MCQs - 4

MCQ FOR FINANCIAL ACCOUNTING
1. Which English alphabet is similar to the shape of an account?

(a) I ; (b) T ; (c) H ; (d) None
2. Gross Profit is the difference between

(a) Net Sales and Cost of goods sold ; (b) PAT and Dividends ;
(c) Net Sales and Cost of production ; (d) Net Sales and Direct costs of productions
3. Recording of Capital contributed by the owner as liability ensures the adherence of principle of
(a) Double Entry
(b) Going Concern
(c) Separate Entry
(d) Materiality
3. The basic concepts related to Balance Sheet are
1 Cost Concept
2 Business Entity Concept
3 Accounting Period Concept
4 Both (a) and (b) above
5. The basic concepts related to P & L Account are

(a) Realization Concept
(b) Matching Concept
(c) Cost Concept
(d) Both (a) and (b) above
6. Which of the following is (are) characteristic(s) of Bad Debt?
(a) It is a definite loss to the business ; (b) It must be shown in Profit & loss account ;
(c) No provision is necessary for it ; (d) All of the given options
7. Only the significant events which affect the business must be recorded as per the principle of
(a) Separate Entity
(b) Accrual
(c) Materiality
(d) Going Concern
8. P & L Account is prepared for a period of one year by following
(a) Consistency Concept
(b) Conservatism Concept
(c) Accounting Period Concept
(d) Cost Concept
9. If the Going Concern concept is no longer valid, which of the following is true?
(a) All prepaid assets would be completely written-off immediately
(b) Total contributed Capital and Retained Earnings would remain unchanged
(c) Intangible Assets would continue to be carried at net Amortized historical cost
(d) Land held as an Investment would be valued at its realizable value
10. Under which of the following concepts are shareholders treated as creditors for the amount they paid
on the shares they subscribed to?
(a) Cost Concept
(b) Duality Concept
(c) Business Entity Concept
(d) Since the shareholders own the business, they are not treated as creditors
11. The underlying accounting principle(s) necessitating amortization of intangible asset(s) is/are
(a) Cost Concept
(b) Realization Concept
(c) Matching Concept
(d) Both (a) and (c) above
12. Which of the following practices is not in consonance with the convention of conservatism?
(a) Creating Provision for Bad debts
(b) Creating Provision for Discount on Creditors
(c) Creating Provision for Discount on Debtors
(d) Creating Provision for tax
13. The accounting measurement that is not consistent with the Going Concern concept is
(a) Historical Cost
(b) Realization
(c) The Transaction Approach
(d) Liquidation Value
14. Recording of Fixed Assets at cost ensures adherence of
(a) Conservatism Concept
(b) Going Concern Concept
(c) Cost Concept
15. Omission of paise and showing the round figures in financial statements is based on
(a) Conservatism Concept
(b) Consistency Concept
(c) Materiality Concept
(d) Realization Concept
16. X Ltd., purchased goods for ` 5 lakh and sold 9/10th of the value of goods for ` 6 lakh. Net expenses
during the year were ` 25, 000. The company reported its net profit as ` 75,000. Which of the following
concept is violated by the company?
(a) Realization
(b) Conservation
(c) Matching
(d) Accrual
17. Accounting does not record non- financial transactions because of
(a) Entity Concept
(b) Accrual Concept
(c) Cost Concept
(d) Money Measurement Concept
18. Mr. Rohit, owner of Rohit Furniture Ltd., owns a personal residence that cost ` 6,00,000, but has a market
value of ` 9,00,000. During preparation of the financial statement for the business, the entire value of
property was ignored and was not shown in the financial statements. The principle that was followed
was
(a) The concept of the Business Entity
(b) The concept of the Cost Principle
(c) The concept of Going Concern Principle
(d) The concept of Duality Principle
[Hints: (a) Business entity concept requires the business to be treated as a separate entity.]
19. Provision for bad debt is made as per the

(a) Entity Concept
(b) Conservatism Concept
(c) Cost Concept
(d) Going Concern Concept
[Hints: (b) Provision for bad debts is made as per the concept of conservatism.]
20. Fixed Assets and Current Assets are categorized as per concept of
(a) Separate Entity
(b) Going Concern
(c) Consistency
(d) Time period
21. Which of the following is NOT a revenue expenditure?
(a) Petrol consumed in motor vehicles ; (b) Cost of saleable goods ; (c) Bad debts ;
(d) Premium given on lease
22. Which of the following statements is true?

(a) Going Concern Concept assumes that business will be carried on for a definite period
(b) The Capital Losses need not be deducted to ascertain net income
(c) Provision for bad and doubtful debts is created in recognition of conservatism concept
(d) Materiality concept states that all business transactions are to be recorded however insignificant
they may be
23. The expenses and incomes pertaining to full trading period are taken to the Profit and Loss Account of
a business, irrespective of their payment or receipt. This is in recognition of
(a) Time period Concept
(b) Going Concern Concept
(c) Accrual Concept
(d) Duality Concept
24. Which of the following is an example of Capital Expenditure?
(a) Insurance Premium
(b) Taxes and Legal expenses
(c) Discount allowed
(d) Customs duty on Import of Machinery
25. In the creditors control account, all of the below exist except:
(a) Credit purchases ; (b) Purchase returns ; (c) Cash purchases ; (d) Cash/cheques paid
26. Ledger contains various ___________ in it

(a) Transactions ; (b) Entries ; (c) Accounts ; (d) None of these
27. Which of the following concepts assumes that a business will last indefinitely?
(a) Business Entity
(b) Going Concern
(c) Periodicity
(d) Consistency
28. Which of the following is an example of Personal Account?
(a) Machinery
(b) Rent
(c) Cash
(d) Creditor
1 ayment received from Debtor

(d) Decreases the Total Assets
(e) Increases the Total Assets
(f) Results in no change in the Total Assets
(g) Increases the Total Liabilities
30. The ____________ in a ledger helps in locating the accounts contained in it

(a) Folio ; (b) Pages ; (c) Serial Number ; (d) None of these
31. Cash Purchases

(a) Increases Assets
(b) Results in no change in the Total Assets
(c) Decreases Assets
(d) Decrease Liability
[Hints: (b) Cash purchases result in decrease in cash and increase in stock. Thus there is no change in
the total assets.]
32. In which of the following statement opening stock is shown?

(a) Profit and loss account (Right Answer) ; (b) Balance sheet ; (c) Cash flow statement ;
(d) Owner‘s equity
33. The process of transfer of entries from day book to ledgers is called _______________
(a) Simple posting ; (b) Journal posting ; (c) Transaction ; (d) Ledger posting
34. Goods returned from X is entered as

(a) Debit X A/c; Credit Purchase Return A/c
(b) Debit X A/c; Credit Cash A/c
(c) Debit Sales Return A/c; Credit X A/c
(d) Debit X A/c; Credit Sales A/c
35. When Fixed Assets are sold
(a) The Total Assets will increase
(b) The Total Liabilities will increase
(c) The Total Assets will decrease
(d) There is no change in the Total Assets
36. Withdrawal of goods from stock by the owner of the business for personal use should be recorded by
(a) Debiting Stock Account and crediting Capital Account
(b) Debiting Capital Account and crediting Drawings Account
(c) Debiting Drawings Account and Crediting Stock Account
(d) Debiting Stock Account and Crediting Drawings Account
37. Which of the following transactions would cause a change in ―owners‘ equity‖?
(a) Repayment of a Bank Loan
(b) Payment of Dividends and Unprofitable Operations
(c) Sale of Land on Credit
(d) Purchase of Assets and incurrence of Liabilities
38. Withdrawals by proprietor would

(a) Reduce both Assets and Owner‘s Equity
(b) Reduce Assets and increase Liabilities
(c) Reduce Owner‘s Equity and increase Liabilities
(d) Have no affect on the Balance Sheet
[Hints: (a) Withdrawals by proprietor would reduce both assets and owner‘s equity.]
39. Which of the following is true?

(a) The payment of a Liability causes an increase in Owner‘s Equity
(b) The collection of an Account Receivable will cause Total Assets to increase
(c) The accounting equation may be stated as: Assets+Liabilities = Owners‘ equity
(d) The purchase of an asset such as office equipment, either for cash or on credit, does not change
the Owners‘ Equity
40. Which of the following statements is/are true?
(i) Cash Book records all cash receipts and cash payments
(ii) Cash Book records all sale and purchase transactions of goods both in cash and on credit
(iii) Cash Book records discount on Cash Payments
(a) Only (i) above
(b) Only (ii) above
(c) Only (iii) above
(d) Both (i) and (iii) above
41. Trade discount allowed at the time of Sale of goods.
(a) Is recorded in Sales Book
(b) Is recorded in Cash Book
(c) Is recorded in Journal
(d) Is not recorded in Books of Accounts
42. The Periodical total of the Sales Return Book is posted to the
(a) Debit of Sales Account
(b) Debit of Sales Return Account
(c) Credit of Sales Return Account
(d) Debit of Debtors Account
43. If the Petty Cash fund is not reimbursed just prior to year end and an appropriate adjusting entry is not
made, then
(a) The petty cash account is to be returned to the company‘s cashier
(b) Expenses are overstated and Cash is understated
(c) Cash is overstated and expenses are understated
(d) Cash is overstated and expenses are overstated
44. XYZ Ltd. Paid wages of ` 8,000 for erection of machinery. The journal entry for the transaction is
(a) Debit wages and credit cash
(b) Debit machinery and credit cash
(c) Debit wages and credit erection charges
(d) Debit machinery and credit erection charges
45. Purchase of goods on credit
(a) Increases Liabilities
(b) Increases Assets
(c) Increases both Assets and Liabilities
(d) Decreases Assets
46. Purchase of Raw Material for Cash
(a) Increases total Assets
(b) Leaves total Assets unchanged
(c) Increases total Fixed Assets
(d) Increases total Current Assets
47. Which of the following is not an Asset?
(a) Stock of stationery
(b) Goodwill
(c) Profit and Loss Account (Credit Balance)
(d) Accounts Receivable
48. The process of balancing of an account involves equalization of both sides of the account. If the debit
side of an account exceeds the credit side, the difference is put on the credit side. The said balance is
(i) A Debit balance
(ii) A Credit balance
(iii) An expenditure or an Asset
(iv) An Income or a Liability
(a) Only (ii) above
(b) Only (iv) above
(c) Both (i) and (iii) above
(d) Both (ii) and (iii) above
49. Ledger is also called
(a) Principal book of accounts ; (b) Cash books ; (c) Subsidiary book ; (d) None of these
50. Which of the following transactions of a business is/ are recorded in Journal Proper?
(i) Purchase of goods on credit
(ii) Sale of Office Furniture for cash
(iii) Discounting of Bill of Exchange with a bank
(iv) Endorsement of a Bill of Exchange in settlement of debt of the business
(a) Only (i) above
(b) Only (iv) above
(c) Both (ii) and (iv) above
(d) (i),(iii) and (iv) above

(i) Drawings Account is a Nominal Account
(ii) Capital Account is a Real Account
(iii) Sales Account is a Nominal Account
(iv) Outstanding salaries account is a Nominal Account
(v) Patents Account is a Personal Account
(a) Only (i) above
(b) Only (iii) above
(c) Both (ii) and (iii) above
(d) Both (ii) ,(iv) and (v)above
52. The entry to record the collection of cash from Sundry Debtors would involve a
(i) Debit to Sundry Debtors
(ii) Debit to Cash Account
(iii) Credit to Sundry Debtors
(iv) Credit to Cash Account
(a) Only (i) above
(c) Both (ii) and (iii) above
(d) Both (i) and (iv) above
53. ABC Ltd. makes payments to its Sundry Creditors through cheques and the Cash Discount received on
these payments is recorded in the Triple-columnar Cash Book. In the event of dishonour of any such
cheques, the discount so received should be written back through
(i) A debit to discount column of the Cash Book
(ii) A credit to discount column of the Cash Book
(iii) A credit to bank column of the Cash Book
(iv) A debit to Discount Account through Journal Proper
(v) A credit to Creditor‘s Account through Journal Proper
(a) Only (i) above
(b) Only (ii) above
(c) Both (i) and (iii) above
(d) Both (iv) and (v) above
54. R Ltd. makes purchases on credit. If the purchases are not as per the specifications, the company
returns them to the suppliers. The book, that is used to record such returns is
(a) Returns Inward Book
(b) Returns Outward Book
(c) Cash Book
(d) Journal Proper
55. If Office Equipment is purchased for cash, what effect will this transaction have on the financial
position of the company?
(a) There is no change in the Assets, Liabilities and Owners‘ Equity
(b) There is a decrease in Assets, increase in Liabilities and no change in Owners‘ Equity
(c) There is a decrease in Assets, no change in Liabilities and a decrease in Owners‘ Equity
(d) There is an increase in Assets, decrease in Liabilities and no change in Owners‘ Equity
56. The periodical total of discount column on receipts side of a Triple Column Cash Book is recorded to
the
(a) Credit side of Discount Account
(b) Credit side of provision for Discount Account
(c) Debit side of Discount Account
(d) Credit side of Debtor‘s Account
57. Which of the following statements is false?

(a) Credit side total of Discount column of Cash Book is an income
(b) Credit balance of Bank Pass Book is an overdraft
(c) Debit balance of Bank column of Cash Book is an Asset
(d) Debit balance of Cash column of Cash Book is an Asset
58. Purchase of Fixed Assets on credit is originally recorded in

(a) Purchases Book
(b) Ledger
(c) Cash Book
(d) Journal Proper
59. If you start with cash book favorable balance in Bank Reconciliation Statement, which item will be
added?
(a) Cheque deposited but not credited by the bank
(b) Cheques omitted to be deposited into bank
(c) Any amount directly collected by bank on behalf of customer but not recorded in cash book
(d) Debit side of cash book was overcast
60. The amount of Owners‘ equity in a business is not affected by

(a) The percentage of Total Assets held in cash
(b) Investments made in the business by the owner
(c) The profitability of the business
(d) The amount of dividends paid to Stock holders
61. When a Fixed Asset is obtained as a gift, the account to be credited is
(a) Goodwill A/c
(b) Capital Reserve A/c
(c) Donor‘s A/c
(d) General Reserve A/c
[Hints: (b) Fixed assets received as a gift implies the asset account should be debited and the
corresponding credit is given to Capital Reserve Account, since it is a capital asset.]
62. Which of the following is/are fixed asset(s)?

(a) Closing inventory
(b) Fixed Deposits in a bank
(c) Patents
(d) Prepaid expenses
63. Bank Overdraft is shown as a

(a) Current Liability ; (b) Contingent Liability ; (c) Unsecured Loan ; (d) Provision
64. Which of the following is NOT a characteristic of Cash Book?

(a) It has two identical sides—left hand side, the debit side and right hand side, the credit side
(b) It verifies the arithmetic accuracy of posting of entries from the Journal to the Ledger
(c) The difference between the total of two sides of cash book shows cash in hand
(d) It always shows debit balance. It can never show credit balance
65. If Machinery Account is debited with the amount of repairs incurred on the machine, this is an
example of
(a) Compensating error
(b) Error of principle
(c) Error of commission
(d) Error of omission

(a) Bank Account is a Personal Account
(b) Stock of stationery Account is a Nominal Account
(c) Returns Inward Account is a Personal Account
(d) Outstanding rent Account is a Nominal Account
67. Which of the following is a liability of a firm?

(a) Debit balance of analytical Petty Cash Book
(b) Credit balance of Bank Pass book
(c) Debit balance of Bank column of Cash Book
(d) Credit balance of Bank column of Cash Book
68. Which of the following errors is an error of principle?

(a) Total sales figure was taken as ` 19,373 instead of ` 19,733
(b) A discount of ` 30 allowed to Mr. A was not recorded in the discount allowed account
(c) Legal charges for acquisition of building for ` 500 was entered in the Legal Expenses Account
(d) ` 1,000 received from Mr. X was posted to the credit of Mr. M
69. The book which all accounts of the firm are maintained is known as
(a) Cash book ; (b) Ledger ; (c) Journal ; (d) Daybook
70. 500 paid as cartage on new Plant and Machinery, this was debited to Carriage Inward A/c. This is an
error of-
(a) Principle ; (b) Omission ; (c) Commission ; (d) Compensating
71. ` 4,500 paid to Madan as salary for the month of December‘12, this was debited to his A/c, this is a/an
……………………… error.
(a) Principle ; (b) Omission ; (c) Commission ; (d) Compensating
72. While checking the accounts of ABC the following discrepancies were noticed, even though the Trial
Balance was made to balance by putting the difference to Suspense A/c.
(i) Sales day book for the month of June‘12 was found overcast by ` 7,000.
(ii) A credit purchase of ` 3,000 was omitted to be recorded in the days book.
(iii) ` 4,300. Received from A credited to A A/c ` 3,400.
(iv) Purchase of Office Equipment worth ` 5,000 included in trading purchases.
From the above details what would have been the difference in Trial Balance which was made to
balance by opening Suspense A/c.
(a) Debit side short by ` 9,100 ; (b) Credit side short by ` 9,100 ;
(c) Debit side more by ` 7,900 ; (d) Credit side more by ` 6,100
73. Cash Account is a –

(a) Personal A/c ; (b) Nominal A/c ; (c) Real A/c ; (d) Dummy A/c
74. Rent outstanding for the month of December‘12 will appear on-
(a) Debit side of Cash Book ; (b) Credit side of Cash Book ; (c) Either side ; (d) Nowhere
75. Goods worth ` 5,000 purchased from A on credit will be recorded on-
(a) Debit side of Cash Book ; (b) Credit side of Cash Book ; (c) Nowhere in the Cash Book ;
(d) Either (a) or (b)
76. Which column of Cash Book is never balanced.

(a) Discount Column ; (b) Cash ; (c) Bank ; (d) Petty Cash
77. The total of debit side of discount column of Cash Book is-
(a) Balanced with credit side of discount column ; (b) Posted to Discount Allowed A/c;
(c) Posted to Discount Received A/c ; (d) Posted to Profit & Loss A/c
78. Prepaid rent is a –

(a) Nominal A/c ; (b) Representative Personal A/c ; (c) Tangible Assets A/c ; (d) None
79. Which of the following assets is a fictitious asset

(a) Goodwill A/c ; (b) Prepaid Rent A/c ; (c) Outstanding Salary A/c ;
(d) Preliminary expenses A/c
80. Nominal A/c represents-

(a) Profit/Gain ; (b) Loss/Expenses ; (c) None ; (d) Both (a) and (b)
82. Liability A/c has……………. Balance

(a) Debit ; (b) Credit ; (c) No balance ; (d) Either (a) or (b)
83. The Sales Returns Day Book would include:

(a) Goods bought on credit ; (b) Fixed Assets bought that are inappropriate for business ;
(c) Stock that customers have returned ; (d) Goods bought on credit that are returned to the original
supplier
84. An Investment in one asset A/c may lead to –

(a) Increase in liability A/c ; (b) Decrease in A/c asset ; (c) Each a or b ; (d) Both a/b.
85. The process of recording business transaction in a book of original entry is known as-
(a) Journals ; (b) Balance ; (c) Posting ; (d) None
86. The type of A/c with a named credit balance is-

(a) Expenses A/c ; (b) Assets A/c ; (c) Revenue A/c ; (d) Suspense A/c
87. Overcasting of purchases journal would affect

(a) Sales account ; (b) Purchase account ; (c) Supplier's account and purchase account
(d) None of these
88. Any income or profit derived by carrying on the business or during the course of business is called-
(a) Capital Receipt ; (b) Revenue Receipt ; (c) Revenue Gain ; (d) Capital Gain
89. Amount received from the proprietors as capital or loan receipt is treated as-
(a) Capital Receipt ; (b) Revenue Receipt ; (c) Revenue Income ; (d) Capital Income
90. When the benefits of revenue expenditure is available for a period of two or three years, the
expenditure is known as-
(a) Revenue Expenditure ; (b) Deferred Revenue Expenditure ; (c) Capital Expenditure ;
(d) Depreciation.
91. Endowment fund receipt is traded as-

(a) Casual Receipt ; (b) Revenue Receipt ; (c) Loss ; (d) Expenses
92. Legacy are generally-

(a) Capitalized ; (b) Treated Loss ; (c) Revenue Expenses ; (d) Deferred Revenue expenses.
93. Interest Account will have-

(a) Debit balance only ; (b) Credit balance only ; (c) Debit or Credit balance ;
(d) No balance at all
94. Purchase A/c will have-

(a) No balance at all ; (b) Debit balance ; (c) Credit balance ; (d) Debit or Credit
95. Which of the following voucher is used to record transactions that do not affect bank & cash?
(a) Journal Voucher ; (b) Receipt Voucher ; (c) Payment Voucher ; (d) Nominal Voucher
96. Opening entries are generally passed through-

(a) General Journal ; (b) Purchase Journal ; (c) Profit and Loss A/c ; (d) Suspense A/c
97. Purchases made on credit not recorded at all would affect

(a) Purchases account ; (b) Supplier's account ; (c) Purchases account and supplier's account
(d)None of these
98. Which of the following is the example of contingencies?

(a) Compulsory acquisition of part of land of the company by the Government
(b) A suit filed by the employee against the company
(c) A debtor of the company is declared insolvent, resulting in bad debts to the company
(d) All of (a), (b) and (c) above.
99. Which of the following is not a contingent liability?

(a) Claims against the company not acknowledged as debts
(b) Debts included on debtors which are doubtful in nature
(c) Uncalled liability on partly paid shares
(d) Arrears of cumulative fixed dividends
100. In an account if debit side > credit side, the balance is known as the:
(a) Negative Balance ; (b) Debit balance ; (c) Positive Balance ; (c) Credit balance
101. Total depreciation of an asset cannot exceed its:

(a) Scrap value ; (b) Residual value ; (c) Market value ; (d) Depreciable value
102. Amount paid to Gagan posted to the credit side of his account would affect
(a) Gagan's account ; (b) Cash account ; (c) Cash account and Gagan's account ;
(d) None of these
103. Which of the following statements is/are true ?

(a) A sale of an asset is recorded in the Sales Book
(b) Total of Return Outward Book is debited to Return Outward Account
(c) The balance of Petty Cash Book is a liability
(d) Cash Book is a subsidiary book as well as a ledger
104. Which of the following is true regarding closing entries?
(a) They must be followed by reversing entries
(b) They transfer the balances in all of the Nominal Accounts to the Trading and Profit and Loss
Account
(c) They must be made after the reversing entries but before the adjusting entries
(d) They must be made after the adjusting entries but before the reversing entries
105. Closing stock is generally valued at

(a) Cost Price
(b) Market Price
(c) Cost price or Market price whichever is higher
(d) Cost price or Market price whichever is lower
106. Which of the following assets is/are to be valued at the lower of cost and net realizable value?
(a) Goodwill
(b) Inventories
(c) Investments
(d) Both (b) and (c) above.
107. A few errors committed in Ahhiwalia's books of account are given below. State which errors would
affect the Trial Balance.
(a) Sales of `950 to Ram completely omitted from books of account
(b) Purchases of `720 from Shyam entered in the purchases journal as `700
(c) Purchases Journal is overcast by `1,000
(d) Sales returns journal is undercast by `200
(e) Amount paid to Agarwal wrongly posted to the debit to Mittal's account
(f) Bank overdraft shown under debit column in the Trial Balance
(g) Sales of `500 to Sadiq entered in sales journal as sales to Mushtaq
(h) Wages paid for installation of machinery debited to wages account
(a) a, c and g
(b) c, d and f
(c) c, d, e and h
(d) c, d, f and h
108. Which of the following methods is not a practical way of realizing revenue?
(a) Delivery method
(b) Percentage-of-completion method
(c) Production method
(d) Moving average method
109. The amount payable to a person as consideration for the use of rights vested in him is
(a) Dividend
(b) Royalty
(c) Purchase consideration
(d) Installment
110. Buildings account is debited with an amount towards repairs. This is an example of
(a) Error of commission
(b) Error of principle
(c) Error of omission
(d) Compensating error
[Hints: (b) Buildings account debited with an amount towards repairs is an error of principle. Error of
principle is a wrong classification of expenditure or receipt.]
111. The concept of conservatism will have the effect of

(a) Overstatement of Assets
(b) Understatement of Assets
(c) Overstatement of Liabilities
(d) Understatement of Liabilities
112. During the year 2011-2012, the value of closing inventory was overstated by ` 25,000. Which of the
following is true?
(a) The cost of goods sold was overstated during 2011-2012 and income will be understated during
2012-2013
(b) The income was overstated during 2011-12 and closing inventory will be overstated during 2012-
2013
(c) The retained earnings was overstated during 2011-2012 and retained earnings will be understated
during 2012-2013
(d) The cost of goods sold was understated during 2011-2012 but retained earnings will not be
affected during 2012-2013
113. Which of the following errors is an error of omission?
(a) Sale of ` 100 was recorded 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) Repairs to buildings have been debited to buildings account
114. Which of the following statements is /are true?
(a) Entering wrong amount in the subsidiary book affects the agreement of the Trial Balance
(b) Undercasting or overcastting of a subsidiary book is an example or error of commission
(c) Errors of principle do not affect the agreement of Trial Balance
(d) Both (b) and (c) above
(a) Error of casting affects personal accounts
(b) Omission of a transaction from a subsidiary record affects only one account
(c) Error of carry forward affects two accounts
(d) Error of principle involves an incorrect allocation of expenditure or receipt between capital and
revenue
116. Journal proper is meant for recording
(a) Credit purchase of fixed assets ; (b) Return of goods
(b) All such transactions for which no special journal has been kept by the business
(d) None of these
117. Closing stock in the Trial Balance implies that

(a) It is already adjusted in the opening stock
(b) It is adjusted in the Purchase A/c
(c) It is adjusted in the Cost of Sale A/c
(d) It is adjusted in the Profit &Loss A/c
(a) If a Trial Balance tallies, it always means that none of the transactions has been completely
omitted
(b) A Trial Balance will not tally if a transaction is omitted
(c) A customer to whom goods have been sold on credit cannot avail himself of a cash discount
(d) A credit balance in the Pass Book indicates excess of deposits over withdrawals
119. The adjustment to be made for income received in advance is:
(a) Add income received in advance to respective income and show it as a liability
(b) Deduct income received in advance from respective income and show it as a liability
(c) Add income received in advance to respective income and show it as asset
(d) Deduct income received in advance from respective income and show it as an asset in the
Balance Sheet
120. Which of the following statements is correct?
(a) The Trial Balance is prepared after preparing the Profit and Loss Account
(b) The Trial Balance shows only balances of Assets and Liabilities
(c) The Trial Balance shows only nominal account balances
(d) The Trial Balance has no statutory importance from the point of view of law
121. While finalizing the current year‘s accounts, the company realized that an error was made in the
calculation of closing stock of the previous year. In the previous year, closing stock was valued more
by ` 50,000. As a result
(a) Previous year‘s profit is overstated and current year‘s profit is also overstated.
(b) Previous year‘s profit is understated and current year‘s profit is overstated.
(c) Previous year‘s profit is overstated and current year‘s profit is understated.
(d) There will be no impact on the profit of either the previous year or the current year.
122. Which of the following is not correct?

(a) Errors which affect one account can be errors of posting
(b) Errors of omission arise when any transaction is left to be recorded
(c) Errors of carry forward from one year to another year affect both Personal and Real A/c
(d) Errors of commission arise when any transaction is recorded in a fundamentally incorrect manner
123. Which of the following errors is an error of omission?

(a) Purchase of ` 2,000 has been recorded in the Sales Return Book
(b) Repairs to machinery has been debited to Machinery Accounts
(c) The total of purchase journal has not been posted to the Purchase Account
(d) Legal charges paid to Mr. Lawyer have been debited to his account
124. If goods worth ` 1,750 returned to a supplier is wrongly entered in sales return book as ` 1,570 , then
(a) Net Profit will decrease by ` 3,140 ; (b) Gross Profit will increase by ` 3,320
(c) Gross Profit will decrease by ` 3,500 ; (d) Gross Profit will decrease by ` 3,320
125. For the past 3 years, DK Ltd. has failed to accrue unpaid wages earned by workers during the last
week of the year. The amounts omitted, which were considered material, were as follows:
March 31,2010 - ` 56,000

March 31, 2011 - ` 51,000
March 31, 2012 - ` 64,000
The entry on March 31, 2012 to rectify these omissions would include a
(a) Credit to wage expense for ` 64,000
(b) Debit to wage expense for ` 64,000
(c) Debit to wage expense for ` 51,000
(d) Debit to wage expense for ` 13,000
126. Purchase journal is kept to record

(a) All purchases of goods ; (b) All credit purchases of goods ; (c) All credit purchases;
(d) None of these
127. The beginnings inventory of the current year is overstated by ` 5,000 and closing inventory is
overstated by ` 12,000.
These errors will cause the net income for the current year by
(a) ` 17,000 (overstated)
(b) ` 12,000 (understated)
(c) ` 7,000 (overstated)
(d) ` 7,000 (understated)
128. The accountant of Leo Ltd. recorded a payment by cheque to a creditor for supply of materials as `
1,340.56. The bank recorded the cheque at its correct amount of ` 3,140.56. The Company has not
passed any rectification entries and the error is not detected through the bank reconciliation. The
impact of this error is
(a) The Trial Balance will not agree
(b) The balance of creditors is understated
(c) The purchases are understated
(d) The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book
129. Which of the following errors affects the agreement of a Trial Balance?
(a) Mistake in balancing an account
(b) Omitting to record a transaction entirely in the subsidiary books
(c) Recording of a wrong entry in the subsidiary books
(d) Posting an entry on the correct side but in the wrong account
(i) An error in casting the subsidiary books is an error of commission
(ii) An error in wrong casting of the sales day book will not affect the personal accounts of debtors
(iii) Mistake in transferring the balance of an account to the Trial Balance will not affect the
agreement of the Trial Balance
(iv) The mistake of treating a liability as an income or vice versa will not affect the agreement of a
Trial Balance
(a) Only (i) above
(b) Only (ii) above
(c) Both (i) and (ii) above
(d) (i),(ii) and (iv) above
131. Which of the following should not be treated as revenue expenditure?

(a) Interest on loans and debentures
(b) Annual fire insurance premiums on Plant and Equipment
(c) Sales tax paid in connection with the purchase of office equipment
(d) Small expenditures on long- lived assets, such as ` 20 for a paper weight.
132. Capital expenditure is an expenditure which
(a) Benefits the current accounting period
(b) Will benefit the next accounting period
(c) Results in the acquisition of a permanent asset
(d) Results in the acquisition of a current asset
133. Which of the following is not a deferred revenue expenditure?

(a) Expenses in connection with issue of equity shares
(b) Preoperative expenses
(c) Heavy advertising expenses to introduce a new product
(d) Legal expenses incurred in defending a suit for breach of contract to supply goods
134. Any donation received for a specific purpose is a
(a) Liability ; (b) Assets ; (c) Revenue receipts ; (d) Capital receipts
135. Which of the following is an item of capital expenditure?

(a) Research and development costs during the year
(b) Interest on borrowed fund utilized for acquisition of Office Furniture
(c) Installation charges paid in conjunction with the purchase of Office Equipment
(d) Monthly rent of a machinery used in the business
(a) Provision for doubtful debts represents the amount that cannot be collected
(b) The distinction between capital and revenue items is important because it is of fundamental
importance to the determination of profits
(c) Goods lost by fire need not be accounted for since they are not sales
(d) Free samples received are business gains
137. The balance of which of the following accounts do not disappear, once they are debited/credited to
Trading Account.
(a) Sales
(b) Purchases
(c) Inward returns
(d) Closing stock
138. Which one of the following should be considered a revenue expenditure?

(a) `1000 paid for the execution of a new plant
(b) Loss of `10,000 incurred in increasing the sitting accommodation of a hotel
(c) Damage paid on account of breach of a contract to supply certain goods
(d) Repair to machinery purchased, second hand.
139. Which of the following statements are / is true? ―Events after Balance Sheet‖ are
(a) All the significant events after the Balance Sheet date
(b) The events after Balance Sheet date but before submitting it to the Registrar of Companies
(c) The events after Balance Sheet date but before its approval by the board
(d) All changes after Balance Sheet date before its approval
140. Which one of the following is a capital expenditure?
(a) Compensation paid to Directors on termination of their services
(b) Expenditure incurred in connection with the renewal of a Trade Mark.
(c) Gratuities paid to Directors on termination of their services.
(d) Royalty paid in installments for the purchase of rights to manufacture and sell patient medicines.
141. Which of the following enhances the earning capacity of an asset?

(a) Increase in working capacity of an asset
(b) Reduction in operating costs
(c) Replacing damaged parts of an asset
142. Which of the following items should not be capitalized relating to fixed assets?
(a) Interest payable on loans or deferred credits taken for the acquisition or construction of fixed
assets before they are ready for use
(b) Stand by equipment and servicing equipment
(c) Expenditure incurred on test runs and experimental production
(d) Administration and general expenses
143. Which of these errors affect only one account
(a) Errors of casting ; (b) Errors of carry forward ; (c) Errors of posting ; (d) All the three
144. Which of these errors affect two or more accounts

(a) Errors of complete omission ; (b) Errors of principle ; (c) Errors of posting to wrong account;
(d) All the three
145. Which of the following error is an error of principle

(a) ` 5,000 received from Sham credited to Ram A/c
(b) ` 5,000 incurred on installation of new plant debited to travelling expenses A/c
(c) ` 500 paid for wages debited to salary A/c
(d) ` 500 being purchase of raw material debited to purchase A/c ` 50
146. Which of the following is an one sided error

(a) ` 500 purchase of old equipment not recorded in the books of A/c at all;
(b) ` 500 being expense on travelling expense credited to travelling expenses;
(c) Both ; (d) None
147. Any gain on the sale of non-current assets should be _________ from the net profit and the loss must
be _________to the net profit in determining fund from operation
(a) Added, Reduced ; (b) Added, Added ; (c) Deducted, Added ; (d) Deducted, Deducted
148. Cash book records—

(a) Only cash sales ; (b) All types of cash receipts and payments ; (c) Only revenue receipts
(d) Only capital receipts
149. In a three column cash book ---------- does not exist

(a) Cash column ; (b) Bank column ; (c) Petty cash column ; (d) Discount column
150. Which of these transactions will not be recorded in cash book—

(a) Cash received from debtors ; (b) Cash paid to creditors ; (c) Salary remained outstanding
(d) Cash deposited with bank
151. The closing balance of a petty cash book is a / an —

(a) Liability ; (b) Gain ; (c) Assets ; (d) Loss
152. Which column of a cash book will not have credit balance —
(a) Bank column ; (b) Discount column ; (c) Cash column ; (d) None
153. Petty cash balance is a/an —

(a) Assets ; (b) Expenditure ; (b) Liability ; (d) None
154. Which of these is a Part of cash in hand

(a) Postage stamps ; (b) B/R ; (c) Cheque Deposited with Bank ; (d) B/R endorsed
155. Which of the following is a Real A/c
(a) Salary A/c ; (b) Bank A/c ; (c) Building A/c ; (d) Goodwill A/c
156. Which of the following is a Personal A/c

(a) Outstanding Salary A/c ; (b) Rent A/c ; (c) SBI A/c ; (d) Bad debts A/c
157. Which of the following is a representative Personal A/c

(a) Outstanding Salary A/c ; (b) Rent A/c ; (c) SBI A/c ; (d) Bad debts A/c
158. Which of the following is a Nominal A/c

(a) Outstanding Salary A/c ; (b) Rent A/c ; (c) SBI A/c ; (d) Debtors A/c
159. Goodwill A/c is a/an —

(a) Nominal A/c ; (b) Tangible Asset ; (c) Intangible Asset ; (d) Fictitious Asset
160. Posting is the process of —

(a) Posting the letters in drop box ; (b) Posting suitable person to a suitable job;
(c) Entering in the ledger the information contained in the ledger ; (d) All the three
161. A book wherein various accounts are opened is called—

(a) Subsidiary books ; (b) Journal ; (c) Ledger ; (d) Trial Balance
162. Which of these is not a special purpose journal

(a) Cash journal ; (b) Purchase journal ; (c) Debtors journal ; (d) Sales journal
163. The periodic total of sales day book is posted to —

(a) Sales A/c ; (b) Cash sales A/c ; (c) Sales return A/c ; (d) Credit sales A/c
164. The periodic total of purchase day book is posted to —

(a) Purchase register ; (b) Purchase A/c ; (c) Cash purchase A/c ; (d) Credit purchase A/c
165. Capital expenses are shown in —

(a) Balance Sheet ; (b) Profit and Loss A/c ; (c) Trading A/c ; (d) None of these
166. Revenue receipts are shown in —

(a) Balance Sheet ; (b) Profit and Loss appropriation A/c ; (c) Manufacturing A/c;
(d) Trading and Profit and Loss A/c
167. Revenue is generally recognised as being earned at that point of time when
(a) sale is effected ; (b) cash is received ; (c) production is completed ;
(d) debts are collected
168. Which of the following is a revenue expenses

(a) Raw material consumed ; (b) Plant purchased ; (c) Long term loan raised from bank;
(d) Share Capital
169. Which of the following is a capital expenditure

(a) Repair of plant and machinery ; (b) Salary paid to workers ;(c) Cost of stand by equipment;
(d) Annual whitewash of the office building
170. Which of these types of expenditure would not be treated as a Capital Expenditure
(a) Acquisition of an Asset ; (b) Extension of an Asset ; (c) Improvement of the existing Asset ;
(d) Maintenance of the Asset
171. Expenses of the following nature are treated as a Revenue expenses except —
(a) Expenses for day to day running of the business ; (b) Putting the new asset in working condition ;
(c) Depreciation ; (d) Purchase of raw material
172. Cash received from debtors would be deemed as ………… of funds.

(a) No flow ; (b) Sources ; (c) Uses ; (d) Gain
173. Purchase day book records
(a) All cash purchases ; (b) All credit purchases ; (c) Only credit purchase of raw material or goods
purchased for resale ; (d) All purchases
174. Journal is also known by —

(a) Memorandum A/c ; (b) Kaccha books ; (c) Books of original entry ; (d) Proper books
175. Generally the term fund is used to mean the difference between
(a) Current assets and current liabilities ; (b) Profit and loss A/C and Balance sheet ;
(c) Current assets and non-current liabilities ;(d) Current liabilities and non-current liabilities
176. The periodic total of purchase day book is posted to —

(a) Creditors A/c ; (b) Debtors A/c ; (c) Purchase A/c ; (d) None
177. Which of these documents is not required for Bank Reconciliation

(a) Bank column of Cash Book ; (b) Bank Pass Book ; (c) Bank Statement ; (d) Trial Balance
178. Which of these will not affect Bank and Cash balance
(a) Cash received from X credited to Y;
(b) Cheques issued to A but debited to B;
(c) Cheques deposited and cleared on the same date ; (d) All the three
179. Which of these items are taken into consideration for preparation of adjusted Cash Book
(a) Mistake in Cash Book ; (b) Mistake in Pass Book ;
(c) Cheque issued but not presented for payment ; (d) Cheques deposited but not cleared
180. Credit balance as per Cash Book mean-

(a) Surplus cash ; (b) Bank overdraft ; (c) Terms deposits with bank ; (d) None of these
181. Debit side of Bank Pass book corresponds to –

(a) Credit side of Cash Book ; (b) Debit side of Cash Book ; (c) Debit side of Trial Balance
(d) Credit side of Balance Sheet
182. Difference in Bank Balance as per Pass Book and Cash Book may arise on account of
(a) Cheque issued but not presented
(b) Cheque issued but dishonoured
(c) Cheque deposited and credited by bank
(d) All of (a) and (b) above
[Hints: (d) Differences in Bank Balance as per Bank Pass Book and Cash Book arise due to many
reasons. Few of them are Cheques issued (a credit entry in Cash Book made) but not presented for
payment (so no corresponding entry in Pass Book).
Cheques issued (a credit entry in Cash Book made) but dishonoured (so no corresponding entry
made in Pass Book).
In case of cheques deposited and credited by bank, entries in both Cash Book and the Bank Pass
book are made, hence no difference arises.
Hence option (d) is the right option. Only in situations (a) and (b) result in difference.]

(a) When there are cheques deposited but not collected by the banker, overdraft balance as per
Pass Book will be less than that as per Cash Book
(b) When the payment side of the Cash Book is undercast, overdraft balance as per Cash Book will
be more than overdraft balance as per Pass Book
(c) When reconciliation is to be done with the extracts of the Cash Book and Pass Book relating to
the same period, the transactions which do not figure in one of the extracts are to be noted
(d) Bank interest debited in the Pass Book is to be added to Overdraft Balance as per Pass Book to
arrive at the Overdraft balance as per Cash Book
184. The Bank Reconciliation Statement is prepared
(a) To rectify the mistakes in the Cash Book
(b) To arrive at the Bank Balance
(c) To arrive at the Cash Balance
(d) To bring out the reasons for the difference between the Balance as per Cash Book and the
Balance as per Bank Statement

(a) When the bank column of a Cash Book shows a credit balance, it means an amount is due to the
bank
(b) When Pass Book shows a debit balance, it means overdraft as per Pass Book
(c) While preparing Bank Reconciliation Statement, cheques paid into bank but not yet cleared are
deducted from the Debit balance as per Cash Book to arrive at the balance as per Pass Book
(d) A Bank Reconciliation Statement is a part of Pass Book
(a) Bank charges increase debit balance shown as per Bank Column of the Cash Book.
(b) Bank charges increase debit balance as per Bank pass book.
(c) A cash sale of a non-trading asset is recorded in the journal proper.
(d) Cash discount allowed by the business will appear on the debit side of the debtor‘s account.
187. Bank reconciliation is a statement prepared to reconcile—
(a) Trial balance ; (b) Cash book ; (c) Bank A/c;
(d) Cash as per cash book with bank balance as per bank pass book
188. Bank reconciliation statement is a part of —

(a) Cash book ; (b) Trial balance ; (c) Auditors report ; (d) None of these
189. Benefits of preparing Bank Reconciliation Statement includes —

(a) It bring out any errors committed in preparation of Cash book / Bank Pass Book
(b) Highlights under delay in clearance of cheques deposited but not credited
(c) Help know actual bank balance ; (d) All the three
190. Debit balance as per bank pass book mean —

(a) Surplus cash ; (b) Bank Overdraft ; (c) Terms deposits with bank ; (d) None of these
191. Which of the following is not a cause of difference in balance as per cash book and balance as per
bank pass book—
(a) Errors in cash book ; (b) Errors in pass book ; (c) Cheques deposited and cleared;
(d) Cheques issued but not presented for payment
192. Provision is created for —

(a) Unknown Liabilities ; (b) Known Liabilities ; (c) Creation of Secret Reserves ; (d) All the Three
193. Which of the following is not a method of charging depreciation

(a) Straight line Method ; (b) Written down value Method ;
(c) Discounted present value Method ; (d) Sum of digits Method
194. A second hand car is purchased for ` 2,00,000 and sold at ` 1,40,000 after two years. If depreciation is
charged @ 10% on SLM method, find the profit or loss on sale of the car.
(a) ` 20,000 Loss ; (b) ` 20,000 Profit ; (c) ` 10,000 Loss ; (d) ` 10,000 Profit
195. In the above question if the depreciation is charged @10% on written down value method, find
the profit or loss on sale of the Second hand car.
(a) Loss of ` 20,000 ; (b) Loss of ` 22,000 ; (c) Loss of ` 11,000 ; (d) Profit of ` 11,000
196. The term ― Reserve‖ has been defined in ------ of the Companies Act, 1956
(a) Part III Schedule VI ; (b) Part III Schedule V ; (c) Part II Schedule VI ; (d) Part I Schedule I
197. Which of the following is true with respect to providing depreciation under diminishing balance
method?
(a) The amount of depreciation keeps increasing every year while the rate of depreciation keeps
decreasing
(b) The amount of depreciation and the rate of depreciation decrease every year
(c) The amount of depreciation decreases while the rate of depreciation remains the same
(d) The amount of depreciation and the rate of depreciation increases every year
198. Which of the following statements best describes the purpose of depreciation?
(a) Regular reduction of asset value to correspond to changes in market value as the asset ages
(b) A process of correlating the market value of an asset with its gradual decline in physical
efficiency
(c) Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on
the Balance Sheet in excess of net realizable value
(d) Allocation of the cost of an asset to the periods in which services are received from the asset
199. The main objective of providing depreciation is to

(a) Calculate the true profit
(b) Show the true financial position in the Balance Sheet
(c) Provide funds for replacement of fixed assets
200. Depreciation is a process of
(a) Valuation
(b) Valuation and allocation
(c) Allocation
(d) Appropriation
201. The portion of the acquisition cost of the asset yet to be allocated is known as
(a) Written down value
(b) Accumulated value
(c) Salvage value
(d) Residual Value
202. Which of the following statements is true with regard to written down value method of depreciation?
i. The rate at which the asset is written off reduces year after year
ii. The amount of depreciation provided reduces from year to year
iii. The rate of depreciation as well as the amount of depreciation reduce year after year
iv. The value of the asset gets reduced to zero over a period of time
(a) Only (i) above
(b) Only (ii) above
(c) Both (i) and (ii) above
(d) (i),(ii) and (iii) above
203. The accounting process of gradually converting the unexpired cost of fixed assets into expenses over
a series of accounting periods is
(a) Depreciation
(b) Physical deterioration of the asset
(c) Decrease in market value of the asset
(d) Valuation of an asset at a point of time
204. Which of the following factors are primarily considered to determine the economic life of an asset?
(a) Passage of time, asset usage, and obsolescence
(b) Tax regulations and SEBI guidelines
(c) Tax regulations and asset usage
(d) SEBI guidelines and Asset usage
205. In which of the following methods, the cost of the asset is spread over in equal proportion during its
useful economic life?
(a) Straight-line method
(b) Written down value method
(c) Units-of-production method
(d) Sum-of-the years‘-digits method
206. Which of the following statements is correct?

(a) Depreciation cannot be provided in case of loss in a financial year
(b) Depreciation is a charge against profit
(c) Depreciation is provided in the books only when there is profit
(d) Depreciation is an appropriation of profit
207. Depreciation is calculated on the

(a) Cost price of asset ; (b) Market price ; (c) Cost+ Transport+ Installation expenses;
(d) Cost or market values whichever is less
208. Which of the following is an external cause of depreciation

(a) Routine repair and maintenance ; (b) Misuse ; (c) Obsolescence ; (d) Wear and tear
209. Depreciation is a process of —

(a) Valuation of fixed assets ; (b) Allocation of cost over the useful life of assets
(c) Generating funds replacements of the assets ; (d) Avoidance of tax
210. Which of the following is not depreciated

(a) Building ; (b) Land ; (c) Plant and Machinery ; (d) Office equipment
211. Schedule XIV of the Companies Act specifies —————— as minimum rate of depreciation (WDV) on
ship fishing vessels
(a) 27% ; (b) 33% ; (c) 10% ; (d) 15%
212. —————— is also known as Appraisal system of depreciation

(a) Inventory system ; (b) Survey system ; (c) Annuity system ; (d) Insurance
213. Bad debts recovered account will be transferred to

(a) Debtor‘s Account
(b) Profit and Loss Account
(c) Provision for Doubtful Debt Account
(d) Either (b )or (c) above
214. The entry for creating a Provision for bad debts is

(a) Debit Provision for Bad Debts A/c and credit Debtors A/c
(b) Debit Debtors A/c and credit Provision for Bad Debts A/c
(c) Debit Provision for Bad Debts A/c and credit Profit & Loss A/c
(d) Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.
215. When a person purchasing goods on credit he becomes a………….. in the books of the seller-
(a) Debtor ; (b) Creditor ; (c) Defaulter ; (d) Offender
216. Which of these is not a Business expense-

(a) Fire Insurance of other building ; (b) LIC Premium of proprietor ; (c) Interest on Capital
(d) Commission on sales
217. Cost of goods sold excludes-

(a) Opening Stock ; (b) Carriage inward ; (c) Wages & Salary ; (d) Postage & Stamps
218. Tax deducted at source A/c appears in-

(a) Assets side ; (b) Liability side ; (c) Profit & Loss A/c ; (d) Debited to Capital A/c
219. Investment in own share A/c appears in –

(a) Asset side ; (b) Liability side ; (c) Netted from Capital ; (d) Profit & Loss A/c
220. Payments received in advance from a customer for a contract can be

(a) Shown as a deduction from contract work-in-progress on asset side
(b) Shown as a liability
(c) Credited to P&L A/c
(d) Either (a) or (b) above
221. If a company has contingent liabilities, they appear in the

(a) Balance Sheet
(b) Directors‘ report
(c) Notes on account to Balance Sheet
(d) Chairman‘s report
222. Recent developments have made much of a company‘s inventory obsolete. This obsolete inventory
should be
(a) Written down to zero or its scrap value
(b) Shown in the Balance Sheet at its replacement cost
(c) Shown in the Balance Sheet at cost, but classified as a non-current asset
(d) Carried in the accounting records at cost until it is sold
223. Which of the following is not classified as inventory in the financial statements?
(a) Finished goods ; (b) Work-in-process ; (c) Stores and spares
(d) Advance payments made to suppliers for raw materials

(a) Inventory valuation affects only the income statement
(b) Undercasting or overcastting of subsidiary book is an example of error of commission
(c) Capital expenditure wrongly treated as revenue is an example of error of commission
(d) Inventories should be valued at lower of historical cost and current replacement cost
225. Which of the following statements is / are not correct?
(a) Provision for bad debts appears as a liability on the Balance Sheet
(b) The provision for bad debts is owed to the proprietor
(c) Bad debts could be less than the provision for bad debts
(d) Bad debts could exceed the provision for bad debts
226. If actual bad debts are more than the provision for bad debts, then there will be a
(a) Credit balance of Provision for Bad Debts Account
(b) Debit balance of Provision for Bad Debts Account
(c) Debit balance of Bad Debts Account
(d) Debit balance of Discount on Debtors Account
227. The creation of provision for doubtful debts given as an adjustment requires
(a) Debit Profit and Loss Account and deduct the provision from debtors
(b) Credit Profit & Loss Account and deduct the provision from debtors
(c) Credit Profit and Loss Account and add the provision to debtors
(d) Debit Profit & Loss Account and add the provision to debtors
228. Under the direct write-off method of recognizing a bad debt expense. Which of the following
statements is/are true?
(a) The bad debt expense is not matched with the related sales
(b) Revenue is overstated in the year of sales
(c) It violates the matching principle of accounting
(d) All of the above
229. At the time of preparation of financial accounts, bad debt recovered account will be transferred to
(a) Debtors A/c
(b) Profit & Loss A/c
(c) Profit & Loss Adjustment A/c
(d) Profit & Loss Appropriation A/c
230. The balance of Revaluation Reserve pertaining to an asset that has been disposed off or retired can
be transferred to
(a) General Reserve A/c
(b) Profit & Loss A/c
(c) Asset A/c
(d) Capital Reserve A/c
231. Property, Plant and Equipment are conventionally presented in the Balance Sheet at
(a) Replacement cost – Accumulated Depreciation
(b) Historical cost – Salvage Value
(c) Historical cost – Depreciation portion thereof
(d) Original cost adjusted for general price-level changes
232. Outstanding salaries is shown as
(a) An Asset in the Balance Sheet
(b) A Liability
(c) By adjusting it in the P & L A/c
233. Insurance prepaid is shown as
(a) Current Asset
(b) Current Liability
(c) Fixed Asset
(d) Income
234. Depreciation appearing in the Trial Balance should be
(a) Debited to P&L A/c
(b) Shown as liability in Balance Sheet
(c) Reduced from related asset in Balance Sheet
235. A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case
(a) P&L A/C is debited with ` 1,400
(b) P&L A/C is debited with ` 1,200
(c) ` 200 is shown as current asset
236. Bad debts recovered is

(a) Credited to P&L A/c
(b) Debited to P&L A/c
(c) Reduced from debtors in Balance Sheet
(d) Added to debtors in Balance Sheet
[Hints: (a) Bad debts earlier written–off and later recovered is a profit to the firm and hence they are
transferred to Profit & loss Account.]
238. The adjustment to be made for prepaid expenses is

(a) Add prepaid expenses to respective expenses and show it as an asset
(b) Deduct prepaid expenses from respective expenses and show it as an asset
(c) Add prepaid expenses to respective expenses and show it as a liability
(d) Deduct prepaid expenses from respective expenses and show it as a liability
[Hints: (b) Prepaid expense is an expense relating to the next accounting period but has been paid in
the current accounting period and hence it is a current asset. The adjustment would be to deduct it
from the respective expense account in the P&L A/c and show it as a current asset in the Balance
Sheet.]
238. On scrutiny of a firm‘s books of accounts, it was observed that the following errors have occurred in
the previous years but have not yet been rectified.
i. Depreciation for 2011-2012- ` 7,000 understated
ii. Accrued expenses as at March 31, 2013 - ` 10,000 understated
The impact of this on the reported net income for the year ending March 31, 2013 is
(a) ` 7,000 Overstated
(b) ` 10,000 Overstated
(c) ` 17,000 Understated
(d) ` 17,000 Overstated
[Hints: (b) Net income will be overstated by ` 10,000 because the accrued expense are understated.
Under/ Overstatement of depreciation of the year 2011-2012 does not affect the net income of
current year i.e., 2012-13.]
239. Which of the following entries is correct in respect of reserve for discounts on accounts payable?
(a) Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c
(b) Debit Accounts Payable A/c and Credit P&L A/c
(c) Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c
(d) Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c
240. Sundry debtors as per Trial Balance is ` 43,000 which includes ` 2,200 due from ‗H‘ in respect of goods
sent to him on approval basis, the cost price of which is ` 1,800. Rectification would involve:
(a) Adding ` 2,200 to closing stock
(b) Deducting ` 1,800 from closing stock and deducting ` 2,200 each from debtors and sales
(c) Adding ` 1,800 to closing stock and deducting ` 2,200 each from debtors and sales
(d) Deducting ` 1,800 from debtors
241. Goods in stock worth ` 800 are destroyed by fire and the Insurance Co. is accepted the claim for `
600. Adjustment would involve:
(a) Debit of ` 800 to Trading Account and credit of ` 600 and ` 200 to insurance company and Profit
and Loss Account respectively
(b) Deduct the ` 800 from closing stock in the Trading Account
(c) Credit insurance company for ` 600
(d) Debit of ` 600 and ` 200 to insurance company and Profit and Loss Account respectively and
credit of ` 800 to Trading Account
242. Prepaid expenses are valued on the Balance Sheet at

(a) Replacement cost
(b) Current cost
(c) Cost to acquire less accumulated amortization
(d) Cost less expired portion
243. Which of the following relationships is/are false?
(a) Net Profit = Gross Profit – Administration and Other expenses
(b) Net Profit = Gross Profit + Administration expenses and Other expenses
(c) Opening Stock + Purchases – Closing Stock = Cost of Sales
244. Gross Profit is equal to
(a) Sales – Cost of goods sold ; (b) Sales – Closing Stock + Purchases
(c) Opening Stock + Purchases – Closing Stock ; (d) None of the above
245. Which of the following shall not be deducted from net profit while calculating managerial
remuneration?
(a) Loss on sale of undertaking
(b) Debts considered bad and written off
(c) Liability arising from a breach of contract
(d) Director‘s remuneration
246. Which of the following equations is correct?

(a) Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock
(b) Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock
(c) Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales
(d) Gross Profit – Opening Stock + Direct expenses + Purchases +Closing stock = Sales
247. Which of the following is not true with regard to preparation of Profit & Loss Account?
(a) Profit & Loss Account is prepared for a certain period and hence it is an interim statement
(b) Profit & Loss Account does not disclose the effect of non-financial items
(c) Net Profits are ascertained on the basis of current costs
(d) Net Profits as disclosed by P&L Account is not absolute
248. The Profit and Loss Account shows the

(a) Financial results of the concern for a period
(b) Financial position of the concern on a particular date
(c) Financial results of the concern on a particular date
(d) Cost of goods sold during the period
(a) Provision for doubtful debts represents the amount that cannot be collected
(b) Cash balance on hand shows whether the business has earned Profit or Loss
(c) Free samples received are business gains
(d) The WDV of an asset depreciated on the reducing balance method can never become zero
250. Cash Profit is
(a) Net profit – Non-trading Profit – Depreciation and provision
(b) Gross Profit – Non-trading Profit + Depreciation and provision
(c) Net Profit + Depreciation and provision
(d) Gross Profit – Operational expenses
(a) Provision for discount on debtors can be estimated only after computing the provision for
doubtful debts
(b) All pre-received incomes under the cash system of accounting are current gains
(c) Cash balance on hand shows whether the business has earned Profit or Loss
(d) Capital expenditure should be shown in the books by debiting asset account and crediting
supplier or cash account
252. Which of the following will not appear in Profit and Loss Account of a business?
(a) Drawings
(b) Bad debts
(c) Accrued expenses
(d) Reserve for discount on Sundry Creditors
253. Which of the following is not a financial statement?
(a) Profit and Loss Account
(b) Balance Sheet
(c) Funds Flow Statement
(d) Trial Balance
254. If unexpired insurance appears in the Trial Balance, it should be
(a) Credited to the Profit & Loss Account
(b) Debited to the Profit & Loss Account
(c) Shown on the liabilities side of the Balance Sheet
(d) Shown on the assets side of the Balance Sheet
255. Which of the following are/is not a fixed asset?

(a) Stock ; (b) Vehicle ; (c) Fixed deposit in bank ; (d) Both (a) and (c) above
256. Which of the following are/is a current asset?

(a) Sundry Debtors ; (b) Stock ; (c) Prepaid insurance ; (d) All of (a), (b) and (c) above
257. Tax deducted at source appears in the Balance Sheet

(a) On the assets side under current assets
(b) On the assets side under loans and advances
(c) On the liabilities side under current liabilities
(d) On the liabilities side under provisions

(a) Balance Sheet discloses financial position of the business
(b) A person who owes to the business is called Debtor
(c) Decrease in the value of the asset could decrease the value of a liability
(d) Assets are to be shown in the Balance Sheet at the realizable value
(a) The balance of the goods account shows the value of stock in hand;
(b) Balancing of all accounts must be done at the end of each day;
(c) Assets which are to remain in business for continuous use and not meant for conversion into cash
are fixed assets ; (d) Balance Sheet discloses income position of the business
260. The Balance Sheet gives information regarding the

(a) Results of operations for a particular period
(b) Financial position during a particular period
(c) Profit earning capacity for a particular period
(d) Financial position as on a particular date
261. Which of the following accounts appear(s) in the Balance Sheet of a business?
i. Stock at the end of the financial year
ii. Stock at the beginning of the financial year
iii. Drawings
iv. Prepaid Rent
v. Interest received but not yet earned
(a) Only (i) above
(c) Both (i)and (iii) above
(d) (i), (iii), (iv) and (v) above
262. Computers taken on hire by a business for a period of twelve months should be classified as
(a) Current assets
(b) Intangible assets
(c) Deferred revenue expenditure
(d) Not an asset
263. Which of the following is not an intangible asset?
(a) Trade mark
(b) Franchise
(c) Accounts Receivable
(d) Secret Profit
264. Which of the following is a current liability?
(a) Prepaid expenses
(b) Trademark
(c) Discount on issue of shares
(d) Outstanding Salaries
265. Based on which of the following concepts, is Share Capital Account shown on the liabilities side of a
Balance Sheet?
(a) Business entity concept
(b) Money measurement concept
(c) Going concern concept
(d) Matching concept
266. Which of the following is not a contingent liability?

(a) Debts included in Sundry Debtors which are doubtful in nature
(b) Uncalled liability on partly paid shares
(c) Claims against the company not acknowledged as debts
(d) Arrears of fixed cumulative dividend
267. Which of the following are current assets of a business?

i. Income received in advance
ii. Stock
iii. Debtors
iv. Pre-paid expenses
v. Accrued income
(a) Both (i) and (iv) above
(b) Both (ii) and (iii) above
(c) (i),(ii) and (iii) above
(d) (ii),(iii),(iv) and (v) above

(a) Bad Debts Recovered Account is transferred to Sundry Debtors Account
(b) Bill of exchange is drawn by the purchaser
(c) Trial Balance establishes the arithmetical accuracy of the accounting records
(d) A well maintained asset need not be depreciated
(d) are not true. By tallying Trial Balance always proves the arithmetical accuracy of the accounting
records. Hence (c) is correct.]
269. Closing entries are generally passed —
(a) At the time of opening new books of account ; (b) At the time of closing the accounts;
(c) During the course of accounting period any time ; (d) After certification of accounts
270. Closing stock appearing in the Trial Balance is shown in –

(a) Trading A/c and Balance Sheet ; (b) Profit and Loss A/c ; (c) Balance Sheet only
(d) Trading A/c only
271. Depreciation Account appearing in the Trial Balance is shown in —

(a) Profit and Loss A/c ; (b) Trading A/c ; (c) Deducted from the concerned assets A/c;
(d) Shown on the liability side
272. Profit on sale of old plant is shown –

(a) In Trading A/c ; (b) In Profit and Loss Appropriation A/c ; (c) Profit and Loss A/c
(d) Being a non operating item ignored
273. Carriage on goods purchased is shown in —

(a) Profit and Loss A/c ; (b) Capitalized with work in progress ; (c) Trading A/c;
(d) Shown in Balance Sheet
274. Which of these is not an operating income

(a) Income from sale of trading goods ; (b) Bad debts recovered ; (c) Interest on FDs ;
(h) None
275. ABC holds an average inventory of ` 36,000(CP) with an inventory turnover of 5 times. If the firm makes
a gross profit of 25% on sales, find the total sales of the company
(a) ` 2,40,000 ; (b) ` 2,10,000 ; (c) ` 2,00,000 ; (d) ` 1,80,000
276. From the following details what will be the partners‘ commission?
Net profit before charging partners‘ commission `65,000. Partners‘ commission @ 11% after charging
such commission
(a) 6441 ; (b) 5431 ; (c) 7654 ; (d) 9876
277. From the following details what will be the partners‘ commission?
Net profit before charging partners‘ commission `65,000. Partners‘ commission 11% before charging
such commission
(a) 6441 ; (b) 5431 ; (c) 7150 ; (d) 5876
278. Arrangement of Balance Sheet in a logical order is known as —

(a) Dressing Balance Sheet ; (b) Marshalling Balance Sheet;
(c) Formatting Balance Sheet ; (d) Make up of Balance Sheet
279. Improper valuation of inventory effects—

(a) Profitability ; (b) Financial position ; (c) Both ; (d) Cash inflows
280. Find the cost of goods sold if goods are sold for ` 2,000 at 25% profit on cost
(a) ` 1,600 ; (b) ` 1,500 ; (c) ` 1,000 ; (d) ` 1,800
281. Find the value of opening stock from the following data.
Purchases ` 1,50,000, Closing stock ` 30,000 , Sales `2,20,000, Gross profit ` 40,000.
(a) ` 50,000 ; (b) ` 55,000 ; (c) ` 60,000 ; (d) ` 65,000
328. The Accounting Standards are issued for the purpose of —

(a) For improving the reliability of financial statements
(b) Harmonizing accounting policies
(c) Elimination of non-comparability between financial statements
(d) All the three
329. IASB stands for —

(a) International Accounting Standard Board ; (b) Indian Accounting Standard Board;
(c) Institution of Accounting School Board ; ; (d) None
340. Current Liabilities mean —

(a) Liabilities which are payable within 12 months
(b) Liabilities which are payable immediately
(c) Liabilities which payable after one accounting year
(d) Liabilities which are readable within 3 months
342. Expenses A/c will always have —

(a) Debit balance ; (b) Credit balance ; (c) Either (a) or (b) ; (d) No balance at all
343. Which of these is not a cause of depreciation

(a) Usage ; (b) Passage of time ; (c) Fall in market demand ; (d) Wear and tear
344. Tick the correct match

A B
1. Current Asset 1. Depreciation
2. Nominal A/c 2. Land
3. Non Depreciable Asset 3. Insurance A/c
4. Non Cash Expense 4. Prepaid Rent A/c
(a) (1,2), (2,3), (3,4), (4,1)

(b) (1,3), (2,1), (3,4), (4,2)
(c) (1,4), (2,2), (3,1), (4,3)
(d) (1,4), (2,3) (3,2), (4,1)
345. Revenues affect net income —

(a) in the period during which they are earned
(b) in the period when they are collected
(c) in the period when they are accounted for
(d) any of the above three which occur first
346. Which of these Accounts are not closed in a Trading A/c

(a) Sales A/c ; (b) Purchase A/c ; (c) Wages A/c ; (d) Depreciation A/c
347. Undercasting of the total of Sales A/c will affect —

(a) Gross Profit and Loss ; (b) Debtors A/c ; (c) Closing Stock ; (d) Working Capital
348. ` 5,500 incurred on sundry expenses inadvertently recorded in the books of account as ` 550. This is
an example of —
(a) Fraud ; (b) Error of Commission ; (c) Error of Principle ; (d) Compensatory Error
349. How does depreciation effect basic accounting equation

(a) Leads to decreases in assets and shareholders equity
(b) Leads to decrease in asset only
(c) Leads to increase in liability and decrease in assets
(d) Leads to decrease in shareholders equity
350. ——— Principle specifies that cost or expenses should be recorded at the same time as the revenue to
which they correspond
(a) Going run concern ; (b) Matching ; (c) Historical Cost ; (d) Prudence
351. X a debtor is declared insolvent and only 25 paise in a rupee is recovered from his estate. If X owes `
5,000 to Y, Y would debit Cash A/c by —
(a) ` 5,000 ; (b) ` 25 ; (c) ` 1,250 ; (d) ` 2,500
352. In question no. 351, Bad Debts A/c would be debited by —

(a) ` 3,600 ; (b) ` 3,750 ; (c) ` 1,250 ; (d) ` 4,000
353. It is supposed that on 31-12-20012, the sundry debtors are amounted to Rs. 40,000. On the basis of past
experience, it is estimated that 5 % of the sundry debtors are doubtful. It is also suppose that during the
year 2013 actual bad debts were Rs. 1,600. What entry will pass to create provision for doubtful debts?
(a) Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000 (Cr)
(b) Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000 (Cr)
(c) Provision for doubtful debts a/c Rs. 1,600 (Dr) & Profit & Loss a/c Rs. 1,600 (Cr)
(d) Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs. 1,600 (Cr)
354. Opening Stock ` 15,000, Closing Stock ` 6,000, Total Purchase during the year ` 30,000. Given that
Opening Stock inadvertently includes postage stamps of ` 1,500. Find the cost of goods sold
(a) ` 40,000 ; (b) ` 39,000 ; (c) ` 37,500 ; (d) ` 36,000
355. From the following details estimate the capital as on 1.1.2012, Capital as on 31.12.2012 ` 2,40,000,
drawing ` 20,000, Profit during the year ` 25,000
(a) ` 2,35,000 ; (b) ` 2,25,000 ; (c) ` 2,20,000 ; (d) ` 2,00,000
356. ` 1,250 paid for the residential telephone bill of the proprietor which of these accounts will be detailed
(a) Household A/c ; (b) Drawing A/c ; (c) Telephone A/c ; (d) None
357. When a large number of articles are sent on a sale or return basis,, it is necessary to maintain
(a) Sale journal
(b) Goods returned journal
(c) Sale or return journal
(d) None of the above.
358. ABC Industries Ltd. purchased a new Machinery on 1.1.2008 for ` 2,75,000 and spent ` 25,000 on its
installation. The Machine is subject to 10% depreciation on the original cost. The company sold the
Machinery on 31.12.2012 for ` 1,45,000. Find the accumulated depreciation on the Machine as on
31.12.2012 —
(a) ` 1,25,000 ; (b) ` 1,35,000 ; (c) ` 1,05,000 ; (d) ` 1,50,000
359. Consider the following data and identify the amount which will be deducted from Sundry Debtors in
Balance Sheet.
Particulars `
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year‘s provision (new) 800
(a) ` 400
(b) ` 800
(c) ` 2,000
(d) ` 2,400
360. On 31st March, goods sold at a sale price of ` 30,000 were lying with customer, Mohan to whom these
goods were sold on 'sale or return basis' and recorded as actual sales. Since' no consent was
received from Mohan, the adjustment entry was made presuming goods were sent on approval at a
profit of cost plus 20%. In the balance sheet, the stock with customers account will be shown at `
(a) 30,000.
(b) 24,000.
(c) 20,000.
(d) 25,000.
361. XYZ send goods worth ` 1,00,000 to Y on consignment basis at 20% above the cost price. The goods
are sold by the consignee on a mark of 15% on invoice price. Find the total mark up % over the cost
price of the goods —
(a) 30% ; (b) 38% ; (c) 35% ; (d) 25%
362. In question no. 361 above find the total profit on consignment if the consignee expenses amounted to
` 8,000
(a) ` 30,000 ; (b) ` 28,000 ; (c) ` 25,000 ; (d) ` 38,000
363. From the following details ascertain net profit of ABC club for the period ending on 31.03.2013 under
accrual system
Items 31.03.2012 31.03.2013
Net profit as per Cash Basis 10,750
Accrual Subscription 550 450
Subscription received in advance 250 100
Salary outstanding 300 50
Prepaid rent 600 150
(a) ` 11,000 ; (b) ` 10,450 ; (c) ` 10,750 ; (d) ` 11,050
364. From the following details ascertain the adjusted Bank balance as per Cash Book —
Overdraft as per Cash Book ` 80,000; Cheque received entered twice in the Cash Book ` 5,000; Credit
side of bank column cast short by ` 500; Bank charges amounting to ` 200 entered twice; Cheque
issued but dishonoured ` 2,000
(a) ` 80,500 ; (b) ` 85,500 ; (c) ` 85,000 ; (d) ` 85,300
365. From the following details calculate the net profit for the year ending 31.03.2013
Opening Stock ` 1,50,000; Purchase ` 2,50,000; Manufacturing Expenses ` 80,000; Selling Expenses `
20,000; Administration Expenses ` 10,000; Financial Charges ` 5,000; Slaes ` 5,55,000 which includes
damaged goods sold for ` 5,000 against the cost price of ` 12,000. Gross profit margin on normal sales
is 20% on the sales
(a) ` 65,000 ; (b) ` 68,000 ; (c) ` 70,000 ; (d) ` 77,000
366. L of Lucknow consigned goods costing ` 60,000 to A of Allahabad at an invoice price bearing 331/3 %
mark up on the cost price. Goods costing ` 15,000 were damaged in the transit and the insurance
company admitted the claim in full. Expenses incurred by the consignor on loading and transportation
of the goods amounted to ` 1,800. The consignee incurred ` 200 on cartage and ` 6,000 as Godown
Rent and sold 2/3 of the goods received by him at the invoice price. He is entitled to 5% normal
commission and 2.5% del credere commission. Find the value of goods sold
(a) ` 60,000 ; (b) ` 40,000 ; (c) ` 55,000 ; (d) ` 50,000
367. Based on the facts given in question no. 366 above find the total commission payable to the
Consignee
(a) ` 2,000 ; (b) ` 3,000 ; (c) ` 1,000 ; (d) ` 1,500
368. Based on the facts given in question no. 366 find the value of abnormal loss
(a) ` 15,000 ; (b) ` 16,500 ; (c) ` 15,500 ; (d) ` 15,750
369. Research and Development Cost A/c appearing in Balance Sheet is a —

(a) Real A/c ; (b) Intangible Asset A/c ; (c) Tangible Asset A/c ; (d) Personal A/c
370. Endownfund received by a club is a —

(a) Revenue Receipt ; (b) Capital Receipt ; (b) Advance Payment ; (d) Revenue Payment
371. A trade purchase of ` 5,500 from Y was passed through Sales Day Book as ` 550, what rectification
entry would be passed if the mistake is detected before preparation of Trading and Profit & Loss A/c
(a) Sales A/c ….Dr. ` 550, Purchase A/c ….Dr. ` 5,500, Y‘s A/c Cr. ` 6,050
(b) Profit and Loss Adjustment A/c ….Dr. ` 6,050, Y‘s A/c Cr. ` 6,050
(c) Sales A/c ….Dr. ` 550, Purchase A/c ….Dr. ` 5,500, Suspense A/c Cr. ` 6,050
(d) None
372. Which of these document is a replica of customer‘s account in the books of a bank
(a) Pass Book ; (b) Debit Note ; (d) Credit Note ; (d) Cash Book
373. Huge expenditure incurred at the time of launching of a new product in market is a/an —
(a) Revenue Expenditure ; (b) Capital Expenditure ; (c) Loss ;
(d) Deferred Revenue Expenditure
374. The Primary objective of providing depreciation is:

(a) To calculate true profit ; (b) To show the asset on market value ;
(c) To reduce tax Burdon ; (d) To provide funds for replacement
375. Find the closing stock from the following details.

Opening Stock ` 80,000, Purchases ` 1,40,000, Wages ` 60,000, Sales ` 3,20,000, GP on sales 25%
(a) ` 60,000 ; (b) ` 40,000 ; (c) ` 45,000 ; (d) ` 30,000
377. Tick the correct statement

(a) Petty cash is an expense ; (b) Balance Sheet is also known as a positional statement ;
(c) Revaluation A/c is Real A/c ; (d) Depreciation is a process of valuation
378. Revenue is said to have been earned when —

(a) Sale is made ; (b) Cash is received ; (d) Goods are manufactured ;
(d) When accounted for
380. A firm has a policy of changing depreciation on Plant and Machinery @ 10% under WDV Method. If the
book value of Plant and Machinery was ` 81,000 on 31.03.2013. Find the original cost of the plant if the
same was purchased on 01.04.2011
(a) ` 80,000 ; (b) ` 1,00,000 ; (c) ` 81,000 ; (d) ` 1,20,000
381. Which of these items will appear in a Manufacturing A/c

(a) Power and Steam A/c ; (b) Salary and Wages A/c ; (d) Carriage Outward ;
(d) Goodwill written off
384. Credit balance in Cash Book means—

(a) Bank overdraft ; (b) Bank deposit ; (c) FD with Bank ; (d) Cash embezzlement
386. From the following abstract of Trial Balance, estimate the profit and loss for the year ended 31.03.2013
Debit balance ` Credit balance `
Assets excluding closing stock 7,500 Capital and Reserve 9,000
Expenses 6,500 Liabilities 1,000
Prepaid Expenses 2,000 Revenue 6,500
Interest 500
Total 16,500 Total 16,500
Closing stock was ` 600
(a) ` 100 ; (b) ` 550 ; (c) ` 1,500 ; (d) ` 250
387. 5,000 paid as local cartage on material purchased. However this amount was booked under
Miscellaneous Expenses A/c instead of on Carriage Inward. Due to this error net profit and loss will—
(a) Increase by ` 5,000 ; (b) Decrease by ` 5,000 ; (c) Increase by ` 10,000 ;
(d) not be affected at all
388. Tick the correct match

A B
1. Wages and Salary 1. Trial balance
2. AS 10 2. Depreciation accounting
3. Process of spreading cost 3. Profit and Loss A/c
4. Check arithmetic accuracy 4. Accounting for Fixed Asset
(a) (1, 2), (2, 3), (3, 4), (4,1)

(b) (1, 3), (2, 4), (3, 2), (4, 1)
(c) (1, 4) (2, 2) (3, 1), (4, 3)
(d) (1, 4), (2, 3), (3, 2), (4, 1)
389. If outside liabilities and owners‘ equity are added we get………
(a) Total Liabilities ; (b) Net worth ; (c) Shareholders Fund ; (d) Gross Block
390. Business expenses excludes…

(a) Fire insurance premium of office building ; (b) LIC premium on the life of proprietor ;
(c) Interest on capital ; (d) Repair of office furniture
392. Which of these is not a function of Financial Accounting

(a) To portray gloomy picture of the business in order to evade tax liabilities
(b) To keep a systematic record of business transactions
(c) To depict a true and fair view of the financial position of the business
394. Accounting is a/ an –
(a) Science ; (b) Art ; (c) Subject matter of sociology ; (d) Subject matter of philosophy
395. Trial Balance is prepared to….

(a) Check true and fair view of Balance Sheet ; (b) To check arithmetic accuracy of A/cs ;
(c) To ensure legal compliance ; (d) To ensure compliance to IFRS
396. The term PBIT stands for:-

(a) Profit before Income Tax ; (b) Profit before Interest and Tax ;
(c) Profit before Internal Transfers ; (d) Profit by Income Tax
397. …… is a secret reserve usually created to provide for the loss by way of fluctuation in the value of
investment
(a) Investment Fluctuation Reserve ; (b) Foreign Exchange Fluctuation Fund ;
(c) General Reserve ; (d) Capital Reserve
398. As per the Companies Act, 1956 which of these are allowed to create secret reserves in their books of
account
(a) Banking Companies ; (b) Insurance Companies ; (c) Electricity Companies ;
(d) All the three
399. An increase in one liability may lead to

(a) Increase in another asset ; (b) Decrease in liability ; (c) Both (a) and (b) ; (d) Either (a) or (b)
400. Over statement of sales may lead to-

(a) Over statement of profit of current year;
(b) Over statements of profit of next year;
(c) Under statement of profit of current year ; (d) All the three
404. A second hand truck was purchased for `75,000, `10,000 was spent on its repair, `2,000 to get the truck
registered in the name of the firm and `1,000 as dealers commission. The capitalized value of truck will
be-
(a) ` 88,000 ; (b) ` 87,000 ; (c) ` 85,000 ; (d) ` 75,000
405. Under which method of depreciation annual depreciation goes on decreasing

(a) Reducing balance method ; (b) Straight line method ; (c) Annuity method ; (d) None
406. Choose the true statement-

(a) Income and gain A/cs shows increase on credit side
(b) Expenses and losses A/cs shows reduction in balance on debit side
(c) Assets A/c can have credit balance also ; (d) Debtors are the owing of the business
407. Which of these is an example of accelerate method of depreciation
(a) Written down value method ; (b) Straight line method ; (c) Sinking fund method ;
(d) Annuity method
409. Which of these items will not be capitalized along with the Asset
(a) Installation charges ; (b) Annual repair and maintenance ; (c) Statutory levies ;
(d) Freight and insurance
410. On the debit side of a Sales A/c entry can be for which of these reasons
(a) Sales returns ; (b) Discount allowed ; (c) Both ; (d) Additional sales
411. An office equipment is purchased on 1.1.12 for `1,10,000 having working life of 4 years at the end of
which it is expected to have a scrap value of `10,000. Find the difference in depreciation as per Sum
of years digit methods and reducing balance method (25% WDV) for the year ending on 31 st
December 12
(a) ` 25,000 ; (b) ` 40,000 ; (c) ` 15,000 ; (d) ` 10,000
412. Suspense A/c is generally opened to rectify —

(a) Errors of principle ; (b) One sided errors ; (c) Compensating errors ; (b) All types of errors
413. From the following estimate total sales —

Cash sales `20,000, cash collection from debtors `130,000, Bad debts during the year 15,000, cash
discount to debtors `5000. Debtors as on 1.1.12 `25,000 Debtors as on 31.12.12 `55,000
(a) ` 1,50,000 ; (b) ` 1,80,000 ; (c) ` 2,00,000 ; (d) ` 1,90,000
417. Under which method of depreciation annual depreciation fluctuate with the volume of production
(a) Sum of Years‘ Digit Method ; (b) Production Method ; (c) Written Down Value Method ;
(d) None
418. On 01.04.2012 Novel industries purchased a new office equipment for `1,50,000 with a working life of
10 years. The estimated scrap value at the end of 10 year is estimated to be `20,000. Find the
depreciation for the 10 th years under straight line method,
(a) 15,000 ; (b) 13,000 ; (c) 12,000 ; (d) 10,000
419. When the goods are returned by the customers within the specified time, they are recorded
(a) Initially in the Sale or Return Ledger. Thereafter, in the Sale or Return Day Book
(b) Initially in the Sale or Return Day Book. Thereafter, in the Sale or Return Ledger
(c) Only in the Sale or Return Day Book
(d) Only in the Sale or Return Ledger
421. A sent some goods costing ` 3,500 at a profit of 25% to B on sale or return basis.
B returned goods costing ` 800. At the end of the accounting period i.e. on 31st March,
the remaining goods were neither returned nor were approved by him. The stock
on approval will be shown in the balance sheet at `
(a) 2,000.
(b) 2,700.
(c) 2,700 less 25% of 2,700.
(d) 3,500.
422. An amount of `6,000 is credited twice in the bank column of cash book. Taking credit balances as per
pass book as the starting point what adjustment needs to be done to arrive at the balance as per cash
book
(a) `12,000 add to the balance as per pass book
(b) Add `8,000 to the balance as per cash book
(c) Deduct `6,000 from the balance as per pass book
(d) Add `4,000 to the balance as per pass book
423. From the following details calculate net profit under accrual basis of
accounting Goods sold for cash `5,00,000, credit sales `25,000
Cash purchases `4,00,000, credit purchases `50,000
Wages paid `20,000, outstanding expenses `10,000
Rent paid `5,000, Rent outstanding `2,000 Depreciation on building `10,000
Loss on sales of fixed assets `1,000
(a) ` 75,000 ; (b) ` 27,000 ; (c) ` 32,000 ; (d) ` 40,000
424. Long term assets being `3,00,000, current Assets `80,000, outside liabilities `1,20,000. Find owners
equity-
(a) ` 3,50,000 ; (b) ` 2,60,000 ; (c) ` 2,00,000 ; (d) None
425. A merchant sends out his goods casually to his dealers on approval basis. All such transactions are,
however, recorded as actual sales and are passed through the sales book. On 31st March, it was
found that 100 articles at a sale price of ` 200 each sent on approval basis were recorded as actual
sales at that price. The sale price was made at cost plus 25%. The amount of stock on approval will be
amounting
(a) ` 16,000.
(b) ` 20,000.
(c) ` 15,000.
426. From the following details calculate annual depreciation on the coal mine
Coal mine purchased `10,50,000, Additional expenses incurred on development of coal mine
`2,00,000. Total coal expected from the coal mine 1,00,000 Mt. Expected value of coal mine after
exhausting coal resources `50,000. Coal production during 2012–13 was 5000Mt.
(a) ` 60,000 ; (b) ` 1,00,000 ; (c) ` 1,20,000 ; (d) ` 1,00,000
427. In the Sale or Return Ledger

(a) All the customers are individually debited and the sale or return account is credited with the
periodical total of the Sale or Return Day Book,
(b) All the customers are debited in total and the sale or return account is credited with the
periodical total of the Sale or Return Day Book.
(c) All the customers are individually debited and the sale or return account is also credited with the
individual total of the Sale or Return Day Book.
428. All revenue receipts and expenditure are shown in –
(a) Balance Sheet ; (b) Trading and Profit and Loss A/c ; (c) Cash Flow Statement ;
(d) Statement of Affairs
429. On 1st January 2013 X paid `120,000 being rent upto 31.12.2013. If the accounts are closed on 31.03.12.
`90,000 will be shown as –
(a) Accrued rent ; (b) Prepaid rent / Expenses ; (c) Accrued expenses ; (d) Accrued income
430. Choose the true statement—

(a) Accrued income represent income unearned but realized in cash
(b) Accrued income represent income earned but not realized in cash
(c) Accrued income A/c is shown on the liability side ;
(d) No tax is payable on accrued income
431. Which of these will cause change in working capital

(a) Payment of Creditors in cash
(b) Realization of amount due from the Debtors
(c) Sale of office equipment for cash
(d) Providing depreciation on Plant and Machinery
432. Sale or Return Day Book and Sale or Return Ledger are known as
(a) Principal books ; (b) Subsidiary books ; (b) Memorandum books ; (d) None of the above
[Hint : The books maintained to record the transactions related to sale or return are Memorandum
books.]
433. Which of the following is true when a debtor pays his dues?
(a) The asset side of the Balance Sheet will decrease
(b) The asset side of the Balance Sheet will increase
(c) The liability side of the Balance Sheet will increase
(d) There is no change in total assets or total liabilities
434. Consider the following data pertaining to a firm:

Credit balance as per bank column of cash book `13,000; Bank interest on overdraft appeared only in
the pass book `2,600; Cheques deposited but not collected by the bank ` 5,000. The balance as per
pass book is
(a) ` 20,600 (Dr. balance) ; (b) ` 18,500 (Dr. balance) ; (c) ` 18,500 (Cr. balance) ;
(d) ` 15,600 (Dr. balance)
435. Consider the following data pertaining to a company for the year 2011-2012 :
Opening balance of sundry debtors ` 40,000; Credit sales `4,30,000; Cash sales ` 20,000; Cash
collected from debtors `4,00,000; Closing balance of sundry debtors ` 50,000
The bad debts of the company during the year are
(a) `40,000 ; (b) `35,000 ; (c) `30,000 ; (d) `20,000
436. The opening stock of a company is `60,000 and the closing stock is `70,000. If the purchases during the
year are `2,00,000 the cost of goods sold will be
(a) `2,10,000 ; (b) `2,00,000 ; (c) `1,90,000 ; (d) ) `1,80,000
437. The balance as per bank statement of a company is `12,000 (Dr.). The company deposited two
cheques worth `9,500, out of which one cheque for `2,300 was dishonoured which was not entered in
the cash book. The credit balance as per cash book is
(a) `21,000 ; (b) `15,300 ; (c) `23,800 ; (d) `9,700
438. During the year 2012-13, the profit of a business before charging Sales Manager‘s commission was
`1,89,000. If the Sales Manager‘s commission is 5% on profit after charging his commission, then the
total amount of commission payable to manager is
(a) `10,000 ; (b) `9,450 ; (c) `9,000 ; (d) `8,500
439. Which of the following is not a main column of sales or return journal?
(a) Goods sent on approval column ; (b) Goods returned column
(c) Goods approved column ; (d) Purchase column
[Hint : In sale or return journal, the information about the purchases is not important.]
440. Which of the following accounting treatments is/are true in respect of accrued commission
appearing on the debit side of a Trial Balance?
(a) It is shown on the debit side of the Profit and Loss Account
(b) It is shown on the credit side of the Profit and Loss Account
(c) It is shown on the liabilities side of the Balance Sheet
(d) It is shown on the assets side of the Balance Sheet
442. Depreciation amount of a fixed asset represents —

(a) Historical cost less residual value ; (b) Historical cost ; (c) Historical cost less cost of disposal;
(d) Book Value less scrap value
445. When benefit of a revenue expense extend beyond an accounting year, it is called
(a) Revenue Expenditure ; (b) Capital expenditure ; (c) Deferred Revenue Expenditure;
(d) Recurring profit
446. The convention that states that the accounting practice should be followed consistently over the years
(a) Consistency ; (b) Conservation ; (c) Materiality ; (d) Disclosure
447. Which of the following is a non-monetary asset?

(a) Account Receivable ; (b) Account Payable ; (c) Demand Bank Deposits ;
(d) Patents and Trademarks
448. This is more of a convention than a concept, it proposes that while accounting for various transactions,
only those which may have material effect on profitability or financial status of the business should
have special consideration for reporting, this concept is known as
(a) Concept of Consistency ; (b) Concept of Conservation ; (c) Concept of Materiality ;
(d) Concept of Disclosure
449. Accounting for Fixed Assets is related to

(a) AS 7 ; (b) AS 16 ; (c) AS 10 ; (d) AS 21
450. The maximum amount beyond which a company is not allowed to raise funds, by issue of share is
(a) Issued Capital ; (b) Reserve Capital ; (c) Subscribed Capital ; (d) Authorised Capital
451. Accounts dealing with transaction relating to persons or an organization is called

(a) Personal Account ; (b) Nominal Account ; (c) Real Account ;
(d) Representative Personal Account
452. An account is said to have a debit balance if —
(a) The amount of the debits exceeds the amount of the credits
(b) There are more entries on the debit side than on the credit side
(c) Its normal balance is debit without regard to the amounts or number of entries on the debit side ;
(d) The last entry of the accounting period was posted on the debit side
453. Residual value is the —

(a) value of the asset when it is purchased
(b) value of the asset at the end of its useful life
(c) cost of the asset ; (d) allocation of the cost
454. From the books of Mr. N , it was observed that cheques amounting to ` 2,40,000 were deposited in the
bank, out of which cheques worth ` 20,000 were dishonoured and cheques worth ` 40,000 are still in
the process of collection. The treatment of this while preparing Bank Reconciliation Statement is
(a) Deduct ` 60,000 from bank balance as per pass book
(b) Add ` 20,000 and deduct ` 40,000 from overdraft balance as per cash book
(c) Deduct ` 60,000 from overdraft balance as per pass book
(d) None of the above
464. The document listing the latest balances of all Real and Personal A/c in the ledger on a given date is
known as —
(a) Trial Balance ; (b) Positional Statement ; (c) Income Statement ; (d) Charter of Accounts
466. A company sends its cars to dealers on 'sale or return' basis. All such transactions ire
however treated like actual sales and are passed through the sales day book. Just before
the end of the financial year, two cars which had cost ` 55,000 each have been sent on
sale or return and have been debited to customers at ` 75,000 each, cost of goods lying
with the customers will be
(a) ` 1,10,000.
(b) ` 35,000.
(c) ` 75,000.
467. From the following details estimate the capital as on 31.03.2013, Capital as on 01.04.2012 ` 2,05,000.
Drawing ` 20,000, Profit during the year ` 25,000
(a) ` 2,05,000 ; (b) ` 2,25,000 ; (c) ` 2,10,000 ; (d) ` 2,00,000
468. Goods worth ` 10,000 were purchased by B on which the traders allowed ` 500 trade discount and
offer to give 5% cash discount if immediate payment is made. The Purchase A/c will be debited by —
(a) ` 10,000 ; (b) ` 9,800 ; (c) ` 9,000 ; (d) ` 9,500
469. S issued cheque worth ` 35,000 in March 2013 out of which cheques worth ` 15,000 were presented for
payment after by 31st march, 2013. What amount should be added to balance as per pass book
(a) ` 15,000 ; (b) ` 10,000 ; (c) ` 25,000 ; (d) None of the above
470. Owing of the business are called —

(a) Liabilities ; (b) Capital ; (c) Net Worth ; (d) Assets
471. ` 8,000 is spent of travelling expenses of the partner to a foreign trip for purchased of an asset to be
used for the business is a/an —
(a) Capital Expenditure ; (b) Revenue Expenditure ; (c) Revenue Loss ; (d) Capital Loss
472. The Capital of X Ltd. was ` 55,000 as on 01.04.2012 which fell to ` 25,000 by the end of 31.03.2013. Find
the value of goods sent of consignment basis —
(a) Drawings ; (b) Business losses during the period ; (c) Both ; (d) Introduction of new capital
473. A trader has credited certain items of sales on approval aggregating ` 60,000 to Sales
Account. Of these, goods of the value of `16,000 have been returned and taken into
stock at cost ` 8,000 though the record of return was omitted in the accounts. In respect
of another parcel of ` 12,000 (cost being `6,000) the period of approval did not expire
on the closing date. Cost of goods lying with customers should be
(a) ` 12,000.
(b) ` 54,000.
(c) ` 6,000.
474. Cash sales will be recorded in —
(a) Sales Day Book ; (b) Cash Book ; (c) Purchase Book ; (d) Return in Ward Book
475. Cost of goods sold excludes —

(a) Opening Stock ; (b) Closing Stock ; (c) Wages and Salary ; (d) Salesmen Commission
476. A firm purchased goods costing ` 1,00,000. He sold goods costing ` 50,000 at ` 75,000 and the
remaining were sold to a customer cooperative society at the same GP as in the case of direct
sales less 20%. Find the total sales of the firm
(a) ` 1,35,000 ; (b) ` 90,000 ; (c) ` 1,50,000 ; (d) ` 1,40,000
477. From the following details find out the amount to be debited to Profit and Loss A/c as fresh provision
for doubtful debts during 2012-13
Debtors ` 30,000 as on 31.03.2013; Bad debt during the year ` 1,500; Provision for bad debts as
on 01.04.2012 ` 2,000; Provision for doubtful debts to be kept at 5% of total debtors
(a) ` 1,500 ; (b) ` 1,000 ; (c) ` 3,000 ; (d) ` 2,000
478. A of Assam sent goods costing ` 45,000 to K of Kolkata at cost plus 331/3%. 1/5 of the goods were
lost in transit and the remaining was sold at profit of 20% on invoice price. Find the value of sales —
(a) ` 54,500 ; (b) ` 60,000 ; (c) ` 57,600 ; (d) ` 55,000
479. Two primary qualitative characteristics of Financial Statements are —

(a) Understandability and Materiality ; (b) Relevance and Reliability ;
(c) Relevance and Understandability ; (d) Materiality and Reliability
480. Profit and loss on Depreciation Investment Fund A/c is transferred to —

(a) Profit and Loss A/c ; (b) General Reserve A/c ; (c) Trading A/c ; (d) Capital Reserve A/c
481. From the following details ascertain net profit of Q Club for the period ended on 31.03.2013 under cash
basis
Items 31.03.2012 31.03.2013
Net Profit as per Accrual Basis 10,800
Accrued Subscription 550 450
Subscription received in advance 250 100
Salary outstanding 300 50
Prepaid Rent 600 150
(a) ` 11,000 ; (b) ` 10,800 ; (c) ` 10,950 ; (d) ` 11,050
482. Which of these expenses does not result in cash outflow

(a) Depreciation ; (b) Interest on Loan ; (c) Payment on Dividend ; (d) Donation
483. ` 10,000 paid to A of Assam, his A/c was credited by ` 1,500. To set right A‘s A/c his account should be
—
(a) Debited by ` 1,500 ; (b) Credited by ` 10,000 ; (c) Credited by ` 15,000 ;
(d) Debited by ` 11,500
486. Going concern concept is not followed in —

(a) Bank Accounts ; (b) Joint Venture Accounting ; (c) Partnership Accounting ;
(d) Proprietorship Concerns
488. Calculate sales from the following

Opening Stock ` 50,000, Closing Stock ` 40,000, Purchase less returns ` 1,90,000, Profit margin is 16.66%
on the sales
(a) ` 2,20,000 ; (b) ` 2,40,000 ; (c) ` 1,50,000 ; (d) ` 1,90,000
489. To convert the accounts prepared on cash system of accounting into mercantile system of
accounting, which of these adjustments is not necessary
(a) Reconciliation of cash with bank
(b) Adjustment of prepaid expenses and income received in advance
(c) Adjustment of outstanding expenses and income statement
(d) Distinction between revenue and capital expenditure/income
490. Trade discount is given to

(a) Boost sales ; (b) Make payment early before due date ; (c) To evade tax ; (d) All the three
491. Which types of errors will effect net profit
(a) Affecting Nominal Account ; (b) Affecting Personal Account ; (c) Affecting Real Account
(d) None
493. Raw material and components purchased and used at the time of installation of new Plant and
Machinery will be debited to
(a) Plant and Machinery A/c ; (b) Raw Material Consumed A/c ; (c) Purchase A/c ; (d) Profit ;and
Loss A/c
494. Under estimation of useful life of a depreciable asset will lead to —

(a) Overstatement of profit ; (b) Excess charging of depreciation every year ;
(c) Over valuation of assets in Balance Sheet ; (d) Short charging of depreciation every year
494. Which of these expenses are not included in valuation of closing stock lying with the consignee
(a) Freight and insurance ; (b) Loading and unloading incurred ; (c) Godown rent ;
(d) Custom duties
495. X purchased a new plant and machinery for ` 50,000 on 01.01.2012. The machinery was received in
the factory on 10.01.2012 and was installed and put to use on 18.01.2012. Depreciation on the plant
and machinery will commence from
(a) 01.04.2011 ; (b) 01.04.2012 ; (c) 01.01.2012 ; (d) 18.01.2012
496. Under sales on return or approval basis, the ownership of goods is passed only
(a) When the retailer gives his approval
(b) If the goods are not returned within specified period.
(c) Both (a) and (b)
(d) None of the above
[Hint: Under sale on return or approval basis, the ownership is passed when the seller gives his approval
/ acceptance, if he sells it to 3rd party. Also when the seller does not return the goods in specified time
the goods are deemed to be accepted.
497. To obtain the amount of credit sales made during an accounting period, which account is
generally used in single entry and incomplete records?
(a) Payable Account ; (b) Total Revenue Account ; (c) Debtors Account ; (d) Stock Account
498. The receipts and payments account of a non-profit organization is a

(a) Nominal Account ; (b) Real Account ; (c) Income Statement Account ;
(d) Financial Account
499. The capital of a non-profit organization is generally known as

(a) Equity ; (b) Accumulated Fund ; (c) Finance Reserve ; (d) Cash Fund

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MCQ FOR FINANCIAL ACCOUNTING

1. Which English alphabet is similar to the shape of an account?

2. Gross Profit is the difference between

5. The basic concepts related to P & L Account are

19. Provision for bad debt is made as per the

22. Which of the following statements is true?

26. Ledger contains various ___________ in it

1 ayment received from Debtor

30. The ____________ in a ledger helps in locating the accounts contained in it

31. Cash Purchases

32. In which of the following statement opening stock is shown?

34. Goods returned from X is entered as

38. Withdrawals by proprietor would

39. Which of the following is true?

51. Which of the following statements is/are true?

57. Which of the following statements is false?

58. Purchase of Fixed Assets on credit is originally recorded in

60. The amount of Owners‘ equity in a business is not affected by

62. Which of the following is/are fixed asset(s)?

63. Bank Overdraft is shown as a

64. Which of the following is NOT a characteristic of Cash Book?

66. Which of the following is true?

67. Which of the following is a liability of a firm?

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

73. Cash Account is a –

76. Which column of Cash Book is never balanced.

78. Prepaid rent is a –

79. Which of the following assets is a fictitious asset

80. Nominal A/c represents-

82. Liability A/c has……………. Balance

83. The Sales Returns Day Book would include:

84. An Investment in one asset A/c may lead to –

86. The type of A/c with a named credit balance is-

87. Overcasting of purchases journal would affect

91. Endowment fund receipt is traded as-

92. Legacy are generally-

93. Interest Account will have-

94. Purchase A/c will have-

96. Opening entries are generally passed through-

97. Purchases made on credit not recorded at all would affect

98. Which of the following is the example of contingencies?

99. Which of the following is not a contingent liability?

101. Total depreciation of an asset cannot exceed its:

103. Which of the following statements is/are true ?

105. Closing stock is generally valued at

111. The concept of conservatism will have the effect of

117. Closing stock in the Trial Balance implies that

122. Which of the following is not correct?

123. Which of the following errors is an error of omission?

March 31,2010 - ` 56,000

126. Purchase journal is kept to record

131. Which of the following should not be treated as revenue expenditure?

133. Which of the following is not a deferred revenue expenditure?

135. Which of the following is an item of capital expenditure?

138. Which one of the following should be considered a revenue expenditure?

141. Which of the following enhances the earning capacity of an asset?

144. Which of these errors affect two or more accounts

145. Which of the following error is an error of principle

146. Which of the following is an one sided error

148. Cash book records—