OBJECTIVE TYPE QUESTIONS

(A)Choose the best Alternate :

1. Voucher is prepared for :
(A) Cash received and paid
(C) Cash/Credit purchase
2. Voucher is prepared from :
(A) JournalEntry
(C) Source DOcuments
(B) Cash/Credit sales
(D) Allof the above
(B) Ledger Account
(D) Allof the above

3. Source Documents of Accounting are: Invoice and Bills

(A) Cash Memo (B)
(C) Cheque (D) All of the above
following :
4. Which equation is correct out of the
(A) Assets = Liabilities Capital
(B) Assets = Capital - Liabilities
(C) Assets = Capital + liabilities
(D) Assets = Net worth-Liabilities
following:
5. Which equation is correct out of the
(A) Liabilities = Assets + Capital
(B) Assets = Liabilities -Capital
(C) Capital = Assets ùùLiabilities
(D) Capital = Assets + Liabilities
following :
6. Which equation is incorrect out of the
(A) Assets = Liabilities + Capital
(B) Capital = Assets - Liabilities
(C) Liabilities = Assets-Capital
(D) Assets = Liabilities -Capital
 1. Main elements of accounting equation are :
(A) Capital,Creditors and Bills Payable
(B) Assets, Liabilities and Capital
(C) Cash, Stock and Debtors
(D) Bank balance, Investments and Bills Receivable
8. As a result of the following transactions, the total of accounting equation uwil
be
() Started business with cash 2,00,000.
(ii) Purchased furniture 25,000.
(i1i) Purchased goods on credit 760,000.
(A) 2,85,000 (B) 2,25,000
(C) 2,35,000 (D) 2,60,000
9. As a result of the following transactions, the total of accounting equation will
be
i) Started business with Cash 5,00,000
(ii) Goods purchased for cash 2,00,000
(iüi) Goods costing I,50,000 sold for 1,60,000 on credit :
(A) 74,60,000 (B) 7,10,000
(C) 5,10,000 (D) 6,60,000
10. Due to the following transactions, the total of accountingequation will be :
() Commenced business with cash 4,00,000
(ii) Purchased goods on credit 1,75,000
(ii) Goods costing 1,00,000 sold at a profit of 20% for cash
(iv) Rent paid 5,000
(A) 4,90,000 (B) 75,90,000
(C) 4,40,000 (D) 3,40,000
[Ans. 1. (D) 2. (C) 3. (D) 4. (C) 5. (C)
6. (D) 7. (B) 8. (D) 9. (C) 10. (B)]
(B) State whether the following statements are True or False :
1. Accounting is always based on accounting equation.
2. Liabilities = Capital + Assets
3. Capital of abusiness is2,50,000 and its liabilities are 30,000. Hence, assets
will be 2,80,000.
4. If there are no liabilities, assets of the business willbe equal to its capital.
Ans. True: 1,3,4
False:2

(C) Fillin the blanks :

1. Assets = Capital +
2. Liabilities = Assets
3. Assets Liabilities =
Ans. 1.Liability; 2. Capital; 3. Capital.
A
ASSERTION-REASON QUESTIONS
Given below are two statements, one labelled as ASsertion (A) and other
labelled as Reason (R):
Which one of the following is correct?
Codes :
(A) Both (A) and (R) are true and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
1. Assertion (A):
Accounting equation states that the total claim (internal) and (external) are
always equal to total assets of the business.
Reason (R):
It is based on dual aspect concept i.e., every transaction has 2 aspects debit and
credit. (Chandigarh, 2021)
2. Assertion (A):
Main elements of accounting equation are Assets, Liabilities and Capital.
Reason (R) :
Assets = Liabilities + Capital
Assertion (A) :
In case goods costing 30,000 is sold for cash for 40,000, the accounting
equation will hold true because it will lead to increase in cash by 740,000 and
decrease in stock by a similar amount i.e.. 740,000.
Reason (R):
Inthe above mentioned case accounting equation will hold true because cash
will increase by 40,000; Stock will decrease by 30,000 and Capital will
increase by 10,000.

ANSWERS TO ASSERTION-REASON QUESTIONS

1. A 2. A 3. D
 (B) Fill in the blanks:
1. Debit means
increase in
2. Credit means
increase in
3. Debit means
increase in
4. Credit means or
increase in A/c is
5. Withdrawl of cash the capital A/c so capital
6. Profit increases capital so it is to be
7. For every debit, there is corresponding of equal
amount.
8. Left side of an account is called and right side of an
account is called
9. Increase in assets or expenses has balance.
10. Increase in liability or income has balance.
11. Interest charged on capital will capital in accounting
equation.
12. While
will
preparing accounting equation, interest charged on drawing
capital.
13. Goods costing 10,000 sold to Ram 12,000 will reduce Stock
? 10,000, increase Debtors 12,000 and will also
capital by ? 2,000 while preparing accounting equation.
ANSWERS

1, Asset 2. Liabilitiesor Capital 3. Asset or Expense

4. Liabilitiesor Revenue (gain) 5. Reduces, Debited
6. Credited 7. Credit 8. Debit; Credit
10. Credit 11. not affect
9. Debit
12. not affect 13. increase

U (C) Multiple Choice Questions (MCQs)

Select the correct alternative:
equation,debit means:
1. During the course of accounting liabilities
(b) Increase in
(a) Increase in asset
(d) Allof these
(c) DeCrease in asset
income always has a
2. Increase in liability or (b) Cr. balance
(a) Dr. balance
(d) None of these
(c) Both (a) & (b)
of accounting equation, credit means:
3. During the course
(a) Increase in capital
(b) Increase in liability
or capital
(c) Increase in liability
(d) None of these
 Accountancy - XI
5.30
debit means:
4. While preparing accounting equation,
(a) Increase in asset
(b) Increase in expense
(c) Increase in asset or expense
(d) None of these
equation is correct?
5. Which of the following accounting
(a) Assets + Liabilities = Capital
(b) Assets + Capital = Liability
(c) Assets - Liabilities = Capital
(d) None of these
6. Which of the following accounting equation is incorrect?
(a) Capital = Assets - Liabilities
(b) Assets = Liabilities + Capital
(c) Assets = Liabilities - Capital
(d) Liabilities = Assets - Capital
7. Payment to creditor will lead to:
(a) Decrease in asset and increase in liability
(b) Decrease in asset and decrease in liability
(c) Increase in asset and increase in liability
(d) Increase in asset and decrease in liability
8. In accounting equation,wages paid 1,000 will reduce cash and
(a) reduce liability (b) reducecapital
(c) increase liability (d) increase capital
YCharge interest on capital 2,000 will accounting
equation.
(a) increase (b) decrease
(c) not affect (d) can't say
10-Ram commenced business with a capital of ? 2,00,000. At the end
of year, his assets were valued 4,00,000 and liabilities were of
?1,50,000. His profit or loss will be
(a) 2,50,000 profit (b) 50,000 profit
(c) 50,000 loss (d) None of above
11. An increase in one asset is
accompanied by
(a) decrease in another asset (b) increase in
liability
(c) increase in capital (d) any of above
ANSWERS
1. (a) 2. (b) 3. (c) 4. (c) 5. (c) 6. (c) 7. (b) 8. (b)
9. (c) 10. (b) 11, (d)