CHAPTER 1. ACCOUNTING BASICS

 1) What is the method of summarizing and classifying the record of financial transaction in monetary
     terms?
    (a) Book Keeping (b) Auditing (c) Accountancy (d) Cost Accountancy

2) The obligation of an enterprise other than owner’s fund are known as:
    (a) Assets (b) Liabilities (c) Capital (d) None

3) On January 1, Shyam paid rent of Rs. 5,000. This can be classified as:
    (a) An Event                                       (b) A transaction
    (c) A transaction as well as an Event (d) Neither a transaction as well as an Event

4) Accounting is concerned with –
(a) Monetary transactions                                (b)non-monetary transactions
(c) Monetary and non-Monetary transactions (d) Illegal transactions

5) Function of accounting include:
(a) Keeping systematic record of all business transactions
(b) To know the financial position of the company
(c) Ascertains the profit & loss
(d) All

6) Financial position of the business is ascertained on the basis of:
(a) Record prepared under book keeping process (b) Trial balance
(c) Balance Sheet                                                     (d) Profit & Loss A/c

7) Basic function of financial accounting is to:
(a) Record all business transactions
(b) Interprets the financial data
(c) Assist the management in performing their function effectively
(d) All

8) Financial statements only consider: –
(a) Assets expressed in monetary terms
(b) Liabilities expressed in monetary terms
(c) Assets expressed in non-monetary terms
(d) Assets and Liabilities expressed in monetary terms

9) Tick the wrong statement –
(a) Accounting is the language of business
(b) Transactions are recorded in quantitative terms only
(c) Accounting is the art of recording, classifying and summarizing
(d) Transactions and events of financial character are subject –matter of accounting

10) An Economic event that involves transfer of money or money’s worth:
(a) Barter                  (b) Credit transaction
(c) Cash Transaction (d) Financial transaction

11) Exchange of financial benefit (goods, property etc) for cash receivable or payable in future:
(a) Financial cash transaction (b) Financial credit transaction
(c) Barter transaction              (d) Not a transaction

12) An exchange of goods between two parties:
(a) Barter  (b) Transaction
(c) Sale     (d) Transfer 

13) _____is the end result of Transaction?
(a) Book Keeping (b) Transaction
(c) Accounting     (d) Event

14) On March 31st,2020 Narnia Enterprises purchased a vehicle from Hyundai. For Rs. 1,75,000. This
is:
(a) An event.                                       (b) A transaction.
(c) A transaction as well as an event. (d) Neither a transaction nor an event

15) Which of this transaction would cause Increase in owner’s equity?
(a) Profit from a successful business operation
(b) Fresh investment made by the owner
(c) Bringing in new asset in the business

(d) All

16) Unpaid expenses are:
(a) Outstanding liabilities (b) Prepaid expenses
(c) Unaccrued expenses   (d) All of these

17) Money owed from an Outsider is a:
(a) Asset (b) Liability (c) Expense (d) Capital

18) Accounting is defined as:
(a) An art of recording, classifying and summarizing in a significant manner and in terms of money,
     transactions and events which are in part at least of a financial character, and interpreting the
      result thereof
(b) A systematic and regular record of events affecting a firm with a view to obtaining a clear
financial picture
(c) A method of ascertaining profit & Losses
(d) Nothing but Book Keeping

19) ___is the business performance of trading activities?
(a) Book Keeping (b) Transaction (c) Accounting (d) Event

20) Fixed assets are assets which are:
(a) Long term assets where benefits from it is likely to extend beyond one accounting period
(b) Assets, which a business firm gets in the beginning of the year
(c) Assets, which are financed by bank loan
(d) Immovable assets like Land, Building etc.

21) On 31stMarch ,2020 a Trader, after sale of goods, is left with the closing stock of Rs.10,000. This
closing stock is termed as:
(a) An event.                                       (b) A transaction.
(c) A transaction as well as an event. (d) Neither a transaction nor an event

22) Which of the following event is subject matter of accounting?
(a) Death of key executive of the business /Company
(b) Strike of workers
(c) Payment of Rs. 10,000 to bank in discharge of outstanding loan
(d) Marriage of the daughter of the managing Director of the Company

23) Tick the true statement –
(a) Keeping systematic recording of business transaction is not the function of financial
accounting
(b) Accounting is concerned with monetary transactions
(c) Accounting is concerned with past as well as future events
(d) Business and businessmen are one and the same from accounting point of view 

24) Which of the following transaction would cause decrease in owner’s equity?
(a) Withdrawal of cash for self-use by the proprietor
(b) Withdrawal of goods for self-use by the owner
(c) Payment of personal expenses of the proprietor
(d) All

25) On 31st Dec 2020 Ashok Ltd. purchased a Machine from Mohan Ltd. for Rs.1,75,000. This is (yearend 31st December)
(a) A transaction   (b) An event
(c) None of these (d) Both Transaction as well as Event

26) Which of the following event is not a subject matter of accounting?
(a) Quarrel between the production manager and sales manager
(b) Loss of goods worth Rs. 50,000 in fire
(c) Realization of old bad debts amounting to Rs. 10,000
(d) Payment of interest Rs. 5,000 on loan

27) Accounting is basically concerned with:
(a) Forecasting (b) Measurement (c) Management (d) None

28) Objectives of Accounting is /are:
(i) Systematic recording of transactions
(ii) Ascertainment of result of recorded transactions
(iii)Ascertainment of the financial position of the business
(iv) To know the solvency position

Which combination is correct?
(a) only (i) and (ii) (b) Only (ii) and (iii) (c) only (ii), (iii) and (iv) (d) All

29) Book keeping includes of the financial transactions and events of business:
(a) Analysis (b) Elimination
(c) Reading (d) Recording and classification

30) Financial Statements are a part of:
(a) Accounting (b) Book-keeping (c) Both (d) None

31) Which of the following is not a function of financial accounting?
(a) Keeping systematic recording (b) Meeting Legal Requirements
(c) Forecasting                               (d) Communicating Business result

32) Which of the following is a sub-field of accounting?
(a) Management Accounting (b) Cost Accounting
(c) Financial Accounting         (d) All

33) Maintaining record of various assets is –
(a) To ascertain profit or loss of the business.
(b) To ensure that there is no unauthorized use or disposal of any asset or property of the
      business.
(c) To fulfil statutory obligation.
(d) To have a professionally managed company.

34) Financial statements are used by:
(a) Creditors (b) Debtors (c) Investors (d) All

35) Which of one of the following types of information a long-term creditor would be interested to
      gather while reading annual reports of an Enterprise?
     (a) Profitability (b) Liquidity (c) Continuity (d) Solvency

36) Generally Accepted Accounting principles can be applied to the financial statements of which of
the following –
(a) Sole proprietor (b) Partnership firm (c) Corporate body (d) All

37) Refers to the general usage & practices in day-to-day social or economic life.
(a) Accounting Assumptions (b) Accounting Conventions
(c) Accounting policies          (d) Accounting principles (GAAP)

38) All the following items are classified as fundamental accounting assumptions except:
(a) Consistency (b) Business entity (c) Going concern (d) Accrual

39) Fundamental accounting assumptions are:
(a) Going concern (b) Accrual (c) Consistency (d) All

40) Which of the following is not an accounting concept?
(a) Consistency (b) Accrual
(c) Realization (d) Going concern

41) Depreciation is charged on fixed assets due to which concept?
(a) Convention of Disclosure      (b) Convention of Materiality
(c) Convention of Conservation (d) Going concern concept

42) Going concern concept assumes that:
(a) The business entity would continue to operate independent of the proprietor/owner
(b) Duration of the business is limited to the life span of the owner /proprietor
(c) Life of the business is defined by the contractual agreement
(d) Business is uncertain life

43) If Going concern concept is no longer valid, which of the following is true.
(a) All prepaid assets would be completely written off immediately
(b) The allowance for uncollectible accounts would be eliminated
(c) Intangible assets would continue to be carried at net amortised historical cost
(d) Land held as an investment would be valued at its realizable value

44) Fixed assets & current assets are categorized as per concept of:
(a) Separate entity (b) Going Concern (c) Consistency (d) Time period

45) “Advance received from customers is not taken as sale “is based on:
(a) Money measurement concept (b) Accrual concept
(c) Consistency concept                 (d) Conservative

46) ABC Co. whose accounting year begins on 1st April, has invested Rs. 50,000 with a bank on 1-10-
2020 for 1 year. The interest @ 12% p.a. will be paid on maturity on 01-10-2021. ABC Co. shows
Rs. 3,000 as interest receivable on the credit (income) side in the Profit & Loss A/c for the year 1
st April 2020 to 31st March 2021-
(a) Interest measurement (b) Accrual (c) Dual aspect (d) Cost

47) Kanika Enterprises follows the written down value method of depreciating Machinery year after
year due to:
(a) Comparability (b) Convenience (c) Consistency (d) All

48) The capital contributed by the proprietor is treated as a liability according to –
(a) Cost Concept                 (b) Business Entity Concept
(c) Going concern Concept (d) Materiality Concept

49) Which of the following is an example of business entity concept?
(a) Provision for doubtful debts
(b) Treating cash withdrawn by the proprietor for personal use or goods taken for selfconsumption as drawing
(c) Valuation of stock at cost or market prices whichever is less
(d) All

50) Select the wrong statement:
(a) Profit or loss belongs to the business only.
(b) Only business transaction rather than personal transaction of the owner/proprietor is subject
      matter of accounting.
(c) Personal property /asset of the businessmen are not recorded as business property
(d) Business entity concept is applicable to corporate bodies only.

51) If a radio seller proprietor buys a radio for his personal use from out of business funds, the
amount paid for the Radio will be treated as “drawings” of the proprietor because of the.
(a) Dual aspect Concept      (b) Going Concern Concept
(c) Business Entity Concept (d) Matching Concept

52) According to money measurement concept, currency transactions and events are recorded in
the books of accounts.
(a) In the ruling currency of the country in which transaction takes place
(b) In the ruling currency of the country in which books of accounts are prepared
(c) in the currency set by ministry of finance
(d) in the currency set by Government

53) Transactions and events not capable of being expressed in terms of money are not to be recorded
in accounting due to:
(a) Cost concept            (b) Materiality Concept
(c) Realization Concept (d) Money Measurement concept

54) Money Measurement Concept lacks on the ground that:
(a) Any transaction /event in spite of being very important cannot be recorded in the books of
     account, if it cannot be expressed in money.
(b) As per this concept, a transaction is recorded at its money value on the date of occurrence
     a subsequent change in the money value is conveniently ignored.
(c) Both (a) and (b)
(d) Neither (a) nor (b)

55) The determination of expenses for an accounting period is based on the concept of:
(a) Objectivity (b) Materiality (c) Matching (d) Periodicity

56) The accounting convention of Matching means:
(a) Profit for the period to be matched with the sales revenue
(b) Profit for the period to be matched with the Investment
(c) Expenses of one period to be matched against the expenses of another period
(d) Expenses of one period to be matched against the revenue of the same period

57) The underlying accounting principle(s) necessitating amortization of intangible asset(s) is/are:

(a) Cost concept (b) Realization Concept (c) Matching concept (d) All

58) M purchased goods for Rs. 15,00,000 and sold 4/5th of the goods amounting Rs. 18,00,000 and met
expenses amounting Rs. 2,50,000 during the year 2022. He counted net profit as Rs. 3,50,000.
Which of the accounting concept was followed by him?
(a) Entity (b) Periodicity (c) Matching (d) Conservatism

59) Assets in the Balance Sheet are shown at cost rather than their market value because of the
      accounting concept
      (a) Cost (b) Disclosure (c) Realization (d) Money Measurement

60) Ignore the market value of Long-Term Assets-
(a) Going concern (b) Realization (c) Conservation (d) Cost

61) MR. A purchased a machinery costing Rs. 1,00,000 on 1st October ,2020. transportation and
installation charges were incurred amounting Rs. 10,000 and Rs. 4,000 respectively. Dismantling
charges of the old machine in place of which new machine was purchased amounted Rs. 10,000.
Market value of the machine was estimated at Rs. 1,20,000 on 31st March 2021. while finalizing the
annual accounts, A values the machinery at Rs. 1,20,000 in his books. which of the following
concepts was violated by which of the following concept was violated by A?
(a) Cost Concept           (b) Matching Concept
(c) Realization concept  (d) Periodicity concept

62) Assets acquired are recorded in the books:
(a) At historical Cost i.e., the acquisition cost (b) At market value
(c) At net Resizable value                                (d) Either (a), (b) or (c)

63) Revenue is generally recognized when earning process is virtually complete and significant risks
and rewards have been exchanged. What principle is described herein –
(a) Consistency (b) Matching (c) Realization (d) Conservation

64) Capital invested in by the proprietor is an example of:
(a) Increase in Assets and Increase in Liability
(b) Increase in Liability and decrease in Asset
(c) Increase in Assets and decrease in Liability
(d) Increase in one Asset and decrease in another asset

65) The Accounting Equation that ‘Assets = Capital + Liability’ is based on which of the following
concept:
(a) Dual Aspect concept                (b) Going Concern Concept
(c) Money Measurement concept (d) Accounting policy

66) A purchased a car for Rs. 5,00,000 making a down payment of Rs. 1,00,000 and signing a Rs.
      4,00,000 bill payable due in 60 days. As a result of this transaction –
(a) Total assets increased by Rs. 5,00,000
(b) Total liabilities increased by Rs. 4,00,000
(c) Total assets increased by Rs. 4,00,000
(d) Total assets increased by Rs. 4,00,000 with corresponding increase in liabilities by Rs.
     4,00,000

67) When fixed assets are sold:
(a) Total assets will increase  (b) Total liabilities will increase
(c) Total assets will decrease (d) There is no change in total assets

68) Double entry Principle means:
(a) Writing twice the same entry
(b) Writing all the entries twice in the book
(c) Having debit for every credit and credit for each debit
(d) All

69) Ram starts business with Rs 90,000 and then buys goods from Shyam on credit for Rs 23,000. The
accounting equation based on Assets Capital + Liabilities will be:
(a) 1,13,000 = 90,000+23,000 (b) 1,13,000 = 1,13,000+0
(c) 90,000 = 67,000+23,000    (d) 67,000 = 90,000-23,000

70) Which financial statement represents the accounting equation: ASSETS=LIABILITIES+OWNER’S
 EQUITY
(a) Income statement (b) Cash flow statement
(c) Balance sheet        (d) Funds flow statement

71) An asset was purchased for Rs.6,60,000. Cash was paid Rs. 1,20,000 and for the balance a bill
 was drawn for 60 days. What will be the effect on Fixed Assets?

(a) Rs. 1,20,000 (b) Rs. 5,40,000 (c) Rs. 6,60,000 (d) Nil

72) A businessman purchased goods for Rs. 25,00,000 and sold 70% of the such goods during the
accounting year ended 31st March, 2020. The market value of the remaining goods was Rs. 5,00,
000. He valued the closing stock at Rs. 5,00,000 and not Rs. 7,50,000 due to –
(a) Money measurement (b) Cost (c) Conservatism (d) Periodicity

73) Stock is valued at cost or market value whichever is less, is based on:
(a) Entity concept    (b) Money Measurement concept
(c) Accrual concept (d) Conservation

74) Accounting to the Convention of Conservatism assessment of the stock of the business is done:
(a) On cost value
(b) On market value
(c) Cost value of Net Realizable value (NRV) whichever is lower
(d) Cost value of market value whichever is higher

75) Which of the following statements is correct?
(a) Conservatism concept demands that anticipated income should not be taken in to account
(b) Consistency demands that same amount of profit and loss be reported every year
(c) Disclosure concept requires that only immaterial information should be disclosed
(d) Business profit always increase cash in hand

76) When applied to the balance-sheet, the convention of conservatism results in:
(a) Understatement of assets (b) Understatement of liabilities and provisions
(c) Overstatement of capital (d) All

77) The verifiable objective evidence concept envisages the recording of all accounting transactions.
(a) Supported by verification by auditors
(b) Supported by object perception
(c) Supported by the object clause in the memorandum of association
(d) Supported by invoices, correspondence, vouchers and business documents

78) A proprietor. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking
into consideration the following amount:
(a) The cost of an asset of Rs. 25,000 has been taken as an expense
(b) Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his
books
(c) Salary of Rs. 7,000 payable in the financial year has not been taken in to account
(d) Mr. A purchased-on asset for Rs. 75,000 but its fair value on the date of purchase was Rs.
     85,000. Mr. A recorded the value of asset in his books by Rs. 85,000
      On the basis of the above facts answer the following question from the given choices. What is
      the correct amount of profit to be reported in the books?
      (a) Rs. 1,25,000 (b) Rs. 1,35,000 (c) Rs. 1,50,000 (d) Rs. 1,33,000

79) What is the Amount of profit added to the Capital?
Capital as on 1-4-20 Rs 90,000
Capital introduced Rs 25,000
Drawings made Rs 35,000
Capital as on 31-3-21 Rs 1,25,000
What is the amount of profit added to the Capital?
(a) Rs 50,000 (b) Rs 60,000 (c) Rs 75,000 (d) Rs. 45.000

80) Calculate the closing capital from following details –
1. Suresh commenced business with cash Rs. 36,000
2. Paid rent in advance Rs. 300
3. Purchased for cash Rs. 18,000 & Credit Rs. 12,0004. Sold goods for cash Rs. 18,000 costing Rs. 12,000
5. Paid salary Rs. 300 and salary outstanding Rs. 60
6. Bought motorcycle for personal use Rs. 3,000
(a) Rs. 50,700 (b) Rs. 12,060
(c) Rs. 38,640 (d) Rs. 62,760

81) Calculate the total assets from the following details –
1. X invested Rs. 9,000 in cash.
2. Purchased securities for Rs. 4,500 in cash.
3. Purchased a home for staff Members Rs. 9,000 giving Rs. 3,000 in cash and balance through
a loan.
4. Sold securities costing Rs 600 for 900.
5. Purchased an old car for 1,680 in cash.
6. Received cash as salary Rs. 2,160.
7. Paid Rs. 300 for loan and Rs. 180 for interest.
8. Paid cash for household expenses Rs. 180.
9. Received cash for dividend on securities Rs. 120.
(a) Rs. 16,920 (b) Rs. 11,220 (c) Rs. 5,700 (d) Rs. 22,620

82) Capital of business is Rs. 75,000 and Liability is Rs. 25,000 then total assets of business would be
     (a) Rs. 1,00,000 (b) Rs. 15,000 (c) Rs. 75,000 (d) Rs. 25,000

83) If assets –Rs. 36,000, Liabilities -Rs. 15,000, Capital is:
(a) Rs. 20,000     (b) Rs. 21,000

84) If Capital is –Rs. 15,000 & Liabilities are -Rs. 18,000 then the Total Assets are
(a) Rs. (-) 3,000 (b) Rs. 33,000

85) If total assets are –Rs. 42,000 & capital is Rs. 27,000, then Liabilities are
(a) Rs. 15,000 (b) Rs. 69,000

86) Opening Capital –Rs. 6,000; Profit –Rs. 3,000 Drawings Rs. 1,200; Fresh Capital Rs. 600 Closing
Capital?
(a) Rs. 4,800 (b) Rs. 8,400 (c) Rs. 10,800 (d) Rs. 6,600

87) If the capital on the last day of the year is Rs. 12,000; Loss during the year Rs. 600; drawings
during the year are Rs. 1,800 & fresh capital introduced during the year is Rs. 2,400 then what
is the amount of capital on the first day of the year.
(a) Rs. 12,000 (b) Rs. 14,400 (c) Rs. 13,200 (d) Rs. 16,800

88) If Capital on 1-1-20 =Rs. 12,000 Capital on 31-12-20=Rs. 6,000
Profit (loss) during the year = Rs. 3,000 Fresh capitals introduced =Rs. 600
Then the amount of drawings –
(a) Rs. 3,600 (b) Rs. 6,000 (c) Rs. 12,600 (d) Rs. 9,600

89) If the capital of M/s XYZ & Co. on the first & last day of the accounting year is Rs. 18,000 & Rs.
9,000 respectively. Profit/(Loss) for the year is (Rs. 4,800) & goods or cash withdrawn by
partners from business were Rs. 4,200. Then the amount of fresh capital introduced by partners
is –
(a) Nil (b) Rs. 9,000 (c) Rs. 4,800 (d) Rs. 27,000

90) Mr. X commenced chocolates business on 1st Jan 2009 with a capital of Rs. 18,000. On 31st
December 2009 her assets were worth Rs. 30,000 & liabilities of Rs. 6,000 Find out her closing
capital A/c balance at the end of the year-
(a) Rs. 24,000 (b) Rs. 6,000 (c) Rs. 30,000 (d) Rs. 12,000

91) T Hari Krishna started a business on 1.1.2021 with a capital of Rs. 10,00,000 & a loan of Rs.
5,00,000 borrowed from Balakrishna. On 31st December his assets were Rs. 30,00,000. Apart
from loan, Hari Krishna owes Rs. 2,50,000 to Balkrishna (supplier of goods) find out his capital
on 31.12.21.
(a) Rs. 22,50,000 (b) Rs. 25,00,000 (c) Rs. 30,00,000 (d) Rs. 32,50,000

92) Chang started a business on 1-1-2021 with a capital of Rs. 6,000 & a loan of Rs. 13,000 borrowed
from Yang. During the year made a profit of Rs. 3,000. His capital on 31-12-21:
(a) Rs. 9,000 (b) Rs. 22,000 (c) Rs. 19,000 (d) Rs. 12,000

93) Shyam started a business on 1-1-2021 with a capital of Rs. 60,000 & a loan of Rs. 30,000 borrowed
from Mohan. He introduced additional capital of Rs. 30,000. Drawing made by him were Rs.
18,000. He made a profit of Rs. 30,000. Total Capital on 31-12-2021 would be:
(a) Rs. 1,02,000 (b) Rs. 1,32,000 (c) Rs. 1,20,000 (d) Rs. 1,42,000

94) As per AS-1, the fact must be disclosed with reasons in the financial statements if the following
concept is not followed:
(a) Matching (b) Going Concern Assumption (c) Conservatism (d) Realization

95) On 31-12-2022 total Assets & capital were Rs. 50,000 & Rs. 35,000 respectively Find out the
amount of liabilities as on 31-12-2022:
(a) Rs. 85,000 (b) Rs. 15,000 (c) Rs. 35,000 (d) Rs. 50,000

96) On 1-1-2020 Tulsa started a business with a capital of Rs. 10,000 & loan of Rs. 5,000 borrowed
from her husband Mihir. During 2020, she earned a profit of Rs. 5,000. On 31-12-2020 the total
Assets were Rs. 50,000. Find out liabilities on 31-12-2020-
(a) Rs. 35,000 (b) Rs. 30,000 (c) Rs. 40,000 (d) Rs. 50,000

97) On 1-1-2020 Manoj started a business with a capital of Rs. 10,000 & loan of Rs. 5,000 borrowed
from Kiran. During the year he earned a profit of Rs. 5,000. Introduced further capital of Rs.
6,000 & withdrawn Rs. 3,000 personal uses. On 31-12-2020 the total Assets were Rs. 50,000. Find
out liabilities on 31-12-2020-
(a) Rs. 32,000 (b) Rs. 27,000 (c) Rs. 50,000 (d) Rs. 35,000 

 

98) Complete the missing amount for the following individuals
Particulars                               Tall                          Maal                      Baal
A/c Payable                              ?                           5,000                      2,000
A/c receivable                       15,500                     30,000                   13,000
Loans given                            2,700                      5,000                      2,500
Cash                                       5,970                       5,500                      8,000
Capital                                  49,000                       57,500                       ?
Office equipment                  30,000                          ?                          12,000
Land                                      14,000                       2,500                          10,000
A/c payable of Tall:
(a) 19,170 (b) 13,770 (c) 21,870 (d) 34,670

99) Office equipment of Maal:
(a) 19,500 (b) 29,500 (c) 22,000 (d) 25,000

100) Capital of Baal:
(a) 38,500 (b) 43,500 (c) 41,500 (d) 33,500

 

1) (c)
2) (b)
3) (b)
4) (a)
5) (d)
6) (c)
7) (a)
8) (d)
9) (b)
10) (d)
11) (b)
12) (a)

13) (d)
14) (c)
15) (d)
16) (a)
17) (a)
18) (a)
19) (b)
20) (a)
21) (a)
22) (c)
23) (b)
24) (d)
25) (d)
26) (a)
27) (b)
28) (d)
29) (d)
30) (a)
31) (b)
32) (d)
33) (b)
34) (d)

35) (d)
36) (d)
37) (b)
38) (b)
39) (d)
40) (d)
41) (d)
42) (a)
43) (d)
44) (b)
45) (b)
46) (b)
47) (c)
48) (b)
49) (b)
50) (d)
51) (c)
52) (b)
53) (d)
54) (c)
55) (c)
56) (d)

57) (c)
58) (c)
59) (a)
60) (d)
61) (a)
62) (a)
63) (c)
64) (a)
65) (a)
66) (d)
67) (d)
68) (c)
69) (a)
70) (c)
71) (c)
72) (c)
73) (d)
74) (c)
75) (a)
76) (a)
77) (d)
78) (d)

79) (d)
80) (c)
81) (a)
82) (a)
83) (b)
84) (b)
85) (a)
86) (b)
87) (a)
88) (d)
89) (a)
90) (a)
91) (a)
92) (a)
93) (a)
94) (b)
95) (b)
96) (a)
97) (a)
98) (a)
99) (a)
100) (b)

1) An expenditure is capital in nature when:
(a) The receiver of the amount is going to treat it for the purchases of fixed assets
(b) It increases the quantity of Fixed Assets
(c) It is paid as interests on loans for the business
(d) It maintains a fixed asset

2) An expenditure is called capital expenditure when:
(a) The amount is paid in lump-sum

(b) The amount is large
(c) It is intended to benefit in the current period
(d) It is intended to benefit in the future period

3) The term Capital Expenditure is generally used to signify that expenditure which:
(a) Increases quality of Fixed Asset            (b) Increases quantity of Fixed Asset
(c) Results in Improvement of Fixed Asset (d) All

4) Which of the following is a Capital Expenditure?
(a) Cost of a standby equipment            (b) Cost of purchase of goods for resale
(c) Repair of a second-hand equipment (d) Annual maintenance of computer systems

5) Capital expenditures are recorded in the_______.
(a) Balance Sheet (b) Profit & Loss A/c
(c) Trading A/c     (d) Manufacturing A/c

6) Money spent Rs. 20,000 as traveling expenses of directors on trips abroad for purchase of
Capital Assets is:
(a) Capital expenditures                  (b) Revenue expenditures
(c) Deferred revenue expenditures (d) None

7) Amount spent, for construction of temporary huts, necessary for construction of the cinema
house & demolished when the cinema house was ready is a:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

8) Rs. 25,000 spent on structural alterations to existing asset whereby revenue earning capacity is
increased is:
(a) Capital Expenditure    (b) Deferred Revenue Expenditure
(c) Revenue Expenditure (d) None

9) Rs.1500 spent on repairs before using a second-hand car purchased recently is a _______.
(a) Capital Expenditure                   (b) Revenue Expenditure
(c) Deferred Revenue Expenditure (d) None

10) Rings & pistons of an engine were changed at a cost of Rs.5000 to increase fuel efficiency is:
(a) Capital Expenditure                   (b) Revenue Expenditure
(c) Deferred Revenue Expenditure (d) Name of the above

11) The expired portion of capital expenditure is shown in the financial statements as:
(a) As an income    (b) As an expense   (c) As an asset     (d) As a liability

12) Insurance claim received on account of loss of machinery by fire is:
(a) Capital Receipt          (b) Revenue Receipt
(c) Capital Expenditures (d) Revenue Expenditures.

13) 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 fee
(c) Gratuities aid to employees on their retirement
(d) Royalty paid in lump sum for the purchases of rights to manufacture & sell patent medicines

14) Which of the following is NOT a capital expenditure?
(a) Legal expenses incurred in raising a debenture loan
(b) Compensation paid to a dismissed employee
(c) Brokerage paid to the broker at the time of purchase of land
(d) Expenses for pulling down an old structure

15) Expenditure incurred in preparing a project report:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

16) Premium paid in connection with acquisition of leasehold premises:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

17) Invested Rs.2 Lakhs on the purchase of 2,000 equity shares of Rs. 100 each of a subsidiary
company:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

18) Office rent in advance for 3 years (Similar to deposit):
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

19) Rs. 50,000 invested in a government bond:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

20) Cost of Goodwill:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

21) Spent towards additions to machinery in order to double the production, Rs. 40,000:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

22) Rs. 15,000 customs duty was paid on import of a machinery for modernization of factory in the
current year & Rs. 5,000 paid as import duty on raw materials:
(a) Revenue Expenditure, Revenue Expenditure
(b) Capital Expenditure, Revenue Expenditure
(c) Capital Expenditure, Capital Expenditure
(d) Revenue Expenditure, Capital Expenditure

23) Demolition of old building, book value Rs. 10,000 & constructing new building at its site for
Rs.1,50,000:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

24) A sum of Rs. 10,000 spent for alteration of existing plant incorporating thereby new devices which
could affect substantial reduction in power consumption:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

25) A petrol engine of a passenger bus was replaced by a diesel engine:
(a) Revenue Expenditure               (b) Capital Expenditure
(c) Deferred Revenue Expenditure (c) None

26) Installed freezer container in place of ordinary container in a truck to enable transport of milk:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

27) Payment for acquiring rights for a sole-selling agency:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

28) Payment made to partners of another firm for acquiring the business of that firm:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

29) Purchased 4% Government Securities of Rs. 40,000 at Rs. 39,000:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

30) Received from Jairam & Co., a bill for Rs. 15,000 for erection of additional Factory Sheds:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

31) Inauguration expenses of Rs.25 Lakhs for opening of new manufacturing unit in existing business:
(a) Revenue Expenditure               (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

32) Materials purchased but used for the erection of new office block for the firm’s use:
(a) Revenue Expenditure               (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

33) A machine with a written down value of Rs. 10,000 has been sold for Rs. 13,000. The amount
realized is a:
(a) Capital receipt & profit involved should be transferred to capital reserve
(b) Revenue receipt
(c) Capital receipt & profit involved should be transferred to General reserve
(d) Capital receipt & profit involved should be transferred to profit & loss A/c

34) Amount received from landlord as compensation for surrender of tenancy rights to shop of the
concern:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) Capital Receipt

35) Gift received from father of proprietor deposited in bank account of concern:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) Capital receipt

36) An expenditure is revenue in nature, when:
(a) It benefits the current period        (b) It benefits the future period
(c) It belongs to the previous period (d) None

37) Which of the following is revenue expenditure?
(a) Freight paid on purchase of Plant & Machinery
(b) Legal expenses paid to acquire a property
(c) Expenses to reduce working capital requirement
(d) Annual White wash of the factory building

38) Cost of Goods purchased for resale is an example of:
(a) Capital Expenditure                  (b) Revenue Expenditure
(c) Deferred Revenue Expenditure (d) None

39) Amount of Rs. 10,000 spent as lawyers’ fee to defend a suit claiming the firm’s factory site is:
(a) Capital Expenditures                  (b) Revenue Expenditures
(c) Deferred Revenue Expenditures (d) None

40) Rs. 10,000 spent on the replacement of worn-out parts of an electronic machinery is:
(a) Capital Expenditure                  (b) Revenue Expenditure
(c) Deferred Revenue Expenditure (d) Capital Loss

41) Which one of the following will be treated as revenue expenditure?
(a) Cost incurred for a new exit in a cinema hall as required under the local bodies bye laws
(b) Interest paid on loan during construction of factory
(c) Cost of pulling down old building & also payment made to the architect for plan of a new
building
(d) Payment to Contractor for construction of building

42) Expenses incurred in manufacturing products is a:
(a) Revenue expenses (b) Deferred revenue expenses
(c) Capital expenses    (d) Either (b) or (c)

43) Expenditure to train employees for better running of machinery:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

44) Expenditure incurred for repairing cinema screen:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

45) All expenditures & receipts of revenue nature go to:
(a) Trading A/c            (b) Profit & Loss A/c
(c) Balance Sheet        (d) Either to (a) or (b)

46) Amount spent on uniform of workers:
(a) Revenue expenditure                (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

47) Import duty on raw material purchased:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

48) Fees paid for renewal of licence for factory:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

49) Goods worth Rs. 27,000 distributed free amongst the workers on Diwali Pooja day:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

50) Spent Rs. 39,600 on research, but subsequently project was abandoned by the management:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

51) If repair cost is Rs. 25,000, whitewash expenses are Rs. 5,000, cost of extension of building is
      Rs.2,50,000 & cost of improvement in electrical wiring system is Rs. 19,000; the amount to be
     expensed is:
      (a) Rs.2,99,000 (b) Rs.44,000 (c) Rs.30,000 (d) Rs.49,000

52) Taxes paid:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

53) Rs. 5,000 spent on maintenance of plant & machinery is:
(a) Capital expenditure.                (b) Revenue expenditure.
(c) Deferred capital expenditure. (d) None

54) Purchase of machinery for sale:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

55) Stock of Rs. 25,000 was destroyed by fire of which Rs. 15,000 was received from Insurance
Company:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

56) Compensation paid to a retrenched employee for loss of employment:
(a) Revenue expenditure                (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

57) Rs. 2,000 was paid in connection with carriage on goods purchased:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

58) Wages paid to workers for converting raw materials into finished products:
(a) Revenue expenditure                (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

59) Rs. 10,000 paid for removal of Stock to a new site:
(a) Revenue expenditure                (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

60) Visit of a safes manager abroad, total cost Rs. 16,000 for promoting export sales; visit was quite
successful:
(a) Revenue expenditure                (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

61) Imported goods worth Rs. 25,000 confiscated by custom authority for non-disclosure of material
facts:
(a) Revenue expenditure                (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

62) Expenses on celebration of annual day/staff picnic/sports day:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

63) Gratuity & pension paid to employees after retirement:
(a) Revenue expenditure                (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

64) Cost of rain coats & umbrellas for employees who are given the same every 2 years:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

65) Paid Audit Fees Rs. 10,000:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

66) Purchased a Drill Machine for Rs. 5,000 with useful life of 1 year is:
(a) Revenue expenditure                (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

67) Received from Joy Electricals Co., a bill for Rs. 6,000 for cost of replacing old electrical
installation in Factory:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

68) Labour welfare expenses:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

69) Employees State Insurance premium Rs.600 paid:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

70) Cost of hiring a Motor Van:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

71) Payment for heavy inaugural expenses:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

72) Bad debts recovered during the year is a:
(a) Capital Expenditures     (b) Revenue Expenditures
(c) Capital Receipt or Gain (d) Revenue Receipt

73) Claim amount received from Insurance company for loss of profit under Loss of Profit Policy when
business was suspended due to fire in the premises:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) Revenue Receipt

74) Interest received on loans given:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) Revenue receipt

75) Amount received from a Sundry Debtor:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) Revenue Receipt

76) Commission received on Sales:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) Revenue receipt

77) Which is deferred revenue expenditure?
(a) High legal expenses incurred by the company to defend legal suit of Rs.10 Lakhs
(b) Sales promotion expenses amounting to Rs. 50,000
(c) Rs. 10,000 spent on dismantling of Plant & Machinery
(d) All

78) A sum of Rs. 50,000 was spent by factory, overhauling its existing plant & machinery. It has
enhanced its working life by 5 years. The aforesaid expenditure is:
(a) Revenue Expenditure (b) Deferred revenue Expenditure
(c) Capital Expenditure    (d) Partly Capital & Partly Revenue Expenditure

79) Preliminary expenses are an example of:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) All

80) Discount allowed on issue of shares is an example of:
(a) Capital Expenditure                   (b) Revenue Expenditure
(c) Deferred Revenue Expenditure. (d) General Expenses

81) Amount spent on an advertisement campaign, the benefit of which is likely to last for three years
is a:
(a) Capital Expenditure                  (b) Revenue Expenditure
(c) Deferred Revenue Expenditure (d) Contingent Expenditure

82) Legal expenses in connection with issue of capital:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

83) Brokerage paid in connection with issue of debentures repayable after 6 years:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

84) Contribution to co-operative society managing the industrial estate in which factory is located,
for construction of internal roads in the estate:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

85) Repainting of building done every 3 years:
(a) Revenue Expenditure               (b) Capital Expenditure
(c) Deferred revenue Expenditure (d) None

86) Paid fees Rs. 6,000 to the Association for 3 Years:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

87) Cost of carrying out experiment to modify a product:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

88) Compensation of Rs.2.50 Crores paid to workers, who opted for voluntary retirement:
(a) Revenue Expenditure                (b) Capital Expenditure
(c) Deferred Revenue Expenditure (d) None

89) Which of the following is capital profit?
(a) Premium paid on redemption of debentures
(b) Profit on sale of shares held as stock in trade
(c) Premium received on issue of shares
(d) Dividend received on shares held as permanent investment

90) Money embezzled by an employee of a trader is:
(a) Capital Expenditure (b) Revenue Expenditure
(c) Capital Loss              (d) Revenue Loss

91) One time entrance fee of Rs.20,000 received by a Club is a:
(a) Capital Receipt        (b) Revenue Receipt
(c) Capital Expenditure (d) Revenue Expenditure

92) Rs. 20,000 received from an issue of further shares, the expenses of issue being Rs. 2,500.
(a) Capital Expenditure Rs. 20,000 & Revenue Expenditure Rs. 2,500
(b) Capital Receipt Rs. 20,000 & Deferred Revenue Expenditure Rs.2,500

93) Rs. 75,000 being cost of land purchased for agricultural farm & Rs.450 paid for land & revenue.
(a) Revenue Expenditure Rs.450 & Capita! Expenditure Rs. 75,000
(b) Capital Loss Rs. 75,000 & Deferred Revenue Expenditure Rs.450

94) Mr. Alok runs a shop of cosmetics. During the year, he incurred Rs. 23,000 for advertisement in
newspapers & Rs. 50,000 for neon-sign board at airport. How would you treat such expenses?
(a) Capital Expenditure Rs. 50,000 & Revenue Expenditure Rs. 23,000
(b) Revenue Loss Rs.50,000 & Capital Loss Rs.23,000

95) A Second Hand Car is purchased for Rs. 10,000, Rs. 1,000 is spent on repairs, Rs.500 incurred to
get the car registered in owner’s name & Rs. 1,200 paid as dealer’s commission. Amount debited
to car account will be:
(a) Rs.10,000 (b) Rs.10,500 (c) Rs.11,500 (d) Rs.12,700

96) A Motor Car which was purchased for Rs. 20,000 had its book value Rs. 12,000 was sold for Rs.
25,000 the capital profits will be:
(a) Rs.5,000 (b) Rs.8,000 (c) Rs.13,000 (d) Rs.25,000

97) If repair cost is Rs. 20,000, whitewash expenses are Rs. 10,000, cost of extension of building is
Rs.2,50,000 & cost of improvement in electrical wiring system is Rs. 20,000 the amount of revenue
expenses will be:
(a) Rs.2,70,000 (b) Rs.3,00,000 (c) Rs.30,000 (d) Rs.50,000

98) The cash price of a machine is Rs.1,20,000 & its hire purchased price is Rs.1,50,000 to be paid in
five equal yearly instalments. If a company purchases the machine on hire purchase basis, the
amount of capital expenditure will be:
(a) Rs.1,20,000 (b) Rs.1,35,000 (c) Rs.1,50,000 (d) Rs.1,60,000

99) Rs. 99,500 was spent for dismantling, removing & reinstalling of Plant, Machinery & Fixtures:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

100) The removal of stock from the old factory to the new at a cost Rs. 1,000:
(a) Revenue expenditure               (b) Capital expenditure
(c) Deferred revenue expenditure (d) None

1) (b)
2) (d)
3) (d)
4) (a)
5) (a)
6) (a)
7) (b)
8) (a)
9) (a)
10) (a)
11) (b)
12) (a)
13) (d)
14) (b)
15) (b)
16) (b)
17) (b)
18) (d)
19) (b)
20) (b)
21) (b)
22) (b)
23) (b)

25) (b)
26) (b)
27) (b)
28) (b)
29) (b)
30) (b)
31) (b)
32) (b)
33) (d)
34) (d)
35) (d)
36) (a)
37) (d)
38) (b)
39) (b)
40) (b)
41) (a)
42) (a)
43) (a)
44) (a)
45) (d)
46) (a)
47) (a)
48) (a)

49) (a)
50) (a)
51) (c)
52) (a)
53) (b)
54) (a)
55) (a)
56) (a)
57) (a)
58) (a)
59) (a)
60) (a)
61) (a)
62) (a)
63) (a)
64) (a)
65) (a)
66) (a)
67) (a)
68) (a)
69) (a)
70) (a)
71) (a)
72) (d)

73) (d)
74) (d)
75) (d)
76) (d)
77) (a)
78) (b)
79) (c)
80) (c)
81) (c)
82) (c)
83) (c)
84) (c)
85) (c)
86) (c)
87) (c)
88) (c)
89) (c)
90) (d)
91) (a)
92) (b)
93) (a)
94) (a)
95) (d)
96) (a)

97) (c)

98) (a)

99) (b)

100) (a)

1) Recording of a transaction in a journal is called –
(a) Posting (b) Entry (c) Transfer (d) Ruling

2) What is the order in which the accounting transactions & events are recorded in the books?
(a) Journal, Subsidiary books, Ledger, Balance Sheet, Profit & Loss Account (P&L Account)
(b) Ledger, Journal, Ledger, Balance Sheet, P&L A/c
(c) Journal, Ledger, Profit & Loss A/c, Balance Sheet
(d) Profit & Loss A/c, Ledger, Balance Sheet, Journal

3) Personal Accounts are related to –
(a) Assets & Liabilities      (b) Expenses, Losses & Incomes
(c) Debtors, Creditors etc (d) All

4) Real accounts are related to –
(a) Assets                           (b) Expenses, losses & incomes
(c) Debtors, Creditors etc. (d) All

5) Nominal Accounts are related to –
(a) Assets & Liabilities       (b) Expenses, losses & incomes, gains
(c) Debtors, Creditors etc. (d) All

6) Narrations are given at the end of –
(a) Final Accounts            (b) Trial Balance
(c) Each Ledger Account (d) Each Journal Entry

7) Which of the following statement is true-
(a) Building account is a nominal account
(b) Outstanding rent a/c is a non-personal account
(c) Every debit has a corresponding credit
(d) Incomes are debited

8) Which of the account is debited –
(a) Income received in advance (b) Bank loan
(c) Prepaid insurance premium (d) Reserve for doubtful debts.

9) Income earned & collected results in –
(a) Increase of assets & increase in Capital
(b) Decrease in assets & increase in Capital
(c) Increase in assets & decrease in Liability
(d) Decrease in assets & increase in Liability

10) Payment received from debtor –
(a) Decreases the Total Assets                     (b) Increases the Total Assets
(c) Results in no change in the total assets (d) Increase the total liabilities

11) Debit means –
(a) An increase in Asset (b) An increase in Liability
(c) (a) decrease in Asset (d) An increase in Proprietor’s Equity.

12) Credit means –
(a) An increase in Asset    (b) An increase in Liability
(c) A decrease in Liability (d) A decrease in Proprietor’s Equity.

13) Which of the following is a credit transaction?
(a) Sold goods                                     (b) Sold goods for cash
(c) Sod goods to a customer for cash (d) Sold goods to a customer

14) Purchase of furniture for cash would –
(a) Increase fixed assets & reduce current assets
(b) Reduce fixed assets & increase current assets
(c) Increase total assets

 (d) Both (a) & (b)

15) Which of the following is a Fictitious Asset?
(a) Goodwill (b) Depreciation Reserve
(c) Preliminary expenses A/c (d) Claims receivable

16) Basic rule of book-keeping “Debit what comes in & Credit what gods out” is applicable to –
(a) Personal Account  (b) Nominal Account  (c) Real account     (d) None

17) Basic rule of book-keeping “Debit all expenses & Credit all Incomes / Gains” applicable to –
(a) Real account (b) Nominal account (c) Personal (d) None

18) Basic rule of book-keeping “Debit the Receiver & Credit the Giver” applicable to-
(a) Personal Account (b) Real Account (c) Nominal Account (d) None

19) Payment of salary is recorded by –
(a) Debiting salary a/c crediting cash a/c
(b) Debiting cash a/c crediting salary a/c
(c) Debiting employee a/c crediting cash a/c
(d) Debiting employee a/c crediting salary a/c

20) Purchase of Goods on credit from (a) is recorded as –
(a) Debit purchases A/c; Credit cash A/c (b) Debit (a) A/c; Credit purchase A/c
(c) Debit purchases A/c; Credit (a)’s A/c (d) Debit stock A/c; Credit purchases A/c

21) Goods returned by 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

22) On purchase of a machine, Rs.200 was paid to workers as wages for installing the machine-
(a)Wages A/c be debited        (b) Installation charges A/c debited
(c) Machinery A/c be debited (d) Cash A/c debited

23) The cash discount allowed to a debtor should be credited to –
(a) Discount Account (b) Customer’s Account (c) Sales Account (d) None

24) The rent paid to landlord is credited to –
(a) Landlord’s account (b) Rent account (c) Cash account (d) None

25) In case of a debt becoming bad, the amount should be credited to –
(a) Debtors account (b) Bad debts account
(c) Cash account (d) Sales account

26) Which account is not a Fixed Asset?
(a) Office Furniture & Equipment (b) Freehold land & buildings
(c) Stock of Materials (d) Plant & Machinery

27) Debts written off as bad, if recovered subsequently are –
(a) Credited to Bad Debts Recovered Account (b) Credited to Debtors Account
(c) Debited to profit & Loss Account                (d) None

28) (a) withdrawal of cash from business by the proprietor of the firm should be credited to –
(a) Capital account    (b) Cash account
(c) Drawing account (d) Proprietor’s account

29) Consider the following adjusting entries –
Which of the adjusting entries given is / are correct?
(a) 1 Only (b) 2 & 3 (c) 1 & 4 (d) 1, 2, 3, & 4
1. Outstanding expenses                     Expense A/c Dr.
                                                             To O/s Expense A/c
2. Prepaid expenses                             Expense A/c Dr.
                                                             To Prepaid Expenses A/c
3. Income earned & not received         Income A/c Dr.
                                                              To O/s Income A/c
4. Income received in advance             Income A/c Dr.
                                                              To Pre-Earned Income A/c

30) We will debit Mr. A’s account when
(a) A gets goods, services or assets on credit from us
(b) We get money from Mr. A on loan
(c) We get goods, services or assets on credit from Mr. A
(d) We get money from Mr. A “on account”

31) Journal entry for Rs.6,000 stolen from the safe of the firm will be
(a) Dr. P & L A/c & Cr. Cash embezzlement a/c Rs. 6,000.
(b) Dr. Cash embezzlement a/c & Cr. Cash a/c Rs. 6,000.
(c) Dr. Cash a/c & Cr. P& L a/c Rs. 6,000
(d) None

32) Goods purchased from Rekha on credit. In this transaction the names of two accounts affected
are –
(a) One Personal & one Nominal (b) Both Personal
(c) Both Real accounts                  (d) One Personal & one Real

33) Kiran used the amount in business by selling his old personal car to Surya. The entry of this
transaction in Journal will be –
(a) Cash a/c Dr. To Car a/c (b) Car a/c Dr. To Capital a/c
(c) Car a/c Dr. To Sonu a/c (d) Cash a/c Dr. To Capital a/c

34) The owner of the business took goods worth Rs.15,600 for his personal use. In this transaction
which account will be credited –
(a) Sales a/c         (b) Drawings a/c
(c) Purchases a/c (d) Capital a/c

35) Interest earned but not received, adjustment entry is –
(a) Accrued Interest Dr. To Customer (b) Accrued interest Dr. To Interest
(c) Cash a/c Dr. To Interest                 (d) None

36) Goods worth Rs.1,600 sold to Neeraj, its recording in Journal would be-
(a) Debit the Sales Account, credit Neeraj Account
(b) Credit the Sales Account, debit the cash Account
(c) Debit Neeraj Account, credit the sales Account
(d) Debit Sales Account & Neeraj Account

37) Stock worth Rs.10,000 (cost price Rs.7,500) taken by Mohan-Office Clerk. Amount to be deducted
from his salary in the subsequent month. Journal entry will be –
(a) Dr Salary & Cr Purchases A/c Rs.10,000 (b) Dr Mohan & Cr Sales Rs.10,000
(c) Dr Salary & Cr Purchases Rs.7,500          (d) Dr Salary & Cr Sales Rs.10,000

38) Insured goods were lost due to theft & the Insurance Company accepted the claim. In this
transaction –
(a) Loss Dr. to Stock A/c (b) Loss Dr. to Insurance Claim Receivable A/c
(c) Loss Dr. to Cash A/c   (d) Loss Dr. to Trading A/c

39) Ganesh’s salary is Rs. 10,000 per month. During a month, he withdrew goods worth Rs. 2,500 for
personal use & also got salary Rs. 9,500 in cash. The excess payment of Rs. 2,000 will be debited
to –
(a) Sales a/c (b) Goods a/c (c) Salary a/c (d) Salary in advance a/c

40) Income-tax of the sole trader paid is shown –
(a) Debited to profit & Loss A/c (b) Debited to Trading A/c
(c) Debited to his capital A/c      (d) None

41) Which of the following A/c has a debit balance?
(a) Debtors A/c (b) Sales A/c (c) Creditors A/c (d) Bank overdraft A/c

42) Which of the following A/c has a credit balance?
(a) Purchase A/c (b) Sales A/c (c) Goodwill A/c (d) Cash in hand A/c

43) Debit balance in a personal A/c means –
(a) Amount due from him (b) Amount due to him
(c) Discount allowed to him (d) Goods sold to him

44) Expenses A/c will always have –
(a) Debit balance (b) Credit balance
(c) Nil balance (d) Debit or credit balance

45) Journal entry for wages paid Rs.2,000 for installation of machinery will be _____.

(a) Dr. Wages A/c & Cr. Cash A/c Rs.2,000
(b) Dr. Machinery A/c & Cr, Cash A/c Rs.2,000
(c) Dr. Machinery repairs A/c & Cr. Cash A/c Rs.2,000
(d) None

46) Income tax liability of the proprietor Rs.1,200 was paid out of petty cash. Journal entry will be —
(a) Dr. drawings & Cr. Cash A/c Rs.1,200 (b) Dr. drawings & Cr. Petty Cash Rs.1,200
(c) Dr Income tax & Cr Cash A/c Rs.1,200 (d) None

47) B started business by bringing in cash Rs. 3,000, goods worth Rs. 4,000 & vehicle worth Rs 5,000
(a) Assets A/c                            Dr.                12,000
To B’s Capital A/c                                                               12,000
(b) Cash A/c                             Dr.                 3,000
Stock A/c                                 Dr                . 4,000
Vehicle A/c                              Dr.                 5,000
To B’s Capital A/c                                                               12,000
(c) B’ Capital A/c                     Dr.                  12,000
To Cash A/c                                                                         3,000
To Purchase A/c                                                                  4,000
To Vehicle A/c                                                                     5,000
(d) None of the above

48) B purchased goods worth Rs. 8,000 from X & paid him Rs. 2,000 –
(a) Cash A/c                           Dr.                     2,000
X’ s A/c                                  Dr.                     6,000
To Goods A/c                                                                       8,000
(b) Purchase A/c                   Dr.                      8,000
To Cash A/c                                                                          6,000
To X’s A/c                                                                              2,000
(c) Purchase A/c                   Dr.                     8,000
To Cash A/c                                                                          6,000
To Discount A/c                                                                    2,000
(d) Purchase A/c                  Dr.                     8,000
To Cash A/c                                                                          2,900
To X’s A/c                                                                             6,000

49) B sold goods worth Rs. 3,000 to A who paid him Rs. 1,000 immediately –
(a) Cash A/c                        Dr.                     1,000
A’s A/c                                Dr.                     2,000
To B’s A/c                                                                                3,000
(b) Cash A/c                       Dr.                      3,000
To Sales A/c                                                                            3,000
(c) Sales A/c                       Dr.                      3,000
To A’s A/c                                                                                2,000
To Cash A/c                                                                             1,000
(d) Cash A/c                       Dr.                       1,000
A’s A/c                               Dr.                        2,000
To Sales A/c                                                                              3,000

50) B took goods worth Rs. 1,000 & cash Rs. 2,500 for his own use-
(a) B’s Drawings A/c          Dr.                         3,500
    To Purchases A/c                                                                   1,000
    To Cash A/c                                                                            2,500
(b) B’s Drawings A/c          Dr.                         3,500
To Sales A/c                                                                             1,000
To Cash A/c                                                                             2,500
(c) B’s Capital A/c               Dr.                       3,500
To Goods Taken by B A/c                                                          1,000
To B’s Drawings A/c                                                                   2,500
(d) Goods Taken by B A/c Dr.                         1,000
Cash A/c                           Dr.                                                     2,500
To B’s Drawings A/c                                                                   3,500

1) (b)
2) (c)
3) (c)
4) (a)
5) (b)
6) (d)
7) (c)
8) (c)
9) (a)
10) (c)
11) (a)
12) (b)
13) (d)
14) (a)
15) (c)
16) (c)
17) (b)
18) (a)
19) (a)
20) (c)
21) (c)
22) (c)
23) (b)
24) (c)
25) (a)
26) (c)
27) (a)
28) (a)
29) (c)
30) (a)
31) (b)
32) (d)
33) (d)
34) (c)
35) (b)
36) (c)
37) (c)
38) (b)
39) (d)
40) (c)
41) (a)
42) (b)
43) (a)
44) (a)
45) (b)
46) (b)
47) (b)
48) (d)
49) (d)
50) (a)

1) Purchases book is used to record –
(a) All purchases of Goods            (b) All Credit Purchases
(c) All Credit purchases of Goods (d) All Credit purchases of assets other than Goods

2) Goods bought from Mr. P, the payment for which is due after a month –
(a) Cash Book  (b) Purchase Book  (c) Sales Book  (d) Purchase Return Book

3) A periodic total of the Purchases Book is –
(a) Posted to the debit of the Purchases Account
(b) Posted to the debit of the Sales Account
(c) Posted to the credit of the Purchases Account
(d) Posted to the credit of Sales A/c

4) Sales Book is used to record –
(a) All sales of goods                                       (b) All credit sales
(c) All credit sales of assets other than goods (d) All credit sales of goods

5) Transactions recorded in sales book are posted to –
(a) On the debit side of customer’s accounts  (b) On the credit side of sales returns A/c
(c) Nowhere                                                     (d) Either (a) or (b).

6) Purchases Returns Book is used to record –
(a) Returns of goods purchased for cash
(b) Returns of fixed assets purchased on credit
(c) Returns of good purchased on credit
(d) Purchase of goods.

7) Total of Purchases Returns Book is posted to the ledger –
(a) On the credit sale of purchases
(b) On the credit side of the Purchases Returns A/c
(c) On the debit side of purchases returns A/c
(d) Either (b) or (c)

8) A debit note issued to a creditor for goods returned by us is to be recorded in the –
(a) Bills Receivable Book                   (b) Purchases Book
(c) Journal proper (General Journal) (d) Purchases Return Book

9) When the goods are returned to a supplier –
(a) An invoice is sent to him     (b) A debit note is sent to him
(c) A credit note is sent to him (d) A receipt is sent to him

10) Goods Outward Journal is meant for recording all returns of goods –
(a) Sold on credit (b) Purchased on credit (c) Purchased on cash (d) None

11) Sales returns book is used to record –
(a) Returns of fixed assets sold on credit (b) Returns of goods sold for cash
(c) Returns of good sold on credit           (d) Sales of goods.

12) Total Sales Returns Book is posted to the ledger –
(a) On the debit side of sales return A/c (b) On the credit side of sales returns A/c
(c) On the debit of sales A/c                    (d) Nowhere.

13) When a customer returns the goods –
(a) An invoice is sent to him     (b) A debit note is sent to him
(c) A credit note is sent to him (d) A receipt is sent to him.

14) Total of Bills Receivable Book is posted to the ledger –
(a) On the Credit side of Bills Payable A/c (b) On the Debit side of Bills Receivable A/c
(c) Nowhere                                               (d) Either (a) or (b)

15) Total of Bills Payable Book posted to the ledger –
(a) On the debit side of Bills Payable A/c (b) On the credit side of Bills Payable A/c
(c) Nowhere                                              (d) Either (a) or (b),

16) Closing entries are recorded in –
(a) Cash Book    (b) Ledger          (c) Journal proper      (d) Balance sheet

17) The following is entered in the Journal Proper –
(a) Purchase of an asset for cash (b) Purchase of an asset on credit
(c) Purchase of goods for cash    (d) Purchase of goods on credit

18) Rectifying the error of a credit purchase of goods recorded as credit sale discovered two
months later, the entry with be in –
(a) Journal Proper (General Journal) (b) Sales Book
(c) Cash Book                                    (d) Purchase Book

19) A bills receivable received from a debtor is dishonoured on due date will be recorded in –
(a) Purchases Return Book  (b) Bills receivable Book
(c) Purchases Book              (d) Journal Proper (General Journal)

20) Journal proper is used to record –
(a) All cash purchases of assets other than goods
(b) All cash sales of assets purchased on credit
(c) Returns of fixed assets purchased on credit
(d) Recovery of amount already written off as bad debts

21) Goods received from the manufacturer for distribution among the customers as free samples –
(a) Expense Book (b) Purchase Book (c) Cash Book (d) Journal Proper

22) Credit purchase of stationery worth Rs. 5,000 by a stationery dealer –
(a) Purchase Book (b) Sales Book
(c) Cash Book        (d) Journal Proper (General Journal)

23) A bills receivable of Rs. 1,000, which was received from a debtor in full settlement for a claim
of Rs. 1,000, is dishonoured –
(a) Purchases Return Book (b) Bills Receivable Book
(c) Purchases Book             (d) Journal Proper (General Journal)

24) Credit purchase of Goods –
(a) Cash Memo, Purchase Book         (b) Purchase Invoice, Cash Book
(c) Expense Voucher, Purchase Book (d) Purchase Invoice & Purchase Book

25) Return of goods purchased –
(a) Return Note, Purchase Book
(b) Debit Note, Purchase Returns Book
(c) Debit Note, Purchase Book
(d) Credit Note, Purchase Book

26) Credit sale of Goods –
(a) Sale Invoice, Cash Memo (b) Credit Note, Sales Book
(c) Sale Invoice & Sales Book (d) Sale Invoice, Journal Proper

27) Return of goods sold –
(a) Credit Note (CN.) & Sales Returns Book (b) Credit Note, Sales Book
(c) Debit Note, Journal Proper (d) Debit Note, Sales Return Book

28) Bad Debt Written Off-
(a) Journal voucher, Sale Book (b) Journal Voucher & Journal Proper
(c) Debit Note, Journal Proper (d) Credit Note, Journal Proper

29) Credit Sale is debited to the account of –
(a) Customer (b) Supplier (c) Sales (d) None

30) Credit Purchase is credited to the account of –
(a) Purchase (b) Supplier (c) Customer (d) None

31) Debit Note is sent by the –
(a) Seller   (b) Buyer      (c) Banker (d) None

32) Invoice is sent by the –
(a) Seller   (b) Buyer     (c) Lender  (d) None

33) Parties’ Accounts are debited for ____ sale of goods.
(a) Cash          (b) Credit          (c) Retail            (d) None

34) Credit Sales are recorded in Sales Book after_____ trade discount from catalogue price –
(a) Adding     (b) Deducting   (c) Ignoring        (d) None

35) Excise duty is _____ while ascertaining the price to be recorded in Day Book –
(a) Added      (b) Deducted    (c) Ignored         (d) None

36) Credit Note is sent by –
(a) Buyer       (b) Seller            (c) Banker           (d) None

37) Loss of Goods due to theft is recorded in –
(a) Journal Proper               (b) Cash Book
(c) Purchase Return Books (d) Purchase Book

38) Due to damage of goods Ravi was sent credit note of Rs.200. It will be recorded in-
(a) Journal proper      (b) Sales Books
(c) Sales Return Book (d) Purchases Return Book

39) The recording of the transaction related to sending of debit note to the Seller by the Purchaser
is done in –
(a) Purchases Book     (b) Sales Book
(c) Sales Return Book (d) Purchase Return Book

40) Businessman draws goods from business for domestic purpose. The entry of this transaction will
be made in –
(a) Purchases Books    (b) Cash Book      (c) Sales Book     (d) Journal Proper

41) Out of the following which transaction will be written in the Sales Account of Kamal Book Dealers?
(a) Books destroyed due to Fire
(b) One typewriter worth Rs.800 sold to Modem Store on credit
(c) Books worth Rs.200 donated to school
(d) Stationery & books worth Rs.400 sold to Jaipur Stationery Mart

42) Which one will be written in the Purchases Book of Vamsi Cloth Store from the following –
(a) Cloth worth Rs.500 purchased from Jain Bro.
(b) Cloth worth Rs.600 purchased from Gupta for cash
(c) Scissors worth Rs.100 purchased from Aligarh
(d) Table worth Rs.400 purchased from Bharat

43) From the following details for Jan, 2011 calculate amount to be posted to Purchase A/c in Mohit’s
books –
1   Purchased goods of Rs.5,000 from Devan
5   Purchased goods of Rs.5,000 from Dhiren @ 10% trade discount
10 Purchased goods of Rs.8,000 for cash
15 Placed a purchase order on Hiten for Rs.9,000
25 Purchased machinery for factory from Roman for Rs.10,000
26 Purchased goods of Rs, 10,000 from Nimish on credit @ 10% trade discount
27 Sold goods to Rajesh for Rs.10,000
31 Purchased goods for Rs.12,000 @ 10% trade discount from Mitesh
(a) Rs.29,300      (b) Rs.47,300        (c) Rs.30,300      (d) Rs.50,000

44) Calculate Amount posted to Sales A/c from Sonia’s Sales Book & amount posted to Sales return
A/c from her Sales Return Book [Select the Right Combination] from the following details for
January 2009 & post the entries into her Ledger
1 Sold goods of Rs.5,000 to Monica
2 Monica returned goods of Rs. 1,000
5 Sold goods of Rs.5,000 to Radhika @ 10 % trade discount
7 Radhika returned goods having list price of R. 1,000
16 Sold goods of Rs.10,000 to Namita on credit @ 10% trade discount
26 Namita returned half the goods
31 Sold goods for Rs. 12,000 @ 5% trade discount to Ruchika

(a) Rs.15,900, Rs.6,000        (b) Rs.29,900 &Rs.6,400
(c) Rs. 16,500, Rs.7,400       (d) Rs.30,900, Rs.10,000

45) Goods worth Rs.5,000 sold to Varsha @ 10% trade discount & 5% sales tax was charged extra.
By this transaction the Sales account will be credited with:
(a) Rs.5,000 (b) Rs.5,500 (c) Rs.4,500 (d) Rs.4,275

46) Goods worth Rs. 5,000 sold to Bharath @ 10% trade discount & @ 1% cash discount on payment
within 10 days. Bharath made payment within 7 days. At time of receiving payment entry in the
Journal would be:
(a) Cash a/c                  Dr.            4,450
Discount a/c                 Dr.                50
To Lakshman                                                             4,500
(b) Cash a/c                  Dr.            4,455
Discount a/c                 Dr.                 45
To Lakshman                                                             4,500
(c) Cash a/c                   Dr.            4,450
Discount a/c                  Dr.               50
To Sales a/c                                                                4,500
(d) Cash a/c                   Dr.             4,455
Discount a/c                  Dr.                  45
To Lakshman                                                               4,545
 

47) In the books of Raman Prakash, this document will be treated as a ______ & entered in _________
for _______.
(a) Debit Note, Purchase Returns Book, Rs. 4,000
(b) Sales invoice, Sales Book, Rs. 16,000
(c) Purchase Invoice, Purchases Book, Rs. 12,000
(d) Delivery Challan, Journal Proper, Rs. 16,000 & Rs. 4,000

48) In the books of Rohit Booksellers, this document will be treated as a _____ & entered in ______
for ______.
(a) Cash Memo, Cash Book, Rs. 4,000
(b) Credit Memo, Sales Book, Rs. 20,000
(c) Purchase Invoice, Purchases Book, Rs. 16,000
(d) Purchase Invoice, Purchases Book, Rs. 16,000 & Rs.4,000

49) From the subsidiary books of Raman Prakash, the amount(s) shown against the entry will be
posted –
(a) To Dr. of Rohit Booksellers & Credit of Sales A/c
(b) To Dr. of Sales & Credit of Rohit Booksellers A/c
(c) To Cr. of Rohit Booksellers & Credit of sales A/c
(d) To Dr. of Purchase & Credit of Rohit Booksellers A/c

50) From the subsidiary books of Rohit Booksellers, the amount(s) shown against the entry will be
posted –
(a) To Dr. of Raman Prakash & Credit of Sales A/c
(b) To Dr. of Sales & Credit of Raman Prakash A/c
(c) To Dr. of Raman Prakash & Credit Sales of A/c
(d) To Dr. of Purchase & Credit of Raman Prakash A/c

ANSWERS:
1) (c)
2) (b)
3) (a)
4) (d)
5) (a)
6) (c)
7) (b)
8) (d)
9) (b)
10) (b)
11) (c)
12) (a)
13) (c)
14) (b)
15) (b)
16) (c)
17) (b)
18) (a)
19) (d)
20) (c)
21) (d)
22) (a)
23) (d)
24) (d)
25) (b)
26) (c)
27) (a)
28) (b)
29) (a)
30) (b)
31) (b)
32) (a)
33) (b)
34) (b)
35) (a)
36) (b)
37) (a)
38) (a)
39) (d)
40) (d)
41) (d)
42) (a)
43) (a)
44) (b)
45) (c)
46) (b)
47) (b)
48) (c)
49) (a)
50) (d)

1) The process of transferring debit & credit items from a journal to their respective accounts in
ledger is ________.
(a) Posting                        (b) Purchase
(c) Balance of an account (d) Arithmetical accuracy test

2) L.F. (i.e., Ledger Folio) in journal is field at the time of –
(a) Journaling (b) Balancing
(c) Posting      (d) Casting

3) In case of debit balance, the words ______are written on the debit side –
(a) To Balance b/d (b) To Balance c/d
(c) By Balance b/d (d) By balance c/d

4) In case of credit balance, the words ______are written on the credit side –
(a) To Balance b/d (b) To Balance c/d
(c) By Balance b/d (d) By balance c/d

5) Left side of an A/c is ________ & right side is ________.
(a) Debit, Credit   (b) Credit, Debit
(c) Liability, asset (d) None of the three

6) The technique of finding the net balance of an account after considering the totals of both
debits & credits appearing in the account is known as
(a) Posting                           (b) Purchase
(c) Balancing of an account (d) None

7) The words To Balance b/f or By Balance b/f are recorded in the ‘particulars column’ of accounts
as –
(a) All compounded entries (b) An opening entry
(c)(a) transfer entry              (d) An adjusting entry

8) In ledger –
(a) Only personal accounts are maintained (b) Only real accounts are maintained
(c) Only nominal accounts are maintained (d) All the three are maintained

9) Normally the following accounts are balanced –
(a) Personal accounts & nominal accounts (b) Real accounts & nominal accounts
(c) Personal accounts & real accounts         (d) All accounts

10) At the end of accounting year all the nominal accounts of the ledger books are –
(a) Balance but not transferred to P & L A/c
(b) Not balanced & also the balance is the not transferred to the profit & loss account
(c) Balanced & balance is transferred to balance sheet
(d) Not balanced the balance transferred to the profit & loss account

11) The concerned account debited in journal should be –
(a) Debited in the ledger but reference should be of the respective credit account
(b) credited in the ledger but reference should be of the respective debit account
(c) credited in the ledger & reference should also be of the respective credit account
(d) Debited in the ledger & reference should also be of the respective debit account

12) If the total debit side of an account exceeds the total of its credit side it indicates –
(a) Debit balance            (b) Credit balance
(c) Either debit or credit (d) Neither debit nor credit

13) If the total credit side of an account exceeds the total of its debit side it indicates –
(a) Debit balance (b) Income
(c) Losses             (d) Credit balance

14) Credit balance of a personal account indicates –
(a) Cash balance          (b) Amount payable
(c) Amount receivable (d) None

15) Personal A/c credit balance indicates –
(a) Assets   (b) Expense
(c) Debtor   (d) Creditor

16) Personal A/c debit balance indicates –
(a) Profit     (b) Debtors
(c) Creditor (d) Loss

17) Real A/c debit balance indicates –
(a) Expenses (b) Income
(c) Assets      (d) Loss

18) Nominal A/c credit balance indicates –
(a) Liability    (b) Assets
(c) Income     (d) Expense

19) Nominal A/c debit balance indicates –
(a) Assets (b) Liability
(c) Income (d) Expense

20) Credit balance of nominal accounts shows –
(a) Expenses in the business (b) Loss in the business
(c) Income in the business     (d) Assets of the business 

21) Cash account will show –
(a) Debit or credit balance (b) A credit balance
(c) A debit balance              (d) None

22) The balance of bank account is –
(a) Credit (b) Credit or debit
(c) Debit   (d) Zero balance

23) The following account has a credit balance –
(a) Carriage inward (b) Carriage outward
(c) Return inward    (d) Return outward

24) Generally, the balance of capital accounts is –
(a) Debit balance               (b) Credit balance
(c) Debit or credit balance (d) Zero balance

25) The opening balance –
(a) Is settled on 21st January
(b) Is settled on 19th January
(c) Is not yet settled
(d) Rs. 1000 is still outstanding after adjusting discount of Rs. 1000 on 19th January

26) Invoice no 2 is –
(a) Raised by us on Sudhir & not yet settled till month-end
(b) Raised by us on Sudhir & settled on 19th January
(c) Raised by Sudhir on us & is not yet settled
(d) Raised by Sudhir on us &settled on 19th January

27) Invoice no 24 is –
(a) Raised by us on Sudhir & is adjusted against discount of Rs. 1000 on 19th + cash 2,000 on 21st
credit Note Rs. 1000 on 23rd
(b) Raised by Sudhir on us & is not yet settled
(c) Raised by us on Sudhir & Rs. 4,000 against this invoice is outstanding after adjusting credit
note of Rs. 1000
(d) Raised by Sudhir on us &Rs. 4,000 against this invoice is outstanding after adjusting credit
note of Rs. 1000

28) After the preparation of ledgers, the next step is the preparation of –
(a) Trading accounts (b) Trial balance
(c) Profit & loss account (d) None
29) Trial Balance is a –
(a) Statement (b) Subsidiary Book
(c) List             (d) Final Account

30) A Trial Balance contains the balances of –
(a) Only personal & real accounts        (b) Only real & nominal accounts
(c) Only nominal & personal accounts (d) All accounts

31) Trial balance is a statement which shows __________or the _________of all the accounts.
(a) Balances, Totals.                               (b) Opening balances, Closing balances.
(c) Posted balances, Total of balances, (d) Debit balance, Credit balance.

32) Which of the following lists the balance & the title of accounts in the ledger on a given date?
(a) P & L Account         (b) Balance sheet
(c) Earnings Statement (d) Trial balance

33) Which of the following is the objective of Trial Balance?
(a) Serves as the summary of all the Ledger accounts
(b) Helps in the preparation of the Trial Balance
(c) Examines mathematical accuracy of account books
(d) All

34) A Trial Balance shows –
(a) Honesty of accountants                          (b) Accuracy of Account
(c) Only Arithmetical accuracy of accounts (d) None

35) The preparation of a Trial Balance is for –
(a) Locating errors of commission (b) Locating errors of principle
(c) Locating clerical errors              (d) Both (a) & (c) above

36) The balance of ____ account will be shown in the debit column of trial balance –
(a) Cash                              (b) Creditors account
(c) Bank overdraft account (d) Capital account

37) Choose the correct statement from below –
(a) Trial Balance can be prepared before passing transfer entries
(b) Trial Balance can be prepared before passing adjusting entries
(c) Trial Balance can be prepared before passing closing entries
(d) All

38) A Trial Balance will not balance if –
(a) Correct journal entry is posted twice.
(b) The purchase on credit basis is debited to purchases & credited to cash.
(c) Rs.500 cash payment to creditors is debited to creditors for Rs.50 & credited to cash as
      Rs.500.
(d) None

39) 

40) Rs.1,500 received from sub-tenant for rent & entered correctly in the cash book is posted to the
debit of the rent account. In the Trial Balance,
(a) The debit total > by Rs.3000 than the credit total
(b) The debit total >by Rs.1500 than the credit total
(c) Subject to other entries being correct, total will agree
(d) None

41

42

43

44) Find out the total of Trial Balance as at 31-12-2021 from the following Ledger balances –
Capital Rs. 40,000, Purchases Rs. 36,000, Discount Rs. 1,200, Carriage Inwards Rs. 8,700, Carriage
Outwards Rs. 2,300, Sales Rs. 60,000, Return Inwards Rs. 300, Returns Outwards Rs. 700, Rent &
Taxes Rs. 1,200, Plant & Machinery Rs. 10,700, Stock on 1-1-2021 Rs. 15,500, Sundry Debtors Rs.
20,200; Sundry Creditors Rs. 12,000; Commission Rs. 1,800, Cash in hand Rs.100, Cash at Bank Rs.
10,100, Motor Cycle Rs. 4,600.
(a) Rs.1,12,700        (b) Rs.1,10,900            (c) Rs.1,15,800            (d) Rs.1,13,700

45) Given below are ledger balances – Capital Rs. 4,00,000, Computer Rs. 25,000, Air conditioner &
furniture Rs. 1,00,000, Fixed Deposits Rs. 2,00,000, Salaries Rs. 8,00,000, Fees received Rs.
12,00,000, Travelling expenses Rs. 1,50,000, Rent & office expenses Rs. 2,40,000, Cash – Rs.
1,80,000. Bank overdraft Rs. 95,000. The total of trial balance will be:
(a) Rs.16,00,000         (b) Rs.16,95,000          (c) Rs.14,50,000           (d) Rs.15,00,000

46)

47

48

49)

50) A started business with Rs. 20,000 cash & Rs. 11,000 stocks. Cash sales & cash purchases were
Rs. 10,000 &Rs. 5,000. Total sales & purchases amounted to Rs. 70,000 & Rs. 50,000. Outstanding
creditors were Rs. 15,000 & Debtors Rs. 25,000. Expenses paid Rs. 17,000. Machine was purchased
for Rs. 10,000 out of which Rs.8000 is paid. Trial Balance total will be —
(a) Rs.1,18,000     (b) Rs.1,20,000             (c) Rs.1,25,000          (d) Rs.1,40,000

ANSWERS:
1) (a)
2) (c)
3) (a)
4) (c)
5) (a)
6) (c)
7) (b)
8) (d)
9) (c)
10) (d)
11) (a)
12) (a)
13) (d)
14) (b)
15) (d)
16) (b)
17) (c)
18) (c)
19) (d)
20) (c)
21) (c)
22) (b)
23) (d)
24) (b)
25) (a)
26) (b)
27) (c)
28) (b)
29) (a)
30) (d)
31) (a)
32) (d)
33) (d)
34) (c)
35) (d)
36) (a)
37) (d)
38) (c)
39) (b)
40) (a)
41) (c)
42) (b)
43) (d)
44) (a)
45) (b)
46) (c)
47) (d)
48) (a)
49) (c)
50) (a)