Accounting : Meaning and Objects I. Multiple Choice Questions 1.

Qualitative characteristics of
Accounting Informations are : (a) Reliability (b) Relevance (c) Understandable (d) All of the above 2.
Accounting cycle includes : (a) Recording (b) Classification (c) Summarising (d) All of the above 3. Which
of the following statements is not an objective of accounting ? (a) To keep systematic records (b) To
ascertain the operational profit or loss (c) To provide information of the personal assets liabilities of the
owner of an enterprise (d) To ascertain the financial position of the business 4. Which of the following
events represent business transaction: (a) Machinery is purchased for cash (b) Goods are ordered for
delivery next month (c) The owner of the firm dies (d) An employee is dismissed from this job 5. Book-
Keeping is mainly concerned with : (a) Recording of financial data relating to business operations (b)
Designing the systems in recording, classifying the recorded data (c) Interpreting the data for internal
and external users (d) Preparation of final accounts 6. The main objective of accounting is to see concern
(a) Financial position of the concern (b) Position of the cash book (c) Position of purchases (d) Position of
sales 7. Which of the following transactions will be entered in the books of Mr. X, a cloth merchant ? (a)
He receives a shirt as a gift on his birthday (b) He buys a shirt for his son (c) He sells cloth to one of his
customers (d) None of the above II. Matching Questions 1. Part - A Part - B (i) Accountancy (a) Where the
work of Book-Keeping ends (ii) The work of Accounting begins (b) Influenced by personal judgements (iii)
The limitations of Accounting (c) Not fully Accurate (iv) Accounting Statements (d) Types of Accounting
(v) Management Accounting (e) Aet and Science both 2. Part - A Part - B (i) Accounting cycles includes (a)
Proof in court (ii) Advantages of Accounting (b) Calculation of Profit and Loss (iii) Functions of Accounting
(c) Financial Transactions (iv) Relevance (d) Recording (v) Accounting Record (e) Qualitative
characteristics of Accounting Informations OBJECTIVE QUESTIONS FINANCIAL ACCOUNTING CLASS -
11TH G-106, P.C. Colony K. bagh, Patna-20 -1- Contact : 9386313659 3. Part - A Part - B (i) Meaning of
Book-Keeping (a) All transactions are recorded in primary books (ii) Characteristics of Accounting (b)
Purchased machinery for cash (iii) In Book-Keeping (c) Accounting Business Transactions (iv) Business
Transactions (d) Cost Accounting (v) Types of Accounting (e) Recording and Classifications III. Multiple
Choice Questions : More than one correct type Questions 1. Accounting means (a) Accounting is a
Science as well as an Art both (b) Accounting provides financial informations to efficient conduct and
evaluation of the activities of any organisation (c) An employee dismissed from the job is known as an
accounting transaction (d) Accounting explains the qualitative aspects of trade 2. The characteristics of
Accounting are : (a) A perspective employee is interviewed (b) According to accounting tradition all the
assets which are in the possission of business are called goods. (c) Recording of Financial Transactions
only (d) recording in terms of money 3. In Book-Keeping : (a) All the business transactions are recorded
in the Primary Books (b) Posting is done from the Primary Books (c) Book-Keeping is not dependent on
Accounting (d) Trial Balance is prepared 4. In Accountancy : (a) Business transactions are recorded (b)
Accounts of Adjustments and Rectification of errors are include (c) Final Accounts are included (d)
Special knowledge and ability is necessary 5. Objects of Accounting are : (a) To keep systematic records
(b) Calculation of Profit and Loss (c) To ascertain the financial of the business (d) Receiving a huge order
for export 6. The advantages of Accounting are : (a) Compliment of Memory (b) Comprative Study (c)
Proof in Court (d) Helpful in determination of Tax-liability 7. The types of Accounting are : (a) Purchase
Accounting (b) Sales Accounting (c) Financial Accounting (d) Cost Accounting 8. The limitations of
Accounting are : (a) Influenced by Personal Judgements (b) Incomplete Information (c) Source of
Information (d) Accounts of Rectification of Errors 9. The internal users of Accounting Informations are :
(a) Management at the top level (b) Creditors (c) Government (d) Middle and low level Mngt. 10. The
external users of Accounting Informations are : (a) Management at all levels (b) Tax Authorities (c)
Customers (d) Labour Unions th G-106, P.C. Colony K. bagh, Patna-20 -2- Contact : 9386313659 11. The
sub-systems of Accounting Information System are : (a) Cash sub-system (b) Purchase and Accounts
payable sub-system (c) Sales and Accounts Receivable sub-system (d) Employees sub-system 12.
Advantages of Accounting Informations are : (a) Accounting Information is historical in nature (b) It
provides to users the information regarding the earning capacity of Enterprise (c) it provides information
useful for making economic decisions (d) If reflects the current financial position of a business 13.
Qualitative characteristics of Accounting Informations are : (a) Reliability (b) Relevance (c)
Understandability (d) Comparability IV. Assertion-Reason Type Questions Following are two given
statements. Read both the statements and choose the correct alternative : (A) Both statements are true
and Statement-II is the correct explanation of statement-I (B) Both statements are true but statement-II
is not the correct explanationof statement-I (C) Statement-I is true, but statement-II is false (D)
Statement-II is true, but statement-I is false 1. Statement-I “Accountancy starts where book-keeping
ends.” Statement-II “Accountancy refers to the entire body of the theory and practice of Accounting.” 2.
Statement-I “Book-Keeping is the language of business.” Statement-II “Book-Keeping is an Art or
Science.” 3. Statement-I “Assets are future economic benefits, the rights which are owned or controlled
by an organisation or individuals.” Statement-II “Assets are valuable resources owned by a business
which were acquired at a measurable money cost.” 4. Statement-I “Book-Keeping is primary stage.”
Statement-II “Accounting is secondary stage Accounting starts where bookkeeping ends.” 5. Statement-I
“Accountant is not required to possess analytical skill.” Statement-II “Book-keeper is not required to
possess analytical skill.” V. Comprehension/Paragraph based Questions Only those transactions and
events are recorded in accounting which are of a financial character. There are so many transactions in
the business which are very important for business but which cannot be measured and expressed in
terms of money and hence such transactions will not be recorded. For example, the quarrel between the
Production Manager and the Sales Manager, resignation by an able and experienced manager, strike by
employees and starting of a new business by the other competitor etc. Though these events affect the
earnings of the business adversely but as no one can measure the effect of such events in terms of
money, these will not be recorded in the books of the business 1. What type of transactions are recorded
in accounting ? (a) Only Financial transactions are recorded (b) Financial and non-financial transactions
Objective Questions / 3 th G-106, P.C. Colony K. bagh, Patna-20 -3- Contact : 9386313659 (c) All types of
transactions are recorded. (d) Accounting of all of the above 2. Which of the following are not recorded
in accounting ? (a) Quarrel between production manager and sales manager (b) Establishment of all
most same business (c) Resignation by cashier (d) All of the above 3. What type of work is performed by
accountant: (a) Analytical nature (b) Order type work (c) Understanding work (d) Work of own choice
Basic Accounting Terms I. Multiple Choice Questions 1. Assets are : (a) Fixed Assets (b) Floating Assets (c)
Fictitious Assets (d) All of the above 2. Liabilities are : (a) Fixed Liabilities (b) Current Liabilities (c)
Contigent Liabilities (d) All of the above 3. Capitals are (a) Fixed (b) Floating (c) Working (d) All of the
above 4. Goods includes : (a) Purchase of all the commodities (b) Purchase of all the Assets (c) Purchase
of those commodities which are purchased for re-sale purpose (d) Purchase of liquid commodities only
5. A person who owes money to the firm is called a : (a) Creditor (b) Debtor (c) Proprietor (d) None of
these 6. A person to whom money is owned by the firm is called a : (a) Creditor (b) Debtor (c) Employee
(d) None of the above 7. Live Stock includes : (a) Plant and Machinery (b) Animals (c) Stock (d) Life
Insurance Policy 8. Dead Stock includes : (a) Land and Building (b) Debtors (c) Creditors (d) Investments
9. Debentures are : (a) Short-term Liability (b) Contigent Liability (c) Long-term Liability (d) Liquid Liability
10. Bank Loan is (a) Current Liability (b) Current Asset (c) Liquid Asset (d) None of the above II. Matching
Questions 1. Part - A Part - B (i) Fixed Asset is (a) Long-term loan th G-106, P.C. Colony K. bagh, Patna-20
-4- Contact : 9386313659 (ii) Floating Asset is (b) Creditors (iii) Current Liability is (c) Building
Construction Expenses (iv) Capital Exopenditure is (d) Cash and Bank Balance (v) Fixed Liability is (e) Land
and Building 2. Part - A Part - B (i) Revenue expenditure is (a) Land and Building (ii) Live Stock is (b) Cash
Discount (iii) Allowed at the time of sales of goods (c) Horses (iv) Allowed at the time of receipt of
payment (d) Trade Discount (v) Dead Stock includes (e) Wages of Workers 3. Part - A Part - B (i) Bank
Loan is (a) Creditor (ii) Debentures are (b) Debtor (iii) A person to whom money is (c) Amount withdraw
for personal use owned by the firm is called a (d) Long-term liability (iv) A person whoomes money to (e)
Current liability the firm is called a (v) Drawings is treated III. Multiple Choice Questions : More than one
correct type Questions 1. Features of business transactions are : (a) Economic Activity (b) Non-banking
Activity (c) Change in financial position of business (d) Change in measureable in terms of money 2.
Features of assets are : (a) Assets are limited (b) Assets must be valuable (c) Assets must not be owned
by the business (d) The Assets must not be owned by the business. 3. The types of assets are : (a) Fixed
Assets (b) Floating assets (c) Fictitious assets (d) Tangible and intangible assets 4. Fixed assets are : (a)
Cash (b) Debtors (c) Land and Buildings (e) Plant and Machinery 5. Current assets are : (a) Bank balance
(b) Furniture (c) Investments (d) Closing stock 6. Fictitious assets are : (a) Bills Receivable (b) Motor Car
(c) Preliminary Expenses (d) Promotion Expenses of business 7. Wasting assets are (a) Mines (b) Patent
rights (c) Trade Marks (d) Goodwill 8. Tangible assets are : (a) Stock (b) Discount (c) Cash (d) Land and
Building 9. Intangible assets are : (a) Loss (b) Goodwill (c) Trade Marks (d) Cash at Bank 10. Fixed
liabilities are : (a) Creditors (b) Bills Payable (c) Long Term Loans (d) Debentures th G-106, P.C. Colony K.
bagh, Patna-20 -5- Contact : 9386313659 11. Current liabilities are : (a) Bank Overdraft (b) Short Term
Loans (c) Capital (d) Creditors 12. The types of capital are : (a) Fixed capital (b) Fluctuating capital (b)
Working capital (d) Fictitious capital 13. The types of expenditure are (a) Daily expenditure (b) Useless
expenditure (c) Capital expenditure (d) Revenue expenditure 14. The types of stock are : (a) Live Stock (b)
Dead Stock (c) Stock of Raw Material (d) Stock of Closing Stock 15. The types of profit are : (a) Gross
Profit (b) Operating Profit (c) Net Profit (d) Good Profit 16. The types of discount are : (a) Useless
Discount (b) Good Discount (c) Trade Discount (d) Cash Discount IV. Assertion-Reason Type Questions
Following are two given statements. Read both the statements and choose the correct alternative : (A)
Both statements are true and Statement-II is the correct explanation of statement-I (B) Both statements
are true but statement-II is not the correct explanationof statement-I (C) Statement-I is true, but
statement-II is false (D) Statement-II is true, but statement-I is false 1. Statement-I “Liabilities are debts,
they are amounts owed to creditors.” Statement-II “Liabilities = Assets - Capital.” 2. Statement-I “When
cash comes it is debited.” Statement-II “Cash is a Real Account.” 3. Statement-I “Expenses is the cost of
the use of things or services for the purpose of generating revenue.” Statement-II “Income = Revenue -
Expenses.” 4. Statement-I “Cost is the amount of expenditure (actual or national) incurred on, as
attributable to a specified thing or activity.” Statement-II “Cost can be termed as the amount of
resources given up in exchange for some goods or services. The resources given up are money or
money’s equivalent expressed in terms of money.” 5. Statement-I “The term purchases includes both
cash purchases and credit purchases of goods.” Statement-II “The term sales includes both cash and
credit sales.” Accounting : Concepts and Principles I. Multiple Choice Questions 1. Types of Accounting
Principles are : (a) Basic Concepts (b) Basic principles (c) Modifying principles (d) All of the above th G-
106, P.C. Colony K. bagh, Patna-20 -6- Contact : 9386313659 2. Basic concept is (a) Principle of
consistency (b) Current business concept (c) Verifiable objective evidence concept (d) Cost-Benefit
Principle 3. Basic Principles is : (a) Principles of Revenue Realisation (b) Moneymeasurement concept (c)
Principle of industrial practice (d) Principle of consistency 4. Modifying principle is : (a) Principle of
revenue realisation (b) Principle of full disclosure (c) Cost-benefit principle (d) Historical cost principle 5.
According to the current business concept, a business entity is assumed to have (a) A long life (b) A short
life (c) An indefinite life (d) None of the above 6. Contingent Liability is shown in the Balance Sheet
because of : (a) Principle of consistency (b) Principle of materiality (c) Principle of full disclosure (d)
Convention of conservation 7. Revenue is considered as being earned when: (a) Cash is received (b)
Production is done (c) Sale is effected (d) Purchase is effected 8. Accounting does not record non-
financial transactions because of : (a) Business entity concept (b) Money measurement concept (c)
Principle of industrial prectice (d) Cost-benefit principle 9. According to which of the following concepts
even the owner of the business who provides capital is treated as a creditor of the business ? (a)
Business Entity Concept (b) Cost Concept (c) Money Musurement Concept (d) Principle of Full Disclosure
II. Matching Questions 1. Part - A Part - B (i) Names of Accounting Principles (a) There are two aspects in
each transactions (ii) From the point of view of income (b) Current business Tax Accounting year is (c)
Principles of Revenue Realisation (iii) According to dual aspect concept (d) Concepts (iv) Basic concepts is
(e) 1st April to 31st March (v) Basic principle is 2. Part - A Part - B (i) Accounting principles are (a) On the
basis of Development of commerce (ii) Modifying principle is (b) Accepiable to all (iii) Basic principle is (c)
Cost Benefit Principle (iv) According to the current business (d) Principal of Revenue Realisation concept,
a business entity is assumed (e) Long Term to have (v) Accounting principles are developed III. Multiple
Choice Questions : More than one correct type Questions 1. Accounting Principles means: (a) Which are
implemented at the time of recording of accounting transactions (b) Which are implemented at the time
of presentation of Financial Statements. (c) Which are written and certain (d) Which are generally
acceptable th G-106, P.C. Colony K. bagh, Patna-20 -7- Contact : 9386313659 2. Main features of
Accounting Principles are : (a) Uselessness (b) Usefulness (c) Feasibility (d) Based on Real Facts 3. The
types of Accounting Principles are : (a) Accounting Concepts (b) Conventions of Accounting (c)
Accounting Aptitude (d) Accounting System 4. Basic Concepts of Accounting are : (a) Business entity
Concept (b) Verifiable objectives evidence concept (c) Going concern concept (d) Money measurement
concept 5. Accounting conventions are : (a) Convention of full disclosure (b) Principle of consistency (c)
Convention of conservation (d) Accounting year concept 6. As per Dual Aspect Concept (a) Assets =
Liabilities + Capital (b) Assets = Liabilities - Capital (c) Capital = Assets - Liabilities (d) Capital = Assets +
Liabilities 7. Interest on Capital is : (a) Expense for Business (b) Income for Business (c) Income for
Businessman (d) Expense for Businessman 8. In accounting all business transactions are recroded: (a) As
having Single Aspect (b) As having Dual Aspect (c) As having Thrice Aspect (d) As having Double Aspect
IV. Assertion-Reason Type Questions Following are two given statements. Read both the statements and
choose the correct alternative : (A) Both statements are true and Statement-II is the correct explanation
of statement-I (B) Both statements are true but statement-II is not the correct explanationof statement-I
(C) Statement-I is true, but statement-II is false (D) Statement-II is true, but statement-I is false 1.
Statement-I “According to business entity concept, business is treated as a unit separate and distinct
from its owners, creditors, managers and others.” Statement-II “The owner of a business is always
considered as distinct and separate from the business owners. The proprietor is treated as a creditor of
the business to the extent of capital invested by him in the business.” 2. Statement-I “Accroding to Dual
Aspect Concept every business transaction is recorded as having a dual aspect.” Statement-II “Every
transaction affects alleast two accounts. If one account is debited, any other accounts must be credited.”
3. Statement-I “Every transaction have two aspects.” Statement-II “Profit and Loss are two sides of a
business.” 4. Statement-I “According to Matching Concept in determining the net profit from business
operations, all costs which are applicable to revenue of the period should be charged against the
revenue.” Statement-II “Accordingly for matching costs with revenue, first revenues should be recognised
and their cost incurred for generating that revenue should be recognised.” th G-106, P.C. Colony K. bagh,
Patna-20 -8- Contact : 9386313659 V. Comprehension/Paragraph based Questions Theory base of
accounting consists of principles, concepts, conventions, rules and guidelines developed over a period of
time to bring uniformity and consistency to the process of accounting in order to enhance its utility to
various users of accounting information. In addition, accounting standards issued by The Institute of
Chartered Accountants of India (ICAI) also constitute the theory base of accounting. 1. Which of the
following are included in theory based of accounting ? (a) Concepts (b) Conventions (c) Rules and
guidlines (d) All of the above 2. Theory base of Accounting includes : (a) Relevance (b) Accounting
Standard (c) Objectivity (d) Feasibility 3. Which of the following are the kinds of Accounting principles (a)
Accounting Concepts (b) Assumptions (c) Accounting Conventions (d) All of the above Accounting
Standards I. Multiple Choice Questions 1. AS-13 explains : (a) Revenue Recognition (b) Earning Per Share
(c) Consolidated Financial Statements (d) Accounting for Investments 2. AS-22 explains : (a) Accounting
for Taxes on Income (b) Interim Financial Reporting (c) Intangible Assets (d) Leases 3. Accounting
Standards are necessary : (a) For the implementation of certain Policies and Standards (b) For non-
implementation of certain Policies and Standards (c) For the implementation of policies and standards
according to circumstances (d) None of the above 4. Accounting Standards Board was established on : (a)
20th March, 1979 (b) 21st April, 1979 (c) 25th Feb., 1978 (d) 21st May, 1980 5. Accounting Standards are
necessary (a) Due to Reginal Busineas (b) Due to National Business (c) Due to Globalisation of Business
(d) None of the above 6. Accounting Standards Board is established : (a) For the preparation of
Accounting Standards (b) For the publicity of Accounting Standards (c) For the issue of directions of
Accounting Standards (d) For all of the above 7. AS-1 explains (a) Revenue Recognition (b) Disclosure of
Accounting Policies (c) Accounting for Investments (d) Intangible Assets 8. AS-8 explains : (a) Accounting
for Fixed Assets (b) Accounting for Investments (c) Accounting for Research and Development (d)
Accounting for Government Grants th G-106, P.C. Colony K. bagh, Patna-20 -9- Contact : 9386313659 II.
Matching Questions 1. Part - A Part - B (i) AS-22 explains (a) Accounting for investments (ii) AS-13
explains (b) Accounting for taxes of income (iii) AS-10 explains (c) Depreciation Accounting (iv) AS-6
explains (d) Valuation of inventories (v) AS-2 explains (e) Accounting for fixed assets 2. Part - A Part - B (i)
Accounting Standards are useful (a) For the implementation of certain policies and standards (ii)
Accounting Standards must be (b) For Auditors (iii) Accounting standards are necessary (c) Disclosure of
Accounting policies (iv) Clear in AS-1 (d) For the preparation of Accounting Standards (v) Accounting
Standards Board is (e) Simple and Clear III. Multiple Choice Questions : More than one correct type
Questions 1. Accounting Standards means : (a) As a mode of conduct imposed on accountants by
Professional Body (b) Ignorance of certain rules (c) To implement the certain rules (d) As an policy
document 2. The nature of Accounting Standards is : (a) Proper recording of business transactions (b) To
remove the diverse effects of various accounting policies (c) Not to disclose the business transactions (d)
To give informations to the users of financial staements that on which basis these staements have been
prepared. 3. The need of Accounting Standards is : (a) For the uniformity in presentation of Accounts (b)
To maintain the ambiguity in Accounting Terminology (c) For control on scandal (d) For the localisation of
Business 4. The utility of Accounting Standards is : (a) For the unreliability of Financial Statements (b) For
the comparability in Financial Statements (c) To reduce the Manipulations and Frauds (d) To help the
Auditors 5. AS-5 is : (a) Regarding Net Profit and Loss for the period (b) regarding discontinuiting
operations (c) Regarding Intangible Assets (d) Reagrding changes in Accounting policies 6. AS-29 is (a)
Regarding accounting for Investments (b) Regarding accounting for Taxes on Income (c) Regarding
Provisions (d) Regarding Contigent Liabilities and Contigent Assets th G-106, P.C. Colony K. bagh, Patna-
20 -10- Contact : 9386313659 IV. Assertion-Reason Type Questions Following are two given statements.
Read both the statements and choose the correct alternative : (A) Both statements are true and
Statement-II is the correct explanation of statement-I (B) Both statements are true but statement-II is not
the correct explanationof statement-I (C) Statement-I is true, but statement-II is false (D) Statement-II is
true, but statement-I is false 1. Statement-I “Depreciation is charge on fixed assets.” Statement-II
“Depreciation accounting is done according to AS-6.” 2. Statement-I “Disclosure of Accounting policies is
done according to AS-1.” Statement-II “Valuation of inventories is done according to AS-II.” 3. Statement-I
“Accounting for construction contracts is done according to AS-7.” Statement-II “Accounting for Research
and Development is done according to AS-10.” 4. Statement-I “Accounting for Taxes on income is done
according to AS-29.” Statement-II “Accounting for impairment of Assets is done According to As-28.” 5.
Statement-I “Accounting for investment is done according to As-13.” Statement-II “Accounting for Govt.
Grant is done according to As-14.” Process and Bases of Accounting I. Multiple Choice Questions 1.
Systems of Accounting are : (a) Single Entry System (b) Double Entry System (c) Single and Double Entry
System (d) Simple Entry System 2. Defects of Double Entry Systems are : (a) Expensive System (b) Errors
of Principle cannot be traced (c) Compensatory Errors cannot be traced (d) All of the above 3. Books of
Accounts used under Double Entry System are : (a) Purchase Book (b) Sales book (c) Cash Book (d) All of
the above 4. Various stages of Double Entry System are : (a) Books of Original Entries (b) Classification (c)
Preparation of Final Accounts (d) All of the above 5. Types of Accounts are (a) Two (b) THree (c) Four (d)
Five 6. The rule of Personal Accounts is (a) Debit the receiver and Credit the given (b) Debit the giver and
credit the receiver (c) Debit what comes in and credit what goes out (d) Debit what goes out and credit
what comes in 7. The Rule of Real Account is : (a) Debit all expenses and credit all incomes th G-106, P.C.
Colony K. bagh, Patna-20 -11- Contact : 9386313659 (b) Debit what comes in and credit what goes out
(c) Debit the Receiver and credit the Gives (d) Debit the Giver and credit the Receiver 8. The Rule of
Nominal Account is : (a) Debit what comes in and credit what goes out (b) Debit what goes out and
credit what comes in (c) Debit all expenses and losses and credit all incomes and gains (d) debit all
incomes and gains and credit all expenses and losses II. Matching Questions 1. Part - A Part - B (i) Single
Entry System (a) Lucas Pocioli (ii) Double Entry System (b) Rare Possibility of Error (iii) Founder of Double
Entry System (c) Double Entry effect of business transaction (iv) Advantages of Double Entry System (d)
Scientific (v) Characteristics of Double Entry System (e) Unscientific 2. Part - A Part - B (i) Types of
Account (a) Systems of Accounting (ii) Accounts of Insurance Company (b) Disadvantages of Double Entry
System (iii) Single Entry System (c) In Double Entry System (iv) Checking the accuracy Account (d)
Artificial Personal possible (v) Principle cannot be traced (e) Artificial Personal Error of Account III.
Multiple Choice Questions : More than one correct type Questions 1. Systems of Accounting are : (a)
Single Entry System (b) Large Entry System (c) Small Entry System (d) Double Entry System 2.
Characteristics of Double Entry System are : (a) Single effect of business transactions (b) Double effect of
business transactions (c) Recording is not made on the basis of certain prescribed rules (d) Recording of
Personal and Impersonal Accounts 3. Merits of Double Entry System are : (a) Scientific System (b)
Complete Record (c) Preparation of Trial Balance (d) Knowledge of Financial Position 4. Disadvantage of
Double Entry System are : (a) Economical System (b) Expensive System (c) It is very difficult to locate the
error of principle (d) Useless System 5. Principles of Doubled Entry System are (a) Two Parties (b) Three
Parties (c) definite rules (d) One Party 6. According to Double Entry System Accounts are: (a) Personal
Accounts (b) Impersonal Accounts (c) Useless Accounts (d) Nominal Accounts 7. Double Entry System is
the best because of : (a) Account Books are incomplete (b) It is a Scientific System (c) Less possibility of
frauds (d) Knowledge of Arithmetical accuracy 8. Books of Accounts under Double Entry System are (a)
Single Book (b) Double Book (c) memorandum or Waste Book (d) Books of original Enteries th G-106, P.C.
Colony K. bagh, Patna-20 -12- Contact : 9386313659 9. Basis of Accounting are : (a) Cash Basis of
Accounting (b) Accrual Basis of Accounting (c) Purchase Basis of Accounting (d) Sales Basis of Accounting
10. Advantages of Cash Basis of Accounting are : (a) Easy and Realise (b) It follows Matching Principle of
Accounting (c) It is best for Professional People (d) It does not require the use of estimates and personal
judgements IV. Assertion-Reason Type Questions Following are two given statements. Read both the
statements and choose the correct alternative : (A) Both statements are true and Statement-II is the
correct explanation of statement-I (B) Both statements are true but statement-II is not the correct
explanationof statement-I (C) Statement-I is true, but statement-II is false (D) Statement-II is true, but
statement-I is false 1. Statement-I “Balance Sheet is not prepared in Single Entry System.” Statement-II
“Balance Sheet is prepared only in Double Entry System.” 2. Statement-I “Those accounts which are not
according to Double Entry System are imcomplete Records.” Statement-II “System of book-keeping in
which only cash and personal account are recorded is called single entry system..” 3. Statement-I
“Purchase of fixed assets is a capital Expenditure.” Statement-II “Capital Expenditure are shown in
Balance Sheet.” 4. Statement-I “Profit = Closing capital - Opening Capital.” Statement-II “The difference
between closing capital and opening capital is known as profit in single entry.” 5. Statement-I “The
system of Double Entry of Book-Keeping is founded upon the truth that every transaction affetcs two
accounts.” Statement-II “Every Debit must have correspoding credit.” Accounting Equations I. Multiple
Choice Questions 1. The effect of Computer purchase for the son of the owner of the business will be
---------------- (a) Decrease in Asset and Capital (b) Increase in Asset and decrease in liability (c) Increase in
Capital and decrease in liability (d) Increase in liability and decrease in capital 2. An amount of Rs. 5,000
was spent on a Old machine purchased The effect of this transaction of business will be ------ (a)
Decrease in Asset and Capital (b) Increase and Decrease in Asset (c) Increase and Decrease in Liability (d)
Increase and Decrease in capita 3. Due to the following transactions the total of Assets and Liabilities of
the business will be : (i) Ram started business with cash Rs. 80,000 th G-106, P.C. Colony K. bagh, Patna-
20 -13- Contact : 9386313659 (ii) Purchased goods on credit Rs. 18,000 (iii) Purchased machinery Rs.
20,000 (a) Rs. 1,18,000 (b) Rs. 98,000 (c) Rs. 1,00,000 (d) Rs. 80,000 4. Prepare accounting equations on
the basis of the following transactions: (i) Mohan started business with cash Rs. 20,000 (ii) Furniture
purchased Rs. 2,000 (iii) Paid Rent Rs. 200 (iv) Purchased goods on credit Rs. 3,000 5. Main elements of
accounting equation are : (a) Cash, Debtors and Machinery (b) Capital, Creditors and Bills Payable (c)
Assets, Liabilities and Capital (d) Investments, Bills Receivable and Furniture 6. If the capital of business
Rs.1,50,000; creditors of Rs. 50,000 and bills payable of Rs. 10,000 of a business total assets of the
business will be : (a) Rs, 1,60,000 (b) RS. 2,10,000 (c) Rs. 2,00,000 (d) Rs. 60,000 7. If total assets of a
business are Rs. 3,00,000 and capital of Rs. 2,40,000 then creditors will be : (a) Rs. 60,000 (b) Rs.
5,40,000 (c) Rs. 2,40,000 (d) Rs. none of the above 8. On the basis of following transactions, the closing
capital of the business will be: (i) Owner’s capital in the beginning Rs. 2,60,000 (ii) Creditors at the end
Rs. 40,000 (iii) Income during the year Rs. 1,00,000 (iv) Expenses during the year Rs. 50,000 (a) Rs.
3,60,000 (b) Rs. 1,50,000 (c) Rs. 3,10,000 (d) Rs. 2,60,000 9. Ram’s opening capital was of Rs. 2,00,000
and closing capital of Rs. 3,00,000. During the year he introduced Rs. 50,000 as his additional capital and
withdrawn Rs. 10,00,000 for his private expenses, then his profits will be: (a) Rs. 5,00,000 (b) Rs. 60,000
(c) Rs. 2,90,000 (d) Rs. 2,40,000 10. Total Assets of Manish as on 31st Dec., 2005 were Rs. 80,000. His
liabilities were : creditors Rs. 20,000; Bank overdraft Rs. 20,000; Bills Payable Rs. 16,000. On that date his
capital will be: (a) Rs. 60,000 (b) Rs. 24,000 (c) Rs. 40,000 (d) Rs. 64,00 11. If goods is returned to the
supplier then we prepare: (a) Debit Note (b) Credit Note (c) Receipt (d) Invoice 12. If goods is returned by
the customer then trader prepares: (a) Debit Note (b) Credit Note (c) Pay-in-slip (d) Bill 13. On receipt
payment payer gets : (a) Credit Note (b) Debit Note (c) Receipt (d) Pay-in-slip 14. For the deposit of
amount into the bank is used : (a) Cheque Book (b) Pay-in-slip (c) Pass Book (d) None of the above th G-
106, P.C. Colony K. bagh, Patna-20 -14- Contact : 9386313659 15. Type of Vouchers are : (a) Cash
Vouchers (b) Transfer Vouchers (c) Debit and Credit Vouchers (d) All of the above 16. Assets include: (a)
Creditors (b) Bank Loan (c) Investments (d) All of the above 17. Liabilities include (a) Debtors (b) Bills
payable (c) Stock (d) All of the above 18. Which of the following is correct equation: (a) Capital = Assets +
Liabilities (b) Assets = Liabilities - Capital (c) Liabilities = Capital + Assets (d) Capital = Assets - Liabilities
19. If Capital of a business is Rs. 80,000 and Liabilities are Rs. 20,000 then total Assets of business will be:
(a) Rs. 1,00,000 (b) Rs. 60,000 (c) Rs. 80,000 (d) None of the above 20. If total assets of a business are Rs.
4,00,000 and capital is Rs. 3,50,000 then creditors will be: (a) Rs. 4,00,000 (b) Rs. 3,50,000 (c) Rs. 50,000
(d) Rs. 7,50,000 II. Matching Questions 1. Part - A Part - B (i) Source Document of Accounting (a) Wrong
Equation (ii) Outstanding Salary (b) Accounting Equation (iii) Assets = Liabilities + Capital (c) Assets (iv)
Amount of prepaid insurance (d) Invoice and Bill (v) Assets = Liabilities - Capital (e) Liability 2. Part - A
Part - B (i) Amount of Accrued Interest (a) Liabilities (ii) Interest on Investment received in advance (b)
Assets (iii) Salary to Business Manager (c) Assets, Liabilities and paid Capital (iv) Element of accounting
equation Debit (d) Types of Vouchers (v) Debit and Credit Capital (e) Decrease in Assets and Capital III.
Multiple Choice Questions : More than one correct type Questions 1. Which of the following statements
are correct ? (a) Cash Memo (b) Invoice and Bill (c) Debit and Credit Note (d) Pay-in slip and cheque 2.
Voucher means : (a) Written proof of business transactions (b) Cash Book (c) Purchase Book (d)
Documentary evidence in support of an entry appearing in the books of accounts 3. Types of Vouchers
are : (a) Profil and Loss Vouchers (b) Depreciation Vouchers (c) Cash Vouchers (d) Cash Vouchers 4.
Advantages of Voucher are : (a) Recording of partial payments (b) Verification of the entries relating to a
transaction (c) Control on Cash payment th G-106, P.C. Colony K. bagh, Patna-20 -15- Contact :
9386313659 (d) Proper recording of Depreciation 5. Meaning of Accounting Equation is : (a) Another
form of Dual Aspect Concept (b) Another form of Single Aspect Concept (c) Double effect of every
business transaction (d) No effect of business transaction 6. According to Accounting Equation : (a)
Assets = Total Equity (b) Assets = Creditors Equity + Owner’s Equity (c) Liabilities = Assets - Capital (d)
Liabilities = Capital + Assets 7. According to Accounting Equation: (a) Both aspect of the equation wil be
unequal in every circumstance (b) Both aspects of the equation will be equal in every circumstance (c)
Cash + Furniture + Goods + Debtors = Creditors + Capital (d) Cash + Bills Payable - Assets 8. Outstanding
Salary for trade is : (a) Income (b) Asset (c) Liability (d) Amount Payable 9. Interest on Investments
received in advance for trade is : (a) Liability (b) Asset (c) Advance Amount received (d) Capital 10.
Amount of prepaid insurance for trade is : (a) Liability (b) Asset (c) Income (d) Advance payment amount
IV. Assertion-Reason Type Questions Following are two given statements. Read both the statements and
choose the correct alternative : (A) Both statements are true and Statement-II is the correct explanation
of statement-I (B) Both statements are true but statement-II is not the correct explanationof statement-I
(C) Statement-I is true, but statement-II is false (D) Statement-II is true, but statement-I is false 1.
Statement-I “Accounting equation is true in all cases.” Statement-II “A Voucher may be defined as
documentary evidence in support of an entry appearing in the books of accounts.” 2. Statement-I “Profit
= Closing capital - Opening Capital.” Statement-II “Assets = Liabilities + Capital.” 3. Statement-I “Debit
voucher - For cash payment.” Statement-II “Credit voucher - For cash receipt.” 4. Statement-I “Cash
vouchers are prepared for cash receipts and cash payments.” Statement-II “Credit vouchers are prepared
for such transactions which are related with cash receipts.” 5. Statement-I “Non-cash voucher or transfer
voucher are one and the same.” Statement-II “In Case the source document is not available for a
transaction, the receipt portion of the debit voucher is filled and is used assource document.” th G-106,
P.C. Colony K. bagh, Patna-20 -16- Contact : 9386313659 Journal I. Multiple Choice Questions 1. Sale of
Old Newspaper shall be credited to :s (a) Cash Account (b) News-Paper A/c (c) Sales Account (d) Bank
Account 2. Bank overdraft account is : (a) Personal Account (b) Real Account (c) Nominal Account (d)
Bank Account 3. Repair to building would be debited to : (a) Repairs Account (b) Building Account (c)
Cash Account (d) None of these 4. Extension to Building would be debited to : (a) Building Account (b)
Repairs Account (c) Cash Account (d) Personal Account of the Proprietor 5. Goods purchased from
Mohan credited to : (a) Mohan’s Account (b) Purchased Account (c) Goods Account (d) Cash Account 6.
Purchased goods from jitender for Rs. 5,000 for cash less 8% trade discount and received 2% cash
discount, is credited in discount account with Rs. (a) Rs. 400 (b) Rs. 92 (c) Rs. 100 (d) Rs. 500 7. Received
60% out of a total debts of Rs. 8,000 from Sajal because he has been declared insolvent, is debited to
Bad Debt account for Rs. (a) Rs. 3,200 (b) Rs. 4,800 (c) Rs. 8,000 (d) Rs. 6,000 8. Received an order from
M/S Akash Deep Traders for Rs. 10,000 is debited to : (a) Sales Account (b) Rs. Purchase Account (c)
Advance Account (d) No entry 9. Purchased goods from Ram for Rs. 2,000 and they paid cartage Rs. 200
is credited to Ram’s A/c with what amount : (a) Rs. 2,000 (b) Rs. 2,200 (c) Rs. 200 (d) Rs. 2,400 10. Goods
sold to Suresh of list price of Rs. 2,000, Trade Discount @ 10% and Cash Discount @ 5%. He paid the
amount on the same day and availed the cash discount, is debited to cash account with what amount: (a)
Rs. 1,700 (b) Rs. 1,710 (c) Rs. 1,900 (d) Rs. 1,910 11. Credit note issued to Raman for Rs. 500 for goods
damaged in transit, is credited to : (a) Goods in Transits (b) Raman’s Account (c) Goods Account (d)
Purchases Account 12. Paid for Income Tax and children’s school fees is credited to : (a) Drawings’s
Account (b) Income Tax and Children’s Fees Account (c) Cash Account (d) Capital Account 13. The origin
of Journal word is : (a) From the word of Italian language (b) From the word of French language (c) From
the word of Russian language (d) From the word of English language 14. The Journal of a trader is : (a)
Subsidiary Book (b) Cash Book (c) Principal Book (d) Purchase Book th G-106, P.C. Colony K. bagh, Patna-
20 -17- Contact : 9386313659 15. The functions of Journal are : (a) To present the date-wise record of
every transactions (b) To present the detail of debit and credit of every transaction (c) To give the base of
posting for transactions (d) All of the above 16. The objects of Journal are : (a) To provide the
convenience in posting (b) To provide the brief narration of transactions (c) To help in the solution of
trade disputes (d) All of the above 17. The advantages of Journal are : (a) Narration of every transaction
(b) Date-wise entry of every transaction (c) Reliable proof (d) All of the above 18. Trade discount is
given : (a) On the purchase of goods on credit (b) On cash payment (c) On sale of goods (d) On receipt of
cash before time 19. On capital invested by the proprietor in the business will be credited : (a) Cash
Account (b) Capital Account (c) Proprietor Account (c) Goods Account 20. Recording of transaction in the
journal is called : (a) Posting (b) Casting (c) Journalising (d) None of the above 21. The purchase journal
contains : (a) All purchases (b) All purchases of goods (c) Cash purchases of goods (c) Credit purchases of
goods 22. Acounts which are related to gains or losses are called as (a) Personal Account (b) Real Account
(c) Nominal Account (d) None of the above 23. Accounts related to property are called: (a) Real Account
(b) Personal Account (c) Nominal Account (d) None of the above 24. Interest on Capital (a) Increase
assets and decreases capital (b) Increase expense and decrease liability (c) Increase and Decrease Capital
(d) Increase liability and decreases capital 25. Recovery of bad debts previously written off: (a) Increase
Assets and Revenue (b) Decrease Assets and Expenses (c) Increase Assets and Capital (d) Increases
Expenses and Assets 26. Which of the following books should be used to record purchase of furniture on
credit ? (a) Cash Book (b) Jourrnal Proper (c) Purchase Book (c) Furniture Book 27. Which of the following
accounts is increased by debit entries? (a) Machinery Account (b) Purchases Returns Account (c)
Discount Received Account (d) Purchase Account 28. The credit balance in the Bank Account is : (a) An
Asset (b) An Liability (c) An expense (d) An income th G-106, P.C. Colony K. bagh, Patna-20 -18- Contact :
9386313659 29. Returns Outward Book makes a record of : (a) Goods returned by the suppliers (b)
Goods returned by the Customers (c) Goods returned by the proprietor (d) None of the above 30.
Amount paid for the life policy of the proprietor will be debited: (a) In Life Insurance Account (b) In
Capital Account (c) In Drawings Account (d) None of the above II. Matching Questions 1. Part - A Part - B
(i) Cash Discount (a) An example of Personal Account (ii) Goods taken for personal use (b) An example of
Nominal Account (iii) Drawings Account (c) Personal Account (iv) Discount Account (d) On receipt of cash
before time (v) Bank Overdraft Account (e) Drawings 2. Part - A Part - B (i) The Journal of a trader is (a)
Increase in Capital (ii) Credit Purchases (b) A Liability (iii) Accounts which are related to (c) Principal book
gains or losses are called (d) Nominal Account (iv) Credit balance of Bank Account is (e) Recorded in
purchase Journal III. Multiple Choice Questions : More than one correct type Questions 1. Journal means
: (a) Ledger (b) Trial Balance (c) In which originally business transactions are recorded (d) It is a main
book of trader 2. The feature of Journal are : (a) it is a book in which all the transactions are recorded, as
and when they take place (b) It is a book in which all the business transactions are recorded at the last
(c) In it all the transactions are recorded serially and datewise. (d) In it all the transactions are recorded
according to will 3. Objects of Journal are : (a) It simplifies ledger (b) Recording of both aspects of every
transaction (c) It simplifies the preparation of vouchers (d) None of the above 4. Advantages of Journal
are : (a) More possibility or errors (b) Less possibility or errors (c) It simplifies the posting in different
accounts (d) Incomplete narration of business transactions 5. The Columns in the proforma of Journal
are : (a) Date (b) Particulars (c) Ledger Folio/L.F. (d) Number of page of Cash Book 6. The rules of
journalising are : (a) Debit the giver and credit the receiver (b) Debit the receiver and credit the giver (c)
Debit what comes in and credit what goes out (d) debit all expenses and losses and credit all incomes
and gains 7. Classification of Goods is : (a) Debtors Account (b) Creditors Account (c) Purchases Account
(d) Sales Account th G-106, P.C. Colony K. bagh, Patna-20 -19- Contact : 9386313659 8. The types of
discount are : (a) Purchase Discount (b) Trade Discount (c) Purchase Return Discount (d) Cash Discount 9.
Trade discount is which : (a) Allowed by seller to the customer at a fixed percentage on the printed price
list at the time of sales. (b) It is allowed to encourage prompt payment (c) Deducted in the Invoice or
Cash Memo (d) Not deducted in the Invoice or Cash Memo 10. Cash Discount is which : (a) Not recorded
in Books of Accounts (b) Allowed by the seller to purchaser for prompt payment (c) Allowed to
encourage the prompt payment (d) Allowed to encourage the sales IV. Assertion-Reason Type Questions
Following are two given statements. Read both the statements and choose the correct alternative : (A)
Both statements are true and Statement-II is the correct explanation of statement-I (B) Both statements
are true but statement-II is not the correct explanationof statement-I (C) Statement-I is true, but
statement-II is false (D) Statement-II is true, but statement-I is false 1. Statement-I “Expenses are
debited.” Statement-II “Profit & Loss Account is a nominal account.” 2. Statement-I “Journal is a book of
original entry.” Statement-II “Journal has four columns.” 3. Statement-I “At the time of passing entry in
Personal Account rules of debit the receiver and credit the giver is followed.” Statement-II “At the time of
passing entry in Real Account rules of Debit what comes in and Credit what goes out is followed.” 4.
Statement-I “The book in which all the business transactions are entered systematically for the first time
is known as Jourmal.” Statement-II “The journal or daily record as originally used was a book of primary
entry in which transactions were copied in order of date, from a memorandum or waste book. The
entries as they were copied. Were (classified into debits and credits so as to facilitate their being
correctly posted afterwards in the ledger.” 5. Statement-I “The process of recording transactions in the
Journal is called Journalising.” Statement-II “A Journal is called a book of original entry because all
transactions are entered first in this book.” Books of Original Entry - Cash Book I. Multiple Choice
Questions 1. Paid, Rs. 3,000 to Mohan, It will be recorded in the cash-book (a) In credit side (b) In debit
side (c) In Liability side (d) In Asset side 2. Trade Discount allowed to Ram Rs. 100, will be debited to : (a)
Discount A/c (b) Ram’s A/c (c) Sales A/c (d) None of the above th G-106, P.C. Colony K. bagh, Patna-20
-20- Contact : 9386313659 3. Petty cash-book is kept to record : (a) Assets of the business (b) Liabilities
of the business (c) Day to day small expenses (d) Stock of goods 4. The characteristics of cash-book are :
(a) Recording of cash transactions(b) Part of ledger (c) Debit and credit side (d) All of the above 5.
Similarities of cash book and ledger are : (a) Proforma of both is the source (b) Word “To” and “By” is
used in both (c) Both are balanced in the same way (d) All of the above 6. The types of two columnar of
cash book are : (a) Cash and discount columns (b) Bank and discount columns (c) Cash and Bank columns
(d) All of the above 7. Cash discount allowed to Ram Rs. 50. It will be debited to (a) Ram’s A/c (b)
Discount A/c (c) Cash A/c (d) None of the above 8. Cash discount received. It will be credited to : (a)
Discount A/c (b) Creditors A/c (c) Debtors A/c (d) Cash A/c 9. Payment made by cheque will be credited
to : (a) Cash A/c (b) Bank A/c (c) Debtors A/c (d) Creditors A/c 10. Interest allowed by the bank will be
credited to : (a) Bank A/c (b) Cash A/c (c) Interest A/c (d) Asset A/c 11. Cash withdrawn from the bank for
private use will debited to : (a) Drawings (b) Cash A/c (c) Bank A/c (d) Asset A/c 12. Income-Tax paid by
cheque. It will be credited to : (a) Income-Tax A/c (b) Cash A/c (c) Bank A/c (d) Income A/c 13. Ram’s
cheque dishonoured. It will be debited to : (a) Cheque A/c (b) Cash A/c (c) Ram’s A/c (d) Bank A/c 14.
Name the columnthe cash book which is totalled but not balanced: (a) Discount A/c (b) Cash A/c (c) Bank
A/c (d) Asset A/c 15. Cash Book is a : (a) Journal (b) Ledger (c) Journalised Ledger (d) None of the above
16. The advantages of Cash Book are : (a) There is no need to open the Cash Account separately (b)
Record of Bank transactions (c) To calculate the Cash Balance (d) All of the above 17. The Balace of Bank
overdraft is (a) Debit Balance (b) Credit Balance (c) Debit or Credit Balance (d) Neither Debit nor Credit
Balance 18. When a firm maintains a Cash Book, it need not maintain: (a) Sales Journal (b) Purchase
Journal (c) General Journal (d) Cash Account in the ledger 19. Double Column Cash Book records: (a)
Only Cash Transactions (b) All Transactions (c) Cash Purchase and Cash Sales Transactions th G-106, P.C.
Colony K. bagh, Patna-20 -21- Contact : 9386313659 19. Double Column Cash Book records: (a) Only
Cash Transactions (b) All Transactions (c) Cash Purchase and Cash Sales Transactions (d) Cash and Bank
transactions 20. ------------------------ is a contra entry: (a) Selling goods for cash (b) depositing cheque into
bank which was received the same day (c) Depositing cheque into bank which was received the previous
day (d) Receiving cash from Mohan and allowed him discount 21. All credit transactions are recorded of
the cash book (a) In debit side (b) In credit side (c) Either in debit side or in credit side (d) Neither in
debit side nor in credit side 22. ------------------- many have contra entry: (a) Simple Cash Book (b) Cash
and Discount Column Cash Book (c) Cash and Bank Column Cash Book (d) All Cash Books 23. Cash Book
does not record : (a) Credit Purchases (b) Credit Sales (c) Outstanding Expenses (d) All the above
transactions 24. Bank column of the Cash Book has ---------- balance. (a) Debit (b) Credit (c) Outstanding
Expenses (d) All the above transactions 25. Double column Cash Book records: (a) Only cash transactions
(b) All transactions (c) Cash purchases and cash sales transactions (d) Cash and Bank transactions II.
Matching Questions 1. Part - A Part - B (i) Object of maintaining Cash Book is (a) Debit or Credit (ii)
Opening balance of cash is written (b) Total is done (iii) Note recorded in Cash Book (c) Credit Purchase
(iv) Discount column of Cash Book (d) On the debit of Cash Book (v) Balance of Bank column of Cash
Book (e) To know the cash balance 2. Part - A Part - B (i) The balance of Petty Cash Book is (a) Interest
given by the Bank (ii) Petty Cash Book maintain records of (b) Assets (iii) Interest Account is credited (c)
Bank Account (iv) Payment made by cheque will be credited (d) Cash and Bank transactions (v) Double
column Cash Book Records (e) All Petty Expenses III. Multiple Choice Questions : More than one correct
type Questions 1. Main subsidiary Books are : (a) Cash Book (b) Ledger (c) Purchase Book (d) Sales Book
2. Advantages of subsidiary books are : (a) Lack of Flexibility (b) Division of work according to ability (c)
Delay in accounting work (d) Increase in efficiency th G-106, P.C. Colony K. bagh, Patna-20 -22- Contact :
9386313659 3. Cash Book is used : (a) For cash receipts (b) For cash payment (c) For outstanding
expenses (d) For the provision of Depreciations 4. The characteristics of Cash Book are : (a) Recording of
credit transactions (b) Recording of Income which are not received (c) Recording of cash transactions (d)
Recording of bank transactions 5. The Advantages of Cash Book are : (a) There is no need to open
separate cash account (b) It is necessary to open the cash account separately (c) Lack of recording of
Bank transactions (d) Knowledge of Cash-n-hand 6. The types of Cash Book are : (a) Single column Cash
Book (b) Double column Cash Book (c) Three column Cash Book (d) Petty Cash Book 7. The advantages of
Petty Cash Book are : (a) Its preparation is easy (b) It is maintained by Head Cashier (c) Only petty
expenses are recorded in it (d) Less possibility of errors 8. Essentials of good Imprest System are : (a) The
petty cashier should have isufficient amount for payments (b) The petty cashier should have sufficient
amount for payments (c) All the receipts obtained by Petty Cashier should be recorded datewise (d)
There is no upper limit of payment to be made by the petty cashier 9. Advantages of the Imprest system
are : (a) Control over petty expenses (b) Control on Head Cashier (c) Control over misappropriations (d)
Misuse of Cash by Petty Cashier IV. Assertion-Reason Type Questions Following are two given
statements. Read both the statements and choose the correct alternative : (A) Both statements are true
and Statement-II is the correct explanation of statement-I (B) Both statements are true but statement-II
is not the correct explanationof statement-I (C) Statement-I is true, but statement-II is false (D)
Statement-II is true, but statement-I is false 1. Statement-I “When cash comes it is debited.” Statement-II
“Cash is a Real Account.” 2. Statement-I “Cash Book is subdivision of Journal.” Statement-II “Journal
proper is prepared when Cash Book is used as Journal.” 3. Statement-I “Cash Account is an account in the
ledger.” Statement-II “Cash book is a separate book maintained for recording cash transactions.” 4.
Statement-I “Cash Book is a special Journal in which all transactions relating to cash and bank are
recorded directly from source documents.” Statement-II “Cash Account is an account in the ledger where
as Cash Book is a separate book..” 5. Statement-I “Both Cash and Bank transactions can be entered in the
Cash Book.” Statement-II “Cash Book enables abusiness man to know the balance of cash in hand and at
Bank at nay point of time without waiting for posting from the ledger .” th G-106, P.C. Colony K. bagh,
Patna-20 -23- Contact : 9386313659 Books of Original Entry - Other Sibsidiary Book I. Multiple Choice
Questions 1. Final balance of Sales account is transferred to : (a) Purchase Book (b) Purchases Return
Book (c) Trading Account (d) Profit and Loss Account 2. Which account will be credited in giving goods of
Rs. 500 in charity: (a) Sales Account (b) Purchase Account (c) Charity Account (c) Cash Account 3. On
returning the goods purchased the entry will be made in the (a) Purchases Book (b) Sales Book (c)
Purchases Return Book (d) Sales Return Book 4. Record is made in Purchases Book (a) Credit Purchase (b)
Cash Purchases (c) Cash and Credit Purchases (c) None of the above 5. Entry for goods taken away by the
proprietor of the business for his private use will be made in: (a) Purchase Book (b) Return Inward Book
(c) Returns Outward Book (d) Proper Journal 6. The total amount of the sales Return Book is posted to
the (a) Debit side of Sales Account (b) Debit side of Sales Return Account (c) Credit side of Sales Return
Account (d) Credit side of Sales Account 7. The Debit notes is written by : (a) Seller to Purchaser (b)
Purchaser to seller (c) Bank to the Purchaser (d) Bank to Seller 8. Credit Note is written by : (a) A Seller to
the buyer (b) The Buyer to the seller (c) The Bank to the buyer (d) The buyer to the Banks 9. Closing
Balance of Purchases A/c is transferred to : (a) Sales Book (b) Purchase Book (c) Purchase Return Book (d)
Trading Account 10. Record is maintanied in Journal Proper: (a) Transactions which are not recorded in
any subsidiary book (b) All transactions (c) All cash transactions (d) All credit transactions 11. Record is
maintainedin Sales Return Book: (a) Property sold or credit (b) Return of all commodities (c) Goods sold
on credit (d) Return of capital 12. Rs. 16,000 goods was sold to Sita on credit. Some part of goods was
spoiled in transit. For it she was allowed a discount of Rs. 1,000. It will be recorded in : (a) Sales return
Book (b) Cash Book (c) Journal Proper (d) None of the above 13. The record is maintained in Journal
Proper: (a) Opening entries (b) Closing entries (c) Adjusting entries (d) All of the above 14. Purchases
amount is recorded: (a) After deducting Trade Discount (b) After adding Trade Discount (c) After adding
the amount of Sales Tax (d) All of the above 15. In case lesser amount is written in invoice, then note is
sent (a) Credit Note (b) Debit Note (c) Cash Note (d) None of the above 16. The balance of Sales Book is
always (a) Credit (b) Debit (c) Debit or Credit (d) All of the above th G-106, P.C. Colony K. bagh, Patna-20
-24- Contact : 9386313659 17. Following transactions were made by a trader. Due to these transactions
the total of Purchase Book will be : (i) Bought goods from Sharma Rs. 2,000 (ii) Bought goods from S.K.
on Cash basis Rs. 3,000. (iii) Bought goods from Ratan Bros. on credit Rs.1,000. (a) Rs. 6,000 (b) Rs. 3,000
(c) Rs. 4,000 (d) Rs. 5,000 18. Points to be considered in the preparation of Purchases Book (a) Trade
Discount (b) Sales Tax (c) Carriage, Packing and Delivery Charges (d) All of the above 19. Purchase Book
has columns (a) Date and particulars (b) Invoice Number (c) Total amount (d) All of the above 20. Bills
Receivable Book has columns : (a) Date (b) from whom received (c) term and Amount (d) All of the above
21. Sales Book is used for recording : (a) Cash Purchases of goods (b) Cash sales of goods (c) Credit
purchases of the goods (d) Credit sales of the goods 22. Purchase Return Book is used for recording: (a)
Cash sales of goods (b) Credit sales of the goods (c) Cash purchases of goods (d) Returns of credit
purchases 23. Returns outwards Books total is posted to the : (a) Credit of Sales A/c (b) Debit of returns
outward A/c (c) Credit of returns outward A/c (d) None of the above 24. The Sales Book is a (a) Part of
Journal (b) Part of Ledger (c) Part of Profit and Loss A/c (d) Part of Balance Sheet 25. The total of the
Purchase Book is posted to the (a) Debit of the Sales Account (b) Credit in the Sales Account (c) Debit in
the Purchases A/c (d) Credit in the Purchases Account 26. The total Sales Book is posted to the : (a) Debit
of the Sales Account (b) Credit in the Sales Account (c) Debit in the Purchases A/c (d) Credit in the
Purchases Account II. Matching Questions 1. Part - A Part - B (i) Purchases Return Book (a) Credit Note (ii)
Record is maintained in purchases book (b) In purchases book (iii) Credit purchase is (c) Credit purchase
recorded in of property (iv) record is maintained in Journal Proper (d) After deducting trade discount (v)
In case more amount is written in (e) Subsidiary Book invoice, then note is sent 2. Part - A Part - B (i)
Division of work (a) Debit (ii) The balance of is always (b) Advantages of purchases book Sub (iii) Record
for purchase of building will be made sidiary book. (iv) The record is maintained in Journal proper(c) For
Adjustment Credit entries (v) The balance if Sales Book is always (d) Credit (e) In Journal proper th G-106,
P.C. Colony K. bagh, Patna-20 -25- Contact : 9386313659 III. Multiple Choice Questions : More than one
correct type Questions 1. Subsidiary Books are : (a) Bills receivable Book (b) Bills Payable Book (c) Trial
Balance (d) Final Account 2. Transactions are recorded in the Purchases Book (a) Cash Purchases (b)
Purchase of Asset (c) Record of all credit purchases of merchandise goods (d) All credit purchases of
goods 3. The column in the Purchase Book are : (a) Date (b) Particulars (c) Invoice No.- (d) Total Amount
4. Advantages of Purchases Book are (a) Knowledge of cash-in-hand (b) Knowledge of credit sales (c)
Knowledge of all credit purchases of goods (d) Help in the preparation of Trading Account 5. Advantages
of sales book are : (a) Knowledge of value of total credit sales (b) Knowledge of value of total credit
purchases (c) help in the preparation of Trading Account (d) Help in the knowing the Bank Balance 6. The
causes of Purchase Returns are : (a) If goods are as per sample (b) If goods are of inferior quality (c) If
goods is in excess of the order placed (d) If the goods is charged at the accurate price. 7. Entries recorded
in Journal Proper : (a) Opening Entries (b) Cash Transactions (b) Rectification Entries (d) Adjustment
Entries IV. Assertion-Reason Type Questions Following are two given statements. Read both the
statements and choose the correct alternative : (A) Both statements are true and Statement-II is the
correct explanation of statement-I (B) Both statements are true but statement-II is not the correct
explanationof statement-I (C) Statement-I is true, but statement-II is false (D) Statement-II is true, but
statement-I is false 1. Statement-I “Non-cash transactions are recorded in other special purpose
subsidiary Books..” Statement-II “All credit purchases of goods are recorded in the purchases book.” 2.
Statement-I “Only the cash transactions are recorded in the Cash Book.” Statement-II “It is not necessary
for every business to maintain all the special purpose subsidiary books but required books may be kept
depending upon the need of the business.” 3. Statement-I “Cash purchases are not recorded in the
purchases book since these will be recorded in the Cash Book.” Statement-II “All credit sales of goods are
recorded in the sales book because cash sales are recorded in the Cash book.” 4. Statement-I “Whenever
a bill of exchange is received its particulars are entered in a separate book called bill receivable book.”
Statement-II “Whenevr a bill of exchange is accepted its particulars are entered in a separate book called
bills book.” th G-106, P.C. Colony K. bagh, Patna-20 -26- Contact : 9386313659 5. Statement-I “There is
no difference between Journal and Journal proper.” Statement-II “After the sub-division of Journal into
various subsidiary books, Journal remains only a residuary book in which only those transactions are
recorded which can not be recorded in any other subsidiary book.” Classification - Ledger I. Multiple
Choice Questions 1. A Ledger is a Book of (a) Primary entries (b) Final entries (c) Both of the above (d)
None of the above 2. A Ledger contains accounts (a) Personal Accounts (b) Real Accounts (c) Nominal
Accounts (d) All of the above 3. The Trial Balance of a business is usually prepared from informations
obtained from: (a) Journal (b) Ledger (c) Cash Book (d) Purchases Book 4. The Process of transferring
entries from the books of original entry is called : (a) Journalising (b) Balancing (c) Posting (d) None of
the above 5. The Nominal Accounts are closed by (a) By transferring the Balance of P&L A/c (b) By
transferring the balance of Cash A/c (c) By transferring the Balance to Balance Sheet (d) By transferring
the Balance to Sales A/c 6. A Ledger is a (a) Books of final entry (b) Books of original entry (c) Subsidiary
Book (d) List of Summarising 7. The main object of keeping the ledger is : (a) To check the accuracy of
accounts (b) To know the position of the business (c) To know the collective result of business
transactions relating to accounts (d) To know the Profit and Loss of the business 8. The balance of
Drawing A/c is transferred to : (a) Capital A/c of the trader (b) Profit&Loss A/c (c) Trading A/c (d) Cash A/c
9. Credit balance of a Personal A/c shows: (a) Asset of the business (b) Liability of the business (c) Profit
of the business (d) Loss of the business 10. The advantages of maintaining the ledger are : (a) Knowledge
of the value of assets and liability of the business (b) Knowledge of total Purchases and Sales in a certain
period (c) Checking pf arithmetical accuracy by preparing the trial balance from ledger balances (d) All of
the above 11. The posting of accounts written in the debit side Cash Book is done: (a) In debit side (b) In
Credit side (c) In debit and credit both sides (d) None of the above 12. The posting of accounts written in
the credit side of Cash Book is done (a) In debit side (b) In Credit side (c) In debit and credit both sides
(d) None of the above 13. The posting of sellor account on the basis of Purchases Book is done (a) In
debit side (b) In Credit side (c) In Cash A/c (d) In Capital A/c th G-106, P.C. Colony K. bagh, Patna-20 -27-
Contact : 9386313659 14. The posting of Purchase accounts on the basis of Sales Book is done (a) In
debit side (b) In Credit side (c) In Cash A/c (d) In Capital A/c 15. The posting of customer accounts written
in the Sales Return Book is done: (a) In Debit side (b) In Credit Side (c) In Debit or Credit side (d) In Cash
A/c 16. The balance of Purchase Return Book is always: (a) Debit (b) Credit (c) Debit or Credit (d) All of
the above 17. To know the amount of net purchases the amount of Purchases Return is adjusted in the
amount of total purchases: (a) Deducted (b) Added (c) Neither deduction nor addition (d) By deduction
and addition 18. In cash of machinery purchased, its posting will be: (a) In the debit side of Purchases A/c
(b) In the debit side of Goods A/c (c) In the debit side of Machinery A/c (d) The the credit sides of
machinery A/c 19. Ram Lal to whom goods was sold for Rs. 1,075 sends us a cheque for Rs. 1,050 in full
settlement. The posting for the same in Ram Lal’s A/c will be : (a) In Debit Side by Rs. 1,075 (b) In the
Credit side by Rs. 1,075 (c) In the Debit side by Rs. 1,050 (d) In the Credit side by Rs. 1,050 20. Ram
Commenced business: Cash Rs. 15,000; Goods Rs. 5,000; Th posting in Ram’s Capital A/c for the same
will be: (a) In the debit side by Rs. 20,000 (b) In the debit side by Rs. 15,000 (c) In the credit side by Rs.
20,000 (d) In the credit side by Rs. 5,000 21. Ram withdrawn for personal use from the business Rs.
2,000. The posting for the same will be: (a) In the debit side of Ram’s A/c (b) In the debit side of Drawing
A/c (c) In the credit side of Ram’s A/c (d) In the credit side of Drawing A/c 22. Paid to Mohan Rs. 3,900 in
full settlement of Rs. 4,000. The posting for the same in Discount A/c will be: (a) In the debit side by Rs.
100 (b) In the Credit side by Rs. 3,900 (c) In the Credit side by Rs. 100 (d) In the credit side by Rs. 4,000
23. The balance of Purchases A/c is to be transferred to : (a) In the debit side of Trading A/c (b) In the
credit side of Trading A/c (c) In the debit side of P & L A/c (d) In the credit side of P & L A/c 24. The
balance of Sales A/c is to be transferred to : (a) In the debit side of Trading A/c (b) In the credit side of
Trading A/c (c) In the debit side of P & L A/c (d) In the credit side of P & L A/c 25. The balance of
Machinery A/c is to be transferred to : (a) In Trading A/c (b) In Profit & Loss A/c (c) In the Assets side of
Balance Sheet(d) In the Liability side of Balance Sheet 26. The balance of Direct Expenses Accounts are to
be transferred to : (a) In the debit side of Trading A/c (b) In the credit side of Trading A/c (c) In the debit
side of P & L A/c (d) In the credit side of P & L A/c 27. The balance of Indirect Expenses Accounts are to
be transferred to : (a) In the debit side of Trading A/c (b) In the credit side of Trading A/c (c) In the debit
side of P & L A/c (d) In the credit side of P & L A/c 28. The characteristics of ledger books (a) Posting from
subsidiary books (b) Collection of all the transactions related to a particular account at one place (c) The
accuracy of accounts can be checked preparing trial balance (d) All of the above 29. The columns of
ledger are : (a) Date (b) Particulars (c) J.F. and Amount (d) All of the above th G-106, P.C. Colony K. bagh,
Patna-20 -28- Contact : 9386313659 30. The debit balance of Nominal Account shows: (a) Asset (b)
Liability (c) Income (d) EXpenditure 31. Recording of transaction in theledger is called: (a) Journalising (b)
Posting (c) Casting (d) All of the above 32. Accounts which are related to gains or losses are known as: (a)
Personal Account (b) Real Account (c) Nominal Account (d) None of the above 33. Accounts which are
related to property are called: (a) Real Accounts (b) Personal Account (c) Nominal Account (d) Other
Accounts 34. The balance of an Asset Account is : (a) Credit (b) Debit (c) Either Debit or Credit (d) Neither
Debit or Credit 35. The balance of a Personal Account is : (a) Debit (b) Credit (c) Either Debit or Credit (d)
Neither Debit or Credit 36. Posting is made at the --------------- side of the account appearing at the debit
side of the Cash Book: (a) Debit (b) Credit (c) Either Debit or Credit (d) Neither Debit or Credit 37. While
preparing Suppliers Account on the basis of of Purchases-Book Posting is made at the --------------------
side of suppliers Account : (a) Debit (b) Credit (c) Either Debit or Credit (d) Neither Debit or Credit 38.
While preparing Account appearing in the Sales Return Book posting is made at their --------------- side: (a)
Debit (b) Credit (c) Either Debit or Credit (d) Neither Debit or Credit 39. When a firm maintain a Cash-
Book, it need not maintain : (a) Sales Journal (b) Purchase Journal (c) General Journal (d) Cash Account in
the ledger 40. Posting is made of the -------------- side of accounts appearing at the credit side of Cash
Book. (a) Sales Journal (b) Purchase Journal (c) General Journal (d) Cash Account in the ledger II.
Matching Questions 1. Part - A Part - B (i) When all the transactions related to (a) Amount which is to be
received from him one account are collected at one place (ii) Ledger of atrader is (b) Income (iii) Debit
balance of Real A/c shows (c) Principal book (iv) Credit balance of Nominal A/c shows (d) Ledger (v) Debit
balance of customer account shows (e) Assets 2. Part - A Part - B (i) Debit balance of bank account
shows(a) Liabilities and incomes (ii) Credit balance shows (b) Cash balance in bank (iii) Debit balance
shows (c) Assets Credit (iv) A ledger is a book of (d) Always Credit (v) Balance of purchase return book is
(e) Final Entries th G-106, P.C. Colony K. bagh, Patna-20 -29- Contact : 9386313659 III. Multiple Choice
Questions : More than one correct type Questions 1. Ledger means : (a) First stage of Accounting (b)
Second stage of Accounting (c) Third stage of Accounting (d) The Book which contains a classified and
permanent record of all the transaction sof a business 2. Necessity of Ledger is because of : (a) To know
that how musch goods is purchased and how much goods is sold (b) The amount due from each
customer or how much amount the firm has to pay to each of the supplier (c) Due to recording of all the
transactions date wise. (d) Due to recording all the transactions first of all in this book. 3. Advantages of
Ledger: (a) In it page number of ledger (L.F.) is written (b) With the help of its balance a trial balance can
be prepared easily to know the arithmetical accuracy of accounts (c) Full details of all the transactions is
given by narration in it (d) Availability of necessary informations for preparation of Final Accounts 4. The
column in Ledger are : (a) Date (b) Particulars (c) Narration (d) Amount 5. Types of Accounts available in
the Ledger : (a) Personal Accounts (b) Real Accounts (c) Unnecessary Accounts (d) Nominal Accounts 6.
Columns of Ledger maintained by Bank are : (a) Date (b) Particulars (c) Debit and Credit Amount (d)
Balance 7. Sub-division of Ledger is : (a) Capital Ledger (b) Purchase Ledger (c) Sales Ledger (d) General
Ledger IV. Assertion-Reason Type Questions Following are two given statements. Read both the
statements and choose the correct alternative : (A) Both statements are true and Statement-II is the
correct explanation of statement-I (B) Both statements are true but statement-II is not the correct
explanationof statement-I (C) Statement-I is true, but statement-II is false (D) Statement-II is true, but
statement-I is false 1. Statement-I “The book which contains a classified and permanent record of all the
transactions of a business is called the Ledger.” Statement-II “Full details of transactions (Narration) are
recorded in the book called Ledger.” 2. Statement-I “Final Accounts can be prepared with the help of
books of original entry.” Statement-II “Final Accounts can be prepared with the help of ledger accounts.”
3. Statement-I “The ledger is the chief book of accounts and it is in this book that all the business
transactions would ultimately find their place under their accounts in a duly classified terms.” Statement-
II “All the transactions are first of all recorded in the books of original entry, hence, they are also referred
to as books of primary entry or journal.” th G-106, P.C. Colony K. bagh, Patna-20 -30- Contact :
9386313659 4. Statement-I “Each ledger accounts is divided into two equal parts. The left hand side is
known as the debit side and the right-hand side as the credit side.” Statement-II “As an account is in ‘T’
shape, therefore, sometimes it is called ‘T’ account.” 5. Statement-I “Accuracy of the Ledger Accounts is
tested by preparing a Trial Balance.” Statement-II “Accuracy of books of original entry cannot be
checked.” Bank Reconcilliation Statement I. Multiple Choice Questions 1. Debit balance if Cash Book is (a)
Positive (b) Negative (c) Positive or Negative (d) None of the above 2. Credit balance of Cash Book is : (a)
Overdraft (b) Positive (c) Positive or Negative (d) None of the above 3. In case Bank Reconcilliation
Statement is prepared from the Debit balance of Cash Book, we will get: (a) Credit Balance or Overdraft
as per Pass Book (b) Overdraft as per Cash Book (c) Debit balance as per Cash Book (d) Debit or Credit
balance as per Cash Book 4. Overdraft facility is available in : (a) Saving Account (b) Current Account (c)
Fixed Deposit Account (d) Home Saving Account 5. Bank balance is always treated as positive, if it is : (a)
Cash book balance (b) Credit balance as per Pass Book (c) Debit balance as per Cash Book(d) Under all
the above circumstances 6. Bank Reconciliation Stetement : (a) To know the causes of difference
between Cash Column Bank Column of the Cash Book (b) To know thw causes of difference between
Cash Column of Cash Book and Pass Book balance (c) To know the causes of difference between bank
balance as per Bank column of Cash Book and Pass Book balance (d) None of the above 7. The object of
preparing a Bank Reconciliation Statement is : (a) To compare bank balance as per Cash Book cash
column and Pass Book balance (b) To compare opening bank balance as per pass book with the balance
at the end of the year. (c) To Compare balance as per pass Book with bank balances as per Cash Book (d)
None of the above 8. Bank Pass Book is a Copy of : (a) Cash Book Cash Column (b) Customer’s account in
Bank Ledger (c) Cash Book Bank Column (d) None of the above 9. Favourable bank balance as per Cash
Book means (a) Debit balance in Cash Book (b) Credit Balance in Cash Book (c) Debit balance in the Pass
Book (d) None of the above 10. Adjusted Cash Book also includes : (a) Error in the Cash Book (b) Error in
the Pass Book (c) Errors in Cash and Pass Book (d) None of the above th G-106, P.C. Colony K. bagh,
Patna-20 -31- Contact : 9386313659 11. Overdraft of pass Book is : (a) Debit balance of Pass Book (b)
Credit balance of Pass Book (c) None of the above (d) All of the above 12. Overdraft as per Cash Book is :
(a) Credit balance of Cash Book (b) Debit balance as per Cash Book (c) None of the above (d) All of the
above 13. Pass Book is a copy of (a) All Cash transactions (b) In Cash Book all bank transactions are
recorded (c) All receipts and payments of business (d) Customer’s account prepared by the Bank. 14.
Balance taken to prepare Bank Reconciliation Statement : (a) Balance as per Pass Book (b) Balance as per
Cash Book (c) Cash Book or Pass Book Balance (d) Neither cash book balance nor pass book balance 15.
When Bank Reconciliation Statement is prepared from the Cash Book balance then we get: (a) Balance as
per Pass Book (b) Balance as per Cash Book and Pass Book (c) Balance as per Cash Book (d) None of the
above 16. Balance as per Cash Book shows: (a) Credit (b) Debit (c) Debit or Credit (d) Debit and Credit 17.
Which of the following balance is true: (i) Debit balance as per Cash Book Rs. 10,000 (ii) A cheque for Rs.
1,000 deposited but not recorded in the Cash Book (iii) Te payment side of the Cash Book was undercast
by Rs. 100 (a) Rs. 10,900 (b) RS. 11,100 (c) Rs. 9,100 (d) Rs. 8,900 18. Which of the following balace is
true: (i) Overdraft as per Cash Book Rs. 28,000 (ii) Interest charged by the Bank overdraft Rs. 200 (iii)
Cheque issued but not presented for payment Rs. 11,200 (a) Rs. 39,400 (b) Rs. 39,000 (c) Rs. 16,600 (d)
Rs. 17,000 19. Which of the following is true: (i) Balance as per Pass Book Rs. 5,000 (ii) Cheque for Rs.
500 issued but not presented for payment ; (iii) A customer directly deposited Rs.150 into my Bank
Account (a) Rs. 5,650 (b) Rs. 4,650 (c) Rs. 5,850 (d) Rs. 4,350 20. Which of the following balance is true:
(i) Overdraft as per Pass Book Rs. 6,580; (ii) A bill for Rs. 1,000 was retired by the Bank under rebate of
Rs. 15 but the full amount of the bill was credited in the Bank column of the Cash Book (iii) Cheques
ussued but not presented for payment (a) Rs. 8,075 (b) Rs. 8,105 (c) Rs. 5,085 (d) Rs. 5,055 21. Which of
the following balance is true: (i) overdraft as per Pass Book Rs. 1,580 (ii) Cheques paid in to Bank but not
credited Rs. 2,170 (iii) Bank Charges Rs. 30: (a) Rs. 620 (b) Rs. 3,720 (c) Rs. 3,780 (d) Rs. 620 22.
According to -------------- “Bank reconciliation Statement is a statement prepared manily to reconcile the
difference between the ‘Bank Balance’ shown by the Cash Book and Bank Pass Book” (a) Carter (b) Patil
(c) William Pickles (d) None of the above th G-106, P.C. Colony K. bagh, Patna-20 -32- Contact :
9386313659 23. Causes for differences in the Cash Book and Pass Book balances are : (a) Cheques issued
by the bank or deposits (b) Cheques paid into bank for collection but not collected (c) Interest allowed by
the bank on deposits (d) All of the above 24. The importance of Bank Reconciliation Statement is : (a) To
ascertain the error of Cash Book or Bank Pass Book (b) To know the accurate bank balance (c) To make
proper amendment in the Cash Book (d) All of the above 25. The balance of Cash Book may be : (a) Debit
(b) Credit (c) Debit or Credit (d) Neither Debit or Credit 26. The balance for Pass Book may be : (a) Debit
(b) Credit (c) Debit or Credit (d) Neither Debit or Credit 27. Bank Reconciliation Statement may be
prepared : (a) By Cash Book Balance (b) By Pass Book Balance (c) Either Cash Book balance or Pass Book
Balance (d) By the balance of any Asset 28. Questions related to Bank Reconciliation Statement may be :
(a) When debit balance as per Cash Book is given (b) When credit balance as per Cash Book is given (c)
When credit or debit Balance as per Pass Book is given (d) All of the above 29. The Bank balance is
treated as plus balance if it is a balance of ----------- (a) Cash Book (b) Credit balance of Pass Book (c)
Debit balance of Cash Book (d) In the all above cases 30. A Bank Reconciliation Statement is prapred so
that the difference in the under mentioned balance is reconciled. (a) The difference in the balance in the
bank and the cash balances (b) The difference in the balance in the Pass Book in the beginning and at the
end (c) The difference in the Pass Book and Cash Book balances (d) The difference in the balance in the a
Cash Book in the beginning and at the end. 31. A Bank Reconciliation Statement is prepared with the
help of : (a) Bank Pass Book and Bank Column of Cash Book (b) Bank Pass Book and Cash Column of Cash
Book (c) Bank Pass Book and Discount Column of Cash Book (d) Bank Pass Book and Sales Book of the
customer II. Matching Questions 1. Part - A Part - B (i) B.R.S. is prepared by (a) A Statement (ii) Object of
preparing bank account (b) Positive (iii) B.R.S. is (c) Negative (iv) Debit balance of pass book is (d) By
customer having bank account (v) Credit balance of pass book is (e) To reconcill cash book with pass
book 2. Part - A Part - B (i) Credit balance of Cash Book is (a) Positive (ii) Debit balance of Cash Book is (b)
Overdraft (iii) Overdraft facility is a vailable is (c) Customer’s account maintained by the bank (iv) Pass
book is a copy (d) Debit or Credit (v) Balance of pass book (e) Current account th G-106, P.C. Colony K.
bagh, Patna-20 -33- Contact : 9386313659 III. Multiple Choice Questions : More than one correct type
Questions 1. Bank Reconciliation Statement means : (a) Statement which is prepared for issuing the
cheques (b) Statement which are recorded in the pass-book (c) The statement which is prepared mainly
to reconcile the difference between the Bank Balance shown by the Cash Book and Bank Pass Book (d)
The statement that is prepared for reconciling the balance shown by Bank statement and Cash Book
balance 2. Causes for difference in the cash book and pass book are (a) To make the cash payment (b)
Cheques issued but not presented for payment (c) Withdrawal from the business for private expenses (d)
Cheques sent to bank for collection but not collected 3. The necessity of Bank Reconciliation Statement
is : (a) To know the error of Cash Book or Pass Book (b) For the payment of cash (c) To know the accurate
Bank Balance (d) To deposit the cheque into Bank 4. Items to be added at the time preparing Bank
Reconciliation Statement by Deposit balance of Bank column of Cash Book are : (a) Cheques issued but
not presented for payment. (b) Bank charges and commission charged by (c) Direct payment made by
the Bank (d) Interest on Deposits allowed by the Bank 5. Items to be deducted at the time of preparing
the Bank Reconciliation Statement by Debit balance of Bank column of Cash Book are : (a) Interest on
Investments and Dividend Collected by the Bank (b) Cheques paid into Bank for collection but not
collected (c) The amount directly deposited into Bank by customers (d) Cheques issued but ommitted to
be recorded in the Cash Book 6. Items to be added at the time of preparing Bank Reconciliation
Statement by credit balance (Overdraft) of Bank column of Cash Book are : (a) Bank charges and
commission charged by the Bank (b) Direct payments made by the Bank (c) Interest allowed by the Bank
on deposits (d) Interest on Investments and Dividend collected by the Bank 7. Items to be deducted at
the time of preparing Bank Reconciliation Statement by credit balance of Bank column of Cash Book are :
(a) Direct payment into Bank by a customer (b) Cheques issued but ommitted to be recorded in the Cash
Book (c) Any wrong entry in the credit side of the Pass Book (d) Any wrong entry on the receipt side of
Cash Book 8. Bank Reconciliation Statement is prepared by : (a) By Trader (b) By the Bank (c) By the
Creditor (d) By the customers of a Bank th G-106, P.C. Colony K. bagh, Patna-20 -34- Contact :
9386313659 IV. Assertion-Reason Type Questions Following are two given statements. Read both the
statements and choose the correct alternative : (A) Both statements are true and Statement-II is the
correct explanation of statement-I (B) Both statements are true but statement-II is not the correct
explanationof statement-I (C) Statement-I is true, but statement-II is false (D) Statement-II is true, but
statement-I is false 1. Statement-I “Bank Reconciliation Statement is prepared by the balance of any
asset.” Statement-II “Bank Reconciliation Statement is prepared with the help of Bank 2. Statement-I
“The balance of Pass Book may be both debit or credit.” Statement-II “The balance of Cash Book is only
debit.” 3. Statement-I “The debit balance of Pass Book is an overdraft.” Statement-II “The difference in
the Cash Book and Pass Book balance is also due to the interest allowed by the bank on deposits.” 4.
Statement-I “Bank Pass Book is a copy of customers account in the bank ladger.” Statement-II “Adjusted
Cash Book includes the errors in the Pass book..” 5. Statement-I “Bank Reconciliation Statement is a
statement prepared mainly to reconcile the difference between the ‘Bank Balance’ shown by Cash Book
and Bank Pass Book.” Statement-II “Reconciliation Statement is prepared when an account boldes gets
the duly completed pass book from the bank. To tally the two balances a reconciliation statement is
prepared.” V. Comprehension/Paragraph based Questions A reconciliation statement is prepared when
an account holder gets the duly completed pass book from the bank. Immediately on receiving the pass
book, he tallies the bank balance shown by the cash book with the balance shown by the pass book and,
in case of any difference, items appearing in the pass book are checked and ticked with the items
appearing in the cash book. Unticked items in both the books will be the points of difference. These will
be noted on a piece of paper and then, with the help of these causes of difference, a statement of
reconciliation will be prepared. A bank reconciliation statement can be prepared by taking the balance
either as per cash book or as per pass book as a starting point. If the statement is started with the
balance as per bank column of the cash book, the answer arrived at in the end will be the balance as per
pass book. Alternatively, if the statement is started with the balance as per pass book, the answer
arrived at in the end will be the balance as per cash book. 1. If Cash Book balance is given in the question
at the start, but is not clearly stated that this balance is debit or credit, it will be treated as : (a) Credit
balance (b) Debit balance (c) Debit or Credit (d) None of the above 2. Balance as per ledger balance
means : (a) Balance as per Cash Book (b) Balance as per Pass Book (c) Ledger balance (d) None of the
above 3. A bank reconciliation statement can be started in which of the following balance: (a) Dr. balance
as per Cash Book (b) Cr. balance as per Cash Book (c) Debit or Credit balance as per Pass Book (d) Any of
the above balance th G-106, P.C. Colony K. bagh, Patna-20 -35- Contact : 9386313659 Trial Balance and
Errors I. Multiple Choice Questions 1. Trial Balance is a (a) Real Account (b) Nominal Account (c) Personal
Account (d) Not a Ledger 2. Compensating error effects (a) Effects the total of Assets and Liabilities of the
Balance Sheet (b) Effects the total of Debit and Credit of Trial Balance (c) Neither (a) nor (b) (d) (a) or (b)
above 3. Ledger posting of goods sold for Rs. 48 is posted as Rs. 84 (a) error of Omission (b) Error of
Commission (c) Error of Principle (d) Compensating error 4. Balance of which account is shown on the
Debit of Trial Balance (a) Cash Account (b) Capital Account (c) Bank Overdraft (d) Creditors Account 5.
out of the following errors trial balance fails to disclose: (a) Errors in books of original entry (b) Errors of
principle (c) Compensating errors (d) All of the above 6. Preparation of Trial Balance is : (a) Voluntary (b)
Compulsory (c) Neither (a) or (b) (d) (a) or (b) above 7. Trial balance is a -------------------- (a) Statement (b)
A Ledger (c) Summary (d) An Information 8. Errors not disclosed by the Trial Balance are : (a) Errors of
Omission (b) Errors of Principle (c) Compensating Errors (d) All of the above 9. Errors disclosed by the
Trial Balance (a) Error of Totalling (b) Error of Posting on the wrong side (c) error of omitting any Account
in the Trial Balance (d) All of the above 10. Error of commission arises when : (a) A transaction is
recorded fundamentally wrong (b) A transaction is recorded partly or fully wrong (c) A transaction
ommitted to record (d) None of the above 11. Error of omission arises when (a) A transaction ommitted
to record (b) A transaction is recorded fundamentally wrong (c) A transaction is recorded partly or fully
wrong (d) All of the above 12. Error of Principle arises when : (a) A transaction is recorded fundamentally
wrong (b) A transaction is recorded partly or fully wrong (c) A transaction is ommitted to record (d) None
of the above 13. Errors which affect only one Account may be (a) Errors of Commission (b) Errors of
Principle (c) Errors of Posting (d) None of the above 14. The form listing the balances and the tittle of the
accounts in the ledger on a given date is the : (a) Income Statement (b) Balance Sheet (c) Profit and Loss
Account (d) Trial Balance th G-106, P.C. Colony K. bagh, Patna-20 -36- Contact : 9386313659 15. A Trial
Balance is a : (a) Real Account (b) Personal Account (c) Nominal Account (d) List of Balances 16. The
arithmetical accuracy of accounts may be ascertained : (a) Form the Ledger (b) From the Trial Balance (c)
From the Profit and loss Account (d) From the Balance sheet 17. The main characteristics of Trial Balance
are : (a) It is prepared on a particular date (b) It includes the balance of every ledger account (c) Its both
sides should be equal (d) All of the above 18. The need of Trial Balance is : (a) To receive the summary of
ledger accounts (b) To check the arithmetical accuracy of ledger accounts (c) To prepare the Final
Accounts (d) All of the above 19. Final Accounts are prepared : (a) from Journal (b) from the Ledger (c)
from the Cash Book (d) from the Trial Balance 20. The columns in Trial Balance are : (a) Name of Ledger
Account (b) Ledger Folio (c) Debit and Credit amount (d) All of the above 21. The methods of preparing
Trial Balance are : (a) Balance Method (b) Balance Amount Method (c) Balance and Total Amount
Method (d) All of the above II. Matching Questions 1. Part - A Part - B (i) Trial Balance is (a) Credit side (ii)
Trial Balance is prepared (b) Debit side (iii) Difference of trial balance is transferred (c) Not a ledger (iv)
Trial Balance does not include (d) All ledger accounts (v) Name the suitable method of preparing Trial
Balance (e) Voluntary 2. Part - A Part - B (i) Assets are shown on the (a) After ledger (ii) Liabilities are
shown on the (b) Balance Method (iii) Trial Balance shows balances (c) Closing Stock (iv) Trial Balance is a
(d) In Suspense Account (v) Preparation of Trial Balance is (e) A Statement III. Multiple Choice Questions :
More than one correct type Questions 1. Trial Balance means : (a) Trial Balance is the list of debit and
credit balances, taken out from ledger (b) It is an Account (c) A list of balances which is prepared at a
particular date (d) Second form of Ledger 2. Essentials of Trial Balance are : (a) It is prepared at a
particular date (b) There are Journal balances in it (c) its both sides should be equal (d) Knowledge of
arithmetical accurracy of accounting by it Objective Questions / 37 th G-106, P.C. Colony K. bagh, Patna-
20 -37- Contact : 9386313659 3. Objects of preparing Trial Balance are : (a) To know the accuracy of
Journal (b) To make more efficiant to Managers (c) For preparing the Final Accounts (d) To know the
arithmetical accurracy of Ledger 4. The columns of Trial Balance are : (a) Name of Ledger Account (b)
Ledger Folio or L.F (c) Debit Amount (d) Credit Amount 5. Methods of preparing Trial Balance are : (a)
Balance Method (b) Bank Method (c) Total Amount Method (d) Balance and Total Method 6. Points to
remeber while preparing Trial Balance are : (a) There are credit balances of Assets (b) There are debit
balances of Capital and Liabilities (c) There are Debit balances of all the expenses and losses (d) There
are Credit balances of all the incomes and gains 7. Errors not disclosed by the Trial Balance are : (a)
Errors of principle (b) Compensating Errors (c) Errors of Totalling (d) Errors of posting on the wrong side
8. Errors disclosed by the Trial Balance are : (a) Errors of Omission (b) Errors of writing the wrong amount
(c) Error of Double Posting in one Account (d) Errors of wrong entries in the Books of Original Records 9.
The types of Errors are : (a) Errors of principle (b) Compensating Errors (c) Profitable Errors (d) Useless
Errors IV. Assertion-Reason Type Questions Following are two given statements. Read both the
statements and choose the correct alternative : (A) Both statements are true and Statement-II is the
correct explanation of statement-I (B) Both statements are true but statement-II is not the correct
explanationof statement-I (C) Statement-I is true, but statement-II is false (D) Statement-II is true, but
statement-I is false 1. Statement-I “Error of principle effects Trial Balance.” Statement-II “Trial Balance is
the proof of accuracy.” 2. Statement-I “Trial Balance is summary of Ledger account.” Statement-II “Trial
Balance is prepared to detect errors.” 3. Statement-I “Trial Balance is a Real Account.” Statement-II
“Liabilities are always shown on the credit side of trial balance.” 4. Statement-I “Trial Balance is prepared
by balance and total method.” Statement-II “The balance of Capital A/c is shown in the debit side of trial
balance.” 5. Statement-I “Trial Balance is a list of balance of all ledger accounts on a particular date.”
Statement-II “Trial Balance is a part of Book-Keeping.” th G-106, P.C. Colony K. bagh, Patna-20 -38-
Contact : 9386313659 Rectification of Errors I. Multiple Choice Questions 1. A credit item of Rs. 83 had
been debited to a Personal Account as Rs. 38. In rectifying entry personal account will be ----------- with
what amount (a) Debited for Rs. 76 (b) Debited for Rs. 38 (c) Credited for Rs. 121 (d) Credited for Rs. 38
2. Error disclosed by trial balance is : (a) Compensating error (b) Error of Principle (c) Error of Omission
(d) Posting on a wrong side of an account 3. A sale of goods to Ram for Cash should be debited to : (a)
Ram (b) Cash (c) Sales (d) Purchase 4. The monthly total of the purchases Book are posted to : (a) On the
Debit of Purchases Account (b) On the Debit of Sales Account (c) On the Credit of Purchases Account (d)
On the Debit of Cash Account 5. The preparation of Trial Balance helps to detect: (a) Error of Omission
(b) Error of Commission (c) Error of Principle (d) Compensating Error 6. Goods worth Rs. 500 given away
as charity, should be credited to : (a) Charity A/c (b) Sales A/c (c) Purchases A/c (d) Cash A/c 7. Goods
sold to Babu Ram for Rs. 1,350 were entered in the sales Book as Rs. 1,530. In rectifying entry Sales
Account will be ------------- by what amount? (a) Debited by Rs. 180 (b) Credited by Rs. 180 (c) Debited by
Rs. 1,350 (d) Credited by Rs. 1,530 8. An amount of Rs. 200 was received from S. Ray but wrongly
entered into the debit of M. Ray Entry in cash book was correctly posted , In rectifying entry ----- account
will be debited by Rs. ------------ (a) M. Ray Rs. 400 (b) Suspense A/c Rs. 400 (c) S. Ray Rs. 400 (d) M. Ray
Rs. 200 9. Instead of crediting Rs. 512 in Mohan’s account, Rs. 215 have been debited to his account. In
rectifying entry Mohan’s account will be ------------ by Rs. ---------- (a) Credited by Rs. 727 (b) Debited by
Rs. 727 (c) Debited by Rs. 215 (d) Debited by Rs. 515 10. Discount allowed to Ramesh Rs.41 has been
posted to his account as Rs. 14 only. The rectifying entry will be : Rs. Rs. (a) Suspense A/c Dr. 27 To
Ramesh 27 (b) Suspense A/c Dr. 41 To Ramesh 41 (c) Ramesh Dr. 27 To Suspense A/c 27 (d) Ramesh Dr.
41 To Suspense A/c 41 11. Rent paid in advance Rs. 150 omitted to be carry forward. The rectifying entry
will be Rs. Rs. (a) Prepaid Rent A/c Dr. 150 Suspense A/c 150 (b) Prepaid Rent A/c Dr. 150 To Rent 150 (c)
Prepaid Rent A/c Dr. 150 To Cash A/c 150 (d) Rent A/c Dr. 150 Prepaid Rent A/c 150 th G-106, P.C. Colony
K. bagh, Patna-20 -39- Contact : 9386313659 12. In the sales book total of page no.4 was carried forward
to page no. 5 as Rs. 1,000 instead of Rs. 1,200 and total of page no.8 was carried forward to page no. 9
as Rs. 5,600 instead of Rs. 5,000. The rectifying entry will be: Rs. Rs. (a) Sales A/c Dr. 400 To Suspense A/c
400 (b) Sales A/c Dr. 600 To Suspense A/c 600 (c) Suspense A/c Dr. 400 To Sales A/c 400 (d) Suspense A/c
Dr. 600 To Sales A/c 600 13. Received from Arun one bill for Rs. 500, passed through bills payable book.
Now Bills Payable account will be ----------------- for Rs. --------------. (a) Credited for Rs. 500 (b) Debited for
Rs. 500 (c) Debited for Rs. 1,000 (d) Credited for Rs. 1,000 14. Goods of Rs. 300 were sold to Mahesh, but
it was recorded in Purchases Book. The rectifying entry will be: (a) Suspense A/c Dr. 600 To Sales A/c 300
To Purchases A/c 300 (b) Mahesh Dr. 600 To Sales A/c 300 To Purchases A/c 300 (c) Suspense A/c Dr. 300
Mahesh A/c Dr. 300 To Sales A/c 300 To Purchases A/c 300 (d) Sales A/c Dr. 300 Purchases A/c Dr. 300 To
Mahesh 600 15. The total of Return Inward book was overcast by Rs. 475. In rectifying entry Suspense
Account will be ------------- by Rs. --------------: (a) Credited by Rs. 475 (b) Debited by Rs. 475 (c) Debited by
Rs. 950 (d) None of the above 16. Goods sold to Ramesh for Rs. 117 but recorded in Sales Book as Rs.
171. The rectifying entry will be : (a) Ramesh Dr. 54 To Sales A/c 54 (b) Sales A/c Dr. 54 To Ramesh 54 (c)
Sales A/c Dr. 171 To Ramesh 171 (d) Sales A/c Dr. 117 To Ramesh 117 17. Rs. 2,600 paid as wages for
erecting a machine should be debited to : (a) Wages Account (b) Machinery Account (c) Capital Account
(d) None of the above 18. On purchase of old furniture, the amount of Rs. 1,000 spent on its repairs
should be debited to : (a) Repairs Account (b) Furniture Account (c) Cash Account (d) None of the above
th G-106, P.C. Colony K. bagh, Patna-20 -40- Contact : 9386313659 19. Good worth Rs. 100 given as
charity should be credited to : (a) Charity Account (b) Sales Account (c) Purchases Account (d) None of
the above 20. Goods worth Rs. 500 taken by the proprietor for domestic use should be credited to : (a)
Sales Account (b) Proprietor’s Account (c) Expenses Account (d) Purchases Account 21. Rs. 400 received
from Shyam whose account was previously written off as Bad Debts should be credited to : (a) Bad Debts
Recovered Account (b) Shyam’s Account (c) Cash Account (d) Capital Account 22. Purchase of office
furniture worth Rs. 1,500 has been debited to General Expenses Account, it is (a) A clerical error (b) An
error of principle (c) An error of omission (d) A compensatory error 23. Goods destroyed by fire should
be credited : (a) To Purchases Account (b) To goods lost by Fire Account (c) To Sales Account (d) None of
the above 24. Sale of office furniture should be credited : (a) To Sales Account (b) To Office Furniture
Account (c) To Cash Account (d) To Goods Account 25. Debiting wages account for wages paid for the
construction of building is : (a) Error of omission (b) Errors of comission (c) Errors of principle (d)
Compensating errors 26. The difference in the trial balance is transferred to : (a) Capital Account (b)
Difference Account (c) Suspense Account (d) Profit and Loss Account 27. Suspense Account in the trial
balance will be entered in the : (a) Trading Account (b) Profit and Loss Account (c) Balance Sheet (d)
Manufacturing Account 28. Errors detected before the preparation of trial balance will be rectified: (a) by
opening suspense account (b) whithout opening suspense account (c) by transferring to profit and loss
account (d) by transferring to trading account 29. Salaries paid to Mahan amounting to Rs. 700 will be
debited to : (a) Salaries Account (b) Mohan’s Account (c) Cash Account (d) Capital Account 30. Rent paid
to landlord amounting to Rs. 70 was credited to rent account with Rs. 700. In the rectifying entry, rent
account will be debited with: (a) Rs. 700 (b) Rs. 70 (c) RS. 330 (d) Rs. 630 31. A brief case purchased for
Rs. 300 for the son of a partner was debited to trade expenses account with Rs. 30. Drawing account
should be debited in the rectrifying entry with (a) Rs. 300 (b) Rs. 30 (c) Rs. 330 (d) Rs. 270 32. Ram and
sons, the dealer in furniture, debit furniture account for purchasing furniture on credit. It is an error of :
(a) Omission (b) Principle (c) Compensation (d) Commission 33. Repair to Plant will be debited to : (a)
repair account (b) plant account (c) wages account (d) machinery account th G-106, P.C. Colony K. bagh,
Patna-20 -41- Contact : 9386313659 34. Which of the following errors will not affect the Trial Balance?
(a) Wrong balancing of an account (b) Writing an amount in the wrong account bu on correct side (c)
Wrong totalling of an account (d) None of the above 35. Which of the following error is an error of
omission ? (a) Sale of Rs. 500 was written in the purchases journal (b) Wages paid to Mohan have been
debited to his account (c) The total of the sales journal has not been posted to the sales Account (d)
None of the above 36. Errors of commission do not allow : (a) Correct totalling of Balance Sheet (b)
Correct totalling of the Trial balance (c) The Trial Balance to agree (d) None of the above II. Matching
Questions 1. Part - A Part - B (i) When trial balance does not tally, (a) Compensating error difference is
written (ii) Errors disclosed by trial balance is (b) Through suspense account (iii) The preparation of trial
balance (c) Posting of a wrong side of an account helps to detect (iv) After closing the accounts
rectification (d) In Suspense Account of one sided error is rectified through (v) One error is compensated
by another is called (e) Error of commission III. Multiple Choice Questions : More than one correct type
Questions 1. Types of errors from the point of view of Rectification are : (a) One sided error (b) Two sided
errors (c) Three sided errors (d) Four sided errors 2. Meaning of Rectifying Entries is : (a) Rectification of
errors by cutting (b) No rectification of errors (c) Rectifying entry for the rectfication of errors (d) Entries
which are passed for the rectification of errors 3. Methods of Rectifying errors are : (a) Errors in accounts
should not be recitified by erasing them (b) Errors should not be rectified by cutting them (c) Errors
should rectified by erasing them (d) Errors should be rectofied by cutting them 4. Wages paid for the
construction of private house of Shyam will be debited : (a) Drawings Account (b) Shyam’s Account (c)
Wages Account (d) Capital Account 5. Sale of old Furniture will be credited to : (a) Sales Account (b)
Furniture Account (c) Cash Account (d) Old Furniture Account 6. Two sides errors which do not affect the
Trial Balance are : (a) Purchase of furniture was debited to Purchases Account th G-106, P.C. Colony K.
bagh, Patna-20 -42- Contact : 9386313659 (b) Goods sold on credit for Rs. 1,350 were entered in the
Sales Book as Rs. 1,530 (c) Mahesh A/c was wrangly debited by Rs. 500 instead of credited Mohan’s A/c
(d) An amount of Rs. 1,730 spent on the extension on Building was erongly debited to Repairs A/c as Rs.
1,370 IV. Assertion-Reason Type Questions Following are two given statements. Read both the
statements and choose the correct alternative : (A) Both statements are true and Statement-II is the
correct explanation of statement-I (B) Both statements are true but statement-II is not the correct
explanationof statement-I (C) Statement-I is true, but statement-II is false (D) Statement-II is true, but
statement-I is false 1. Statement-I “Both sided errors do not affect trial balance.” Statement-II “One sided
errors affect the trial balance.” 2. Statement-I “From the transaction point of view errors are of two
types.” Statement-II “Errors of principles are traced by the trial balance.” 3. Statement-I “Error of
omission effects the total of trial balance.” Statement-II “Compensating error does not effect the trial
balance.” 4. Statement-I “The balance of suspense account is shown in the Profit and Loss A/c.”
Statement-II “Omission to record a transaction in the subsidiary book will affect two accounts.” 5.
Statement-I “Wages paid on the construction of building will be debited to wages account.” Statement-II
“The amount of sales of old Typewriter will be credited to Typewriter Account.” Depreciation I. Multiple
Choice Questions 1. Depreciation arises: (a) Due to fall in the value of money (b) Due to physical wear
and tear (c) Due to fall in the market value of Asset (d) None of the above 2. Depreciation of asset for
business is : (a) Expense (b) Income (c) Loss (d) Gain 3. The need for providing depreciation is for (a)
Ascertaining cost of production (b) Ascertaining true profit and loss (c) Showing true financial position
(d) All of the above 4. Points are considered at the time of conputation of depreciation: (a) Actual Cost of
the Asset (b) Estimated working life of the Asset (c) Estimated scrap value of the asset (d) All of the
above 5. Depreciation is the process of : (a) Allocation of Cost (b) Valuation of Asset (c) Both of allocation
and valuation (d) None of the above 6. Under fixed instalment system of depreciation, if cost of an asset
is Rs. 45,000, scrap value is Rs. 5,000 and depreciation rate is 10%. The amount of depreciation for the
year will be : th G-106, P.C. Colony K. bagh, Patna-20 -43- Contact : 9386313659 (a) Rs. 4,500 (b) Rs.
4,000 (c) Rs. 5,000 (d) Rs. 2,000 7. In which of the following methods the amount of depreaciation
remains the same through out : (a) Fixed Instalment Method (b) Diminishing Balance Method (c) Fixed
and Diminising Balance Methods (d) Neither Fixed nor Diminising Balance Method 8. Diminishing
Balance Method is used for charging depreciation (a) On the current assets (b) On the fixed assets (c) On
the fictitious assets (d) On the liquid assets 9. Cost price of a machine is Rs. 20,000 and installation
charges on its are Rs. 5,000. Its Scrap value is Rs. 7,000. Its working life is 10 years The amount of
depreciation for the first years will be : (a) Rs. 2,500 (b) Rs. 2,000 (c) Rs. 2,700 (d) Rs. 1,800 10.
Depreciation in the value of Asset it : (a) Permanent decrease (b) temporary decrease (c) Permanent
increase (d) Temporary decrease 11. The different methods of depreciation are : (a) Fixed instalment
System (b) Diminishing Balance Method (c) Depreciation Fund method (d) All of the above 12. In case of
purchase of an asset is debited to (a) Purchases A/c (b) Goods A/c (c) Assets A/c (d) Cash A/c 13. In case
of sale of an asset is credited (a) Sales A/c (b) Asset A/c (c) Goods A/c (d) Cash A/c 14. On closing of
depreciation A/c at the close of the year the A/c is credited: (a) Depreciation A/c (b) Asset A/c (c) Profit
and Loss A/c (d) None of the above 15. On charging the depreciation at the close of the year will be
debited to : (a) Asset A/c (b) Depreciation A/c (c) Cash A/c (d) Good A/c 16. On the charging the
depreciation at the close of the year will be credited to : (a) Goods A/c (b) Purchases A/c (c) Profit and
Loss A/c (d) Asset A/c 17. A Machine costing Rs. 10,000 was purchased on 1st April, 2008. Depreciation is
charged at 10% p.a. by Fixed Instalment Method. In the 1st Year, the amount of depreciation will be : (a)
Rs. 1,000 (b) Rs.750 (c) Rs. 500 (d) None of the above 18. The merits of Diminishing Balance Method are :
(a) Easy in calculation (b) Proper burden on Profit and Loss A/c (c) The value of Asset never becomes zero
(d) All of the above 19. In case of preparing the Provision for Depreciation A/c, the amount of
Depreciation will be credited: (a) Asset A/c (b) Provision for Depreciation A/c (c) Depreciation A/c (d)
Profit and Loss A/c 20. Depreciation is a process of (a) Valuation (b) Apportionment (c) Valuation and
Apportionment (d) None of the above th G-106, P.C. Colony K. bagh, Patna-20 -44- Contact : 9386313659
21. The main object of depreciation is : (a) To calculate the proper profit (b) To reduce the taxes (c) to
arrange the funds (d) None of the above 22. Depreciation arises because of : (a) Decrease in the market
value of Asset (b) Physical Depreciation of Asset (c) Decrease in money (d) All of the above 23. In straight
line method, depreciation : (a) Increase in every year (b) Decrease in every year (c) Constant in every
year (d) None of the above 24. According to Diminishing Balance Method depreciation will be ------ @
10% p.a. on Rs. 2,000 after 3 years: (a) Rs. 200 (b) Rs. 180 (c) Rs. 400 (d) Rs. 162 25. Depreciation charged
on a machine will be credited to : (a) Machine Account (b) Cash Account (c) Depreciation Account (d)
Capital Account 26. Depreciation charged on a furniture will be debited to : (a) Cash Account (b) Profit
and Loss A/c (c) Depreciation Account (d) None of the above 27. The loss on the sale of machine will be
debited to : (a) Sales Account (b) Profit and Loss Account (c) Cash Account (d) Capital Account 28. The
Diminishing Balance Method means a method by which : (a) The rate of depreciation falls year by year
(b) The amount on which depreciation is calculated falls years by year (c) The rate as well as the amount
on which depreciation is calculated falls year by year (d) All of the above 29. Depreciation is calculated
on ------------- of Assets: (a) Cost Price (b) Market value (c) Book value (d) Incoice price 30. Deperciation
means ---------- (a) physical wear and tear (b) accidents (c) fluctuation (d) obsolescene 31. According to
diminishing belence method depreciation is charged on ------- of assets: (a) Original cost (b) written down
value (c) market value (d) average cost 32. ----------- is maintained for know liabilities (a) Reserve (b)
Provision (c) Capital Reserve (d) Reserve fund 33. Maintenance of ----- is a must : (a) General Reserve (b)
Sinking fund (c) Provision (d) Secret reserve 34. Creation of provision is -------------- (a) discretionsry (b)
must (c) must or discretionery (d) None of the above 35. -------------- is created for unknown liability: (a)
Provision (b) Reserve for bad debts (c) Reserve (d) Provision for taxation 36. Provisions were previously
known as ------------ (a) Specific reserve (b) Reserve fund (c) Contigency fund (d) Capital Reserve th G-106,
P.C. Colony K. bagh, Patna-20 -45- Contact : 9386313659 II. Matching Questions 1. Part - A Part - B (i)
Cause of Depreciation (a) Due to physical wear and tear (ii) Meaning of Depreciation (b) Assets Account
(iii) Method of Depreciation (c) Decrease in the value of asset (iv) Depreciation arises (d) Straight Line
Method (v) In case of purchase of an asset is (e) Obsolescence debited to III. Multiple Choice Questions :
More than one correct type Questions 1. The meaning of Depreciation is : (a) The gradual and
permanent decrease in the value of an Asset from any cause (b) Increase in the value of an Asset (c) No
decrease or no increase in the value of an Asset (d) The permanent and continuing diminishing in the
value of an Asset 2. Features of Depreciations are : (a) Increase in the value of an Asset (b) Decrease in
the value of an Asset (c) Book value is decreased due to the depreciation (d) Purchase value is decrease
due to the depreciation 3. Causes of Depreciation are : (a) Decrease in the market value of an Assets (b)
Continuous use of an Asset (c) Obsolescence (d) Accidents 4. Objetcts of providing Depreciation are : (a)
To know the true profit or loss (b) To know the purchases (c) To know the sales (d) To show true financial
position 5. Points to be considered at the time of computation of Depreciation are : (a) Actual cost of the
Asset (b) Estimated working life of the Asset (c) Estimated scrap value of Asset (d) Market price of Asset
6. Different methods of providing Depreciation are : (a) Market value Method (b) Purchase Price Method
(c) Fixed Instalment Method (d) Diminishing Balance Method 7. Merits of Fixed Instalment Method are :
(a) Easy Method (b) To consider the market value (c) Equal amount of depreciation each year (d) To
consider the sale value 8. Demerits of Fixed Instalment Method are : (a) The Book value of an Asset
becomes zero though the asset is still used (b) Difficult method (c) Not to consider the cost of an Asset
(d) No provision of interest on the investment money of an Asset 9. Merits of Diminishing Balance
Method are : (a) Simple Method (b) The value of Asset does not become zero (c) The rate of
Depreciation is lower in this method (d) Provision for interest on invested capital 10. Demerits of
Diminishing Balance Method are : (a) To become the value of an Asset upto zero (b) The rate of
Depreciation is high th G-106, P.C. Colony K. bagh, Patna-20 -46- Contact : 9386313659 (c) No provision
of interest on invested money (d) No consideration of the cost of an Asset IV. Assertion-Reason Type
Questions Following are two given statements. Read both the statements and choose the correct
alternative : (A) Both statements are true and Statement-II is the correct explanation of statement-I (B)
Both statements are true but statement-II is not the correct explanationof statement-I (C) Statement-I is
true, but statement-II is false (D) Statement-II is true, but statement-I is false 1. Statement-I
“Depreciation is charged on Plant.” Statement-II “Depreciation is charged on all fixed assets.” 2.
Statement-I “Depreciation is gradual and permanent decrease in the value of an asset from any cause.”
Statement-II “Depreciation may be defined as the permanent and continuing diminution in the quality,
quantity, or the value of an asset.” 3. Statement-I “Depreciation refers to only tangible fixed assets.”
Statement-II “with the passes of time, the value of assets does not decrease.” 4. Statement-I “There is no
help to save the Income Tax by providing the depreciation.” Statement-II “It is necessary to know the
actual cost of asset for providing the depreciation.” 5. Statement-I “Depreciation is charged on fixed
assets.” Statement-II “Depreciation Accounting is done according to AS-6.” V. Comprehension/Paragraph
based Questions There is a Paragraph you have to go through the paragraph and mark your answer from
the given options: On 1st January, 2009 X Ltd. purchased a Machine for Rs. 90,000 and spent Rs. 6,000
on its carriage and Rs. 4,000 on its erection. On the date of purchase, it was estimated that the effective
life of the machine will be 10 years and after 10 years its scrap value will be Rs. 20,000 1. Machinery
Account will be debited by what amount ? (a) Rs. 90,000 (b) Rs. 96,000 (c) Rs. 1,00,000 (d) Rs. 1,10,000
2. What amount to Depreciation will be charged every year ? (a) Rs. 8,000 (b) Rs. 10,000 (c) Rs. 11,000
(d) Rs. 9,000 3. What amount will be left after one year in Machine Account after charging depreciation ?
(a) Rs. 90,000 (b) Rs. 94,000 (c) Rs. 92,000 (d) Rs. 96,000 Reserves and Provisions I. Multiple Choice
Questions 1. ------------ According to “Reserve means the amount set aside out of profits and other
surpluses, which are not earmarked in any way to meet any particular liability, known to exit on the date
of the Balance Sheet” th G-106, P.C. Colony K. bagh, Patna-20 -47- Contact : 9386313659 (a) William
Pickles (b) J.R. Batliboi (c) Carter (d) None of the above 2. To face the uncertains of future the
arrangement is done (a) Reserves (b) Provisions (c) Reserves and Provisions (d) None of the above 3. The
importance of Reserves is : (a) Helpful in caseof unknown losses of business (b) To make better financial
position (c) Filling the special aims (d) All of the above 4. The importance of provisions is : (a) To
ascertain the net profit or net loss (b) For the knowledge of Accurate Financial Position (c) For the
arrangement of future losses (d) For all of the above 5. As dividend may be distributed : (a) Provision (b)
Reserve (c) Provision and Reserve both (d) Neither Provision nor Reserve 6. The arrangement Reserve is
made (a) Out of Profit and Loss Appropriation Account (b) Out of Profit and Loss Account (c) Out of
Trading Account (d) Out of Manufacturing Account 7. The arrangement of Provision is made : (a) out of
Manufacturing Account (b) Out of Trading Account (c) Out of P&L Account (d) Out of P&L Appropriation
A/c 8. The types of Reserves are : (a) General Reserves (b) Specific Reserves (c) Capital Reserves (d) All of
the above 9. Distribution of Dividend may be : (a) Out of Revenue Reserve (b) Out of Capital Reserve (c)
Out of Secret Reserve (d) None of the above 10. Secret Reserve is shown (a) In Manufacturing Account
(b) In Trading and Profit and Loss A/c (c) In Balance Sheet (d) None of the above 11. -------------- is
maintained for known liabilities : (a) Reserve (b) Provision (c) Capital Reserve (d) Reserve 12.
Maintenance of ----- is a must : (a) General Reserve (b) Provision (c) Sinking Fund (d) Scret Reserve 13.
Provisions were previously known as ----------- (a) Specific Reserve (b) Reserve Fund (c) Contigency Fund
(d) Capital Reserve II. Matching Questions 1. Part - A Part - B (i) The reserve is made (a) out of Capital
profit (ii) Reserve is shown (b) Compulsory (iii) Capital Reserve is created (c) From Profits and Loss
Account (iv) Provision are created (d) On the liabilities side of Balance Sheet (v) Creation of provision are
(e) To face the future uncertainties th G-106, P.C. Colony K. bagh, Patna-20 -48- Contact : 9386313659 III.
Multiple Choice Questions : More than one correct type Questions 1. To face the future uncertantities
arrangements are made for : (a) Profits (b) Reserves (c) Losses (d) Provisions 2. Reserve means : (a) The
sums set aside out of divisible profits for the purpose of strength during the financial position of the
business. (b) The amount which is withdrawn for miscellaneous expenses (c) The amount which is
withdraw by the proprietor for his private expenses (d) The sums set aside out of divisiable profits for
meeting unknown liabilities in future 3. Features of Reserves are (a) There are created out of profits or
other surpluses (b) There are created to increase the working capital (c) These are craeted to increase
the profits (d) These are created for private expenses 4. The objects of Reserves are : (a) To increase the
profits of the business (b) To make better financial position of the business (c) helpful in case of unknown
losses of business (d) Increase in the working capital of business 5. The meaning of provision is : (a) It is a
charge to Profit and Loss A/c and is created to meet any depreciation in the value of an Asset (b) The
sums which are provided to increase the working capital of business (c) Provision for such liabilitoes the
amount of which cannot be determined with substantial accuracy (d) The amount which is provided to
increase the profits of business 6. The objects of provision are : (a) The ascertain accurate Drawings (b)
To ascertain the Net Profit or Net Loss (c) To ascertain accurate expenses (d) Knowledge of accurate
financial position of the business 7. The features of provisions are : (a) It is a charge to the Profit and Loss
A/c (b) it is created out of Net Profits or other Surpluses (c) They are made for contigencies (d) They are
made for the increase of working capital 8. The importance of provisions is : (a) To know the accurate
incomes (b) To know the accurate expenses (c) For the arrangement of future losses and expenses (d) To
ascertain the Net Profit or Loss for knowledge of true and fair financial position of the business 9. Types
of Reserves are : (a) Revenue Reserve (b) Capital Reserve (c) Secret Reserve (d) Drawings Reserve 10.
Objects of creating Secret Reserves are : (a) Reserve for known losses (b) Reserve for known incomes (c)
To increase working capital (d) Not to disclose the extraordinary losses th G-106, P.C. Colony K. bagh,
Patna-20 -49- Contact : 9386313659 IV. Assertion-Reason Type Questions Following are two given
statements. Read both the statements and choose the correct alternative : (A) Both statements are true
and Statement-II is the correct explanation of statement-I (B) Both statements are true but statement-II
is not the correct explanationof statement-I (C) Statement-I is true, but statement-II is false (D)
Statement-II is true, but statement-I is false 1. Statement-I “Secret Reserve is shown in the Balance
Sheet.” Statement-II “Capital Reserve may be created prior to incorporation.” 2. Statement-I “There is
difference between Reserve and Provision.” Statement-II “General Reserve may be created out of
security premium.” 3. Statement-I “Distrubution of dividend may be out of Capital Reserve.” Statement-II
“Provisions are necessary to ascertain the Net Profit or Loss.” 4. Statement-I “Provision are created for
known loss.” Statement-II “Reserves are created for unknown loss.” 5. Statement-I “Creation of provision
is a legal necessity. Provisions have to be provided even if there are no profit.” Statement-II “Creation of
Reserve is discretionary. It can be created only if adequate profits have been earned.” Bills of Exchange I.
Multiple Choice Questions 1. A bill of Rs. 1,000 was dishonoured. Amount of Rs. 15 was paid for noting
charges and it was renewed with Rs. 20 as interest. The amount of new bill will be : (a) Rs. 1,000 (b) Rs.
1,015 (c) Rs. 965 (d) Rs. 1,035 2. A bill was drawn on 10th Jan, 2009 for 3 months. Its due date will be.
Emergency Holiday on 13th April, 2006 (a) 14th April, 2009 (b) 10th April, 2009 (c) 11th April, 2009 (d)
12th April, 2009 3. On 1st October, 2008 Y sends a bill for 2 months to X. X discounted it with his banker
@ 6% p.a. The amount of discount will be debited in X’s Books (a) Rs. 60 (b) Rs. 30 (c) Rs. 15 (d) Rs. 10 4.
Manuj sold goods to Sanjay for Rs. 10,000 at 10% trade discount and draws a bill upon Sanjay for the
amount due. Sanjay accepted the bill and returned it to Manuj, On due date the bill was dishonoured
and Manuj paid Rs. 40 as nothing charges. In this case Sanjays’ A/c will be debited by : (a) Rs. 10,040 (b)
Rs. 9,040 (c) RS. 9,960 (d) Rs. 9,000 5. Ram paid @ 75 paise in a rupee for Rs. 5,000. In this case Ram’s
A/c will be credited by : (a) Rs. 3,750 (b) Rs. 1,250 (c) Rs. 5,000 (d) Rs. 6,250 6. According to ---------- “A
Bill to Exchange is an instrument in writing, an unconditional order signed by the maker directing to pay
a certain sum of money only to or to the order of a certain person or to the bearer to the instrument.” th
G-106, P.C. Colony K. bagh, Patna-20 -50- Contact : 9386313659 (a) Banking Company Act, 1949 (b)
Indian Negotiable Instruments Act, 1881 (c) Indian Companies Act, 1956 (d) Indian Partnership Act, 1932
7. The characteristics of Bills of exchange are : (a) It should be in writing (b) There is an order for the
payment in it (c) There should be an acceptance of Debtor in it (d) All of the above 8. The parties to a
Bills of Exchange are : (a) Drawer (b) Accetor or Drawee (c) Payee (d) All of the above 9. Bill of Exchange
are useful for (a) Increase the area of the business (b) these may be discounted from the bank before the
expiry of the period (c) Exsiness of foreign payments (d) All of the above 10. The characteristics of a
Promissory Note are : (a) It should be in writing (b) There should be a promise to pay (c) There should be
the signature of drawer on it (d) All of the above 11. A Promissory Note is an instrument : (a)
Unconditional (b) Conditional (c) Unconditional and Conditional (d) Neither Unconditional nor
Conditional 12. Payment before maturity of a bill is called : (a) Discounting of a Bill (b) Retiring of a Bill (c)
Dishonour of a Bill (d) Renewal of a Bill 13. Liability of drawer in case of bill discounted by him from the
bank is : (a) Certain Liability (b) Partial Liability (c) Contigent Liability (d) No Liability 14. By the debtor is
written : (a) Bill of Exchange (b) Journal (c) Promissory Note (d) Subsidiary Book 15. Acceptance is
necessary : (a) On the Promissory Note (b) On the cheque (c) On the Bank Draft (d) On the bill of
Exchange 16. Payment of the Bill before maturity is called (a) Endosement (b) Retiring (c) Dishonour (d)
None of the above 17. Transfer to third party is called : (a) Endorsement (b) Transfer (c) Acceptance (d)
Dishonour 18. Bill Payable Book is a part of : (a) Posting (b) Journal (c) Cash book (d) Trial Balance 19.
Bills-Receivable Book is (a) Subsidiary Book (b) Cash Book (c) Ledger (d) None of the above 20. In relation
of renewal of a bill, the interest will be calculated: (a) For the period of new bill (b) For the period of
original bill th G-106, P.C. Colony K. bagh, Patna-20 -51- Contact : 9386313659 (c) For the period of
original and new bill (d) For the period of 3 months 21. The amount of Promissory-Note is paid by : (a)
Maker (b) Creditor (c) Bank (d) Acceptor 22. A three months bill drawn on 5th April, 2006. Its sue date
will be: (a) 5th July, 2006 (b) 6th July, 2006 (c) 8th July, 2006 (d) 4th July, 2006 23. A bill was drawn on
29th July, 2005 for 2 months. Its due date will be: (a) 29th September, 2005 (b) 30th September, 2005 (c)
1st October, 2005 (d) 3rd October, 2005 24. Shyam paid @ 60 paise in a rupee out of Rs. 10,000. In this
case Bad Debts A/c will be debited by : (a) Rs. 4,000 (b) Rs. 6,000 (c) Rs. 10,000 (d) None of the above 25.
The main contents of speciment of a Bill of Exchange are : (a) Date (b) Acceptance (c) Term (d) All of the
above 26. The advantages of Bill of Exchange are : (a) It can be discounted from the bank (b) Helpful in
foreign payments (c) It can be endorsed (d) All of the above 27. The essentials of a Promisspry Note are :
(a) In Writing (b) Promise to Pay (c) Without ant conditions (d) All of the above 28. The main contents of
a Promossory Note are : (a) Date (b) Payment to a specific person (c) Stamped (d) All of the above 29.
The copies of Foreign Bill of Exchange are prepared : (a) One (b) Two (c) THree (d) Four 30. Days of grace
are considered in the calculation of due date of a bill are : (a) One (b) Two (c) THree (d) Four 31. If Ram’s
acceptance which was endorsed by us in favour of Saleem is dishonoured, then the amount will be
debited in our books to : (a) Saleem (b) Ram (c) Bills Receivable Account (d) Bills Payable Account 32. A
Bill of exchange was drawn on 11th July, 2006; its term was one month. The due date of this bill will be:
(a) 14th August, 2006 (b) 11th August, 2006 (c) 12th August, 2006 (d) 15th August, 2006 33. A four
months bill drawn on 1st January, 2006 will mature for payment on : (a) 3rd May, 2006 (b) 4th May, 2006
(c) 5th May, 2006 (d) 6th May, 2006 34. The Bill Receivable Book is Part of : (a) The Journal (b) Ledger (c)
Trial Balance (d) The Profit 35. The rebate on a bill shows that : (a) It has been dishonoured (b) It has
been paid before the due date of maturity th G-106, P.C. Colony K. bagh, Patna-20 -52- Contact :
9386313659 (c) It has been paid after the due date of maturity (d) None of the above 36. In case of
renewal of a bill interest will be calculated for the period to : (a) Original bill (b) Fresh bill (c) Original and
fresh bill (d) Six months 37. Discount in case of discounting the bill wiil be calculated for the period
between the date of : (a) Drwing and discounting the bill (b) Discounting and due date (c) April 1 to
March 31 (d) January 1 to December 31 38. A bill was drawn on January 1, 2007 for six months. The
drawee cleared the bill on 4th March, 2007. The drwee should be allowed rebate for ------------- months
(a) Six (b) Four (c) Three (d) Two 39. Noting charges are paid to the notary public by : (a) Drawer (b) Bank
(c) Endorsee (d) Either of the three parties 40. For Payment of nothing charges to the notary public will
be credited : (a) Noting Charges Account (b) Bank Account (c) Notary Public Account (d) Cash Book 41.
Bills of exchange is drawn by : (a) Debtor (b) Creditor (c) Purchaser (d) Bank 42. A bill for Rs. 1,000 was
dishonoured with Rs. 15 as noting charges. It was renewed with interest of Rs. 20. The amount of new
bill will be : (a) Rs. 1,000 (b) Rs. 1,015 (c) Rs. 1,035 (d) Rs. 965 43. The entry regarding payment of the bill
will be passed in the books of drawer if the bill is : (a) Retained by the drawer (b) Discounted (c)
Endorsed (d) Retained or sent to bank for collection 44. Payment of the bill before is die date is known as
: (a) Retiring a Bill under rebate (b) Discounting a Bill (c) To send the Bill of Collection (d) None of the
above II. Matching Questions 1. Part - A Part - B (i) Bills of Exchange is (a) Drawer (ii) A Promissory note is
(b) Creditors (iii) A bill of exchange is written by (c) Debtors (iv) A prpmissory note is written by (d) A
promise (v) The payment of promissory note is done by (e) An order 2. Part - A Part - B (i) The perties of
bill of exchange are (a) Promissory note (ii) The parties of promissory note are (b) There should be a
promise to pay (iii) A bills of exchange contain an order (c) Two (iv) The characteristics of a promissory
note are (d) Three (v) By the debtors is written (e) Unconditional th G-106, P.C. Colony K. bagh, Patna-20
-53- Contact : 9386313659 III. Multiple Choice Questions : More than one correct type Questions 1. The
features of Bills of exchange are : (a) A Bill of exchange must be in writing (b) A Bill of exchange must not
be in writing (c) It must contain an order (d) It must contain a request 2. Parties to a Bill of exchange are :
(a) Drawer (b) Acceptor or Draweer (c) Payee (d) Bank 3. Advantages of Bills of Exchange are : (a) It is a
illegal document (b) It is a legal document (c) It provides facility to purchasing and selling the goods on
credit (d) It can be endorsed to creditors 4. Features of Promissory Note are : (a) In writing (b) Not in
writing (c) Promise to pay (d) Without any condition 5. Parties to a Promissory Note are : (a) Maker (b)
Acceptor (c) Payee (d) Bank 6. Elements of Bills of exchange are : (a) Place and date of payment (b) No
stamp duty (c) Term of the bill (d) Days of grace 7. Different uses of Bills Receivable are : (a) Drawer may
return it to the acceptor without explaining any cause (b) Drawer may retain it till the date of maturity (c)
Drawer may discount it from his banker before the date of maturity (d) Drawer cannot endorse it to the
third party 8. The meaning of Accommodation Bills are : (a) Bills which are drawn for purchase and sales
of goods (b) Bills drawn for mutual and temporary help (c) Fictitious Bill (d) Useless Bill 9. Features of an
Accommodation Bill are : (a) These bills are drawn and accepted without any consideration (b) These
bills are drawn for certain consideration (c) These bills are drawn for the mutual help (d) The acceptor of
these Bills is not liable to pay the third party 10. Situations of Accommodation bills are : (a) Single bill for
the accommodation of drawer only (b) Single bill for mutual accommodation (c) Two bills for mutual
Accommodation (d) When no bill is drawn for accommodation IV. Assertion-Reason Type Questions
Following are two given statements. Read both the statements and choose the correct alternative : (A)
Both statements are true and Statement-II is the correct explanation of statement-I (B) Both statements
are true but statement-II is not the correct explanationof statement-I (C) Statement-I is true, but
statement-II is false (D) Statement-II is true, but statement-I is false th G-106, P.C. Colony K. bagh, Patna-
20 -54- Contact : 9386313659 1. Statement-I “Bills of exchange is a negotiable instrument.” Statement-II
“Negotiable instruments are used in settlement of transaction.” 2. Statement-I “There is an order for
payment in bill of exchange.” Statement-II “In bill of exchange a drawer orders drawee for the payment.”
3. Statement-I “A bill of exchange must be in writing.” Statement-II “There are two parties to a bill of
exchange” 4. Statement-I “Bill of Exchange is a legal document.” Statement-II “Bill of exchange cannot be
endorsed to creditor.” 5. Statement-I “In the determination of date of payment of every bill 3 days of
grace are included.” Statement-II “Bill of Exchange is written by a debtor.” Financial Statement-I Final
Accounts without Adjustments I. Multiple Choice Questions 1. The balance of Profit and Loss A/c is
transferred to : (a) In Cash A/c (b) In Sales A/c (c) In Capital A/c (d) In Investment A/c 2. Net Profit is equal
to (a) Gross Profit + Indirect Incomes - Indurect expenses (b) Indirect incomes - Indirect expenses (c)
Gross Profit + Indirect expenses - Indirect incomes (d) None of the above 3. If Credit side of Profit and
Loss A/c is more than its debit side, it shows: (a) Gross Profit (b) Net Profit (c) Gross Loss (d) Net Loss 4.
According to ------- “Balance Sheet is a Classified Statement of Assets and Liabilities to measure the exact
financial position of a business on a particular date” (a) Palmer (b) Freeman (c) J.R. Batliboi (d) None of
the above 5. Balance Sheet is a part of : (a) Trading A/c (b) Profit and Loss A/c (c) Director’s Report (d)
Part of Final Accounts 6. Balance Sheet is prepared on : (a) Diwali (b) Dushehra (c) Holi (d) A Particular
Date 7. Balance Sheet shows : (a) Gross Profit of the business (b) Net Profit of the business (c) Financial
Position of the business (d) All of the above 8. Preparation of Balance Sheet is : (a) Compulsory (b)
Discretionary (c) Useless (d) None of the above II. Matching Questions 1. Part - A Part - B (i) User of
Financial statements (a) In Capital Account (ii) Trading Account shows (b) In P&L A/c (iii) Profit and Loss
Accounts shows (c) Gross Profit or Gross Loss (iv) The balance of Trading A/c transferred to(d) Investors
(v) The balance of P&L A/c is transferred (e) Net Profit or Loss th G-106, P.C. Colony K. bagh, Patna-20
-55- Contact : 9386313659 2. Part - A Part - B (i) Trading Accounts is (a) Part of Final Account (ii) Balance
sheet is a part of (b) Part of Profit and Loss Account (iii) Balance Sheet shows (c) A particular date (iv)
Balance Sheet is prepared as (d) Item of Trading Account (v) Opening Stock (e) Financial Positions of the
business III. Multiple Choice Questions : More than one correct type Questions 1. The meaning of
Financial Statements is : (a) Statements which make the trader more efficient (b) Statements which show
the profit ability of the business at the end of Accounting period (c) Statements which encourage the
investment of capital (d) Statements which show the financial position of the business 2. Main
components of Finantial statements are : (a) Income statement or Trading and Profit and Loss Account
(b) Statement of Finanvial Position (c) Purchase statements (d) Sales statements 3. Objects of Financial
statements are : (a) Valuation of Closing stock (b) To present the statements of purchases and sales (c) To
provide data regarding Net Profit and True and Fair financial position of the business (d) To provide
sufficient and reliable information to the users of Financial statements 4. Users of Financial statements
are : (a) Owner and Management of Business (b) Incestors (b) Creditors of business (d) Persons who do
not want to make any relation with the business 5. The meaning of Trading Account is : (a) Account
which shows the financial results of buying and selling of goods (b) Account which shows Gross Profit or
Gross Loss of the business (c) Account which shows the capital of business (d) Account which shows the
Assets of business 6. Need of Trading Account is : (a) To know the capital of business (b) To ascertain the
Gross Profit or Gross Loss of the business (c) To know the Investments of the busines (d) To know the
Direct expenses of the business 7. Debit items of Trading A/c are : (a) Opening Stock (b) Closing stock (c)
Purchases (d) Direct expenses 8. Credit items of Trading A/c are : (a) Total sales (b) Opening stock (c)
Closing Stock (d) Indirect expenses 9. The meaning of Profit and Loss A/c is : (a) Account which shows the
Net Profit or Net Loss of business (b) Account which shows the excess of incomes over expenditure of
errors of expenditure over incomes (c) Account which shows the Liabilities of business (d) Account which
shows Drawing of the business th G-106, P.C. Colony K. bagh, Patna-20 -56- Contact : 9386313659 10.
Debit items of Profit and Loss A/c are : (a) Office expenses (b) Selling and Distribution expenses (c)
Preliminary expenses of business (d) Development expenses of business 11. Credit items of Profit and
Loss A/c are : (a) Gross Profit (b) Drawings (c) All Income (d) Goodwill IV. Assertion-Reason Type
Questions Following are two given statements. Read both the statements and choose the correct
alternative : (A) Both statements are true and Statement-II is the correct explanation of statement-I (B)
Both statements are true but statement-II is not the correct explanationof statement-I (C) Statement-I is
true, but statement-II is false (D) Statement-II is true, but statement-I is false 1. Statement-I “Trading A/c
is prepared for calculating the gross profit or gross loss.” Statement-II “Trading Account is a personal
account.” 2. Statement-I “Trading Account is a part of P&L Account.” Statement-II “There no difference
between trial balance and Balance Sheet.” 3. Statement-I “P & L A/c shows the Net Profit or Net Loss of a
particular date.” Statement-II “Goodwill is an intangible asset.” 4. Statement-I “Current Asset include the
closing stock.” Statement-II “Marshalling means showing the assets and liabilities in a proper order in the
Balance sheet.” 5. Statement-I “The preparation of a Balance Sheet is compulsory.” Statement-II “The
balance of P & L A/c is transferred to the capital A/c.” Financial Statement-II Final Accounts without
Adjustments I. Multiple Choice Questions 1. The adjustment of Manager’s Commission will be: (a) Only
on the debit side of Profit and Loss A/c (b) Shown on the debit side of Profit and Loss A/c and on the
Liability side of Balance Sheet (c) Only on the credit side of Profit and Loss A/c (d) Only on the Liability
side of Balance Sheet 2. The adjustment of contigent Liability will be : (a) Only on the Liability side of
Balance Sheet as Foot Note (b) On the asset side of Balance Sheet (c) On the credit side of Trading A/c (d)
On the credit side of P&L A/c 3. The investments of business are shown : (a) On the debit side of Trading
A/c (b) On the debit side of P & L A/c (c) On the asset side of Balance Sheet (d) None of the above 4. The
balance of Profit and Loss A/c is transferred to : (a) In Capital A/c (b) In Cash A/c (c) In Investment A/c (d)
In Reserve A/c th G-106, P.C. Colony K. bagh, Patna-20 -57- Contact : 9386313659 5. Balance Sheet is a
part of (a) Trading A/c (b) Profir and Loss A/c (c) Final Accounts (d) None of the above 6. Final Accounts
are prepared for : (a) To know the Gross Profit or Gross Loss (b) To know the Net Profit or LOss (c) To
know the financial position of business (d) All of the above 7. Users of Financial Statements are : (a)
Government and Employees (b) Owner and Management of the business (c) Investers and creditor (d) All
of the above 8. Interest received on loan is shown (a) On the credit side of trading A/c (b) On the credit
side of P & L A/c (c) On the liability side of Balance Sheet (d) None of the above 9. Preparation of Balance
Sheet (a) Discretionary (b) Compulsory (c) Unnecessary (d) Useless 10. The types of Assets are : (a) Fixed
(b) Current (c) Fictitious and Intangible (d) All of the above II. Matching Questions 1. Part - A Part - B (i)
Adhustment entries means (a) Credit side of Trading A/c and Assets side in the Balance Sheet (ii)
Objectives of adjustments are (b) Debit of Trading A/c (iii) Closing stock is written (c) Adding concerned
item and in liability side of B/S (iv) Opening stock is written (d) To ascertain correct profit and loss (v)
Adjustment of outstanding expenses is (e) Any transactions not recorded in the books III. Multiple Choice
Questions : More than one correct type Questions 1. Trading Account is prepared (a) To ascertain to
Gross Profit or Gross Loss (b) To ascertain the Net Profit or Net Loss (c) To know the financial position of
business (d) To know the Direct Expenses 2. Profit and Loss Account is prepared (a) To ascertain the
Gross Profit or Loss (b) To ascertain the Net Profit or Loss (c) To know the capital of business (d) To
Control the expenses 3. The meaning of Balance Sheet is (a) Statement which shows the financial
position of business th G-106, P.C. Colony K. bagh, Patna-20 -58- Contact : 9386313659 (b) Statement
which can be prepared at any time (c) It is prepared on a specific date i.e., at the end of an accounting
period (d) It is a statement of Assets and Liabilities 4. Features of Balance Sheet are : (a) It is a statement,
not an account (b) It is a part of Final Accounts (c) It is not a part of Final Accounts (d) It shows the
Financial Position of business 5. Need of Balance Sheet is : (a) To ascertain the Gross Profit or Loss of the
business (b) To ascertain the Net Profit or Loss of business (c) To know the financial position of business
(d) To know all the Assets and Liabilities 6. Merits of Balance Sheet are : (a) Knowledge of paying
Capacity of Loan by the firm (b) Knowledge of Gross Profit or Loss (c) Knowledge of Purchases and Sales
(d) Knowledge of Cash in hand and Bank Balance 7. Similarities between trial Balance and Balance Sheet
are : (a) Both are statements, not Accounts (b) Generally Trial Balance and Balance sheet both are
prepared (c) Closing stock is shown necessarily in both of the statements (d) Both consist the record of
adjustments 8. Difference between Trial Balance and Balance Sheet are : (a) The preparation of Trial
Balance is Compulsory, whereas, preparation of Balance Sheet is not Compulsory (b) Trial Balance is not
accepted by the Court as documentary evidence where as Balance Sheet is accepted by the court as
documentary evidence (c) Closing stock is shown in the Trial Balance, whereas it is not shown in the
Balance Sheet (d) Trial Balance does not show the financial position of business, where as Balance Sheet
shows it 9. The meaning of Adjustment Entries is : (a) To correct the entry of that transaction which is
omitted to be recorded in the Books of Accounts (b) To correct the entry of that transaction which is not
correctly recorded in the Books of Accounts (c) Entry for providing the Depreciation and other Provisions
(d) Entry to provide the interest on Capital 10. Objects of Adjustments are : (a) To ascertain the actual
Purchases (b) To ascertain is the actual Sales (c) To ascertain accurate Profit or Losss (d) To ascertain the
true financial position of the business th G-106, P.C. Colony K. bagh, Patna-20 -59- Contact : 9386313659
IV. Assertion-Reason Type Questions Following are two given statements. Read both the statements and
choose the correct alternative : (A) Both statements are true and Statement-II is the correct explanation
of statement-I (B) Both statements are true but statement-II is not the correct explanationof statement-I
(C) Statement-I is true, but statement-II is false (D) Statement-II is true, but statement-I is false 1.
Statement-I “Wages paid to the extension of building is shown in the debit side of P & L A/c.” Statement-
II “The provision for discount on debtors is calculated after deducting the provision for bad and doubtful
debts from debtors.” 2. Statement-I “Interest on capital is an income for the business.” Statement-II
“goods given as charity is deducted from purchases and is shown on the debit side of P&L A/c” 3.
Statement-I “Life Insurance Prekmium is treated as drawings.” Statement-II “Interest on drawings is an
expense for the business.” 4. Statement-I “Asset side of Balance Sheet represent debot balance.”
Statement-II “Bank overdraft is a contigent Liability.” 5. Statement-I “Sales Tax paid is shown on the debit
side of Profit and Loss Account.” Statement-II “Income Tax paid is shown on the debit side of Profit &
Loss Account V. Comprehension/Paragraph based Questions Instructions : There is a paragraph you have
to go through the paragraph and mark your answer from given options: Extracts of Trial Balance as on
31st December, 2009 Dr. Dr. Bad-Debts Account 800 Provision for Doubtful Debts 1-1-2009 2,500 Debtors
80,000 Adjustment : Create a provision for Doubtful Debts @ 5% on debtors Rs. Pass Journal Entries and
show the necessary Ledger Accounts and Balance Sheet 1. What account will be debited in the profit and
loss account in the above cases: (a) Rs. 4,800 (b) Rs. 2,300 (c) Rs. 2,500 (d) Rs. 4,000 2. What account will
be shown on the assets side of Balance Sheet in the above case? (a) Rs. 76,000 (b) Rs. 84,000 (c) Rs.
80,000 (d) Rs. 78,000 3. With what account reserve for bad debts will be created ? (a) Rs. 4,000 (b) Rs.
4,800 (c) Rs. 2,500 (d) Rs. 3,500 th G-106, P.C. Colony K. bagh, Patna-20 -60- Contact : 9386313659
Methods of Presenting Financial Statements I. Multiple Choice Questions 1. Meaning of presentation of
Financial statements is : (a) To give right information (b) To give information to right person (c) To give
information to right time (d) To give the information of outside business 2. Methods of presenting of
Financial statements are : (a) Profit and Loss A/c Method (b) Balance Sheet Method (d) Traditional or
Horizontal or T form Method (d) vertical Form or Single Cloumn Form Method 3. Financial Statements
include: (a) Cash Book (b) Income Statement (c) Purchase and Sales Book (d) Statement of Financial
Position or Balance Sheet 4. Modern trends of presentation of Financial Statements are : (a) Booklet
Form (b) Copyright Form (c) Highlight the achievements (d) Use of Charts, Graphs, Diagrams and
Schedules 5. Merits of Vertical Form Single Column Form are : (a) A Vertical Form the figures are
presented in a single manner and therefore, final account are easily understood (b) It is easy to Compute
the different Ratios (c) Lack of Comparision (d) Use of modern equipments II. Assertion-Reason Type
Questions Following are two given statements. Read both the statements and choose the correct
alternative : (A) Both statements are true and Statement-II is the correct explanation of statement-I (B)
Both statements are true but statement-II is not the correct explanationof statement-I (C) Statement-I is
true, but statement-II is false (D) Statement-II is true, but statement-I is false 1. Statement-I “The modern
trend of presenting Financial Statement is Horizontal Form.” Statement-II “Vertical presentation of
financial statements is superior to Horizontal presentation.” 2. Statement-I “According to vertical form, in
preparing the B/S first of all current Assets are shown.” Statement-II “The presentation of financial
statement in vertical Form in not proper” 3. Statement-I “There are two methods of preparing the
Balance Sheet in T form.” Statement-II “According to vertical form Financial statements are presented in
two columns.” 4. Statement-I “According to Horizontal Form, all incomes and gains are shown in the
debit side of Trading and P & L account.” Statement-II “According to Horizontal Form Balance Sheet is
prepared in ‘T’ Form.” th G-106, P.C. Colony K. bagh, Patna-20 -61- Contact : 9386313659 Accounts from
Incomplete Records I. Multiple Choice Questions 1. Meaning of Single Entry System is : (a) It is a system
in which both aspects are recorded of every transaction (b) it is a system in which both aspects are not
recorded of every transaction (c) It is incomplete system of Accountancy (d) It is Scientific system of
Accountancy 2. Essentials of Single entry System are : (a) It is implemented by Small trading
organisations (b) It is a unscientific system of Accountancy (c) It is a complete system of account keeping
(d) It is a systematic system of Accountancy 3. Advantages of Single Entry System are: (a) Simple System
(b) More Suitable for large businesses (c) Inflexible System (d) Economical System 4. Demerits of Single
Entry system are : (a) Full control on Assets (b) Easiness in preparing Balance Sheet (c) Incomplete and
Unscientific System (d) Preparation of Trial Balance is impossible 5. Methods of Ascertainment of Profit
by Single Entry System are : (a) Statement of Affairs Method (b) Cash Method (c) Purchase-Sales (d)
Conversion of Single Entry System into Double Entry System Method 6. Demerits of Statement of Affairs
Methods are : (a) Lack of arithmetical accuracy (b) Market Price of Assets and Liabilities (c) Lack of
reliability (d) Lack of Knowledge of Capital of business 7. Points to be Considered at the time of preparing
closing statement of Affairs are: (a) The ledger balances are taken from Trial Balance (b) Actual Cash
Balance is verified from the Cash Book (c) Different Assets are valued on the basis of estimations (d) The
balance of debtors and creditors should be taken from personal ledger 8. Steps to be taken be calculate
profit made during the year are : (a) Preparation of Trial Balance (b) Preparation of Final Accounts (c)
Preparation of opening and closing Statement of Affairs (d) Add the drawings made by the proprietor in
closing capital and deduct the opening and additional capital introduced during the year 9. In case of
conversion of Single Entry System into Double Entry System, main Accounts are prepared: (a) Total
Debtors Account (b) Total Creditors Account (c) Bills Receivable Account (d) Bills Payable Account 10. The
items of credit side of Total Debtors A/c are : (a) Sales (b) Casg received from Debtors (c) Sales Return (d)
Cash balance 11. The items of Debit side of Total Creditors Account are : (a) Purchases (b) Cash paid to
Creditors (c) B/P Dishonoured (d) Purchase Return th G-106, P.C. Colony K. bagh, Patna-20 -62- Contact :
9386313659 IV. Assertion-Reason Type Questions Following are two given statements. Read both the
statements and choose the correct alternative : (A) Both statements are true and Statement-II is the
correct explanation of statement-I (B) Both statements are true but statement-II is not the correct
explanationof statement-I (C) Statement-I is true, but statement-II is false (D) Statement-II is true, but
statement-I is false 1. Statement-I “At the time of preparing the Profit/Loss statement drawings are
added in closing capital.” Statement-II “In single entry system the object of preparing the statement of
affairs is to know the expenses..” 2. Statement-I “Balance sheet is not prepared in single entry system.”
Statement-II “Balance sheet is prepared only in Double Entry System.” 3. Statement-I “Profit = Closing
Capital - Opening capital.” Statement-II “The difference between closing capital and opening capital is
known as profit in single entry.” 4. Statement-I “Those accounts which are nor according to double entry
system are incomplete records.” Statement-II “System of Book-Keeping in which only Cash and Personal
Account are recorded is called single entry system.” 5. Statement-I “In single entry system, incomplete
accounts are maintained.” Statement-II “Single Entry system is used by large business house..” III.
Comprehension/Paragraph based Questions Instructions : There is a paragraph you have to go through
the paragraph and mark your answer from given options: Anurag keeps incomplete records of his
business. He gives you the following information: Rs. Capital at the beginning of the year 8,00,000
Capital at the end of the year 6,20,000 Drawings made during the year 2,50,000 Additional Capital
introduced during the year 30,000 1. What will be the amount of profit in the above ? (a) Rs. 40,000 (b)
Rs. 30,000 (c) Rs. 80,000 (d) Rs. 70,000 2. In the above if additional capital is not brought in what will be
the amount of profit ? (a) Rs. 40,000 (b) Rs. 70,000 (c) RS. 80,000 (d) Rs. 30,000 ACCOUNTS MADE EASY
BY NEERAJ KUMAR th G-106, P.C. Colony K. bagh, Patna-20 -63- Contact : 9386313659