Objective Paper Set No.: 6 Time: 120 Minutes Maximum Marks: 50

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OBJECTIVE PAPER SET NO. : 6 Time : 120 Minutes

Maximum Marks : 50
1. By double entry system of book-keeping we mean

(1) entering the transactions in two sets of books
(2) entering the transactions at two different dates
(3) .entering the two aspects of the transactions
(4) All of the above Ans. (3)
2. Capital Account is a
(1) Real Account
(2) Personal Account
(3) Current Account
(4) Intangible Account Ans. (2)
3. Discount Account is neither a

(1) Personal Account nor a Real Account
(2) Nominal Account nor a Real Account
(3) Nominal Account nor a Personal Account
4. When do we analyse the transaction in terms of debit and credit ?

(1) At the time of posting
12) At the time of original entry
(3) At the time of casting
(4) At the time of rectification Ans. (2)
5. Which of the following is both journal and ledger ?

(l) Day Book
(2) Sales Book
(3) Petty Cash Book
(4) Cash Book Ans. (4)
6. Bills Payable Book is a part of

(1) Journal
(2) Ledger
(3) Trial Balance
© Oxford University Press – Financial Accounting for Management 3rd Edition – Test
Paper - 6
(c) Oxford University Press 2019.

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(4) Profit and Loss Account Ans. (1)
7. Debiting an item leads to an

(1) increase in an asset
(2) increase in a liability
(3) increase in capital
8. Crediting an item leads to a/an

(1) increase in an asset
(2) increase in a liability
(3) decrease in capital
9. Left side of asset account is for

(1) recording its decreases
(2) recording its increases
(3) recording its decreases and increases
(4) recording rectifying entries Ans. (2)
10. Which of the following accounts is a personal account ?

(1) Ram's account
(2) Wages outstanding account
(3) Bank account
11. Cash received from Tilak as rent will be credited to

(1) Cash Account
(2) Rent Account
(3) Tilak Account
(4) Capital Account Ans. (2)
12. Under which system of accounting are credit transactions not recorded ?
(1) Cash system
(2) Single entry system
(3) Double entry system
(4) Mercantile system Ans. (1)
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13. Which of the following rules of journalising is applicable to personal accounts ?

(1) Debit what comes in, credit what goes out
(2) Debit the receiver, credit the giver
(3) Debit all losses, credit all gains
(4) Debit what comes in, credit the giver Ans. (2)
14. Which of the following transactions will be recorded in the Purchases Book ?
(1) Cash purchase of goods
(2) Credit purchase of goods
(3) Credit purchase of furniture
15. The transactions of non-financial nature arc not recorded in books of account as
per
(1) Cost concept
(2) Money Measurement concept
(3) Matching concept
(4) Going Concern concept Ans. (2)
16. A business has the liabilities of Rs. 45,000 and owner's equity is Rs. 30,000. Its
assets will be
(1) Rs. 75,000
(21 Rs. 45,000
(3) Rs. 15,000
(4) Rs. 30,000Ans. (1)
17. Satish, an owner of the business, withdrew cash for personal use from the
business. This will be debited to
(1) Satish's Account
(2) Cash Account
(3) Drawings Account
(4) Capital Account Ans. (3)
18. Debit side of Three Column Cash Book is used for recording
(l) all receipts, both in cash and by cheque, and discount received
(2) all receipts, both in cash and by cheque, and discount allowed
(3) all receipts in cash and discount allowed and received
(4) all receipts by cheque and discount allowed and received Ans. (2)
19. Discount recorded on the debit side of the Cash Book is the
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(1) cash discount allowed

(2) cash discount received
(3) trade discount allowed
(4) trade discount received Ans. (1)
20. The debit balance of Cash Account means

(1) Profit
(2) Loss
(3) Cash at Bank
(4) Cash in hand Ans. (4)
21. A brief summary of the transaction given after its recording in journal is called
(1) Statement (2) Ledger folio
(3) Narration (4) Casting Ans. (3)
22. Trial Balance is the statement that consists of debit and credit balances of
(1) All accounts except real accounts
(2) All accounts except nominal accounts
(3) All accounts except personal accounts
(4) All accounts except closing stock Ans. (4)
23. Firm's bank account shows a credit balance of Rs. 200. It means
(1) Firm has cash in hand
(2) Firm has cash at bank
(3) Firm has an overdraft
(4) Firm has net profit Ans. (3)
24. 'The factory of a firm is damaged by fire' is an example of

(1) Revenue Loss
(2) Revenue Expenditure
(3) Capital Loss
(4) Capital Expenditure Ans. (1)
25. A customer's cheque of Rs. 5,000 returned dishonoured. It will be recorded in

(1) Cash Book
(2) Sales Book
(3) Bills Receivable Book
(4) Returns Inwards Book Ans. (1)
26. The Net Profit of a firm is Rs. 84,000. Manager is to be allowed commission at 5%
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on net 26 profit after charging such commission. His commission will be

(1) Rs. 2,100
(2) Rs. 4,200
(3) Rs. 3,890
(4) Rs. 4,000 Ans. (4)
27. Which of the following transactions will be recorded in Journal Proper ?

(1) Purchase of patent on credit
(2) Purchase of plant on cash
(3) Sale of goods on credit
(4) Sale of old furniture on cash Ans. (1)
28. An expenditure is a capital expenditure when

(1) it is the personal expenditure of the owner
(2) it is related to liquid assets
(3) it is intended to benefit the future period also
29. A receipt is called a revenue receipt when

(1) it is related to routine activity of the business
(2) it is credited to capital account
(3) it decreases the tax liability
30. A written note containing an unconditional undertaking signed by the maker to pay
a certain sum of money only to or to the order of a certain person or to the bearer of
that instrument is called
(1) Debit Note
(2) Credit Note
(3) Promissory Note
(4) Bank Note Ans. (3)
31. Assets which are regularly used in the business and are not meant for resale are
called
(1) Current assets
(2) Fixed assets
(3) Fictitious assets
(4) Liquid assets Ans. (2)
32. Goodwill, Patents and Trademarks are the examples of

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(1) Both fixed assets and tangible assets

(2) Both current assets and tangible assets
(3) Both fixed assets and intangible assets
(4) Both current assets and intangible assets Ans. (3)
33. Which of the following are added to capital while preparing Balance Sheet ?
(1) Net Profit
(2) Cash at bank
(3) Cash in hand
34. Some of the fixed assets which get exhausted in course of time are called
(1) Current assets
(2) Fictitious assets
(3) Intangible assets
(4) Wasting assets Ans. (4)
35. Petty Cash Book is

(1) a copy of single column Cash Book
(2} a copy of triple column Cash Book
(3) another Cash Book for recording expenses involving small amounts
(4) a Cash Book recording receipts only Ans. (3)
36. Wages and salaries are shown in

(1) Trading Account
(2) Profit and Loss Account
(3) Both in Trading Account and Profit and Loss Account
(4) Manufacturing Account Ans. (1)
37. Which of the following is shown in Profit and Loss Account ?

(1) Carriage Inwards
(2) Carriage Outwards
(3) Freight Inwards
38. Income Tax paid in case of a proprietary concern is

(1) deducted from the capital
(2) shown in Profit and Loss Account as expense
(3) deducted from Gross Profit
(4) debited to Profit and Loss Account and deducted from capital Ans. (1)
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39. Balance Sheet

(1) is a statement of assets and liabilities
(2) is prepared for a particular period
(3) includes all nominal accounts
40. Prepaid expenses

(1) are expenses paid for a future period
(2) are expenses which have become due but have not been paid
(3) are debited to Trading Account
(4) relate to direct expenses only Ans. (1)
41. Interest on capital

(1) is debited to Profit and Loss Account only
(2) added to capital only
(3) deducted from capital only
(4) debited to Profit and Loss Account and also added to capital Ans. (4)
42. Which of the following errors is an error of principle ?

(1) Rs. 1,000 spent on extension of building debited to wages account
(2) entry of Rs. 89 debited to Umesh as Rs. 98
(3) Total of Purchases Book undercast by Rs. 800
43. Which of the following errors is revealed by the Trial Balance ?

(1) Wrong amount entered in the book of original entry
(2) Wrong amount entered in a ledger account
(3) Complete omission of an entry from the book of original entry
44. Machinery worth Ks. 800 sold to Sanjeev was wrongly entered in Sales Book. The
rectifying entry will be
(1) Debit Sales account and credit Machinery account
(2) Debit Sales account and credit Sanjeev's account.
(3) Debit Sanjeev's account and credit Machinery account
(4) Debit Sanjeev's account and credit Sales account Ans. (1)
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45. In order to calculate the due date of a Bill of Exchange how many days of
grace are added ?
(1) Quo (3) Three
(2) Two (4) Five Ans. (3)
46. The person who writes the Bill of Exchange is generally

(1) the creditor
(2) the debtor
(3) the endorser
(4) the owner Ans. (2)
47. If the due date of a Bill of Exchange falls on a public holiday or Sunday, then the
due date will be
(1) next day
(2) a day before the due date
(3) three days before the due date
(4) three days after the due date Ans. (2)
48. Commerce refers to
(1) Trade
(2) Trade and aids to trade
(3) Industry
(4) Industry and trade Ans. (4)
49. Owner's equity means

(1) Capital
(2) Capital and creditors' equity
(3) Capital and assets
(4) Liabilities Ans. (1)
50. The purpose of preparing Balance Sheet is

(1) to know the financial position of the business
(2) to find out cost per unit of goods produced
(3) to find out Net Profit
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Page 1 of 8

OBJECTIVE PAPER SET NO. : 6 Time : 120 Minutes

1. By double entry system of book-keeping we mean

3. Discount Account is neither a

4. When do we analyse the transaction in terms of debit and credit ?

5. Which of the following is both journal and ledger ?

6. Bills Payable Book is a part of

(c) Oxford University Press 2019.

(4) Profit and Loss Account Ans. (1)

7. Debiting an item leads to an

8. Crediting an item leads to a/an

9. Left side of asset account is for

10. Which of the following accounts is a personal account ?

11. Cash received from Tilak as rent will be credited to

(c) Oxford University Press 2019.

13. Which of the following rules of journalising is applicable to personal accounts ?

(c) Oxford University Press 2019.

(1) cash discount allowed

20. The debit balance of Cash Account means

24. 'The factory of a firm is damaged by fire' is an example of

25. A customer's cheque of Rs. 5,000 returned dishonoured. It will be recorded in

(c) Oxford University Press 2019.

on net 26 profit after charging such commission. His commission will be

27. Which of the following transactions will be recorded in Journal Proper ?

28. An expenditure is a capital expenditure when

29. A receipt is called a revenue receipt when

32. Goodwill, Patents and Trademarks are the examples of

(c) Oxford University Press 2019.

(1) Both fixed assets and tangible assets

35. Petty Cash Book is

36. Wages and salaries are shown in

37. Which of the following is shown in Profit and Loss Account ?

38. Income Tax paid in case of a proprietary concern is

(c) Oxford University Press 2019.

39. Balance Sheet

40. Prepaid expenses

41. Interest on capital

42. Which of the following errors is an error of principle ?

43. Which of the following errors is revealed by the Trial Balance ?

(c) Oxford University Press 2019.

46. The person who writes the Bill of Exchange is generally

49. Owner's equity means

50. The purpose of preparing Balance Sheet is

(c) Oxford University Press 2019.

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