended 31 December
2019:
Rs Debit Rs Credit
Prepayments and advances 1,340
Accrual and other payables 1,460
Miscellaneous income 1,010
Additional information:
On 1 October 2019, 60% advance received for an annual maintenance contract of Rs. 510 was
credited to miscellaneous income. Remaining amount would be received at the end of the
contract. Services are rendered evenly throughout the contract period.
Maintenance services for Rs. 200 were rendered in December 2019 but income has been
recorded in January 2020 on receipt of the amount.
Calculate “Miscellaneous income” that would be presented in statement of comprehensive income of
TE for the year ended 31 December 2017.
A. Rs1,010 B. Rs1,057
C. Rs857 D. Rs1,127
Question#34
Following is an extract from the trial balance of Talib Enterprises (TE) for the year ended 31 December
2019:
Rs Debit Rs Credit
Financial charges 810
12% long term loan 5,500
Additional information:
Interest on the loan is paid in arrears on 1 April and 1 October each year. Interest accrued for the
quarter ended 31 December 2019 has been credited to loan account.
Calculate “Financial charges” that would be presented in statement of comprehensive income of TE for
the year ended 31 December 2019.
A. Rs5,500 B. Rs6,310
C. Rs660 D. Rs810
Question#35
Following is an extract from the trial balance of Talib Enterprises (TE) for the year ended 31 December
2019:
Rs Debit Rs Credit
Financial charges 810
12% long term loan 5,500
Question#36
The following is an extract from the trial balance of Gaba Enterprises (GE) as at 31 December 2019:
Rs Debit Rs Credit
Revenue 1,300,000
Inventory 1 January 2019 58,000
Purchases 580,000
Carriage inwards 5,000
Carriage outwards 7,000
Administrative expenses 410,000
Distribution costs 200,000
Return inwards 1,500
Inventory valuation at 31 December 2019 was Rs. 70,000
Calculate “Administrative expenses” that would be presented in statement of comprehensive income
of GE for the year ended 31 December 2019.
A. Rs485,000 B. Rs410,000
C. Rs610,000 D. Rs480,000
Question#37
The following is an extract from the trial balance of Gaba Enterprises (GE) as at 31 December 2019:
Rs Debit Rs Credit
Revenue 1,300,000
Inventory 1 January 2019 58,000
Purchases 580,000
Carriage inwards 5,000
Carriage outwards 7,000
Administrative expenses 410,000
Distribution costs 200,000
Return inwards 1,500
Inventory valuation at 31 December 2019 was Rs. 70,000
Calculate “Distribution costs”that would be presented in statement of comprehensive income of GE
for the year ended 31 December 2019.
A. Rs207,000 B. Rs200,000
C. Rs193,000 D. Rs202,000
Question#38
The following is an extract from the trial balance of Gaba Enterprises (GE) as at 31 December 2019:
Rs Debit Rs Credit
Revenue 1,300,000
Question#39
The following is an extract from the trial balance of Gaba Enterprises (GE) as at 31 December 2019:
Rs Debit Rs Credit
Revenue 1,300,000
Inventory 1 January 2019 58,000
Purchases 580,000
Carriage inwards 5,000
Carriage outwards 7,000
Administrative expenses 410,000
Distribution costs 200,000
Return inwards 1,500
Inventory valuation at 31 December 2019 was Rs. 70,000
Calculate “Gross profit”that would be presented in statement of comprehensive income of GE for the
year ended 31 December 2019.
A. Rs735,350 B. Rs725,560
C. Rs725,500 D. Rs725,900
Question#40
A business has the following assets and liabilities.
Rs
short-term investment 6 000
loan interest owing 1 500
loan repayable within one year 12 000
deposits from customers for orders 4 500
trade payables 27 000
trade receivables 39 000
pre-payments 3 500
What is the amount of net current assets?
A. Rs15 500 B. Rs8 000
C. Rs4 500 D. Rs3 500
Question#41
The table shows information from a business at 30 November 2008.
Question#42
The directors of a company provide the following information.
Rs
bank overdraft 1 200
equipment 12 000
non-current loan 8 000
petty cash 900
inventories 2500
trade payables 3 000
trade receivables 2 000
What is the amount of the net current assets?
A. Rs5 200 B. Rs3 600
C. Rs2 400 D. Rs1 200
Question#43
A business has extracted the following information from its books of account at31 December 2014,
its firstyear of trading.
Rs000
carriage inwards 12
carriage 15
outwards
closing inventory 86
purchases 286
returns inwards 10
returns 2
outwards
revenue 524
What is the gross profit for the year ended 31 December 2014?
A. Rs328 000 B. Rs320 000
C. Rs304 000 D. Rs301 000
Question#44
Rs
Drawings 53 500
profit for the year 62 700
Revenue 1500 000
Expenses 875 000
What was the cost of sales for the year?
A. Rs687 000 B. Rs678 000
C. Rs571 500 D. Rs562 300
Question#45
A company pays or receives the following amounts on the last day of its financial year.
Rs
deposit paid to a supplier 6 500
rental income received in advance 8 000
loan repayment 3 000
payment for last month’s sales commission 900
Which of these amounts will be included as other receivables in the statement of financial
position?
A. Rs18 400 B. Rs17 500
C. Rs14 500 D. Rs6 500
Question#46
Which are examples of the accounting equation?
1. capital + assets = liabilities
2. capital = assets + liabilities
3. capital = assets – liabilities
A. 3 only B. 2 and 3
C. 1 only D. 1 and 3
Question#47
The following information is extracted from the statement of financial position of a business at 31
December 2016.
Rs
bank loan (repayable 16 200
2025)
other payables 1 880
bank overdraft 11 600
capital 20 710
drawings 19 100
inventory 14 610
other receivables 1 420
trade payables 14 110
trade receivables 9 050
What is the value of the net current liabilities?
Question#48
Why does a trader account for accrued income?
A. so that profit is not understated B. so that profit is not overstated
C. so that current liabilities are not D. so that current liabilities are not
understated overstated
Question#49
A trader sends his staff on a training course costing Rs100 per person. 10 staff attended in April and 4
in May. Half the total cost had to be paid at the start of April and the balance at the end of May.
Which entry for training was made in the statement of financial position on 30 April?
A. Rs700 prepayment B. Rs600 prepayment
C. Rs400 accrual D. Rs300 accrual
Question#50
An item can be converted easily into cash.
In which section of the statement of financial position would this item appear?
A. non-current assets B. current liabilities
C. current assets D. capital
Question#2
At 31 December 2019, a customer’s bank statement shows that his bank account is overdrawn by
Rs10 136. At that date, cheques drawn on his account, but not yet presented to the bank, totalled
Rs4 998 and cheques paid into his account, but not yet credited by the bank, totalled Rs5 896. His
bank statement shows that interest of Rs181 has been charged, but this has not yet been entered
in the cash book.
What is the correct bank balance to be shown in the balance sheet at 31 December 2019?
A. Rs11 034 overdrawn B. Rs10 853 overdrawn
C. Rs9 238 overdrawn D. Rs9 057 overdrawn
Question#3
The table shows extracts from business bank reconciliation.
Rs
Cash book balance in hand at 31 December 2,075
Balance as per bank statement at 31 December 2,250
Bank charges per bank statement not entered in cash book 150
Outstanding cheques not presented at the year-end 325
What is the bank balance to be shown in the financial statements?
A. Rs1 925 B. Rs1 600
C. Rs2 225 D. Rs2 075
Question#4
In the cash book of a company the bank account showed a credit balance of Rs5 000. There were
unpresented cheques amounting to Rs1 500. The bank statement showed bank charges of Rs700 not in
the cash book.
What is the balance on the bank statement?
A. Rs5 800 credit B. Rs4 200 credit
C. Rs4 200 debit D. Rs3 300 debit
Question#5
Maaz Enterprises is in process of reconciling its cash book with banks statement. Which of the
following item require entry in cash book?
A. Cheques presented by suppliers after the B. Cheque of another account erroneously
date of bank statement credited by bank
C. Deposits credited by the bank after the D. Bank service charges
date of the bank statement
Question#7
The following bank reconciliation statement has been prepared by an accountant:
Bank reconciliation statement as at June 30, 2019 Rs
Balance as per bank statement (Cr) 46.600
Add: Outstanding cheques 12,800
Less: Uncleared lodgements 13,900
Balance as per cash book (Dr) 45,500
Question#8
Balance of bank account as per cash book is Rs.34,000 (Dr) while balance as per bank statement is
Rs.32,000 (Cr). Difference is explained as Uncleared lodgements of Rs.2,000 not included in the bank
statement.
What is the amount of bank balance to be reported in Statement of financial Position?
A. Rs.32,000 Overdraft B. Rs.32,000 Cash at bank
C. Rs.34,000 Overdraft D. Rs.34,000 Cash at bank
Question#9
A business is in process of preparing its bank reconciliation statement. The balance of cash book did
not agree with the balance in bank statement. The following information is available:
Balance as per cash book before comparing bank statement Rs. 12,000 (Dr)
Outstanding Cheques Rs.1,660
Outstanding lodgements Rs.1,250
Bank charges Rs.70
Bank interest income Rs.90
What is the balance as per bank statement?
A. Rs12,430 Dr B. Rs12,430 Cr
C. Rs12,230 Dr D. Rs12,230 Cr
Question#11
The balance at bank in X’s cash book at 30 April is Rs12 460 debit. However, a cheque for Rs14 470
received from Y and a cheque for Rs1 740 paid to Z appears in the cash book but not on the bank
statement. Bank charges of Rs4 500 have not been entered in the cash book.
What is the balance shown on the bank statement at 30 April?
A. Rs20 690 debit B. Rs20 690 credit
C. Rs4 770 debit D. Rs4 770 credit
Question#12
A bank reconciliation statement shows a credit balance of Rs400 in the Cash Book and a balance in
hand of Rs100 in the bank statement.
The bank reconciliation statement includes unpresented cheques of Rs700 in addition to cheques
banked and not yet credited in the bank statement.
What is the total of cheques banked and not yet credited?
A. Rs1 200 B. Rs1 000
C. Rs400 D. Rs200
Question#13
When preparing a bank reconciliation statement the following information is available.
Rs
Bank balance shown by the cash 20 000 debit
bookUnpresented cheques 2 500
Uncleared bankings 1 400
Standing order shown on the bank statement (not in the cash 300
book)
What is the balance on the bank statement?
A. Rs21 400 B. Rs20 800
C. Rs19 200 D. Rs18 600
Question#14
Which one of the following statements is correct?
A. Credit balance as per cash book means an B. Debit balance as per cash book means a
asset bank overdraft
C. Debit balance as per bank statement D. Credit balance as per bank statement
means a bank overdraft means a bank overdraft
Question#15
Following information has been collected from the books of Kamran as at 31 January 2019: Balance as
per cash book Rs.14,000 (Dr)
On scrutiny of bank statement it was found:
Question#16
The following information pertains to bank reconciliation:
The bank balance in the cash book before taking the items below into account was Rs.9,770
overdrawn
Bank charges of Rs.700 on the bank statement have not been entered in the cash book
The bank has credited the account in error with Rs.650 which belongs to another customer
Cheque payments totalling Rs.4,395 have been entered in the cash book but have not been
presented by payment
Cheques totalling Rs.6,400 have been correctly entered on the debit side of the cash book but
have not been paid in at the bank
What was the balance as shown by the bank statement?
A. Rs11,955 Overdrawn B. Rs11,825 Overdrawn
C. Rs11,925 Overdrawn D. Rs11,885 Overdrawn
Question#17
A check written by the company for Rs167 is incorrectly recorded by a company as Rs176. On the bank
reconciliation, the Rs9 error should be
A. Deducted from the balance per bank. B. Added to the balance per bank.
C. Deducted from the balance per books. D. Added to the balance per books.
Question#18
Which one of the following require deduction from cash book balance while preparing bank
reconciliation statement?
A. Bank debits interest Rs. 2,600 instead of B. Unpresented cheques not yet paid by
Rs. 6,200, the correct amount has been bank
included in cash book
C. Standing orders paid by the bank not yet D. Direct deposit by a customer into bank
entered in cash book but not yet entered in cash book
Question#19
For which of the following errors should the appropriate amount be added to the balance per bank on
a bank reconciliation?
A. Check for Rs75 recorded by the company B. A returned Rs300 check recorded by the
as Rs57. bank as Rs30.
Question#20
Which of the following would be added to the balance per bank on a bank reconciliation?
A. Service charges. B. Notes collected by the bank.
C. Deposits in transit D. Outstanding checks.
Question#21
Which of the following items on a bank reconciliation would require an adjusting entry on the
company’s books?
A. A deposit in transit B. A bank service charge.
C. Outstanding checks D. An error by the bank.
Question#22
Balance as per bank statement of Asim was Rs.11,800 credit as on April 30, 2018, which was not in
agreement with the balance as per cash book. On investigation the following items were detected:
Cheques issued and paid by the bank for Rs.4,500 but recorded in the cash book as Rs.500
Bank service charges not entered in the cash book Rs.620
Outstanding lodgements Rs.1,4300
Bank has erroneously debited a cheque of Rs.950 to Asim actually the cheque was issued by Asif.
Unpresented cheques Rs.1,300
What should be the balance as per cash book before adjustments?
A. Rs. 17,470 Credit B. Rs. 17,470 Debit
C. Rs. 12,850 Credit D. Rs. 12,850 Debit
Question#23
The bank column of a cash book showed a credit balance of Rs.8,500. There were unpresented
cheques amounting to Rs.2,600. The bank statement showed bank charges, Rs.920, which were not
recorded in the cash book. What is the balance on the bank statement?
A. Rs9,420 Normal B. Rs9,420 Overdraft
C. Rs6,820 Normal D. Rs6,820 Overdraft
Question#24
Balance as per bank statement was Rs.1,500 in debit. Comparison of bank statement with cash book
revealed that cheques of Rs.4,000 paid in per the cash book but not yet on the bank statement and
cheques of Rs.850 paid out but not yet appeared on the bank statement. In addition the bank
statement shows direct deposit of Rs.750 by a customer but it is not recorded in cash book.
What is the balance as per cash book after adjustments?
A. Rs.1,650 Positive Balance B. Rs. 1,650 Overdraft
C. Rs.1,880 Positive Balance D. Rs. 1,880 Overdraft
Question#25
When preparing a bank reconciliation statement the following information is available
Balance as per cash book Rs.26,000 (Dr)
Outstanding cheques Rs.1,800
Question#26
The main purpose of preparing a bank reconciliation statement is?
A. To know the bank balance B. To know the balance of bank statement
C. To identify causes of difference between D. To correct the cash book
cash book and bank statement
Question#27
Favorable balance means?
A. Credit balance in the cash book B. Debit balance in cash book
C. Credit balance in Bank statement D. Both B and C
Question#28
Bank reconciliation statement is?
A. A sub-division of journal B. A separate statement
C. Part of the cash book D. Part of bank statement
Question#29
Uncollected checks are also known as?
A. Uncleared checks B. Outstation checks
C. Outstanding checks D. Both A and B
Question#30
Bank reconciliation is not a?
A. Procedure to provide cash book B. Ledger account
adjustments
C. Memorandum statement D. Reconcile records
Question#31
Determine the balance as per bank statement using the following information:
Balance as per cash book Rs. 48,100
Cheques received and deposited into the bank, but not yet credited in the bank statement Rs.
4,950
Unpresented cheques Rs. 6,900
Credit transfers appearing in the bank statement but not entered in the cash book Rs. 3,600
A. Rs53,650 B. Rs52,920
C. Rs53,750 D. Rs52,960
Question#32
Question#33
Following information has been extracted from the records of Lightning Store (LS), as at 30 June 2016:
Un-cleared cheques amount to Rs. 6,580,000 and include:
A cheque of Rs. 378,000 received from a customer was returned by the bank as amount in
words was not in conformity with the amount in figures. The return was not recorded and the
cheque was sent to the customer for replacement.
A cheque of Rs. 79,000 received from a customer in settlement of an invoice availing payment
discount of 3%. The collection was recorded by EG at gross amount of invoice.
Balance as per bank statement (overdraft) Rs. 1,580,650 .
Assuming that cash book balance has been corrected and adjusted, what amount of bank balance shall
be reported in statement of financial position?
A. Rs5,426,650 Positive balance B. Rs5,426,650 Overdraft
C. Rs4,621,350 Positive balance D. Rs4,621,350 Overdraft
Question#34
Which one of the following is not missing of cash book?
A. Interest credited in bank statement B. Bank charges debited in bank statement
C. Outstation check D. Mistakes in cash book
Question#35
When cash is deposited into bank then the following account would be debited in the company
accounts?
A. Bank account B. Cash account
C. Overdraft account D. None
Question#36
While reconciling the bank statement with the cash/bank book of Alpha company for the year ended
December 31, 2015, you noted the following:
Balance as per bank statement at December 31, 2015, overdrawn Rs. 804,986
Cheques drawn but not presented till December 31, 2015, Rs. 387,884
A time-barred cheque of Rs. 5,550 was replaced with a new cheque on December 30, 2015, and
Question#37
While reconciling the bank statement with the cash/bank book of Alpha company for the year ended
December 31, 2015, you noted the following:
Balance as per bank statement at December 31, 2015, overdrawn Rs. 804,986
Cheques drawn but not presented till December 31, 2015, Rs. 387,884
The above unpresented cheques include a cheque of Rs. 36,000 issued to supplier that is time barred
as of January 3, 2016.
Assuming that cash book balance has been corrected and adjusted, what amount of bank balance shall
be reported in statement of financial position?
A. Rs1,292,240 Credit B. Rs1,292,240 Debit
C. Rs1,192,870 Credit D. Rs1,192,870 Debit
Question#38
The balance on the debit side of the bank column of cash book indicates?
A. Cash at bank B. The total amount overdraft in the bank
C. The total amount has drawn from the D. None
bank
Question#39
When bank statement shows a debit balance, it means?
A. Unfavorable balance as per bank book B. Unfavorable balance as per cash book
C. Overdraft balance as per cash book D. None
Question#40
The check which is deposited into bank but not cleared at the end of a particular year is called?
A. Omitted check B. Unpresented check
C. Uncredited check D. Dishonored check
Question#41
The table shows details relating to a company’s banking transactions at 31 December.
Rs
Balance at bank per bank 22 650
statementUn-cleared 3 110
lodgments 6 290
Un-presented cheques 650
Bank credit recorded twice by bank in error
Which balance for cash at bank should appear in the Balance Sheet at 31 December?
A. Rs26 480 B. Rs25 180
Question#42
A draft Balance Sheet shows a bank balance of Rs1 400. The following information is now available.
Rs
cheques issued but not yet cleared by the bank 150
bank charges not in the cash book 45
lodgments in the cash book but not on the bank statement 220
What is the figure shown on the Bank Statement?
A. Rs1 515 B. Rs1 425
C. Rs1 355 D. Rs1 285
Question#43
The following items are recorded in the cash book of a business but not yet recorded in its bank
statement:
Rs
Cheques drawn 3000
Amounts banked 250
The cash book shows a bank overdraft of Rs2600. What is the balance on the bank statement?
A. Rs400 overdraft B. Rs400 in hand
C. Rs150 overdraft D. Rs150 in hand
Question#44
Question#45
A bank reconciliation statement has been prepared by an inexperienced book-keeper.
Rs
bank statement balance (68 100)
(overdrawn)cheques received 141 200
not paid in 209 300
(41 800)
cheques paid to suppliers, not yet 167 500)
presented cash book balance
(overdrawn)
What is the correct bank balance according to the cash book?
A. Rs167 500 B. Rs167 500 overdrawn
Question#46
When dealing with Bank reconciliation statement while using missing method the credit side of cash
book corresponds to?
A. Credit side of Bank statement B. Debit side of cash book
C. Debit side of Bank statement D. None
Question#47
In cash book bank charges recorded on which side?
A. Debit side B. Credit side
C. Both A and B D. None
Question#48
Credit balance as per pass book is?
A. Favorable balance B. Unfavorable balance
C. Both A and B D. None
Question#49
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 added D. Rs. 2,000 will be deducted
Question#50
If any amount is directly deposited into the bank then?
A. Cash book will show less balance & bank B. Bank book will show double balance
book will show more
C. Cash book will show double balance D. Cash book will show more balance & bank
book will show less
Answer Key
1. C 2. D 3. B 4. D
5. C 6. A 7. B 8. D
9. A 10. B 11. D 12. A
13. B 14. C 15. D 16. A
17. B 18. A 19. C 20. D
21. B 22. DA A 23. DA C 24. DA D
25. DA B 26. DA D 27. A 28. A
29. A 30. A 31. C 32. DA A
33. DA C 34. B 35. B 36. A
37. D 38. D 39. A 40. A
41. B 42. D 43. A 44. B
45. C 46. DA A 47. DA C 48. DA B
49. DA C 50. DA A
98
Chapter 2 Books of prime entry
Answer key
1 D 15 A 29 DA A 43 DA A
2 B 16 A 30 DA A 44 A
3 C 17 D 31 DA B 45 DA C
4 B 18 B 32 DA C 46 A
5 C 19 C 33 DA C 47 B
6 D 20 D 34 DA B 48 C
7 C 21 DA C 35 DA C 49 DA B
8 A 22 DA C 36 DA C 50 D
9 B 23 DA A 37 DA B
10 D 24 D 38 D
11 C 25 DA C 39 D
12 B 26 D 40 A
13 B 27 C 41 DA A
14 B 28 A 42 DA A
99
43) Decrease in the provision for doubtful debts increases the gross profit means income
statement is credited.
45) Opening balance provision – 70,000*3% = 2,100
Closing balance provision = 73,000*3% = 2,190
Increase in provision = 90
This provision is Debit in income statement as an expense.
49) Rs. 55,000+8000+47,000-75,000= Rs. 35,000
100
Chapter3 Ledgers and Trial balance
Answer Key
1. A 2. B 3. B 4. B
5. D 6. B 7. A 8. A
9. D 10. A 11. D 12. D
13. D 14. D 15. C 16. A
17. C 18. D 19. A 20. D
21. A 22. B 23. C 24. D
25. C 26. C 27. D 28. D
29. A 30. B 31. C 32. C
33. D 34. C 35. DA B 36. DA A
37. B 38. DA B 39. DA D 40. DA D
41. B 42. A 43. DA B 44. A
45. A 46. D 47. A 48. C
49. A 50. D
36)
Accounts Payable
Particulars Rs. Particulars Rs.
Bank 195,000 b/d 66,450
Discount received 28,900 Purchases 205,600
Receivable (contra) 12,700
c/d 35,450
272,050 272,050
38)
Accounts Payable
101
Particulars Rs. Particulars Rs.
Bank 100,600 Opening (b/d) 138,000
Discounts Recieved 5,500 Purchases 55,600
c/d 87,500
193,600 193,600
39)
Cash a/c
Particulars Rs. Particulars Rs.
b/d 250,000 Payables 58,000
Receivables 92,000 c/d 284,000
342,000 342,000
41)
Accounts Recievable
Particulars Rs. Particulars Rs.
Opening (Bal.) 558,440 Bank 563,890
Sales 452,880 Discount allowed 28,900
Payable(contra) 67,580
1,011,320 1,011,320
43)
Building a/c
Particulars Rs.Mn Particulars Rs.Mn
b/d 90 Disposal 19
Additions 40 c/d 111
130 130
102
Chapter 4 Accruals and Prepayments
Answer Key
1. A 2. B 3. C 4. A
5. A 6. A 7. DA A 8. C
9. C 10. D 11. C 12. A
13. C 14. C 15. C 16. C
17. A 18. A 19. B 20. B
21. B 22. B 23. DA D 24. DA A
25. DA D 26. C 27. DA B 28. DA B
29. D 30. B 31. DA B 32. C
33. B 34. D 35. D 36. B
37. C 38. A 39. D 40. C
41. B 42. DA C 43. A 44. C
45. A 46. DA A 47. DA D 48. DA C
49. DA C 50. D
103
30) Step 1 : 690,000/12 *10 = 575,000 ( rent of 10 months)
Step 2 : 690,000/110 * 100 = 627,273 To calculate rent of previous year
Step 3 : 627,273/12 * 2 = 104,546 Rent of Jan and Feb
Step 4 : 575,000 + 104,546 = 679,546
31) (1,200,000*8/12)+(1,500,000*4/12) = 1,300,000
42) 1,200,000*0.08 = 96,000 Annual interest => 96,000*2/4 = 48,000 Interest of two quarter
46)
Rs Rs
Amount received 38,400
Less : prepayment for 2021 (5,400)
33,000
Received in 2021 34,000
Recievable for 2020 34,500/3 11,500
44,500
47) Paid Rs75,000 on 30 September 2020
This covers July/August 2020 (2x25,000) Rs50,000
So there was an accrual for September 2020
For September 2020 25,000
Paid 1.1.2021 (3x Rs25,000) 75,000
Paid 1.4.2021 (3x Rs25,000) 75,000
Paid 1.7.2021 (3x Rs25,000) 75,000
Accrued for July/Aug (2 x 25,000) 50,000
Expense for year 300,000
104
Chapter 5 Bad and doubtful debts
Answer Key
1. D 2. A 3. DA B 4. C
5. DA B 6. DA A 7. DA C 8. A
9. DA B 10. B 11. A 12. A
13. A 14. D 15. C 16. C
17. C 18. B 19. A 20. A
21. DA D 22. D 23. A 24. DA D
25. D 26. DA D 27. C 28. B
29. C 30. D 31. DA A 32. DA D
33. A 34. C 35. DA D 36. C
37. DA B 38. DA C 39. DA A 40. A
41. C 42. C 43. DA B 44. DA B
45. C 46. DA D 47. C 48. DA A
49. D 50. C
6) (142,400-2,000) * 3% = 4,212
7)
Rs
Total bad debts written off 1 500
Increase in provision for doubtful debts (Rs2 500-Rs1 000) 1 500
Less Bad debts recovered (100)
Net amount to be charged to Income statement 2 900
21)
Rs Rs
Bad debts 800
105
Bad debts recovery (200)
Provision for doubtful debts required [(Rs17 800 - Rs800)* 340
2%]
Provision for doubtful debts available 580
Decrease in provision (240)
Total bad and doubtful debts 360
24)
Rs
Provision for doubtful debts required [(Rs69 200 - Rs480)* 3 436
5%]
Existing provision for doubtful debts 2 600
Increase in provision 836
29)
Rs
Provision for doubtful debts required [(Rs10 620 -Rs260)* 5%] 518
Provision for doubtful debts brought forward 460
Increase in existing provision 58
31)
Rs
Provision for doubtful debts required (Rs125 400 *5%) 6 270
Provision for doubtful debts at 1 January 2013 (1 800)
Doubtful expense for the year 4 470
35)
Rs
Total of current assets on 30 September 28000
Increase in inventories (Rs2 000 × 80%) 1 600
Decrease in cash (Rs2 000 × 80% × 95%) (1 520)
Decrease in trade receivables due to bad debts (400)
Total of current assets on 2 October 27 680
106
37) Closing allowance = Rs. 95,000x6% = Rs. 5,700
Charge for Statement of profit or loss Rs.
Decrease in allowance (300)
Irrecoverable debts 4,000
Bad debts recovered (1,700)
Profit or loss 2,000
39) Rs. 1,200,000 – 1% discount as payment made within 10 days = Rs. 1,188,000
43) Rs. 900,000 – 120,000 = Rs. 780,000 – 1% discount as payment made within 10 days = Rs.
772,200
44) Allowance = (54,200 x 0%) + (32,500 x 5%) + (12,080 x 49%) = Rs. 7,544.2
Decrease in allowance = Rs. 7,250 – 7,544.2 opening = Rs. (294.2)
46) Rs. 3,000,000 x 5% x 4% = Rs. 4,000 x 33.33/133.33 = Rs. 1,500 Increase in allowance would
increase expense, resulting in reduction in profit.
107
Chapter 6 Depreciation
Answer Key
1. B 2. B 3. D 4. D
5. B 6. B 7. A 8. B
9. D 10. A 11. B 12. DA D
13. D 14. B 15. DA C 16. A
17. DA D 18. C 19. A 20. B
21. D 22. C 23. C 24. DA B
25. B 26. A 27. D 28. C
29. DA D 30. A 31. C 32. B
33. A 34. C 35. D 36. DA A
37. DA B 38. DA D 39. DA B 40. A
41. DA B 42. DA B 43. C 44. DA A
45. DA B 46. B 47. C 48. DA D
49. DA B 50. D
108
29)
Rs
Freehold land 4,500,000
Architect fees 150,000
Site preparation 200,000
Materials 2,250,000
Direct labor costs 1,120,000
Legal fees 50,000
Total 8,270,000
39) Rs225,000
Disposal A/c
Particulars Rs. Particulars Rs.
Cost 300,000 Cash 90,000
Profit 15,000 Accumulated depreciation(bal.) 225,000
315,000 315,000
109
42) 200,000/5 = 40,000
44) 15,000
Disposal A/c
Particulars Rs. Particulars Rs.
Cost 1,200,000 Cash 840,000
Profit (bal.) 230,000 Accumulated depreciation 590,000
1,430,000 1,430,000
Rs in 000
45) List price of machine 82,000
Less: trade discount 8% (6,560)
75,440
Less: cash discount 4% (3,017.6)
Import duty 1,500
Delivery fees 2,050
Electrical installation costs 9,500
Pre-production testing 4,900
90,372.4
46) 430,000
Disposal A/c
Particulars Rs. Particulars Rs.
Cost 600,000 Cash(Bal.) 430,000
Profit 70,000 Accumulated depreciation 240,000
670,000 670,000
Rs
Cost of machine sold 270,000
Depreciation for first year (270,000 ´ 20%) (54,000)
216,000
Depreciation for second year (216,000 ´ (43,200)
20%)
Book value of machine sold 172,800
Sales price of machine sold 120,000
Loss on machine disposal 52,800
110
Chapter 7 IAS-2 Inventories
Answer Key
1. A 2. D 3. B 4. C
5. DA A 6. B 7. A 8. DA A
9. DA D 10. B 11. C 12. A
13. B 14. A 15. B 16. DA D
17. DA A 18. A 19. C 20. DA D
21. A 22. B 23. A 24. DA C
25. B 26. B 27. DA C 28. B
29. A 30. B&D 31. C 32. B
33. B 34. D 35. D 36. DA C
37. B 38. B 39. D 40. B
41. B&D 42. A 43. D 44. C
45. DA C 46. A 47. C 48. DA B
49. B&D 50. D
5) 1,020+170+60+265+115+1600 = 3,230
9) (15*350)+(12*360)+(11*250) = 12,320
20) Cost Rs. 158,000 is lower NRV Rs. 253,000 (i.e. Rs. 260,000 – 7,000) is higher
Replacement cost Rs. 255,000 is irrelevant
24) 10 September (Rs. 40,000 + 15,000)/ (400+100 units) = Rs. 110 per unit
10 September (Rs. 55,000 + 60,000)/ (500+300 units) = Rs. 143.75 per unit
27) Debit Cost of Sales Rs. 1,568,000 & Credit Inventory Rs. 1,568,000
Rs. 1,880,000 + 80,000 = Rs. 1,960,000 x 100/125 = Rs. 1,568,000
111
45) Sales – costs of sales = gross profit
Rs. 4,600,000 – (Rs. 1,600,000+2,650,000-900,000) = Rs. 1,250,000
112
Chapter 8 Accounting for Manufacturing
Answer Key
1. C 2. D 3. A 4. C
5. C 6. D 7. C 8. B
9. A&B 10. B&C 11. D 12. B
13. B 14. C 15. C 16. B
17. DA A 18. A 19. B 20. A
21. B 22. DA C 23. DA A 24. DA D
25. DA A 26. A 27. D 28. DA B
29. DA B 30. DA B 31. DA D 32. DA B
33. DA D 34. B 35. B 36. DA A
37. A 38. B 39. A 40. DA D
41. C 42. A 43. B 44. DA A
45. DA A 46. A 47. A 48. B
49. C 50. A
33) Rs. 17,000 indirect + Rs. 25,000 x 80% Depreciation + Rs. 12,500 rent and utilities = Rs. 49,500
113
45) 76,000+(425,000-27,000)-110,000 = 364,000
114
Chapter 9 Preparation of Financial Statements
Answer Key
1. B 2. B 3. B 4. B
5. DA A 6. D 7. A 8. DA D
9. DA D 10. D 11. DA D 12. DA A
13. DA A 14. DA B 15. DA C 16. C
17. C 18. C 19. A 20. B
21. DA D 22. DA A 23. DA C 24. DA D
25. B 26. D 27. DA C 28. DA B
29. A 30. A 31. DA C 32. DA D
33. DA B 34. D 35. DA A 36. B
37. DA A 38. DA D 39. DA C 40. D
41. DA D 42. DA D 43. DA C 44. DA D
45. D 46. A 47. DA C 48. A
49. D 50. C
9) 160,000*10%*3/12 = 4,000
15) Inventory as given Rs. 4,500 – write down Rs. 70 – return to supplier Rs. 710 = Rs. 3,720
17)
Rs
Bank balance at start 4 800
115
Less Material cost paid * (1 890)
Add Cheque received from trade receivables 450
Bank balance at end 3 360
20) Total contract price 180,000 + 180,000 = 360,000 x 4/9 months = 160,000 less advance 180,000
= 20,000 unearned
28) Total sales = Rs215 000 + Rs536 000 + Rs84 000 = Rs835 000
116
40)
Current Assets Rs Rs
Short-term investment 6 000
Trade receivables 39 000
Pre-payments 3 500 48 500
Current Liabilities
Loan interest owing 1 500
Loan repayable within one year 12 000
Deposits from customers for orders 4 500
Trade payables 27 000 (45 000)
Net Current Assets 3 500
42)
Rs
Current Assets (Rs2 500 + Rs2 000 + Rs900) 5 400
Current Liabilities (Rs1 200 + Rs3 000) (4 200)
Net Current Assets 1 200
43)
Rs00 Rs000
0
Revenue 524
Returns inwards 10 514
Cost of sales
Purchases 286
Add Carriage inwards 12
Less Returns outwards (2)
Less Closing inventory (86) (210)
Gross profit for the year 304
44)
Rs
Sales 1 500 000
Cost of Sales (Rs1 500 000 - Rs937 700) (562 300)
Gross profit (Rs62 700 + Rs875 000) 937 700
Expenses (875 000)
Profit for the year 62 700
47)
Current Liabilities Rs Rs
Other payables 1 880
Bank overdraft 11 600
Trade payables 14 110 27 590
Current Assets
Inventory 14 610
Other receivables 1 420
Trade receivables 9 050 (25 080)
117
Net current liabilities 2 510
118
Chapter 10 Bank Reconciliations
Answer Key
1. A 2. DA C 3. DA A 4. DA C
5. D 6. DA A 7. DA C 8. D
9. DA B 10. B 11. DA C 12. DA D
13. DA B 14. C 15. DA A 16. DA B
17. D 18. C 19. C 20. C
21. B 22. DA B 23. DA D 24. DA A
25. DA B 26. C 27. D 28. B
29. D 30. B 31. A 32. DA D
33. DA C 34. C 35. A 36. DA A
37. DA C 38. A 39. A 40. C
41. DA D 42. DA D 43. DA D 44. DA B
45. DA C 46. C 47. B 48. A
49. A 50. A
2)
Rs
Overdraft balance as per adjusted cash book (balancing figure) 9,238
Add Uncreditedcheques 5,896
15,124
Less Unpresented cheques (4,998)
Overdraft balance as per bank statement 10,136
3)
Rs
Balance as per adjusted cash book [balancing figure) 1,925
Add Unpresented cheques 325
Balance as per bank statement 2,250
4)
Rs
Bank overdraft as per cash book (Rs5 000 + Rs700) 5,700
Less Unpresented cheques (1,500)
Balance as per bank statement 4,200
6) 10,400-450+80-180-140 = 9,710
7) 46,600-12,800+13,900 = 47,700
119
9) (12,000-70+90)+1,660-1,250 = 12,430
11)
Balance as per adjusted cash book (Dr) (Rs12 460 – Rs4 500) 7 960
Add Unpresented cheques 1 740
Less Uncreditedcheques (14 470)
Balance as per bank statement (Dr) 4 770
12)
Balance as per cash book (Cr) 400
Add Uncreditedcheques (balancing figure) 200
Less Unpresented cheques (700
Balance as per bank statement (Cr) 100
13)
Bank Reconciliation Statement Rs
Balanc as per adjusted Cash book (Dr) 19700
e
Add Unpresented cheques 2 500
22 200
Less Uncleared deposits (1 400)
Balanc as per bank statement 20 800
e
15) Cash Book: Rs. 14,000 (unadjusted) – 190 bank charges - 140 interest charged + 1,350 Receipts
x 2 times – 1,100 payments x 2 times = Rs. 14,170 (Adjusted)
16) Cash Book: Rs. (9,770) (unadjusted) – 700 bank charges = Rs. (10,470) (Adjusted) Bank
Reconciliation Statement: Rs. (10,470) (Adjusted Cash Book) + 4,395 Unpresented – 6,400
Uncredited + 650 error = Rs. (11,825) (Bank Statement)
22) Bank Reconciliation Statement: Rs. 11,800 (Bank Statement) – 1,300 Unpresented + 1,400
Uncredited + 950 error = Rs. 12,850 (Adjusted Cash Book)
Cash Book: Rs. ? (unadjusted) – 4,000 unrecorded payments – 620 bank charges = Rs. 12,850
(Adjusted)
Unadjusted Balance calculated from above equation = Rs. 17,470 (Positive balance)
23) Cash Book: Rs. (8,500) (unadjusted) – 920 Bank charges = Rs. (9,420) (Adjusted) Bank
Reconciliation Statement: Rs. (9,420) (Adjusted Cash Book) + 2,600 Unpresented = Rs. (6,820)
(Bank Statement)
24) Bank Reconciliation Statement: Rs. (1,500) (Bank Statement) – 850 Unpresented + 4,000
Uncredited = Rs. 1,650 (Adjusted Cash Book)
120
31) Cash Book: Rs. 48,100 (unadjusted) + 3,600 Credit transfers = Rs. 51,700 (Adjusted) Bank
Reconciliation Statement: Rs. 52,500 (Adjusted Cash Book) + 6,900 Unpresented – 4,950
Uncredited = Rs. 53,650 (Bank Statement)
32) Unpresented cheques = Rs. 3,986,400 – 55,000 cancelled – 4,830 cancelled = Rs. 3,926,570
Bank reconciliation statement: Rs. (1,580,650) bank statement – 3,926,570unpresented = Rs.
(5,507,220) Adjusted cash book
33) Uncredited items = Rs. 6,580,000 – 378,000 dishonoured cheque = Rs. 6,202,000
Bank reconciliation statement: Rs. (1,580,650) bank statement + 6,202,000Uncredited = Rs.
4,621,350 Adjusted cash book
37) Bank reconciliation statement: Rs. (804,986) – 387,884 unpresented = Rs. (1,192,870) Adjusted
cash book
41)
Balance as per bank statement 22,650
Add Uncleared lodgments 3,110
Less Unpresented cheques (6,290)
Bank credit recorded twice by bank (650)
Balance as per adjusted cash book 18,820
42)
Bank Reconciliation Statement Rs
Balance as per adjusted cash book (Rs1 400 Rs45) 1 355
Add Un-presented cheques 150
Less Un-credited cheques (220
Balance as per bank statement 1 285
43)
121
44)
Balance as per bank statement 1,000
Add Unpresented cheques 300
Less lodgements not yet credited by the bank (600
Balance as per adjusted cash book (Credit) 700
Adjusted Cash Book
Rs Rs
Balance c/d (Bank reconciliation) 700 Balance b/f (balancing figure) 550
Bank charges and interest 150
700 700
122