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PART A 8) The short –term obligation, which have

to be met with in the next twelve

1) The accounting is the language of months.
________ a) Current assets
a) Sociology b) Current liabilities
b) History c) Total liabilities
c) Commerce d) Total assets
d) Business
9) The book used to record bills raised by
2) Three elements of balance sheet ___ suppliers
a) Assets, Liabilities and equity a) Bills receivable book
b) Debtor, creditor, customer b) Bills payable book
c) Receipt and payment, trading, c) Cash book
profit and loss account d) Return inward book
d) Single entry system, double entry
system, cash book. 10) The document supporting cheques
deposited into bank
3) The term credit means ______ a) Call-in-slip
a) Debit the receiver b) Pay-in-slip
b) Credit what goes out c) Receipt
c) Trust or believe d) Voucher
d) Own to me the proprietor
11) Error of posting the amount in one
4) The term L. F. stands for __________ account instead of another
a) Letter Forward a) Compensating error
b) Ledger Folio b) Error of principle
c) Least Folio c) Error of commission
d) Last Folio d) Error of omission

5) The system of recording of 12) The document prepared to record

transactions from journal to the ledger goods return to the suppliers
_____ a) Return outward book
a) Posting b) Return inward book
b) Journal c) Sales return back
c) Journal entry d) Purchase book
d) Ledger
13) The book of secondary entry
6) The account shows the net profit or a) Journal
loss of the business entity during an b) Posting
accounting period ___________ c) Ledger
a) Trading account d) Balance sheet
b) Profit and loss account
c) Net profit 14) A happening of “consequences to an
d) Net loss entity”
a) Circumstances
7) A part of total equity of a company b) Ledgers
a) Equity share capital c) Profit
b) Issued share capital d) Event
c) Preference share capital
d) Called up share capital 15) Excess of income over expenditure is
a) Loss
b) Net loss
c) Profit
d) Gross profit d) Income

16) C. I. F. price means 23) The account shows the distributions of

a) Carriage, Insurance and Freight partnership profit among partners
b) Cost, Insurance and Freight a) Profit and loss approximation
c) Cost, Indent and Fixation account
d) Cost, Insurance and fixation b) Profit and loss account
c) Trading and profit and loss account
17) Depreciation is charged at a fixed d) Double entry system of booking
percentage on the value at which the keeping
assets stands in the book at the
beginning of every year. 24) The account kept a side for a known
a) Revaluation method liability of which the account cannot
b) Fund method be determined with substantial
c) Written down method accuracy
d) Annuity method a) Reserve
b) Provision
18) Sale of old furniture with Rs. 10,000. c) Capital reserve
The journal entry for this is d) Profit
a) Cash _ _ _ A/c Dr. 10,000
To furniture A/c 10,000 25) Loan obtained against hypothecation
b) Purchase_ _ A/c Dr. 10,000 of an asset
To Cash A/c 10,000 a) Unsecured loan
c) Cash _ _ A/c Dr. 10,000 b) Long term loan
To Purchase A/c 10,000 c) Secured loan
d) Furniture A/c Dr. 10,000 d) Medium term loan
To Cash A/c 10,000
26) Every debit entry will have a
19) Depreciation is provided on corresponding credit entry. It is called
a) Current liabilities a) Single entry system of book
b) Total assets keeping
c) Current assets b) Double entry system of book
d) Fixed assets keeping
c) Balance sheet
20) The capital required for maintaining d) Profit & loss account
routine operations
a) Long term capital 27) Bank reconciliation statement is
b) Short term capital prepared by
c) Working capital a) Customer
d) Fixed capital b) Director
c) Manager
21) The book, which is required to be d) Clerk
maintained by a company under
Companies Act 1956 28) Dividend will be paid first to
a) Copy book a) Debenture holders
b) Audit report b) Preference shareholders
c) Audit note book c) Auditors
d) Statutory book d) Directors

22) An inflow of economic benefits 29) The total of the sales book is posted to
a) Liabilities the credit of the
b) Net profit a) Purchase book
c) Expenses b) Sales return book
c) Purchase return book b) Dividend
d) Sales book c) Net profit
d) Remuneration
30) The date on which a bill becomes
payable is called 38) The term J, F. stands for
a) Last date a) Journal Folio
b) Discounting date b) Job Folio
c) Time barred date c) Joint Fitting
d) Due date d) Job Finance

31) A formal record of particular type of 39) The report, which discloses certain
transaction vital statutory and non-statutory
a) Cost accounting information
b) Financial Accounting a) Auditor’s report
c) Account b) Directors report
d) Accounting c) Managers Report
d) Financial Report
32) Preference shareholders enjoy
privilege over equity shareholders in 40) F O B means
respect of a) Free On Board
a) Dividend b) Free On Box
b) Loss c) First On Box
c) Interest d) First On Bail
d) Gross profit
33) Depreciation is arise from
a) Financial burden 41) 250 packets hair oil costing Rs. 50 per
b) Fall in the value money packet purchased . Its total cost is
c) Passage of time equal to
d) Increase in the cost of asset a) Rs. 12,500
b) Rs. 7,500
34) The accounting equation is satisfied by c) Rs. 10,000
a) Capital = Loan + Assets d) Rs. 9,500
b) Liabilities = Net assets
c) Capital = Net assets 42) Capital introduced in the business,
d) Capital = Assets + Liabilities journal entry for this is
a) Capital --- A/c Dr.
35) Owners’ investment in a company To Cash A/c
a) Issued share capital b) Cash --- A/c Dr.
b) Equity share capital To Capital A/c
c) Authorised share capital c) Cash --- A/c Dr.
d) Preference share capital To Bank A/c
d) Bank--- A/c Dr.
36) The document prepared to record all To cash A/c
cash and bank receipts
a) Receipt voucher 43) Purchased furniture for Rs. 1,00,000.
b) Journal voucher Two elements are
c) Cash voucher a) Furniture and purchases
d) Payment voucher b) Purchases and furniture
c) Furniture and cash
37) The profit to the shareholder on their d) Cash and furniture
investment is
a) Profit
44) The two most important causes of b) Rs. 16,000
difference between passbook and c) Rs. 34,000
cashbook is d) Rs. 25,000
a) 1) Bank charges not yet intimated
2) Cheques dishonoured but not 50) If the profits of all the company is rs.
intimated 10,00,000. the net remuneration
b) 1) Cash bookdamaged payable to director is
2) Pass book lost a) Rs. 1,00,000
c) Pass book damaged and mutilated b) Rs. 1,10,000
d) 1) Cheque lost c) Rs. 1,20,000
2) Pass book damaged d) Rs. 90,000

45) Cash received from Ram Rs. 650 was 51) If the cost of the machine is Rs. 50,000
debited in his account. The and depreciation to be written off at the
rectification entry is rate of 10% per annum. Under
a) Ram’s --- A/c Dr. 1300 reducing balance method, what would
To Suspense 1300 be the depreciation to be written off
b) Suspense --- A/c Dr. 650 during the second year
To Ram’s A/c 650 a) Rs. 4,000
c) Ram’s --- A/c Dr. 650 b) Rs. 5,000
To Suspense A/c 650 c) Rs. 4,500
d) Suspense A/c Dr. 1300 d) Rs. 4,250
To Ram’s A/c 1300
52) Commission paid Rs. 2000 has been
46) Mr. A purchased 200 copies of posted to salary account. The
textbooks. The selling price of each rectification entry will be
copy was Rs. 100. Later Mr. A a) Commission A/c Dr. 2000
returned 10 copies of textbooks To Salary A/c 2000
because of defective printing. Now the b) Salary A/c Dr. 2000
total cost of returned books To commission A/c 2000
a) Rs. 120 c) Rent A/c Dr. 2000
b) Rs. 1000 To commission A/c 2000
c) Rs. 1400 d) Cash A/c Dr. 2000
d) Rs. 1500 To Salary A/c 2000

47) Both assets and owner’s equity 53) On 31st December 1999 Bank balance
(capital) would be increased by as per cashbook of Suresh stood at Rs.
a) Proprietor’s withdrawals 4,320. On scrutinizing Bank account
b) Purchasing building on credit with the Bank passbook the cashier
c) Retained earnings find that Bank interest of Rs. 50
d) Purchasing of building for cash appearing in the passbook are not yet
recorded in the cashbook. Now Bank
48) Purchase of Govt. securities for cash balance as per passbook is
would a) Rs. 4320
a) Reduce assets b) Rs. 4420
b) Increase assets c) Rs. 4370
c) Increase Liabilities d) Rs. 4270
d) Keep assets unchanged
54) _______ records all residual
49) Mr. X sells goods at cost plus 60%. transactions
The total sales were 32,000. The cost a) Cash book
price of goods is b) Journal proper
a) Rs. 20,000 c) Ledger book
d) None of the above a) 1) Mintues Book
2) Purchase Daybook
55) 50 packets of Tea powder costing Rs. b) 1) Register of shareholders
27.50 per packet purchased. Its total 2) Register of Debentures
cost c) 1) Sales book
a) Rs. 1357 2) Purchase book
b) Rs. 1600 d) 1) Purchase return book
c) Rs. 1500 2) Sales return book
d) Rs. 1375
56) Mr. X purchased goods worth Rs.
2,00,000. The supplier charges 10% Problem No. 1
sales tax. The purchase price will be On 31st December 1999, the cashbook of
a) Rs. 2,20,000 Mr. x showed an over drawn bank balance
b) Rs. 1,80,000 of Rs. 234 on comparing his cashbook
c) Rs. 1,90,000 with the bank passbook. He finds that:
d) Rs. 2,00,000 a) A cheque for Rs. 50 sent to Mr. Y
had been entered in the cash
57) If a company purchased a machine for column of the cashbook
Rs. 50,000 the useful life of machinery b) The bank column on the receipts
is 10 years and in value is rs. 5000. the side of the cashbook was found to
rate of depreciation when the be under cast by Rs. 20
management wants to depreciate it by
straight line method 61) Bank balance as passbook from the
a) 12% above Problem No. 1
b) 10% a) Rs. 117
c) 9% b) Rs. 269
d) 11% c) Rs. 264
d) Rs. 246
58) Paid salary Rs. 400 to Mr. x for
Journal entry is 62) Total Bank overdraft as per cashbook
a) Salary ---- A/c Dr from the above Problem No. 1
To X’s A/c a) Rs. 234
b) X’s --- A/c Dr. b) Rs. 245
To Salary A/c c) Rs. 284
c) Salary--- A/c Dr. d) Rs. 264
To Cash A/c
d) Cash --- A/c Dr. Q. no. : 63 – 64
To Salary A/c
Problem No. 2
59) If an expense on major repairs of On 1st March 2000 Mr. K drew 2 months
machinery purchased second hand has bill on Mr. L for Rs. 2000 and latter
been debited to repairs account. It accepted the same on the due date the bill
invokes was dishonoured.
a) An Error of Commission
b) An Error of Principle 63) The due date for the bill is
c) An Error of Omission a) May 5th
d) No Error b) May 4th
c) May 3rd
60) The following two are the statutory d) May 7th
books to be maintained bya a company
under different sections of the 64) Journal entry in the books of Mr. K for
Companies Act 1956 the recipt of bill
a) Bills receivable A/c Dr. b) Rs. 1050
To L’s A/c c) Rs. 1100
b) K’s A/c d) Rs. 1300
To Bills Receivable A/c
c) Bills Payable A/c Q. No. : 70 – 75
To K’s A/c Problem No. 4:
d) Bills Receivable A/c The Following is the Trial Balance of Sri
To K’s A/c Shiva Kumar as on 31st December 2000
Particulars Dr (Rs.) Cr
Q. No. 65 – 69 (Rs.)
Problem No. 3: Capital 42500
On 1st Jan 1996 Sri Shankar purchased Drawings 3750
machinery for Rs. 6000 and spent Rs. 500 Stock on 1st Jan 1999 6000
for transport and Rs. 1000 for installation. Purchases and Sales 43000 85000
On 36-6-1998 sold a part of machinery Returns 1000 500
costing Rs. 1500 for Rs. 1050. On the Discount 250 350
same date he bought new machinery for Income Tax 350
Rs. 1800. Every year, depreciation was Commission 500
charged at 10% per annum on the original Office Salary 8650
cost method Office Rent 1000
Advertising 850
65) What is the value of machinery as on
Debtors / Creditors 42500 15000
31/12/1998 as per Problem No. 3?
Reserve for doubtful 1500
a) Rs. 8685
b) Rs. 10000
Manufacturing 4300
c) Rs. 6000
d) Rs. 6500
Bills Receivable / 2500 2500
66) What is the total depreciation in the payable
first year as per Problem No. 3? Carriage 300
a) Rs. 600 Machinery 20000
b) Rs. 650 Motor Van 3500
c) Rs. 750 Land and Building 5000
d) Rs. 700 Office Expenses 750
Cash at Bank 3000
67) What is the net loss from the sale of Cash in Hand 1150
the machinery as per Problem 3? Total 147850 147850
a) Rs. 90
b) Rs. 60 Other Adjustments
c) Rs. 70 1. Sock on 31st Dec. 2000 – Rs. 5000
d) Rs. 75 2. Debt worth Rs. 1000 should be written
off as bad
68) What is the net depreciation charged 3. Depreciate machinery by 5% and motor
on the new machinery as on 31-12- van by 15%
1998 as per Problem 3? 4. Reserve for bad and doubtful debts
a) Rs. 72 should be increased by Rs. 300
b) Rs. 45 5. Commission accured but not received
c) Rs. 90 Rs. 250
d) Rs. 75 6. Goods worth Rs. 250 were used by the
proprietor for his personal use.
69) What is the selling price of machinery 7. On 20th Dec 2000 a fire broke out in the
as per problem 3? shop and goods worth Rs. 1000 were
a) Rs. 1200 completely destroyed. The insurance
company accepted it claim for Rs. 750
only and paid the amount on 1st Jan 2001

70) What is the total amount of sales return

as per Problem No. 4?
a) Rs. 1000
b) Rs. 500
c) Rs. 2000
d) Rs. 1500

71) What is the Gross profit as per

Problem No. 4?
a) Rs. 38150
b) Rs. 37150
c) Rs. 38950
d) Rs. 37010

72) What is the total amount of

commission credited to Profit and Loss
Account as per Problem No. 4?
a) Rs. 500
b) Rs. 250
c) Rs. 750
d) Rs. 650

73) What is the total amount of

depreciation charged to Profit and Loss
Accounts per Problem No. 4?
a) Rs. 1525
b) Rs. 1255
c) Rs. 2155
d) Rs. 2551

74) What is the net profit as per Problem

No. 4?
a) Rs. 23765
b) Rs. 23567
c) Rs. 32567
d) Rs. 23675

75) What is total discount debited to Profit

and Loss Account as per Problem No.
a) Rs. 350
b) Rs. 530
c) Rs. 250
d) Rs. 520