Ge ‘Objective Type Questions ; 4, Inthe following eases, indicate the alternative which you consider to be correct (1) Properties owned by a business enterprise reserves sey assets are referred to as (© liabilities (@) capital @ The liability created by a business enterprise when it makes a purchase on credit is termed as (a debtor (0 creditor (b) depreciation (@)_ none of the above @) Acreditor is <4Y" someone to whom money is owed (b) someone who owes us money (©) someone who has supplied goods to us (@)__ someone who has been supplied goods by us @ Adebtoris (a)_ someone to whom money is owed tb” someone who owes us money (© someone who has supplied goods to us (4) someone who has failed to pay the money owed by him to us (8) The following is not an asset (@) patent (© prepaid insurance () stock-in-trade \ DP loan from B Le. (6) The following is not a liability (a)_ bank overdraft (© wages payable fees received in advance . (d)’ provision for doubtful debts(Amounts of money owed by a business ar ts (a) assets (©) income abilities (expenses (>The following isnot an objective of accounting @) Tomaintan systematic records of business transactions. ()Toascertain the operational profit or los of an enterprise (2 To provide information about the personal assets and liabilities ofthe owner ofan enterprise “(@)_ Te provide information sbout the enterprise's assets, labiities and capital (9) Which snot one ofthe thre main users of accounting information? (@) owners (suppliers ©) government pharmacists (AO) Which ofthe following isa major user of accounting reports? (a) theowner ofa business (©) bankers (©) the government {Vall ofthe above 2 Choose the suitable terms from ®h€ X Group and put them in front of ¥ Group in brackets X Group Y Group @) Entry (Things in which a business deals. (©) Liabilities G)_Wisitng ofa business transaction in the books of accounts. (© Goods (Gi) Business operations that result in decrease in capital ©. (@ Income Gv) Business owes to others. (©) Expenses (©) Business operations that result in increase in capital. 4 3. Rewrite each of the following statements filing the blanks in each with the appropriate word of words: fae (Whats owed bya busines to others isnown asits La {Lite > ©) A MUGTEY” is person who owes our fm money. . (© A perion or fim to whom we owe money i said tbe our Oc ALLS, (2 Belay atom thoy age (©) Theteym LeU LANA means the cost of services and goods wed for generating revenue. 4 Read carefu, the statements listed below and choose the correct answer: (a) Liabilite ore what a firm (owns /owes). ©) The peopie to whom the business owes money are its (debtors creditors), 2M, DO, BA, HH, GH, O, MO, GO, Me, ADe. 2. @ Goods, (i) Entry (ii) Expenses, (iv) Liabilities, () Income 3 a) abilities, 6) debtor, (creditor, (4) capital, (expenses, 4. @) owes, (b) creditors, OBOglee ST Qriective type Questions ts Tine: Raney ae Gaara wa eS (Revenue in usually recognised when the earning process is virtually complete. The prinip spain caus (© matting 0) meraencphin (oman career osceeoees Siu eas aneiiaemess mea ae Si maccuee spaeees ol eseaues eas gee ae keene aca ont ee jo ire pam pon cece (©, whan re fer ond and evo ced rm a csomer (@ peataean es ceaiecy eens ea Cry peep te geben oe ee (© app although nee aot be exci toown nai iiales and goes out. bia (allows only calendar years to be used (lanuary to December) (©) disallows segmentation of operations into monthly periods (admits that the longer the period, the less accurate the information, © Alarge im debit altems of equipment costing less than Rs 250to miscellaneous expenses. Th ‘treatment of the expenditure is supported by the principle @ matching (©. conservatism ©) materiality (@ going concern © The basic that a a le in : © rete pasumtion ta firm has a reasonable expectation of continuing in business for going concer (© conservatism ©) fall disclosure (@) matching The assumption tata business frm separate and distinct fom its owners is called (2) going concern (© entity ©) conservatism (consistency (®) The consistency principle requires (a) objective reporting (©) accounting methods be the same throughout aconcem (© accounting methods be the same between concerns {@) accounting methods be the same frm period to period () The matching principle does not (a) match capital expenditure with expenses () match expenses with revenue= fo) form the foundation of computing incoms {require frequent estimates (40) The principe which assumes that financial statements at all inclusive ie (a fall dsclooure (© conservatism @ ently (verifiable objective (a0 The accounting entity assumption (a) isnot applicable to partnerships (2) recognises the legal aspects of business organisations (©) requires periodic income statements (@ is applicable to all forms of business organisations {a2 The matching concept means that (a) assets should be matched agains liabilities (@) revenues should be matched against expenses (©) expenses should relate to the goods or services sold during the period (@) none ofthe above (03) Recording of fixed assets at cost ensures adherence of (@) going concem concept ©) cost concept (© conservatism concept (@ both (a) and) (© both () and ve) (04) The tact that net profit is said to be the difference between revenues and expenses rather than receipts and payments is known as the (@) accrual concept (©) dual aspect concept (0 realisation concept (@) concept of consistency (© concept of conservatism (15) The idea of separation of the owner's business transactions i referred to as @) net worth ©) entity concept © prudence principle (@) all disclosure principle (16) The principle of accounting which recognises the two-fold aspect of a business transaction is (business entity concept 7) Dual aspect concept resulis in the accounting equation. G) assets = capital (©) assets = capital + abilities (0) assets + expenses = capital + profit (@ revenue = expenses(18) Which one ofthe following isnot a basic accounting principle ? (a) entity (or cont (©) matching. (A) rationalisation (19) Which one ofthe following is not a basic accounting principle 7 (conservatism (© materiality ©) going concern (4) equity (20) OF the items below the one which differs significantly from all of the others is (@) accrual concept (©) limited liability concept ©) business entity concept —__(d)_consistency concept (21) The assumption that a business will continue to operate as a going concern will not influence the valuation placed upon (@ cash in hand (0) stock-intrade () trade debtors (@) land and building (22) The taking of profit atthe time of a sale on credit rather than at the later time when the debtor ‘makes payment is known as the (@) accrual concept (©) anticipation concept (©) money measurement concept ()_ realisation concept (23) Revenue is usually recognised when the earning process is virtually complete. What principle i described here ? @) consistency (0 revenue recognition ©) matching (@) conservatism (20 The concept of matching costs and revenue means that (2) the expenses offset against revenues should relate to the same time period () revenues are atleast as great as expenses (0) revenues and expenses are equal (4) net income equals revenues minus expenses (25) In the majority of firms, when is revenue recognised ? @) when cash i collected from customers (©) when an order for goods or services is received from a customer (©) when a deposit or advance payment is received from a customer , (@ ‘when goods are delivered or services are rendered to customers 20 The secunting prod principle ion dre NOE income cannot be enacty known unt fm ligldaes and goes out of (©) allows ony calendar years tobe used January to Decembet) 2: allows segmentation of operation into monthly periodsQf) The consistency principle requires, (expenses be charges aginst the pea in which they are incurred (@) the effect of changes in accounting procedure upon income be properly disclosed (2 extraondinary gains an! losses should not appear on the income setement (accounting procedures be adopted which give a consistent rate of income 5 Te ctl hat ates hat frm as ame opr rc ibis fon © PoE pandctumek hereon font in bane (a) going concern (©) full isconure (2) conservatisn (2) matching (0) The conastency principle requires that (accounting methods be the same throughout a company (2) accounting methods be the same between companies (©) accounting methods be the same from period to period (@) objective reporting G0 Which principle assumes financial statements areal inclusive ? (@) conservatism principle (entity principle (©) full disclosure principle (4) wholenes principle (22) The concept that a busines fim is separate and distinc from is owners is called the (@) going concern principle (@) entity principle (®) conservatism principle (4). consistency principe 65) The entity concept (@)_ isnot applicable to partnerships (©) is applicable to al forms of business organisations (2 requires periodic income measurement (2) recognises the legal aspects of business organisations (4 Which accounting principle prohibits a firm from changing to different deprecation methods ‘every year ? (a) materiality principle (©) consistency principle ©) cost principle (€) matching principle (25) Capital is shown on the lability side ofthe balance sheet because of (a) entity concept (©) dual aspect concept (©) acerual concept going concern:Q) &), (5) (b), (9) (ad, 3) (d), 7) (b), 1) (a), (25) (d), (29) (a), (33) (b), (2) (a), (6) (a), 10) (@), a4) @), (18) (a), (22) (d), (26) (a), (30) (), (34) (©, (8) (a), a2) ©, (16) (©), (20) (), (24) (a), (28) (b), 32) (©),16) Accounting equation ; (Accounting ever SHO diecsive type questions t sie ci aleraive which you comer ob comet 1. In the following case, in (1) The basic accounting equation is @ AnL+OR (© AsL-OE ©) OB = AGL () LOE+A (ote :A stands for Assets L for Liabilities and OE for Owner's Equity) @) Assets minus owner's equity equals open oan © een (name f ©) Teeny of owner ots baer ents fared oa — (seal stove (© Abuinen entre pys 0 ois emo Mette tamactonon sunk gat G2) tear nan cnt ang © nein en at, ee by (©) decrease in an asset, decrease in capital (© nonwofte stove (8. Darnganacontng pro mae decay 50nd capa nny 290014 tou and dono he peiofe cae ene ome @) €19900newae (0 sto donee (b) & 25,000 increase (d) © 25,000 decrease i (6) Which of the following would cause a change in the capital ofa sole trader ? | (2) purchase ofa typewriter on credit for office use (b) depreciation of a motor vehicle (©) payment to a creditor for goods supplied in the last month (€) collection of cash from a debtor(Which ofthe following transactions would affect the cash position of a sole trader ? (@) payment from petty cash for purchase of stationery (©) withdrawal of goods for personal purposes by the proprietor (0) depreciation of office furniture (@) bad debe written off Purchase of machine for cash (a) increases total assets (©) leaves total assets unchanged (0) decreases total assets (@) increases liabilities Withdrawals by the proprietor (@) reduce both assets and owner's equity ©) reduce owner's equity and increase abilities (©) reduce assets and increase liabilities (2) affect none of assets, liabilities and owner's equity (0) On sale of old equipment, owners equity (0) remains unchanged (@) may or may not change (11) The assets ofa business are worth € 156,000 and its capital is € 96,00. Its ibilities are (a) £25200 © 60,000 (0 €96,000 (@ €1,56000 (02) The liabilities ofa business are 40000 and the proprietors claim is € 70,000, The total assets amount to (@ e700 ©) ©3000 © e1,10000 (@) e40000 (03) Which ofthe following is true ? (a) Assets + Reserves = Bquity ©) Asoets + Equity = Liabilities (© Assets~ Liabilities = Owner's funds @) Liabilities to outsiders + Reserves = Equity {6 Which ofthe following events doesnot representa busines transaction ? 5 G@) goods are purchased on credit @) machinery is purchased for cash(©) anemployee te (4) the owner ofthe bu (19) Which ofthe folowing events represent {the owner ofthe firm dies (6) stationery ix pure haced for cash 0) oval ar onder for delivery next month (a) a prompestive employee is interviewed {160 In double entry system of book-keeping every business transaction affects (a) two aides ofthe same account ood fom the business for Ns Personal se trusiness transaction 7 two accounts (©) one account (2) the same account on two different dates. (7) Double entry means (a) entry made in two sides of Books () entry made for two aspects ofthe transaction (© entry made in two places journal and ledger (2) none of these (18) Which ofthe following isa personal account ? (@)_ wages account (©) debtors account (@) cash account (@) furniture account (19) Purchase of an asset is (a) anexpense © aloss (2) an asset (€) none of these (20) Which of the following one is rel account ? (@) salary account (© cash account (©) advertisement account (d)_ creditors account. 21) Commission earned but not received isa (2) real account (© personal account (©) nominal account (@)_both real and personal account (22) Which ofthe following is a nominal account ? (® machinery account ——_(€)_drawings account ) office equipment account (d)_ carriage inwards: (23) Patent right account is of the nature of (2) real account (© personal account ©) nominal account (@) none of these (24) Increase in lability and revenue ae recorded on the (a) debit side (© credit side (©) both sides fa eaein an asset account is recorded on the Oat sie (0. credit side fp both sides (2) neither side oo {in an expense account is recorded! on the ( aebitside (0) credit side ¢) bothsides (@) neither side pers in capita recone om the ) debitside (© credit side (4) bothsides (@ neither side ‘Purchase of goods for cash from Arun shouldbe recorded by Debit Credit (@) purchases account ‘Arun account cash account ‘Arun account (@)_ purchases account Cash account (@ Amun account Cash account Payment of a firm's rent from the business bank account should be recorded by Debit Credit (a) bank account rent account (@) rent account capital account | @ rentaccount drawings account | @ rentaccount ‘bank account ‘0 Cash brought in by the proprietor as capital should be recorded by Debit Credit (@ ash account ‘bank account (©) capital account cash account (@ cash account ‘capital account (@ capital account ‘bank account by (3) Withdrawal of goods from stock by the owner ofthe busines for personal use should be recorded Debit Credit (@) drawings account cash account ©) drawings account purchases account (© capital acount drawings account (@) purchases account capital account 2 Goods returned by Nisit'« cust should be recorded Py ‘Debit (© sales returns account —_Nisit account © purchases account ‘iat acount (© Nisit account sales sceount @ Nisit account goad account(33) Sale of goods on credit to Dipak should be recorded by fa) b) © @ (a) (b) © Debit Credit Dipak account sales account cash account sales account cash account Dipak account sales account Dipak account (G4) Which of the following double entry would not record a purchase of goods for resale ? Debit Credit purchases account cash account purchases account supplier's personal account purchases account stock account purchases account bank account @ (35) Which of the following is not a satisfactory balance sheet equation ? assets - liabilities = owners’ equity assets = liabilities + owners’ equity assets = liabilities - owners’ equity assets — owners’ equity = liabilities1. Ma, 8) ), (5) (b), 22) @, Q9) @), QO, ©) @), (16) (b), (23) (a), 30) (©), (10) (@), 7) (b), (24) (©), (31) (b), @@, @ @), (ID &), 8) ©, 25) (©), 32) (a), (5) (d), (12) ©), a9) ), (26) (a), (33) (@), (6) (b), (3) ©), (20) (©), (27) ©), (34) ©), ee ar 7) (@), (14) ©), 1) @), (28) (©), 35) (©).o @ o bjective Type Questions | z oer inthe following cases, indicate the alternative which you consider to ‘be correct ‘A Journal is (a) a book of accounts (©) a book of original entry (®) a financial statement (d) ledger A Ledger is (@)_ a book of accounts (© _abook of original entry (0) a financial statement (@) a journal ‘Transactions are first recorded (a) inan account (© ina ledger (b) ina journal (@)_ none of the above ‘The process by which the entries in the journal are transferred to the accounts in the ledger is called (a) journalising (© posting (b) ledgerising @_ any of the above If more than two accounts are affected by a business transaction, the sum of the debits must be (@) greater than the sum of the credits (b) less than the sum of the credits (equal to the sum of the credits ‘A book of accounts is called a (an) @ journal (© ledger ©) account (@) financial statement(The following acon (discount allowed () carriage outward 8) The following account has a credit balance (o) returns outward ‘has a crit Balance (o)_cartiage inward discount received @ (a) returns tnwart (0) rent paid (@) cash (9) The following account would be found Inthe purchases ledger (@)_ purchases (o) returns outwards (0) P-Sharma, a supplier (dK. Roy,a customer (10) The following account normaly has a debit balance G) commission received account (@)_a creditor's account @) aan account (a) furniture account (11) The following account normally has a credit balance (@) sales returns account (o rent paid account (©) stock account (a) proprictor’s capital account (42) The following account has a credit balance (@) equipment account (0) purchases account (©) purchase returns account (@)_ depreciation account (13) The following account has a debit balance (@) sales account (©) proprietor’s drawings account ©) interest received account (@) discount received account (4 A credit balance on Bipin’s account (a supplier of goods) in your ledger means that (@) Bipin owes you the money (©) you owe Bipin the money (©. you have just paid Bipin that amount of money (@ you have returned that amount of goods to Bipin (05) Ajournalis (2) a book of original entry ©) abook of inal entry (© permanent record (® anincomplete record (46) Classified summary ofall transactions is called @) cash book ©) joumal (0 ledger (@) tial balance (17) What is putin the posting reference colu @ wnacant nie eae en (b) ledger page number (4) none of the aboveEs “what is putin the posting reference column of a journal ? (@ journal page number © @) edger page number (@) mone of the above 49) Which one ofthe following has a creit balance in the ledger ? (@)cartiage inward (© returns inward () carriage outward (@) returns outward ‘20) The following account would be found inthe debtors ledger G@) sales () retums inward date (© R Dutta, a customer (@)_P.Arora,a supplier «a Which oe ofthe folowing happenings could ot account fora cet balance ona tae debtor's acount? -G@)_ amaccount has been paid twice by the debtor (©) cash discount has not been deducted from an invoice (0) the debtor's cheque had been made out for the wrong amount (@ returns outward have not been taken into account (© there has been a misposting in the debtors ledger (@) Acredit balance on a sole traders capital account is. {@) equal to the cash and bank balances of the business (©) the amount the sole trader owes the business (0. the difference between the assets and external liabilities ofthe business (@ equal to the value of the fixed assets ofthe business. (23) Sales account, salaries account and capital account normally have (@) credit, debit and debit balances respectively ©) credit, credit and debit balances respectively (debit, debit and credit balances respectively (@ credit, debit and credit balances respectively (21) Furniture account, rent received account and debtors account normally have (a) debit, debit and debit balances respectively (©) debit, credit and debit balances respectively (0 credit, debit and credit balances respectively (d) debit, debit and credit balances respectivelyAnswer to Objective-type Questions ae om @; & ©) (a5) fa); (6) ©; 3) d); (24) ). @ @;i @ ®%; @ @:; © ©; © ©; a0 @; a) @; 42 ©; a3 (; GH WO: (18) ®); 9) @; @ ©; QD @; 2 WO; 1 i @ an @sSpiotbcthoypge is hn hmmm otal resigns (saan eens to jective Type Questions a you consider to be comet 1. In the following cases indicate the alternative whic {1) The total of the Purchase Day Book will be posted to a 7 (©) cash account ® ® w o © ® o (o purdase acount (individual acount fsupplen __(d)_noneof the above Mae ci 0 O ues (Onda acon of istome ® cahscount (@) sone ofthe above ‘Te ot ofthe Purchase Returns ay Book we poste 0 (purus act Co nda accounts of ples 0 purdas ture acount (@) eahacout The ta ofthe Sas Reue Day Bok wil be sted to es acount (Onto acsants fost © terete acount (®) choco ‘Te aot the Jura Proper wb debi G@)cashaccount (©) sales account (©) purchases account (@)_ none of the above ‘The following would be entered in the Jounal Proper (@) purchases and returns of goods (©) sales and returns of goods () correction of errors made inthe ledger (4) cash transactions ‘The following is not a book of original entry (a) the journal (©) the ledger () the ash book (@)_ the purchase day book The following is a book of original entry and is also part of the ledger (@) the purchase day book (©) the sales day book ©) the cash book (@)_ the journal Day books are used because {)_ the double entry system would not work without themn| ©) tomeet the requirements ofthe aw (© itisa convenient way of grouping together similar transactions which reduces the ume entries inthe ledgerB_Books of Original Entry invoices reeived ©) credit notes sent out (2) debit notes received The Purchase Day Book is entered up from the © G) invoices received ©) credit notes sent out ‘The Returns Inward Day Book is entered (invoices received ©) credit notes sent out ‘The Returns Outward Day Book is enter (2) invoices received (©) credit notes received ‘The following is entered inthe Journal P (@) purchase of an asset for cash ©) purchase of goods for cash ‘The following is entered in the Journal (@) withdrawal of cash for personal, () sale ofan asset for cash (16) Mathur & Co. purchases a motor car on © © a3 @ an oper © a5 Proper following documents invoices sent out (€) debit notes received ‘up from the following documents, () debit notes received red up from the following documents invoices sent out (4) debit notes sent out purchase of an asset on credit (2)_purchase of goods on credit, ‘use (©) cash discount allowed to customer (entries to open the books of accounts coe from Auto Distributors forthe purpose of real. ‘This transaction will be entered in the = (cash book (© purchase day book oa proper (@) none af thee 7 Rasta Co. purchues a typewster for office se fon Equipment Supplies Ld, imumediaely by cash This ransacton willbe entered ing ne SUPPL. paying cash book (©) purchases day book ©) journal proper (2) none ofthese (18) The principal book of account i (@) ‘cash book (© journal ©) ledger (€) none of these (19) Closing entries ae recorded in purchases book © cashbook ©) tales book (2 journal proper 2) Fotowing one snot book of orginal cy G@) purhases © ledger (b) cash book “{@) bills payable book (21 Closing entries are recorded in 9 joumal proper sash book ©) leger of these (2) Acre note received fom a supplier Wale recorded x (@) cash book (©) reams inward book cutward book 29) as tots of acount of rm of of and three ledgers ; purchases, ‘Purpose of resale, the subsidiary should be (@) journal and general ledger () journal, general ledger and suppliers include the usual subsidiary books 1 a typewriter is purchased on credit forthe ) to/be used for recording this transaction— Principles 01 mars (© pur - 7 S Pacha doy book and general ed trt a saen Jee a mes day book, general ledger aneh Purch es gayg When goods are returned to suppliers, the supplier vedit nite or debit rte () credit noe (oy ithe pa debit nate both (b) debit note ta) xed note & (25) The sale ofa busines asset om credit recorded 18 ; G9) sales ural fo general puma (ay none of tee (©) cash receipt journal Il be entered on the (25) The total ofthe Purchases Day Bok for the month wl (a) debit side of the purchases account (©) credit side of the purchases accent (2a side of the ada acount of re (2) credit side of the individual accounts of creditors 27) Gopal Bros have purchased a filing cabinet for ofice use, from Office Supplies Lid py. limanediately by cash. This transaction will be entered in the (28) Purchase Day Book is used to record (all purchases (©) all credit purchases (2 all credit purchases of goods (@) all cat purchases of ence (29) Sales Day Book i sed to record @ alates (©) all credit ales (2 all credit ales of pods (d) all credit ales of asoets (20) Returns Outward Book i ued to record (a) Retums of goods previously sold (©) Returns of goods previously purchased (© Returns of fixed assets previously purchased (@) Return of fed act previously sold (G1) Returns inward Book is used to record (€) Returns of fixed assets previously sold (2) Which of the following transactions will be entered inthe Journal Proper ? Ga) purchase of furniture for resale (©) sale of old office equipment for cash (0) recovery of a debit previously written off as bad (@)_retum of machinery previously purchased for use in the businessGg 7 Maser to Objective-type Questions © “pad: Qa: (3) (b); 4) ); (5) (d); ‘on; OO; GOO; AD@; Gy@, 19: (16) (b); 7) @); (18); (19) (a) ; aad; 2@; 2)b); 5); (6) @); mo; GO; GD; E62 @; (6) (b) ; MO; 3)(a); (14) (©); 20)(); (21) a); (27) (©) ; (28) ();SPFOM aYatem of potty ogg Pn With example Jecti OF petty cab Ori: tive Type Question, athe HONE CASES Indicate the ale Ma no f ii {ay The balance of petty cash book na h you cones iobrcons (a) petty expenses Tepresents (b)_ profit _ eT pat cash in hand (d) none of these @ Apetty cash book records (@)_receipts and payments only small payments (©) only small expenses (a) small expenses and income @) A petty cash book is usually maintained by (a) small traders oy big business houses (©) all business houses — big and small (#) An analytical petty cash book \Y% lists different petty cash expenses under their relevant headings (b) is used instead of a three column cash book (©) is not part of the double entry system (a) is always run on the imprest system correct Of small amounts— Principles of Accounts # Vol. - | (For ISC Clas, © vu (6) a (8) o ee Under the imprest system the petty cash is (@) increased ty week (b) reduced every week LW always restored to the original amount (A) used up completely before being, restored The main purpose of petty cash is (a) to pay employees’ wages (b) to pay suppliers for their goods (©) to provide change for the till 1U8*to pay small day to day business expenses The petty cash is kept on the imprest system and the balance at the start of the month is 9 y Petty cash expenses during the month of € 270 are incurred, the amount received from the Cathe, at the start of the next month should be (2) & 30,QoFF 270, (c) & 300, (d) & 570. A petty cash account has an imprest of € 250. Currently the account has a debit balance of tH Cash needed to restore the imprest is (a) % 3 AF 220, (c) & 250, (d) & 280. A concern maintains a petty cash book under the imprest system. The imprest amount is ® 25) 4; the beginning of a week the petty cash book has a debit balance of 8 27. Amount needed toresime the imprest is (a) & 250, (b) F227, (c) rbdhe 223.1.1) © ; 2) &) ; (3) ) ; (A) (A) ; G) (© 5 (6) (A) 5 (7) (b) ; 8) (B) (9) A.GP Oriective Type Questions 1. Write down the correct one from the following, (1) A hank reconcifiation statement is prepared to find out the causes of the diff the balance as shown by the cash column of the cash book with the balance shows by its bank column (b) the balance as shown by the cash column of the cash book with the balance shown Py the Pass book {9 the balance show (2) “A bank pass book is a copy of {)_ the cash column of a customer's cash book ()_ the bank column of a customer's cash book {U2 the customer's account in the bank’s ledger 3) "A bank reconciliation statement is prepared by (@)_, a bank ‘a customer of a bank (©) none of them (4) A bank reconciliation statement is (@) a part of the cash book (©) a part of the pass book (© apart of the ledger UAT none of these. (5) A bank reconciliation statement reconciles the (a) ledger with the journal (b) petty cash book with the bank account (©) day books with the bank statement dah bank statement with the cash book m by the bank coloumn of the cash with the balance shown by the pass bookSH Thebankst Teena tnt see hordes Ac mn daven in fave of se F260 (overdrawn (@) €1.000 (overdrawn) ©) Adank recone ion statement is p (@) cash balance and bank balance ()_cash balance and pass book balance ‘LAT bank balance as per bank column of cash bonk and pass book (8) A debit balance in a firm's cash book will be shown as (a) _gaebit balance on the bank statement ‘a credit balance on the bank statement (©) anil balance on the bank statement (@)_ an overdrawn balance on the bank statement Which of the following would not cause discrepancy between a firm's cash book and bank statement? 7 pared to reconcile the dif o (@) cheques drawn have not been presented for payment (@) cheques deposited into bank have not been recorded on the bunk statement (0) bank charges have not been entered in the firs cash book ()_ interest on overdraft charged by the bank and credited inthe cash book (10) Assuming that it reconciles withthe cash book, a credit balance on a bank statement on the 3Tst December would appear inthe balance sheet as a (a) current asset () current liability (eo) fixed asset (4) long term liability (11) Which one of the following would be entered inthe cash book and not in the bank statement (a) a dishonoured cheque () bank charges (© a credit transfer received from a customer (@)_payments into the bank but not yet credited (12) Which ane ofthe following would not appear in the pass book although it would be entered inthe ‘ash book? (a) a direct debit in favour of a supplier () a credit transfer received from a customer (6) adishonoured cheque (a) an sssue of cheque not yet (03) When the monthly bank statement is sent out which one ofthe following woul appear ? (a) credit transfers received from customers {() payments into the bank not yet credited (oases ledger balance written off asa bad debt (2) cheques written but not yet pres ted for payment(0) When te monty fuk semen see aut wha one ofthe allowing would Mo Ppa (0) interest charge by the bank () a dishonoured choyue (0 a payment from petty cash (@ adtirect debit When drawing up a bank reconciliation statement, if you start with a debit ba book, the hank charges should be @) added (0) subtracted (© multipied (@) divided When drawing up a bank reconciliation statement, if you start with debit balance as per the bank statement, the unpresented cheques should be (@) added (©) subtracted (o) multipied (@) divided Which of the following items of information required fr his cash book would a proprietor obtain from his bank statement as) ance in the cash 8) an @ ® © cheques received by the proprietor hesques issued by the propristor interest charge by the bank (2) cash deposited into bank ‘The bank column of your cash book shows a debit balance of € 540. Cheques issted but not presented for payment amount to 245, The balance according to your bank statement should be (@) Debit #785, ©) Credit 8785, (0 Debit 2295 (a) Credit 2295 (19) A standing order for €50 had not been entered in your cash book. If your bank statement shows 4 credit balance of € 680, the balance in your eash book before the standing order is recorded should be (a) Debit £730 () Credit #730 (© Debit ®690 (a) Credit 860 «s)and paid into bank, but not balance in your cash book should be ~ (a0) Your bank statement shows a debit balance of € 860, Cheques received entered in the bank statement amount to % 350, The (a) Debit 510 Oo” Credit 2510 (© Debit €1,210 (d@) Credit ¥ 1,210 (21) A customer paid ® 240 direct into your bank account. His notification was lost in the post. If your bank statement shows a ctedit balance of & 960, the balance in your cash book should be (a) Debit €1,200 “(b) Credit 81,200 {ser Debit & 720 (a) Credit % 72025 Wy Q ©; @) oye 6) © M ©; peau (10) (a); a) 5 3) @); a9 ©; a5) ®) a7 ©; 18) «) ; a9) (a) Qn ©; @ @; @ & ap @; 16) (a) : 2m &)tse OE pO OMUURE UE MAREE Traian seme see DMO siecine Type Questions 1. In the following cases, indicate the alternative which you consider to be correct : (1) Trial Balance is — (a) areal account (b) a nominal account (9 not an account <2) Tria] Balance contains balances — of all ledger accounts “only personal and real accounts ) One. * seminal accounts © ofreai ana,“ay The preparation ofa trial Balance helps in locating — (a) errs ofextiston (ro of principle lercal erors (Errors which affect one account can be — (a) errors of principle eX errors (©) errors of omission Go ae (6) Errors of carry forward from one year to another year affect — (a) personal accounts only (© nominal accounts only (6) realaccounts only U2” both personal and real accounts (©) Errors of commision grses when — = 6 ay tmancon kaha hay oe pty toy taencon ery em eter hl opty Cees cea 0) inert eof Tl Bauer eves ante Te pees Ac labo — (a) credit balance (©) credit or debit balance per oleae pxenmat ae {a) 3 rough draft of the final accounts ee ese i eeeamonge oe aap eset ee Cae ee eames Oca eee ee fae nae cee Cosco ee (C-48) trial balance: (@) journal ae ee eek ee a eae Oy ee cee oaay ceca ea eee een {Lada payment for purchase of stationery has not been posed fom the cash book ae eee ee ee ee eee meres Cine natn ge di mn th rarber oct yes ee eco FOr arp lester eer ‘UJeT™ a sale of € 358 entered in the sales day book as € 538 6 ee Spenser Oe PA foramen ere ereG4) The trial balance provides — (0) complete proot of the accuracy of accounting records 0) subetatal proof of the accuracy of accounting records (9) proot of the equality of debits and credits (@) no proot of accuracy (48) The following errors would prevent the table from agreeing — (a) good sot on cre for € 780 incorrectly invoiced a 870 {stock om hana the endo he year ndervaled by 250 (©) sale of surpissuipment or® 1400 entered in the sles acount {U8 a sales day bok tem for 290 enter inthe customers acount 35 € 239 (06) The following ero atrial balance would beable to disclose — (2) goods costing 50 tken from tock by the proprietor but no etry was made in the books _G9y uncle wages tlalling & S40 repaid fo the cashier but no record was made in the accounts (© petty cash reimbursement of 810 was debited tothe cash account (@) repairs to machinery 200 wrongly debited to machinery account (07) A suspense account can be used asa temporary measure to balance the — manufacturing account (© trading and prot and loss account (©) appropriation account Uay“trial balance (08) Ifa postings made to the correct clas of account anon the correct se, but a wrong acount, itis anertorof SF commission (© exiton ©) principle (@) compensating (09). A suspense account is opened when the — (@) bank account doesnot balance) profit and los account doesnot balance tral balance doesnot balance (@) trading account doesnot balance By” The following account has a normal debit balance c (@) trade creitors AT ash () Anil Sen capital (a) more of these (2 The tabulation of balances of all edger accounts asa summary statement is known as (a) reconciliation statement le“ trial balance (©) financial statement (a) balance shest7, 8 rn cctinne © Answer to Objective-type Questions LOMO; 2; 3 ©; @) (©; (5) (d); (6) (b); (7) _(b); (8) (b); ) (b); 0) (); a @); a2 @; (3) @; G4) ©; 5) @; M6) ©; (17) @); (18) (a); (19) (b); 20); (21)XY Ordiective Type Questions | How mg cases ndticate the alternative which you consider to be correct o A dill of exchange as (a) a promise to pay (©) anorder to pay Q) a request to pay (d) none of theseVrniemane tedrawn by ntineasaniiassll /si7) stor ot Ns cretion ase (9) a seer Whi es 0 pair on his or acum 18 fate alll eae al the on he wie a saw ©) dhawee »ee {9 none of thes per on oho a Bilis draw i calle the rower (© drawer ype (@) endorsee «g_ epene thom the amount oa bilis payable called the a) drawer (© drawee payee @) endorsce ay Apeosory noe is fa) promise to pay (0 anondert ler to pay > Apromissory note is made by a lw) debtor (© actor 1) supplier (customer j Retring a bill under rebate means (a) making payment for the bill before its due date (making payment for the bill ater its due date (making payment for the bill on the due date (2) dishonouring the bill (& Whena bill is dishonoures, noting charge spa by (a) drawer (bank {b) endorsee (@) any ofthese partes (1k) When a bills dishonoures, noting chage is bore by (a) drawer {© drawee ®) endorsce (@ bank (u) Onmaturity, a promissing note is met by i ir deae (© dawee ) moker (@) endorse (2) On maturity, a bills met by is (a) drawer @ (b) drawee (a) endonee snus forthe period ( discounting charge 19) When ails dscountd sou ve (2) from the date of drawing til the date of maturity (8) from the date of ccePtane® eof maturity (© from the date of facet he date (a) from dhe date of drawing te Oy eau from he date of (19 Incase ofan ater date’ Bll tae ment (a) drawing (a) any neath (8) acceptance sary date call from the date of (15 Incase ofan ‘after sight BL BETAS,” dorsement a) drawing (a) any one of these (8) acceptance(lo) an as) ay) 20) an 2 (23) ‘three months bill drawa on UY Apr ture for payment on i J (ay Sth Fuly, 2011 Cb) 8th uly, 2011 (9th July, 2011 xlorsed by A to his creditor C is d 20H wall mm ee from B rd_ A will debit the ameniny wo bile Receivable A/« (© Bills Payable A/c bh) BA/e WW CAL Bills Receivable Book is a part of (a) Journal (© Ledger (b) Cash Book (d)_ None of these Bills Payable Book is a jook conta ayia (a) Principal Book (0 Box peicoe ning, blank forms for writing bily 4 (b) Subsidiary Book (d)_ None of these P pays 8 1,000 to Q on maturity of a bill accepted in favour of Q, P will debit the amount to @ QA/c (0 Bills Payable A/c (b) Bills Receivable (ad) Bank A/c A bill of exchange can be transferred from one person to another by (a) drawing a new bill (© crossing (b) endorsement (a) none of these On 65.11. A draws on B a bill for ® 2,000 payable 3 months after date. B : The due date of the bill is poy er date: B accepts the bill on 85 (a) 98.11 © 68.11 (b) 118.11 (@) 8.8.11 On 87.11 A draws on B a bill for 1,500 payable 2 months aft ; The due date of the bile Pays \onths after sight. B accepts the bill on 107 11 @ 109.11 © 8911 ) 139.11 (@ 11911 State whether the following ctatomante arn PDYTE .- rarer#7 Answer to Objective-type Questions \ GEE —— ©; 2) ) ; B) (@ | A CO 5 (5) @ ; ©) (@) ; 7) (@) ; (8) (a) ; (9) (a) + (10) (c) ; (11) (b) ; (12) (b) ; © 360 14) (2); (15) (D) ; (16) (b) 5 (17) () 5 (18) Ca) ; (19) (b) ; 20) (c); 21) Cb) ; (22) (a: (23) (b).tawe your reasons. TAO: BC rmruanecwere MS RE QF Obiective Type Questions ene 1 Ineach of the following cases state the alternative which is conect: (1) Depreciation is a/an (a) loss (b) asset (©) income (2) Depreciation is a process of (a) valuation (b) allocation (©) both valuation and allocation Depreciation under straight line method (a) remains constant each year (b) decreases each year (©) increases each year (e(8) Depreciation under reducing instalment method is based on (a) original cost price (©) on the value at the beginning of each year (© onserap value (9) Depreciation is provided on (a) current assets (0) fictitious assets (©) fixed assets (2) intangible assets (6) The annual instalment of depreciation is (@) a charge against profits (©) an appropriation of profits (neither a charge nor an appropriation of profits (7) Tre amount of deprecation charged on furniture will be debited to (a) furniture account ()_ depreciation account (© cash account (8) Fixed assets are shown inthe balance sheet at (2) cost price (0) replacement value 0) selling price (@)_ written down value (9) A fixed instalment method of providing for depreciation is one according to which (@) the value of asset remains fixed every year (©) the amount of depreciation isthe same every year (©) the price ofthe asset i adjusted according to market price every year (70) diminishing balance method of providing for depreciation is one according to which (@) the rate percent at which deprecation i writen off goes on declining fom year to year (©) the amount on which deprecation is provided is reduced from year to year 0) the rate percent and also the amount are reduced from year to year (1) Depreciation arises from (a) physical wear and tear (©) fallin the value of money (© fallin the market value of an asset (@) loss in business (22) In straight line method of providing for depreciation (@) depreciation is provided every year on the written down value ofthe asset (b) a fixed amount of deprecation is charged to Profit & Loss Account every year (©) the amount of depreciation goes on diminishing every year (13) Depreciation is an expense arising from (@) use of various services (©) use of fixed assets (© consumption of readily consumable assets (14) Depreciation is charged on machinery @ 20% p.a. under the straight line method. Ifthe cos f ‘machinery is € 80,000 and the present book value is € 48,000, the amount of depreciation fr tht year is (@) 6400 (© ©9600 ) ©16,000 (4) ©25,600(@) €29,000 ) €26,000 (© 29500 (6, take (9 Ihe stght ine method of depreciation sd the depreciation ()afoed peenge fe otf eee tn (a perentage ofthe ook vale ofthese nee (© alvays 10h ofthe contest case (acting perentag ofthc the nee ech yar (an Depreciation sched by to ebclcence oly 0 wearand tear oly (©. pamagecf tne only (8) ny octal he above (Another nae forthe ea instalment etd of deprecation (a) reducing balance method 7 eee (sight line methoa (©. revaluation method (2) none of hse «Fis charge depreciation ech yar (a to ene tat here enough money inthe fimo replace th at ©) toapred the cot ofthe set vers wong le (©. toreduce the profit and thus reduce the dens they cn pay to shaehldes (8) ecw thea sae ty mt (2 The falowing asst mest ly to appreciate han epee (o plantand machinery 0) mor eh (©. land and baldinge (8) atures and tings (2 Thefaloing a metho of cating depreciation ou (owed averge & mo (@) diuhing tle (2 firm buys nase for 1020 and depressing the mining balance me Wich Cie eidedng nouns would he becond yor deprecation cngeat OS pe? eam oes oe @ te (2 ics set acon ta 140. The ol depen charged dae 72.00. The ook ‘ateofthe abst Gane (© e140 airane (@) e220 (20 The ag fur acon on amy 20 Two yer ater te ook vali 600, ‘The straight line depreciation rate of charge each year is (@) 12/,% @ 38 (b) 25% a lili ill(QS) Anasest costs 1,50,000 and is expected to last ten yeas, 80 Sspesciation te charged at 8 15,095 Sear However ater fen year te sat aime Which othe following would he harge for depreciation ? fate sarc apr yr erin Be a ee ey rr ot ota O etert aera setaren Beet emer 2 tates xt 800 The oie head oa a ote tae paint am Saar se ue 3 eee Stee toe eee gota tee Ee Ee = eatin i ore ‘=. (28) Depreciation isa fall (a) inthe original cost ofan aset (©) inthe book value ofan asset (© inthe market value ofan asset (29) The amount of depreciation remains constant year after year under (a) waite down value method (b) straight ine method (© none ofthese methods (90) Depreciation is (a) a process of valuation of fixed assets (©) a process of allocation of the cost of fxed assets (© a method of providing funds for replacement of fixed assets (81) Depreciation isto be calculated on (@) fixed asets (2 intangible asets ©) current assets (@) tangible assets (82) Which ofthe following isa disadvantage ofthe reducing balance method ? (@)_ the charge against the profit and loss account increases over the years (©) percentage figure to be deducted annually is difficult to calculate (© if a further asset is purchased, the amount now required to be writen off neds tb recalculated —o (83) Which ofthe following isan advantage ofthe straight line method of deprecation ? (a) decreasing depreciation charges counter-balances increasing, repair charges (©) simple to understand and easy to calculate {0 no recalculation is necessary when an additional asset is purchased oo Thgchrg for annual depreciation is brought into account through the following book of of (@) the purchase day book «© thecash book ©. theledger (@ the journal proper‘The following isnot a method of a 0 OD. sraght line mie (@) equal instalment (0. lower of cost or market price (2) diminishing balance (a6) Depreciation is not the result of (a) wearand tear (obsolescence (0 passage the time (a) fluctuation in price depreciation on Ona cont — sep rave © ppt eae een eS eimai an ste Casal oa apa aeRO a fe mse Orbit aa 1 A firm doesnot hep its ast account cst. The ent or depreciation a the nd ofthe yea ‘heute vei cmt (a) amet acount banks (tank account tee scout 10. depreciation account tet aout (a) ase acount Aepreinton acxunt (9 Afi ee tate account aco The ny for pect athe nd the yer should be De cate peo provi fr depreiton acount (b) provision for deprecation account depreciation account (0 provision for depreciation account asset account (@) bank account provision for deprecation account (40) The Companies Act states that a company’s Balance sheet must show fixed assets, @) atcost {at cost less total depreciation o date (©) at cost es lst year's deprecation (2) atcurent value (1 Depreciation s provided on fixed assets which ae (a) ase kets to Be converted int cash withina period of twelve months from the date of there (Sell byte im rein he farther sins (© asets purchased bythe frm forsale ata prof at some future date CG) Shek one met sie ofthe balance shox other than those shown under the heading of current assets(42) The objective of providing depreciation is to (a) (b) © (d) provide a fund to replace the fixed asset when it wears out reduce the net profit so that less tax will be paid reduce the cost of the fixed asset in the balance sheet to its market value set against gross profit an appropriate charge for the use of the fixed asset during 4, accounting period. (43) Depreciation, as the term is used in accounting, means (a) (b) © @ the physical deterioration of a fixed asset the decrease in the market value of a fixed asset due to economic factors or to Physica condition the amount necessary to replace a fixed asset at any given time the allocation of the cost of a fixed asset to expense to reflect the use of asset service (44) Accumulated depreciation, as used in accounting, represents (a) (b) © (@) cash set aside to replace the asset being depreciated earnings retained in the business that will be used to purchase another fixed asset when tig present asset becomes fully depreciated an expense that is debited to profit and loss account the portion of the cost of a fixed asset written off as expense to the present date (45) Anasset is purchased for % 32,000. The scrap value is % 2,000 and it is expected to last ten ‘years. The amount of straight line depreciation charged each year would be3. (a), 12. ), 21. (d), 30. (b), 39. (a), 4. (b), 13. ), 22. (b), 31. (a), 40. (b),