1 (c) current assets (d) fictitious assets · in the cash of the sole proprietorship, assets in...

FINAL ACCOUNT

CLASS WORK1. ‘Bank overdraft’ should be classified as

(a) Current asset (b) Current liability

(c) Fixed asset (d) None of these

2. Stock in trade is a

(a) Fixed asset (b) Ctitious asset

(c) Intangible asset (d) Current asset

3. Assets very easily convertible into cash are

(a) Current asset (b) Fixed assets

(c) Liquid assets (d) Floating assets

4. Goodwill should be classified as a

(a) Current asset (b) liquid asset

(c) Floating asset (d) Intangible asset

5. Outstanding wages is an item of

(a) Current asset (b) Current liability

(c) Non-current asset (d) Non-current liability

6. Assets appearing in the book but having no value are known as

(a) Wasting assets (b) Intangible assets

(c) Current assets (d) Fictitious assets1

UNIT - IV

FINAL ACCOUNT 343

7. Profit and Loss Account of business shows the

(a) Balance of all accounts (b) Gross profit earned

(c) Net profit earned (d) Capital employed in business

8. Balance sheet shows the

(a) Financial position of business (b) Balances of all accounts

(c) Net profit earned during a period (d) None of these

9. Which of the following headings is correct?

(a) AB Sates Co. (b) AB Sates Co.

Income Statement as on 31st Dec. 1998 Income Statement for the year ended 31stDec. 1998

(c) AS Sales Co.

Income Statement, 31st Dec. 1998

10. Which of the following headings in correct?

(a) AB Sales Co. (b) AB Sales Co.

Balance Sheet as on 31st Dec. 1998 Balance Sheet for the year ended 31stDec.1998

(c) AB Sales Co.

Balance Sheet, 31st Dec. 1998

11. Which of the followings is an accounting equations ?

(a) Capital — Assets Liabilities (b) Capital = Assets — Liabilities

(c) Assets — Liabilities — Capital (d) Liabilities = Assets + Capital

14. ‘A business has assets of ` 44,312 and owner’s equity ` 13,210. What is the amount of liabilities?

(a) `31,102 (b) `57,522 (c) `44,312 (d) None of these

15. Liabilities of a business are ` 11,220 and owners equity is ` 15,000. The assets of the businesswill be


16. Assets of a business are ` 21,315 and liabilities ` 4,120. What is the amount of owner’s equity?

(a) `21,315 (b) `17,195 (c) `25,435 (d) `4,120

17. Purchase of office equipment results in

(a) Increase in capital (b) Decrease in liabilities

(c) Increase in assets (d) Decrease in capital344 FUNDAMENTALS OF ACCOUNTING (CPT)

18. Purchase of raw materials on account results in

(a) Decrease in capital and increase in Liability

(b) Decrease in assets and increase in liability

(c) Increase in assets and decrease in liability

(d) Increase in assets and increase in liability

(e) Decrease in assets and decrease in liability

19. Investment by owner results in

(a) Increase in capital and decrease in Liability

(b) Increase in capital and increase in Liability

(c) Increase in capital and decrease in asset

(d) Increase in capital and increase in asset

20. Given Jan. 1 Dec. 31

` `

Assets 45,000

Liabilities 9,000

Capital 31,000

Investment by owner ` 4 000 during the year Withdrawal by owner ` 6,000 during the yearNet income for the year ` 3,400

Required : The amount of Assets on Dec 31

(a) `22,000 (b) `43,400 (c) `40,000 (d) `45,400

21. Assuming the data of above question, what is the amount of Capital on January 1?

(a) `36,060 (b) `38,600 (c) `31,000 (d) `29,600

22. Assuming the data of Q. 21, what is the amount of Liabilities on January 1

(a) `9,000 (b) `15,400 (c) `12,400 (d) `14,000

23. Which one of the followings is correct?

(a) Opening stock + Closing stock - Purchases Cost of goods sold

(b) Opening stock + Purchase — Closing stock = Cost of goods sold

(c) Purchases + Closing stock — Opening stock = Cost of goods sold

(d) Closing stock — Purchases — Opening stock = Cost of goods sold

(e) None of these

FINAL ACCOUNT 345

24. Which of the followings is correct?

(a) Closing stock + Purchases - Opening stock + Cost of goods sold = Zero

(b) Opening stock — Closing stock — Purchases + Cost of goods sold = Zero

(c) Purchases + Opening stock — Closing stock - Cost of goods sold = Zero

(d) Cost of goods sold — Closing stock — Purchases - Opening stock = Zero

(e) None of the above

25. What is the cost of goods sold when-

Opening stock = ` 5,000

Closing stock ` 2,500

Purchases = ` 47,000

(a) `44,500 (b) `54,500 (c) `39,500 (d) `49,500

26. What is the amount of purchase when—

Opening stock = 3,500

Closing stock 1,500

Cost of goods sold = 22,000

(a) `20,000 (b) `24,000 (c) `27,000 (d) `17,000

27. What is the amount of gross profit or loss when-

Cost of goods sold = ` 7,900

Sales = ` 11,000

Purchases ` 3,000

(a) `8,000 (b) `4,900 (c) `3,100 (d) `100 (Loss)

28. What is the amount of purchases when—


Closing stock = ` 8,000

Sales ` 1,10,000

Cost of goods sold = ` 80,000

(a) `78,000 (b) `30,000 (c) `82,000 (d) `92,000

346 FUNDAMENTALS OF ACCOUNTING (CPT)

29. What is the amount of Closing stock when -


Cost of goods sold ` 54,500

Purchases = ` 60,000

(a) Nil (b) `19,000 (c) `9,000 (d) `10,000

30. What is the amount of gross profit when —

Opening stock ` 1,200

Closing stock = ` 750

Sales = ` 30,000

Cost of goods sold ` 22,750

(a) `6,500 (b) `7,250 (c) `7,700 (d) `5,300

31. Select the correct amount of purchases, given the following information—

Cost of goods sold ` 1,20,000;

` 1,890;

Opening ` 43,640;

Closing stock ` 38,500:

Purchase returns - ` 2,150;

Sates ` 2,82,650

(a) `1,15,120 (b) `62,650 (c) `1,10,420 (d) None of these

32. When ‘Adjusted Purchases’ appear in the total balance, it indicates that

(a) Opening stock has been adjusted in the Purchases

(b) Closing stock has been adjusted in the pur chases

(c) Both opening and closing stocks have been adjusted in the purchases

(d) Expenses relating to purchases Like carriage inward, Octroi duty etc. have been adjustedin the purchases

e. Purchases returns have been adjusted in the purchases

33. Wages outstanding’ is appearing in the trial balance of a company. While preparing IncomeStatement and Balance Sheet, Wages Outstanding should appear in

(a) The balance sheet only

(b) Income statement only

FINAL ACCOUNT 347

(c) Both income statement as well as balance sheet

(d) Either income statement or balance sheet

34. Wages outstanding has not been adjusted. While preparing final accounts it should appear in

(a) The balance sheet only (b) The income statement only

(c) Both income statement and balance (d) Either income statement or balance

sheet sheet

35. Depreciation is appearing in the trial balance of a company. While making final accounts, itshould be shown in

(a) The profit and Loss account (b) The balance sheet as a deduction

from the asset concerned

(c) The profit and loss account and (d) The profit and loss account or balance

balance sheet sheet

36. The works manager gets commission of 10% on the profits after a charging such commission. Ifthe profit is ` 2,200 what is the amount of his commission?

(a) `220 (b) `200 (c) `240 (d) `244.44

37. The General Manager gets 1/4 of the profit as commission after charging such commission,and also after charging commission of Works Manager, which is 10% of profits after chargingsuch commission. If profit is ` 2,200, the commission of General Manager is

(a) `495 (b) `384 (c) `500 (d) `400

38. The General Manager gets a commission of 14 of profits before charging such commission butafter charging the commission of the works Manager, which is 10% of profit before chargingsuch commission. If profit is ` 2,200, the commission of the General Manager is

(a) `495 (b) `384 (c) `500 (d) `400

39. (i) Works Manager is to get a commission of 10% (after charging such commission) of profits inexcess of ` 2,000. (ii) General manager is to get 1/3 of total profits after charging all provisionsin (i) and (ii) If profits before (i) and (ii) is ` 3,320, what is the commission of the GeneralManager?

(a) `1062.67 (b) `1066.67 (c) `800 (d) `797

40. If operating expenses exceed gross profit the excess is referred to as

(a) Operating income (b) Operating toss

(c) Non-Operating expenses (d) Non-operating income


41. A started business on 1st April, 1995 with a capital of ` 25,000 and a loan of ` 12,500. Totalassets and liabilities at the end of 31st March 1996 amounted to ` 75,000 and ` 12,500respectively. He invested a further capital of ` 12,500 during the year and withdrew ` 7,500during the relevant financial year. His closing capital and profit would be respectively.(a) ` 62,500 and ` 32,500 (b) ` 50,000 and ` 40,000

(c) ` 70,000 and ` 47,500 (d) ` 55,000 and ` 42,500

42. In the cash of the sole proprietorship, assets in Balance Sheet items are conveniently shown in

(a) Order of fixity (b) Order of liquidity

(c) Alphabetical order (d) Order of dates of acquisition

43. If the rate of gross profit is 20% on the cost of goods sold and the sales are ` 1,50,000, then thetotal gross profit would be


44. While preparing ‘Annual Financial Statement’, the ‘credit balance’ shown by the Bank PassBook should be treated as

(a) a liability (b) an asset

(c) an income (d) an excess of payments over receipts.

45. When preparing the Annual Financial statements, the balance of Prepaid Rent Account shouldbe treated as the balance of a

(a) Personal Account (b) Real Account

(c) Nominal Account (d) Deferred Revenue Expenditure

46. While preparing the Annual Financial Statement, the balance of Bills Receivable Account canbe treated as a an

1. Accrued Income

2. Item of Asset

3. Personal Account Balance Of these statements

(a) 2 and 3 are correct (b) 1 and 3 are correct

(c) 1 and 2 are correct (d) None is correct

47. Final accounts of a manufacturing company generally include

1. Balance Sheet

2. Manufacturing Account

3. Profit and Loss Account

4. Trading account

5. Profit and Loss Appropriation Account

FINAL ACCOUNT 349

The correct sequence in which these statements are prepared is

(a) 1, 4, 3, 2, 5 (b) 2, 4. 3, 5, 1 (c) 1, 2,4, 3,5 (d) 2. 4, 5. 3, 1

48. Depreciation on machinery amounting to ` 25,000 is appearing in the Trial Balance of a firm.When preparing Final Accounts, it should be shown in

(a) Profit and Loss Account (Dr. side) (b) Profit and Loss Account (Cr. side)

(c) Balance Sheet (Assets side) (d) Balance Sheet (Liability side)

49. Closing stock appearing in the Trial Balance will be taken to

(a) Trading Account only (b) Balance Sheet only

(c) Trading Account and Balance Sheet (d) Profit and Loss Account only.

50.

(i) The balance of the petty cash is

(a) an expense, (b) income, (c) an asset. (d) liability

(ii) Fixed assets are

(a) kept in the business for use over a long time for earning income

(b) meant for resale

(c) meant for conversion into cash as quickly as possible

(d) All of the above

(iii) Goodwill is

(a) a current asset (b) an intangible fixed asset

(c) a tangible fixed asset (d) an investment.

(iv) Stock is

(a) included in the category of (b) an investment fixed assets

(c) a part of current assets (d) an intangible fixed asset.

(v) The manufacturing account is prepared:

(a) to ascertain the profit or loss on the goods produced

(b) to ascertain the cost of the manufactured goods

(c) to show the sale proceeds from the goods produced during the year

(d) both, (b) and (c).

(i) A new firm commenced business on 1st January, 2006 and purchased goods costing `90,000 during the year. A sum of ` 6,000 was spent on freight inwards. At the end of theyear the cost of goods still unsold was ` 12,000. Sales during the year ` 1,20,000. What isthe gross profit earned by the firm?


(a) ` 36,000 (b) ` 30,000 (c) ` 42,000 (d) ` 38,000

(ii) From the following figures ascertain the gross profit:

`

Opening Stock (1.1.2006) 25,000

Goods Purchased during 2006 1,30,000

Freight and racking on above 5,000

Closing Stock (31.12.2006) 15,000

Sales 1,90,000

Selling expenses on sales 9,000

(a) ` 36,000 (b) ` 45,000 (c) ` 50,000 (d) ` 59,000

(iii) A prepayment of insurance premium will appear in the Balance Sheet and in the InsuranceAccount respectively as:

(a) a liability and a debit balance. (b) an asset and a debit balance.

(c) an asset and a credit balance. (d) None of the above

(iv) Under-statement of closing work in progress in the period will

(a) Understate cost of goods (b) Overstate current assets.

manufactured in that period.

(c) Overstate gross profit from (d) Understate net income in that period.

sales in that period.

Indicate the correct answer :

51. For a Shirt Factory, cotton is

(a) Finished goods (b) Work-in-progress

(c) Raw materials (d) Asset

52. For a Shirt Factory, cloth converted from cotton is

(a) Finished goods (b) ‘Work-in-progress


53. For a Shirt Factory, shirt is

(a) Finished goods (b) Work-in-progress


FINAL ACCOUNT 351

54. The final result of a Manufacturing Account shows

(a) Gross profit from manufacturing (b) Net profit from manufacturing

(c) Cost of manufacturing (d) Book Value of factory

55. Work-in-progress in the books of a manufacturer indicates-

(a) Partly finished repairs (b) Partly finished goods

(c) Partly installed factory (d) Partly finished construction

56. Consumption of raw materials is equal to

(a) Opening stock + purchases + direct expenses + purchase returns — closing stock

(b) Opening stock + purchases - direct expenses — purchase returns — closing stock

(c) Opening stock + purchases + direct expenses — purchase returns — closing stock

(d) Opening stock + purchases + direct expenses — purchase returns + closing stock

57. Manufacturing account

(a) will always have a debit balance (b) will always have a credit balance

(c) May sometimes have a credit (d) None of the above

balance

Q.58 to 59

Particulars ` Particulars `

To Stock: By Sales 13,44,000

Finished Goods 1,28,000 By Closing Stock :

Raw materials 38,400 Finished Goods 1,12,000

1,66,400 Raw Materials 44.800 1,56,800

To Purchases 3,84,000

To Wages 6,49,600

To Carriage Inward 32,000

To Gross Profit 2,68,800

15,00,800 15,00,800

58. The consumption of raw materials is -

(a) ` 3,84,400 (b) `3,77,600 (c) `4,09,600 (d) `4,54,400


59. The cost of manufacturing is -

(a) `4,09,600 (b) `10,59,200 (c) `6,49,600 (d) `10,75,200

Q.60 to 210 : State whether following statements are true or false:

60. Freight inwards on machinery purchased is debited to the ‘Trading Account.

(a) True (b) False

61. Gross Profit is transferred to the Capital Account.

(a) True (b) False

62. Balance Sheet shows the profitability of the business.

(a) True . (b) False

63. Balance Sheet is a statement and not an account.

(a) True (b) False

64. Right-hand side of the balance sheet shows the Liabilities.

(a) True (b) False

65. Profit and Loss account shows items in order of liquidity.

(a) True (b) False

66. Plant in accounting means the trees planted on business premises.

(a) True (b) False

67. Bills Payable means the Bills for expenses still not paid.

(a) True (b) False

68. Profit and Loss Account shows the financial position of the concern.

(a) True (b) False

69. A withdrawal of Cash from the business by the proprietor should be charged to Profit and LossAccount.

(a) True (b) False

70. Fixed Assets are stated in the Balance Sheet at their market value.

(a) True (b) False

71. A Profit and Loss Account is a point statement whereas a Balance Sheet is a period statement.

(a) True (b) False

FINAL ACCOUNT 353

72. The provision for discount on debtors is calculated after deducting the provision for doubtfuldebts from Debtors.

(a) True (b) False

73. Balance sheet is a position statement.

(a) True (b) False

74. All Intangible Assets are Fictitious Assets.

(a) True (b) False

75. Trial Balance shows the profit earned by the firm during a period.

(a) True (b) False

76. Sales - Cost of goods sold = Gross profit

(a) True (b) False

Q.77 to 78 : Relate to the following :

1. Stock 2. debtors 3. creditors

77. Which is/are current liabilities ?

(a) 1, 2 and 3 (b) 1 and 2 only (c) 1 only (d) 3 only

78. Which is/are current assets?

(a) 1, 2 and 3 (b) 1 and 2 only (c) 1 only (d) 3 only

Q. 79 to 91 : Multiple Choice Questions:

79. Return outwards appearing in Trial Balance are deducted from

(a) Sales (b) Purchases

(c) Returns In ward (d) None of the above

80. Returns Inwards appearing in Trial Balance are deducted from

(a) Purchases (b) Sales

(c) Returns Outward (d) None of the above

81. Salaries and Wages appearing in Trial Balance are shown

(a) on the debit side of Trading Account

(b) on the debit side of Profit & Loss Account

(c) on the Liabilities side of the Balance Sheet

(d) None of the above


82. Wages and salaries appearing in Trial Balance are shown

(a) on the debit side of Profit & Loss Account

(b) on the debit side of Trading Account

(c) on the liabilities side of the Balance Sheet


83. Outstanding wages appearing in Trial Balance are shown



(c) on the liabilities side of the Balance sheet


84. Carriage outwards appearing in the Trial Balance is shown



(c) on the liabilities side of the Balance sheet


85. Cash Discount on purchase of machinery received appearing in the Trial Balance is shown

(a) on the debit side of Profit & Loss A/c

(b) on the credit side of Profit & Loss A/c

(c) on the Assets side of the Balance Sheet


86. Discount Allowed appearing in the Trial Balance is shown


(b) on the debit side of Profit & Loss A/c



87. Closing Stock appearing in the Trial Balance is shown

(a) on the credit side of Profit & Loss A/c

(b) on the credit side of Trading A/c



FINAL ACCOUNT 355

88. Sale of scrap appearing in the Trial Balance is shown


(b) on the credit side of Trading Account

(c) on the credit side of Profit & Loss A/c


89. Trade-mark is

(a) Current Asset (b) Fictitious asset

(c) Tangible asset (d) Intangible asset

90. Prepaid salaries ` 5,000 appear in A’s Trial Balance. These will appear in

(a) Trading Account (b) Profit and Loss Account

(c) Balance Sheet (d) Manufacturing Account

91. Drawings are deducted from

(a) Sales (b) Purchases

(c) Return outward (d) Capital

Q. 92 to 94 : [Adjustments],: The cost of closing stock as on 31 March 2006 is ` 5,000. Its marketvalue is ` 6,500.

92. In the Journal

(a) Trading A/c is debited and Closing stock a/c is credited for ` 5,000

(b) Closing stock a/c is debited and Trading A/c is credited for ` 5,000

(c) Closing stock a/c is debited and Trading A/c is credited for ` 6,500

(d) Closing stock a/c is debited for ` 6,500; Trading A/c is credited for ` 5,000 and profit &Loss A/c is credited for ` 1 ,500

93. In the Trading A/c

(a) ` 5,000 is shown on Cr. Side as closing stock

(b) ` 5,000 is shown as closing balance c/d

(c) ` 6,500 is shown on Cr. Side as closing stock

(d) ` 5,000 is shown on Cr. Side as closing stock and ` 1,500 is shown as closing balance c/d

94. In the Balance Sheet

(a) Closing stock ` 6,500 is shown on the Assets Side under Current Assets

(b) Closing stock ` 5,000 is shown as addition to Capital on the Liabilities Side


(c) Closing stock ` 5,000 is shown on the Assets Side under Current Assets

(d) Closing stock ` 5,000 is shown on the Assets Side under Current Assets and ` 1,500 asaddition to Capital on the Liabilities side.

Q.95 to 99

Balances shown in Trial Balance as on 31-3-2006 : `

Reserve for Doubtful Debts (Opening on 1-4-2005 b/d) Cr. 10,000

Sundry Debtors (before adjustments) Dr. 1,55,000

Further Adjustments to be made as on 31-3-2006 :Write off Bad Debts 5,000It is the policy to keep Reserve for Bad & Doubtful Debts @ 10%.

95. in the Journal, for writing off bad debts of ` 5,000 - first, ` 5,000 is debited to Bad Debts A/cand credited to Sundry Debtors A/c; and afterwards(a) Reserve for Bad & Doubtful Debts A/c is debited and Bad Debts A/c is credited(b) Capital A/c is debited and Bad Debts A/c is credited(c) Profit & Loss A/c is debited and Bad Debts A/c is credited(d) No entry is passed in the Journal; ` 5.000 is directly adjusted in Sundry Debtors in the

Balance Sheet96. For creating Reserve for Doubtful Debts @ 10%,

(a) No separate entry is passed in the Journal; the amount is directly adjusted in SundryDebtors in the Balance Sheet

(b) In the Journal, Profit & Loss A/c will be debited and Reserve for Bad & Doubtful DebtsA/c will be credited for ` 15,500

(c) In the Journal, Profit it & Loss A/c will be debited and Reserve for Bad & Doubtful DebtsA/c will be credited for ` 10,000

(d) In the Journal, Reserve for Bad & Doubtful Debts A/c will be debited and Profit & LossA/c will be credited for ` 10,000

97. In the ledger, after recording all adjustments, Reserve for Doubtful Debts Account will show(a) a closing debit balance of ` 15,000 (b) a closing credit balance of ` 15,000(c) a closing credit balance of ` 5,000 (d) a closing credit balance of ` 10,000

98. In the Profit & Loss A/c

(a) ` 5,000 will be shown on Dr. side (b) ` 20,000 will be shown on Dr. side

(c) Net ` 10,000 will be shown on Dr. Side (d) ` 15,000 will be shown on Dr. side

FINAL ACCOUNT 357


(a) Sundry Debtors ` 1 ,50,000 will be shown under Current Assets on Assets side

(b) Sundry Debtors will he shown under Current Assets on Assets side at a net amount of `1,35,000

(c) Sundry Debtors ` 1,50,000 will be shown under Current Assets on Assets side and `15,000 will be shown as Reserve for doubtful debts on the Liabilities side

(d) Sundry Debtors will be shown under Current Assets on Assets side at net ` 1,55,000

Q.100 to 102 : Insurance paid ` 12,000 for 1 year from 1 October 2003, out of which prepaid foryear ending 31st March 2004 is ` 6,000.

100. In the Journal

(a) ` 6,000 will be debited to Pre-paid Expenses A/c

(b) ` 12,000 will be debited to Pre-paid Expenses A/c

(c) ` 18,000 will be debited to Pre-paid Expenses A/c

(d) None of these


(a) ` 6,000 will be debited (b) ` 12,000 will be debited

(c) ` 18,000 will be debited (d) None of these


(a) ` 12,000 is shown as liability (b) ` 6,000 is shown as asset

(c) ` 18,000 is shown as asset (d) None of these

Q.103 to 105 : Following information as on 31 March 2004 is available : Rent Received (uptoFebruary, 2004) ` 11,000, accrued rent ` 1,000.

103. In the Journal

(a) ` 12,000 will be debited to Accrued Income A/c

(b) ` 1,000 will be debited to Accrued Income A/c

(c) ` 1,000 will be credited to Accrued Income A/c

(d) None of these


(a) ` 12,000 will be debited (b) ` 1,000 will be credited

(c) ` 11,000 will be debited (d) None of these



(a) ` 1,000 is shown as Liability (b) ` 1,000 is shown as Asset

(c) ` 11,000 is shown as Asset (d) None of these

Q.106 to 108 : Account for income received in advance for the year ended 31 March 2004, fromthe following information: Rent received ` 26,000 including rent received in advance ` 2,000.

106. In the Journal

(a) ` 2,000 is credited to Income Received in Advance A/c

(b) ` 26,000 is credited to Income Received in Advance A/c

(c) ` 24,000 is credited to Income Received in Advance A/c

(d) None of these


(a) ` 2,000 is debited (b) ` 26,000 is credited

(c) ` 24,000 is credited (d) None of these

108. In the Balance Sheets

(a) ` 2,000 is shown as Liability (b) ` 2,000 is shown as Asset

(c) ` 24,000 is shown as Asset (d) None of these

109. B’s Trial balance contains the following information :

Bad debts ` 1,000; Provision for Doubtful debts ` 1,500.

It is desired to make a Provision for Doubtful Debts of ` 2,000 at end of the year. The amountto be debited to the Profit & Loss Account is

(a) `4,500 (b) `5,000 (c) `1,500 (d) `3,500 (e) `500

110. C’s Trial Balance provides you the following information

Bad debts ` 800; Provision for Doubtful debts ` 2,000.

It is Desired to maintain a Provision for Doubtful debts of ` 1,000. The accounting treatment ofthese adjustments is

(a) ` 1,800 to be debited to the Profit & Loss Account

(b) ` 200 to be credited to the Profit & Loss Account

(c) ` 200 to be debited to the Profit & Loss Account

(d) ` 4,200 to be debited to the Profit & Loss Account

111. D’s Trial Balance provides you the following information

Discount allowed ` 500; Provisions for discount on debtors, ` 1,100

FINAL ACCOUNT 359

It is desired to make a provision for discount on debtors of ` 1,800 at the end of the year. Theamount to be debited to the Profit & Loss Account is

(a) `1,200 (b) `3,200 (c) `700 (d) `2,200

112. As trial balance contains the following information

Bad debts ` 5,000

Discount allowed ` 3,000

Provision for discount on debtors ` 3,300

Provision for bad debts ` 5,500

Sundry debtors ` 60,000

At the end of the year it is desired to maintain a provision for bad debts of ` 5,000 and provisionfor discount on debtor at ` 3,000.

Sundry debtors will appear in the balance sheet at a figure of

(a) `52,000 (b) `44,000 (c) `52,800 (d) `43,200

113. A’s trial balance contains the following information

Sundry Creditors ` 80,000

Discount received ` 5,000

Reserve for discount on creditors ` 5,500

It is desired to maintain a reserve for discount on creditors at ` 6,000

Sundry creditors will appear in the balance sheet at a figure of

(a) `69,000 (b) `74,500 (c) `63,500 (d) `74,000

114. Prepaid insurance has an ending balance of ` 2,300. During the period, insurance of ` 1,200expired. The adjusting entry would contain a debit.

(a) To prepaid insurance for ` 1,200 (b) To insurance expense for ` 1,200

(c) To unexpired insurance for ` 1,100 (d) To insurance expense for ` 1,100

115. If beginning and ending merehmdise inventones are ` 400 and ` 700, respectively and cost ofgoods sold is ` 3,400 net purchase are :

(a) `3,700 (b) `3,400 (c) `3,100 (d) cannot be determined

Q.116 to 117 Relate to the following:

A trader buys ` 2,000 worth of goods paying ` 65 carriage on them. He sells the goods for `3,500 incurring expenses totalling ` 725.


116. The trader’s gross profit is

(a) `1,500 (b) `1,435 (c) `1,345 (d) `710

117. The trader’s net profit is

(a) `1,500 (b) `1,435 (c) `1,345 (d) `710

Q. 118 to 121 : are based onthe following:

Balance sheet as on December 31st, 2002

Liabilities ` Assets `

Capital A/c 10,000 Shop fittings 500

Balance Profit 400 Stock 2,500

10,400 Trading debtors 650

Less: Drawings 200 10,200 Cash in bank 7,550

Trade creditors 1,000 ______

11,200 11,200

118. Current liabilities total

(a) `11,200 (b) `10,400 (c) `10,200 (d) `1,000

119. Current assets total

(a) `11,200 (b) `10,700 (c) `10,550 (d) `3,000

120. The book value of the fixed assets is

(a) `11,200 (b) `3,000 (c) `2,500 (d) `500

121. Market value of fixed Asset is

(a) 5,000 (b) 11,200 (b) 3,000 (d) None of these

122.

(i) Goods purchased from A for ` 10,000 passed through the sales book. The error will resultin

(a) Increase in gross profit. (b) Decrease in gross profit.

(c) No effect on gross profit. (d) Either (a) or (b).

(ii) If a purchase return of ` 1,000 has been wrongly posted to the debit of the sales returnsaccount, but has been correctly entered in the suppliers’ account, the total of the

FINAL ACCOUNT 361

(a) trial balance would show the debit side to be ` 1,000 more than the credit

(b) trial balance would show the credit side to be ` 1,000 more than the debit.

(c) the debit side of the trial balance will be ` 2,000 more than the credit side.

(d) the credit side of the trial balance will be ` 2,000 more than the debit side.

(iii) If the amount is posted in the wrong account or it is written on the wrong side of theaccount, it is called

(a) error of omission. (b) error of commission.

(c) error of principle. (d) compensating error.

(iv) If a purchase return of ` 84 has been wrongly posted to the debit of the sales return account,but had been correctly entered in the suppliers account, the total of the trial balance wouldshow:

(a) the credit side to be ` 84 more than debit side.

(b) the debit side to be ` 84 more than credit side.

(c) the credit side to be ` 168 more than debit side.

(d) the debit side to be ` 168 more than credit side.

123. State which statements complete correctly the sentences given below:

(i) ` 200 paid as wages for erecting a machine should be debited to

(a) Repair account. (b) Machine account.

(c) Capital account. (d) Furniture account

(ii) On purchase of old furniture, the amount of ` 1,000 spent on its repair should be debitedto

(a) Repair account; (b) Furniture account;

(c) Cash account; (d) Bank account

(iii) Goods worth ` 50 given as charity should be credited to

(a) Charity account; (b) Sales account;

(c) Purchase account. (d) Cash account

(iv) Goods worth ` 100 taken by proprietor for domestic use should be credited to

(a) Sales account; (b) Proprietor’s personal expenses;

(c) Purchases account (d) Expenses account.


(v) Errors of Commission do not permit;

(a) Correct totalling of the balance sheet;

(b) Correct totalling of the trial balance;

(c) The trial balance to agree.


(vi) The preparation of a trial balance is for:

(a) Locating errors of commission; (b) Locating errors of principle;

(c) Locating clerical errors. (d) All of the above

(vii) ` 200 received from Smith whose account, was written off as a bad debt should be creditedto :

(a) Bad Debts Recovered account; (b) Smith’s account;

(c) Cash account. (d) Bad debts account

(viii) Purchase of office furniture ` 1,200 has been debited to General Expense Account. It is:

(a) A Clerical error; (b) An error of principle;

(c) An error of omission. (d) Compensating error.

(ix) Goods destroyed by fire should be credited to

(a) Goods lost by fire account; (b) Sales account.

(c) Purchase account (d) Cash account

(x) Sales of office furniture should be credited to

(a) Sales Account; (b) Furniture Account.

(c) Purchase Account. (d) Cash Account

II From the given information, choose the most appropriate answer.

124. Classify the following errors under

(a) Errors of omission, (b) Errors of commission and

(c) Errors of principle, (d) Compensating errors

(i) The total of sales book was not posted to the ledger.

(ii) Sales to Heena ` 143 was posted to Meena as ` 143.

FINAL ACCOUNT 363

(iii) Goods taken away by the proprietor for personal use not recorded anywhere.

(iv) The total of a folio in the sales book ` 1,000 was carried forward as ` 100.

(v) Repairs of newly purchased second-hand machinery debited to repairs accounts.

125. Point out the type of the errors given below: (put 1 against errors of omission, 2 against errorsof commission, 3 against errors principle, 4 if it is not an error).

(a) Sale of ` 120 was written in the purchases book.

(b) Salary paid to Ram, has been debited to his account.

(c) Purchase of furniture has been entered in the purchases book.

(d) ` 120 received from Ganesh has been debited to his account.

(e) Freight paid on machinery has been debited to the freight account.

(f) The discount columns of the cash book have net been posted.

(g) Repairs to buildings have been debited to the buildings account.

(h) The total of the Sales Book is ` 100 short.

(i) The sale of worth ` 337 has been posted as ` 373.

(j) The amount of a dishonoured bill has been debited to general expenses account.

III Given below are the questions containing multiple answers. Choose the correct answers(s).

1 Below some errors are mentioned. State which of these will not be revealed by the TrialBalance :

(a) Compensating errors; (b) errors of priciple;

(c) wrong balancing of an account (d) wrong totalling of an account;

2 Below some errors are mentioned. State which of these will not be revealed by the TrialBalance :

(a) Compensating errors; (b) errors of priciple;

(c) wrong balancing of an account (d) wrong totalling of an account;

***********


HOME WORK - 1

1. Operating Cost is equal to:

(a) Cost of Goods sold + Operating Cost

(b) Cost of Goods sold —Operating Expenses

(c) Sales - Gross Profit

(d) Sales — Operating Profit

2. Operating Profit is equal to:

(a) Sales Cost of Goods sold

(b) Sales — Non-operating cost

(c) Gross profit — operating expenses

(d) Net profit + Operating Revenue

3. Net Profit is equal to:

(a) Sales cost of Goods sold

(b) Sales Operating cost

(c) Gross profit Operating expenses

(d) Sales — Operating arid Non-operating cost

4. Trading Account is prepared to ascertain:

(a) Operating profit (b) Net profit

(c) Cost of Goods Manufactured (d) Gross profit

5. Profit & Loss A/c is prepared to ascertain:

(a) Operating profit (b) Net profit

(c) Cost of Goods Manufactured (d) Gross profit

6. The sequence of preparation of!. Balance sheet 2. Trial Balance and 3. Income Statement is:

(a) 1,2,3 (b) 1,3,2 (c) 3,2,1 (d) 2,3,1

FINAL ACCOUNT 365

7. Trading Account is closed by transferring its balance to the:

(a) Capital A/c (b) Profit & Loss A/c

(c) Manufacturing Ale (d) None of these

8. Trading & Profit & Loss Account is the result of posting of:

(a) Opening entries (b) Closing entries

(c) Adjusting entries (d) Transfer entries

9. Trading and Profit & Loss A/c is based on:

(a) Personal Accounts (b) Real Accounts

(c) Nominal Accounts (d) All of (a), (b), (c)

10. Current Assets are disclosed in the balance sheet at—

(a) Original Cost

(b) Market Value

(c) Cost or Market Value whichever is lower

(d) Cost or Net Realizable Value is lower

11. Contingent Liability is

(a) an ascertained liability but its amount and due date are indeterminate

(b) an ascertained liability but its amount and due date are determinate.

(c) an unascertained liability but its amount and due date are determinate

(d) an unascertained liability but its amount and due date are indeterminate.

12. Provision is —

(a) an unknown liability but its amount and due date are determinate.

(b) an unknown liability and its amount and due date are determinate

(c) a known liability and its amount and due date are determinate

(d) a known liability but its amount and due date are indeterminate.

13. While marshalling

(a) the most urgent payment to be made is shown last in order of liquidity

(b) the least liquid asset is shown first in order of liquidity

(c) the least urgent payment to be made is shown first in order of permanence.

(d) The most liquid asset is shown first in order of permanence

(e) None of the above


14. Under the liquidity approach

(a) the most liquid assets are presented at the bottom of the Balance Sheet.

(b) the least urgent payments are presented at the top of Balance Sheet.

(c) the most urgent payments are presented at the bottom of the Balance Sheet.

(d) the least liquid assets are presented at the bottom of Balance Sheet.

15. Under Permanence approach

(a) the most liquid assets are presented at the top of the Balance Sheet

(b) the least urgent payments are presented at the bottom of Balance Sheet.

(c) the most urgent payments are presented at the top of the Balance Sheet.

(d) the least liquid assets are presented at the top of Balance Sheet.

16. Patent Right is in the nature of

(a) Nominal Account (b) Real Account

(c) Personal Account (d) None of these

17. Provision is:

(a) an appropriation out of profits (b) a charge against the profits

(c) a reserve (d) None of these

18. If opening entry is not passed

(a) Trial Balance will not be tallied

(b) Balance Sheet will not be tallied

(c) Both trial balance & Balance Sheet will be tallied

(d) None of these

19. Closing Entries are required to be passed before the preparation of:

(a) Trial Balance (b) Trading & Profit & Loss Account

(c) Balance Sheet (d) Cash Flow Statement

20. The effect of Closing entries is the closure of:

(a) Personal Accounts (b) Real Accounts

(c) Nominal Accounts (d) All of above

21. The effect of opening entry is the opening of :

(a) Personal Accounts and Real Accounts

(b) Real Accounts and Nominal Accounts

(c) Personal Account and Nominal Accounts

(d) Personal Account, Real Account and Nominal Accounts.

FINAL ACCOUNT 367

22. If adjusting entries are not passed—

(a) Trial Balance will not be tallied

(b) Balance Sheet will not be tallied

(c) Both trial balance & Balance Sheet will be tallied

(d) None of these

23. Income tax paid by a proprietor Rs 3,000 appearing in the Trial balance

(a) to be debited to Profit & Loss Account

(b) to be credited to Profit & Loss Account

(c) to be debited to Profit & Loss Account

(d) to be deducted from Capital

24. Which Reserve has debit balance?

(a) General Reserve (b) Contingency Reserve

(c) Joint Life Policy Reserve (d) Investment Fluctuation Reserve

(e) Reserve for Discount on Creditors

25. Freight inward appearing in Trial Balance are shown:



(c) on the liabilities side of the Balance Sheet.

26. Apprenticeship Premiums received appearing in the Trial Balance are shown:

(a) on the debit side of Profit & Loss A/c

(b) on the credit side of Profit & Loss A/c

(c) on the Assets side of the Balance Sheet.

27. Capital Work-in-Progress is:

(a) Curt-eat Asset (b) Fictitious asset

(c) Tangible asset (d) Intangible asset.

28. Work-in-Progress is:

(a) Current Asset (b) Fictitious asset

(c) Tangible asset (d) Intangible asset.


29.

(a) Trial Balance can be prepared before passing transfer entries

(b) Trial Balance can be prepared before passing closing entries

(c) Trial Balance can be prepared before passing adjusting entries.

(d) All of the above

30. Provision for doubtful debts is

(a) debited to Sundry Debtors Account

(b) credited to Sundry Debtors Account

(c) debited to Bad Debts Account

(d) debited to Profit & Loss Account

31. Provision for Discount on Debtors is —

(a) debited to Sundry Debtors Account

(b) credited to Sundry Debtors Account

(c) debited to Bad Debts Account

(d) debited to Profit & Loss Account

32. Prepaid expenses refer to those expense which have been:

(a) Paid but not incurred during the current accounting period.

(b) Incurred but not paid during the current accounting period.

(c) Incurred but not paid during the previous accounting period.

(d) Paid but not incurred during the previous accounting period.

33. Accrued income refers to that income which has been:

(a) received but not earned during the current accounting period.

(b) earned but not received during the current accounting period.

(c) earned but not received during the previous accounting period.

(d) received but not earned during the current accounting period.

34. Unaccrued income refers to that income which has been:

(a) received but not earned during the current accounting period.

(b) earned but not received during the current accounting period.

FINAL ACCOUNT 369

(c) earned but not recived during the previous accounting period.

(d) received but not earned during the current accounting period.

35. Accrued Income is shown

(a) by way of deduction in the Income statement

(b) as a current asset

(c) as along-term liability

(d) as a current liability

40. Unaccrued income is shown—

(a) by way of addition in the Income statement

(b) as a current Asset

(c) as a fixed Asset

(d) as a current liability

50. If sales revenues are ` 4,00,000; cost of goods sold is ` 3,10,000 and operating expenses are`60,000, the gross profit is

(a) `30,000. (b) `90,000. (c) `3,40,000. (d) `60,000

60. Sales is equal to

(a) Cost of goods sold – Gross profit. (b) Cost of goods sold + Gross profit.

(c) Gross profit – Cost of goods sold. (d) Cost of goods sold + Net profit.

61. A Company wishes to earn a 20% profit margin on selling price. Which of the following is theprofit mark up on cost, which will achieve the required profit margin?

(a) 33% (b) 25% (c) 20% (d) None of the above

62. If sales is ` 2,000 and the rate of gross profit on cost of goods sold is 25%, then the cost of goodssold will be

(a) `2,000. (b) `1,500. (c) `1,600. (d) None of the above.

63. Sales for the year ended 31st March, 2009 amounted to ` 10,00,000. Sales included goods soldto Mr. A for ` 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at thebuyer’s risk. Therefore, such goods should be treated as part of

(a) Sales. (b) Closing stock.

(c) Goods in transit. (d) Sales return.


64. The capital of a sole trader would change as a result of:

(a) a creditor being paid his account by cheque.

(b) raw materials being purchased on credit.

(c) fixed assets being purchased on credit.

(d) wages being paid in cash.

65. Rent paid on 1st October, 2008 for the year to 30 September, 2009 was ` 1,200 and rent paid on1st October, 2009 for the year to 30 September, 2010 was ` 1,600. Rent payable, as shown inthe profit and loss account for the year ended 31 December 2009, would be:

(a) `1,200. (b) `1,600. (c) `1,300. (d) `1,500.

66. A decrease in the provision for doubtful debts would result in:

(a) an increase in liabilities. (b) a decrease in working capital.

(c) a decrease in net profit. (d) an increase in net profit.

From the given information, choose the most appropriate answer for Questions 67, 68 & 69 :

Sales Opening Purchases Closing Cost of Gross Selling Net

Stock Stock goods sold Profit Expenses Profit

` ` ` ` ` ` ` `

15,000 6,000 10,000 ? 9,000 ? 4,000 ?

67. The value of closing stock is

(a) `9,000 (b) `4,000 (c) `8,000 (d) `7,000

68. Gross profit will be

(a) `6,000 (b) `5,000 (c) `8,000 (d) `7,000

69. Net profit will be

(a) `6,000 (b) `5,000 (c) `2,000 (d) `7,000

From the given information, choose the most appropriate answer for Questions 70 and 71 :

Opening Investment Capital at the Net Profit

Capital By Proprietor Drawings end of the year (Loss)

` ` ` ` `

16,000 Nil 3,000 13,500 ?

FINAL ACCOUNT 371

70. The net profit will be

(a) `600 (b) `500 (c) `550 (d) `700

71. If in the given information, Net Loss is ` 1,000, then the investment made by the proprietorduring the year will be

(a) `1,500 (b) `2,000 (c) `1,200 (d) `1,700


` `

Opening Stock 20,000 Carriage on sales 3,000

Closing Stock 18,000 Rent of Office 5,000

Purchases 85,800 Sales 1,40,700

Carriage on purchases 2,300

72. Gross profit will be

(a) `50,000 (b) `47,600 (c) `42,600 (d) `50,600

73. Net profit will be

(a) `42,600 (b) `50,600 (c) `45,600 (d) `47,600


The Zed Company, a whole seller estimates the following sales for the indicated months:

June July August

2009 2009 2009

` ` `

Opening stock 4,08,000 4,34,400 4,60,800

Credit Sales 15,00,000 16,00,000 17,00,000

Cash Sales 2,00,000 2,10,000 2,20,000

Total Sales 17,00,000 18,10,000 19,20,000

Selling price is 125% of the purchase price.

74. The cost of goods sold for the month of June, 2009 is:

(a) `15,20,000 (b) `14,02,500 (c) `12,75,000 (d) `13,60,000


75. Stock purchased in July, 2006 is :

(a) `16,05,000 (b) `14,74,400 (c) `14,40,000 (d) `13,82,500

Considering the following information answer the Questions 76, 77 and 78 given below:

1st January 31st December

` `

Stock of raw materials 17,400 18,100

Work-in-progress 11,200 11,400

Stock of finished goods 41,500 40,700

During the year manufacturing overhead expenses amounted ` 61,100, manufacturing wages `40,400 and purchase of raw materials ` 91,900. There were no other direct expenses.

76. The cost of raw materials consumed, issued and used were:

(a) `1,09,300 (b) `91,200 (c) `91,900 (d) `92,600.

77. The manufacturing cost of finished goods produced were:

(a) `1,31,600 (b) `1,93,300 (c) `1,91,900 (d) `1,92,500.

78. The manufacturing cost of finished goods sold was:

(a) `1,91,700 (b) `1,92,500 (c) `1,94,000 (d) `1,93,300.

79. Capital is the difference between

(a) Income and expenses

(b) Sales and Cost of goods sold

(c) Assets and liabilities


*********

FINAL ACCOUNT 373

ANSWER KEYS


HOME WORK - 2

1. A new firm commenced business on 1st January, 2006 and purchased goods costing ` 90,000during the year. A sum of ` 6,000 was spent on freight inwards. At the end of the year the costof goods still unsold was ` 12,000. Sales during the year ` 1,20,000. What is the gross profitearned by the firm?

(a) `36,000 (b) `30,000 (c) `42,000 (d) `38,000

2. Rent paid on 1 October, 2004 for the year to 30 September, 2005 was ` 1,200 and rent paid on1 October, 2005 for the year to 30 September, 2006 was ` 1,600. Rent payable, as shown in theprofit and loss account for the year ended 31 December 2005, would be:

(a) `1,200 (b) `1,600 (c) `1,300 (d) `1,500

3. Consider the following data pertaining to H Ltd. for the month of March 2005:

Particulars As on March 01, 2005 (`) As on March 31, 2005 (`)

Stock 1,80,000 90,000

The company made purchases amounting ` 3,30,000 on credit. During the month of March2005, the company paid a sum of `3,50,000 to the supplie` The goods are sold at 25% abovethe cost. The sales for the month of March 2005 were

(a) `4,12,500 (b) `5,25,000 (c) `90,000 (d) `3,15,000.

4. Consider the following data pertaining to a company for the month of March 2005:

Particulars `

Opening stock 22,000

Closing stock 25,000

Purchases less returns 1,10,000

Gross profit margin (on sales) 20%

The sales of the company during the month are

(a) `1,41,250 (b) `1,35,600 (c) `1,33,750 (d) `1,28,400

5. C Ltd. recorded the following information as on March 31, 2005:

`

Stock as on April 01, 2004 80,000

Purchases 1,60,000

Sales 2,00,000

FINAL ACCOUNT 375

It is noticed that goods worth `30,000 were destroyed due to fire. Against this, the insurancecompany accepted a claim of `20,000.

The company sells goods at cost plus 33-1/3%. The value of closing inventory, after taking intoaccount the above transactions is,

(a) `10,000 (b) `30,000 (c) `1,00,000 (d) `60,000.

6.

` `

Opening Stock 20,000 Carriage on sales 3,000

Closing Stock 18,000 Rent of Office 5,000

Purchases 85,800 Sales 1,40,700

Carriage on purchases 2,300

Gross profit will be

(a) `50,000 (b) `47,600 (c) `42,600 (d) `50,600

7. Sundry debtors on 31st March 2006 are `55,200. Further bad debts are `200.

Provision for doubtful debts are to be made on debtors @ 5% and also provision of discount is tobe made on debtors @ 2%. The amount of provision of doubtful debts will be

(a) `1,045 (b) `2,750 (c) `1,100 (d) `2,760

8. Following are the extracts from the Trial Balance of a firm was on 31st December, 2005.

Particulars `

Sundry debtors 30,000

Bad debts 5,000

Additional information:

(i) After preparing the trial balance, it is learnt that a debtor, Mohan became insolvent andtherefore, the entire amount of `3,000 due from him was irrecoverable.

(ii) 10% provision for bad and doubtful debts is generally created.

The amount of provision for bad and doubtful debts to be charged to profit and loss accountwill be

(a) `3,000 (b) `2,700 (c) `2,500 (d) None of the three

9. Advertisement expenditure of `10,000 paid on 30.12.2006, the advertisement in respect ofwhich has appeared in the magazines of January, 2007.

This expenditure will be

(a) Shown as ‘expense’ in the financial statements of the year ended 31st December, 2006.

(b) Shown as ‘liability’ in the financial statements of the year ended 31st December,2006.


(c) Shown as prepaid expense in the financial statements of the year ended 31st December,2006.

(d) None of the three.

10. Ram strated business with cash `50,000

Purchased goods from Mohan on credit `20,000

Sold goods to Shyam costing `3,000 for cash `3,600

The accounting equation on the basis of these transactions will be

(a) Assets `70,600 = Laibilities `3,600+Owner’s equity `67,000

(b) Assets `70,600 = Liabilities `50,600+Owner’s equity `20,000

(c) Assets `70,600= Liabilities `20,000+Owner’s equity `50,600.

(d) None of the three.

11. A purchased a computer costing ̀ 10,000. Repairing expenses ̀ 1,000 and miscellaneous expenses`500 were incurred by him. He sold the computer at 20% margin on selling price. The salesvalue will be

(a) `12,500 (b) `11,000 (c) `14,375 (d) `13,800

12. Opening debtors `15,000

Bad debts during the year `14,000

Cash received from customers `1,60,000

Closing Debtors `7,000

Cash sales `20,000

Total sales will be -

(a) `1,50,000 (b) `1,60,000 (c) `1,51,000 (d) `1,86,000

13. Sundry debtors of M/s Santosh amounts to ` 25,000 and bad debts `3,000. M/s Santoshprovides for Doubtful debts @ 2% and for discount @ 1%. The amount of net debtors to beshown in the balance sheet will be

(a) `21,560 (b) `22,000 (c) `21,780 (d) `21,344

14. On 31st March 2005, Suraj has to pay to M/s Chandra `7,000 on account of credit purchasefrom the later. He paid `1,800 on 30th June 2006 after availing a cash discount of 10%. On 30thSeptember 2006, he paid ` 2,850 after availing 5% cash discount. On account of final settlement,the amount to be paid by Suraj without any discount will be

(a) `2,350 (b) `2,000 (c) `2,200 (d) `2,150

FINAL ACCOUNT 377

15. On 1st February, 2005, a loan of `10,000 was given @ 12% per annum. Interest was receivedfor 3 months from February to April in April, 2005. In the financial statements of the yearended 31st March, 2005 amount of accrued interest should be:

(a) `100 (b) `200 (c) `300 (d) `1200

16. On 1-4-2005, Ram invested `1,00,000 in a business. Interest of capital is to be allowed @ 12%per annum. Accounting year is financial year. Amount of interest to be charged to P & LAccount for the year 2005-2006 is:

(a) `9,000 (b) `10,000 (c) `12,000 (d) None of the above.

17. Mohan’s trial balance contains the following information:

Discount received `1,000

Provision for discount on creditors `1,600

It is desired to maintain a provision for discount on creditors at `1,100. The amount to becredited to P & L Account is

(a) `1,500 (b) `3,500 (c) `1,000 (d) `500

18. Carriage inwards is debited to

(a) Trading account. (b) Profit and loss account

(c) Profit and loss appropriation account (d) Balance sheet

19. Fluctuating capital account is credited with __________

(a) Interest on capital. (b) Profits of the year.

(c) Salaries or remuneration of the partne` (d) All of the above.

20. Opening stock of the year is `20,000, Goods purchased during the year is `1,00,000, Carriage`2,000 and Selling expenses `2,000.Sales during the year is `1,50,000 and closing stock is`25,000. The gross profit will be

(a) `53,000 (b) `55,000 (c) `80,000 (d) `51,000

21. Given below are the ledger balances of a management consultancy firm:

Capital `4,00,000, Computer ` 25,000, Air conditioner and furniture ` 1,00,000, Fixed Deposits`2,00,000, Salaries `8,00,000, Fees received ` 12,00,000, Travelling expenses `1,50,000, Rentand office expenses `2,40,000, Cash balances ` 1,80,000. Bank overdraft ` 95,000. The total oftrial balance will be

(a) `16,00,000 (b) `16,95,000 (c) `14,50,000 (d) `15,00,000


22. 18% investment of ` 1,00,000 and interest received on investment ` 15,000 have been given inthe trial balance for the period ended on 31.3.2006. The amount of interest outstanding in thefinal accounts will be

(a) `18,000 (b) `15,000 (c) `3,000 (d) Nil

23. Nidhi started her business with capital of `45,000 on 1st January, 2006. Interest on drawings`5,000 and interest on capital `2,000 were appearing in the Profit and Loss A/c for the yearended 31st December, 2006. Nidhi withdrew `14,000 during the year and profit earned duringthe year amounted to `15,000. Her capital on 31st December, 2006 is

(a) `67,000 (b) `47,000 (c) `45,000 (d) `43,000

24. Suresh’s Trial balance provides you the following information:

Bad debts `10,000

Provision for doubtful debts `15,000

Suresh wants to make a provision of `20,000 at the end of the year. The amount debited to theProfit & Loss Account is:


25. Following are the extracts from the Trial Balance of a firm as at 31st March, 2006:

Name of Account Debit Balance Credit Balance

` `

Salaries 16,000

P.F. deducted from salaries 1,000

Provide for employer’s share of P.F. equivalent to employee’s share to P.F. The amount at whichsalaries expense will be shown in the Profit and Loss A/c is


26. Salary has been paid for 11 months from April 2005 to February, 2006 amounting `22,000. Theamount of outstanding salary shown in the balance sheet will be:

(a) `1833 (b) `2,000 (c) `1,000 (d) None of the above

27. On 1st April, 2005 Raghu invested capital of `2,00,000. He withdrew `50,000 during the year.Interest on drawings is provided @ 10% per annum. The amount of interest on drawings deductedfrom capital is:

(a) `5,000 (b) `15,000 (c) `2,500 (d) `7,500

FINAL ACCOUNT 379

28. Mr Prakash sells goods at 20% above cost. His sales were `15,20,000 during the year. However,he sold damaged goods for `20,000 costing `30,000. This sale is included in `15,20,000. Theamount of gross profit is:

(a) `1,90,000 (b) `2,50,000 (c) `2,40,000 (d) `2,00,000.

29. Capital introduced by Mr. A on 1.4.2006 ` 3,00,000; further capital introduced during the yearwas ` 50,000 in the mid of the year. Mr. A withdrew ` 2,000 per month and the profit earnedduring the year was ` 20,000. Capital as on 31.3.2006 was

(a) `3,94,000. (b) `3,46,000. (c) `2,94,000. (d) None of the three.

30. Rekha purchased a machinery for ` 50,000 on 1.4.2006. She paid electricity and and salaryamounting ` 1,000 and ` 2,000 respectively. Telephone bill amounting ` 200 was outstandingon 31.3.2006. The amount of expenses for the year ended 31st March, 2006 will be

(a) `53,200 (b) `3,000 (c) `53,000 (d) `3,200

31. Gauri paid ` 1,000 towards a debt of ` 1,050, which was written off as bad debt in the previousyear. Gauri’s account should be credited with

(a) 1,000 (b) 1,050 (c) Nil (d) None of the three.

32. Ramesh, an employee of salary ` 10,000 per month withdrew goods worth ` 1,500 for personaluse and got salary of ` 9,000 in cash in the month of March, 2006. The excess payment of ` 500should be debited to

(a) Salaries account. (b) Goods account.

(c) Drawing account. (d) Salaries paid in advance account.

33. Sale of scrap of raw materials appearing in the trial balance are shown on the credit side of______

(a) Trading account. (b) Manufacturing account.

(c) Profit and loss account. (d) None of eth three.

34. Opening stock of raw material of a manufacturing concern is `10,000, Purchase during theyear is `2,00,000, Wages ` 50,000, Carriage `5,000, Factory overheads `1,25,000 and closingstock of raw material is ` 15,000. The amount to be transferred is

(a) ` 3,75,000 to cost of goods manufactured account.

(b) `3,75,000 to cost of goods sold account.

(c) ` 3,75,000 to cost of sales account.

(d) ` 3,75,000 to cost to company account.


35. Following are the items of the balance sheet of Mr. X:

Capital ` 7,00,000; Machinery ` 5,00,000 and cash ` 2,00,000. If Mr. X spends ` 5,000 to meethis family expenses, the balance of capital and cash accounts will be

(a) `7,00,000 and ` 2,00,000 (b) `6,95,000 and ` 1,95,000

(c) `7,00,000 and ` 1,95,000 (d) `6,95,000 and ` 2,00,000

36. Goods sold for cash ` 10,000, plus 10% sales tax. Sales will be credited by

(a) `11,000 (b) `10,000 (c) `9,000 (d) None of the above

37. XYZ & Company employs a team of ten workers who were paid `1,000 each in the yearending 31st December, 2005. At the start of year 2006, the company raised salaries by 10%. Theamount of salaries for the year ended 31st December, 2006 will be.


38. Capital introduced in the beginning by Shyam `. 3,00,000; further capital introduced duringthe year ` 2,00,000; Drawing ` 1,500 per month and closing capital is ` 4,50,000. The amountof profit or loss for the year is

(a) Loss of ` 32,000 (b) Loss of ` 50,000

(c) Profit of ` 32,000 (d) Information is insufficient for anycomment.

39.

` `

Gross Profit 50,000 Provision for Bad Debts (old) 2,000

Rent paid 6,000 Apprentice Premium (Credit) 4,000

Salaries 5,800

Net profit of the firm will be

(a) `42,200 (b) `40,000 (c) `42,000 (d) `45,000

40. R as started business on 01.01.06 with a capital of ` 20,000 and he borrowed ` 3,000 from afriend. He earned a profit of ` 10,000 during the year and withdrew cash ` 5,000 for privateuse. What is his capital at the end of the year?

(a) `25,000 (b) `28,000 (c) `30,000 (d) `27,000

41. Prepaid insurance given in trial balance is recorded in __________

(a) Trading account (b) Profit & Loss account

(c) Balance sheet (d) None of the three

FINAL ACCOUNT 381

42. A new firm commenced business on Jan. 1, 2006 purchased goods costing ` 19,500 during theyear. A sum of ` 400 was spent on carriage inward and ` 1000 on wages.

At the end of the year the cost of goods still unsold was ` 12,000. Sales during the year `25,000. What is the gross profit earned by the firm _________

(a) `16,100 (b) `18,200 (c) `20,000 (d) `15,100

43. A manager gets 5% commission on sales, cost price of goods sold is ` 40,000 which he sells at amargin of 20% on sale. Manager Commission will be

(a) `2000 (b) `2500 (c) `2800 (d) None of the three

44. Opening balance of Capital ` 5,000

Net profit 2,770

Income tax 550

Drawings 650

Interest on capital 500

Interest on Drawings 120

Capital at end will be

(a) `6950 (b) `6000 (c) `6500 (d) `6600

45. Jan 1,2006 Provision for Bad Debts 2,500

Dec. 31, 2006 Bad debts 1,870

Debtors 20,000

Make a provision for bad debts

Debts 5% on debto` Provision for bad debts in Profit and Loss A/c will be


46. Goods destroyed by fire ` 25000 and Insurance company admitted full claim. Claim receivablewill be recorded in _______

(a) Trading A/c (b) P/L Account

(c) Balance Sheet (d) P/L Appropriation A/c

47. If sales revenue are `4,00,000, cost of goods sold is 3,10,000 and operating expenses are `60,000,the gross profit is

(a) `90,000 (b) `30,000 (c) `3,40,000 (d) `60,000


48. Opening Debtors `10,200

Cash Received from debtors during the year

(as per cash book) ` 30,400

Returns Inwards ` 2,700

Bad debts ` 1,200

Debtors at end ` 13,800

Cash Sales (As per cash book) ` 28,400

Total Sales will be

(a) `66,300 (b) `66,000 (c) `65,000 (d) `66,500

49. A company wishes to earn 20% profit margin on selling price. Which of the following is theprofit mark upon cost, which will achieve the required profit margin?

(a) 25% (b) 30% (c) 20% (d) None of the above.

50. All the expenditures and receipts of revenue nature go to

(a) Trading A/c (b) Profit and Loss A/c

(c) Balance sheet (d) Either to (a) or (b)

51. On Jan 1, 2001 the position of V. Mathur was as follows Stock in hand ` 2400; Bills payable `400; Cash at Bank ` 1800; Plant and machinery ` 1000; Owing by debtors ` 500; Owing tocreditors ` 800; Investments 2000; Loan from Raja Ram ` 1500.

V. Mathur’s capital on the above date will be


52. The profit and loss account shows

(a) The financial position of the concern

(b) The degree of honesty with which accounting work has been done

(c) The capital invested in business

(d) Profit earned or loss suffered by the firm

53. Total sales during the year amounted to ` 70,000; Cash sales ` 10,000; Outstanding debtors atthe end of the year ` 25,000. Cash received from debtors during the year will be

(a) `35,000 (b) `30,000 (c) `37,000 (d) `32,000

54. Following figures have been taken from the trial balance of a trader –

Opening Stock ` 14,500

Purchases ` 75,995

FINAL ACCOUNT 383

Carriage Inward ` 1,700

Wages ` 825

Sales ` 93,750

Goods sent on Consignment ` 20,000

Amount of profit will be

(a) 20730 (b) 20500 (c) 20200 (d) 21000

55. Capital introduced in the beginning by Ram ` 16,080; further capital introduced during theyear in the form of machinery ` 2000; personal expenses during the year –

Drawings in cash ` 3,000

Life Insurance Premium ` 250

Closing capital ` 21,925

The amount of profit or loss for the year will be

(a) Profit 7095 (b) Profit 7085 (c) Loss 5000 (d) Loss 6000

56. Closing entry for transfer of Net profit ` 6300 to capital A/c will be

(a) Capital A/c Dr 6300; To P/L A/c 6300

(b) P/L A/c Dr. 6300; To Capital A/c 6300

(c) Trading A/c Dr. 6300; to P/L A/c 6300

(d) None of the three

57. Cash discount allowed to a debtor should be credited to

(a) Discount account (b) Customers account

(c) Sales account (d) None of the above

58. A running business was purchased by Ram with following assets and liabilities

Cash in hand 1000

Cash at Bank 5000

Stock 20000

Land and building 100000

Plant and machinery 50000

Owing from Mr. X 12500

Prepaid Insurance 500

Owing to Z Ltd. 3750


Interest received in advance 250

Rama’s capital will be

(a) 185000 (b) 180000 (c) 175000 (d) None of the above

59. Stock at start 2400 Carriage inward 524

Purchases 15205 Manufacturing wages 2800

Sales 20860 Manufacturing wages outstanding 96

Closing stock 3840 Loss due to fire 1000

Return outward 185 Indirect expenses 200

Return Inward 860

On the basis of the above information, Gross Profit will be


60. Outstanding wages in trial balance is recorded in ________

(a) Trading account (b) Profit & Loss account

(c) Balance sheet (d) None of the three

61. Cash Sales 50,000

Cash Collected from debtors 1,30,000

Bad Debts during the year 5,000

Debitors at the beginning 10,000

Total sales will be ______

(a) `175,000 (b) `170,000 (c) `180,000 (d) `178,000

62. Capital introduced by Mr. A on 01.04.05 ` 300,000, further capital introduced during the yearwas ` 50,000 in the mid of the year. Mr. A withdrew ` 2,000 on the first day of each month.Interest on drawings is charged @ 5%. Profit earned during the year was ` 20,000. Capital atthe end of the year will be

(a) `3,45,350 (b) `3,95,000 (c) `3,46,000 (d) None of the three

63. Goods worth ` 500 given as charity should be credited to

(a) Sales account (b) Purchases account

(c) Charity account (d) None of the three

FINAL ACCOUNT 385

64. A started business with ` 10,000 cash and ` 2,000 furniture. Sales amounted to ` 50,000including ` 5,000 cash sale. ` 10,000 sales were outstanding at the end of the year. Cashbalance will be ___________


65. As old machinery appearing in the books at ` 5,000 is to be exchanged for a new machinery of` 5,000. The old machinery has been valued at ` 800 for exchange purpose. Loss on exchangewill be _________

(a) `4,000 (b) `4,200 (c) `4,500 (d) NIL

66. Proposed dividends are debited to

(a) Trading A/c (b) Profit & Loss A/c

(c) Profit & Loss Appropriation A/c (d) None of the above

67. Depreciation on machinery in trial balance is recorded in ____________

(a) Trading A/c (b) Profit & Loss A/c

(c) Balance Sheet (d) None of the three

68. Gross Profit 51,000

Carriage Out 5,800

Rent paid 6,400

Bad Debts 2,600

Apprentice premium (Cr.) 1,500

Printing & Stationery 1,000


(a) `38900 (b) `36700 (c) `35000 (d) `40000

69. Following figures have been taken from the books of a trader

Purchases 3,00,000

Purchase Returns 6,000

Sales 4,10,000

Sales Returns 10,000

Opening Stock 80,000

Carriage & Freight 12,000

Duty & Clearing Charges 4,000

Wages 8,000


Closing Stock 60,000

Gross profit will be

(a) `60,000 (b) `61,000 (c) `62,000 (d) `65,000

70. On 1st April, 2005 M/s Omega Bros. had a provision for bad debts of ` 6500. during 2005-2006` 4200 proved irrecoverable and it was desired to maintain the provision for bad debts @ 4% ondebtors which stood at ` 195,000 before writing off bad debts.

Amount of net provision debited to profit and loss A/c will be

(a) 7800 (b) 7500 (c) 5332 (d) 5000

71. Goods destroyed by fire ` 50,000 and Insurance company admitted 60% claim. This adjustmentwill be entered in

(a) Trading Account (b) Profit & Loss Account

(c) Balance Sheet (d) All the three

72. Opening debtors - ` 1,50,000

Total sales - ` 50,000

Cash received from debtors – ` 30,000

Cash sales – ` 15,000

Sales Returns – ` 3,000

Bad debts – ` 7,000

Bills received from customers – ` 15,000

Debtors at the end will be

(a) `1,40,000 (b) `1,30,000 (c) `1,20,000 (d) `1,50,000

73. A’s acceptance to B for ` 8,000 renewed at 3 month on the condition that ` 4,000 be paid incash immediately and the remaining amount will carry interest @ 12% p.a. The amount ofinterest will be

(a) 120 (b) 100 (c) 80 (d) 160

74. Capital on January 1, 2004 15,200

Capital on January 1, 2005 16,900

Drawings made during the year 4,800

Additional Capital introduced during the year 2,000

Profit of the firm will be

(a) 4,500 (b) 4,000 (c) 4,800 (d) 5,000

FINAL ACCOUNT 387

75. A started business with ` 10,000 cash and ` 2,000 furniture. Sales amounted to ` 50,000including ` 5000 cash sale. ` 10,000 sales were outstanding at the end of the year. Purchasesamounted to ` 30,000 including ` 10,000 cash purchase. ` 15,000 has been paid to credito`

Expenses paid during the year are ` 19,300. Cash balance at the end will be

(a) `6000 (b) `7000 (c) `5700 (d) `5000

76. Rent payable to the landlord ` 5,000.00 is credited to

(a) Cash account (b) Landlord account

(c) Rent account (d) None of the above

77. ` `

Opening Stock 80,000.00 Purchases returns 6,000.00

Cash purchases 1,00,000.00 Sales returns 10,000.00

Credit purchases 2,00,000.00 Carriage inwards 12,000.00

Cash sales 1,60,000.00 Wages 12,000.00

Credit sales 2,50,000.00 Closing stock 60,000.00

Gross profit of the firm will be

(a) `62,000.00 (b) `75,000.00 (c) `80,000.00 (d) `60,000.00

78. Mohan started business with ` 10,000.00 cash and ` 2,000.00 furniture. Sales amounted to `50,000.00 including ` 5,000.00 cash sales. ` 10,000.00 sales were outstanding at the end of theyear. Purchase amounted to ` 30,000.00 including ` 10,000.00 cash purchases ` 15,000.00 hasbeen paid to credito` Expenses paid during the year 19,300. Trial Balance total will be -

(a) `67,000.00 (b) `70,000.00 (c) `75,000.00 (d) `80,000.00

79. A started business on Jan 1 with a capital of ` 40,000. On 31st Dec. his position was Creditors` 4700, machinery ` 40,000, furniture ` 2,000, Debtors ` 1300, Cash ` 15,000.

He made drawings @ ` 200 per month and ` 1000 which he brought on 1st Oct. in the businessas further capital. Business profit will be

(a) 15,000 (b) 16,000 (c) 14,000 (d) 17,000

80. Opening debtors 20,000

Total sales 90,000

Cash sales 20,000

Cash received from debtors 20,000

Bad debts 3,000

Return inward 1,000


Bills received from customers 10,000

Debtors at end will be

(a) 56,000 (b) 70,000 (c) 60,000 (d) 65,000

81. ` 5000.00 spent on maintenance of plant and machinery is:

(a) Revenue expenditure (b) Capital expenditure

(c) Deferred capital expenditure (d) None of the three above

82. Salary and wages is debited to

(a) Trading Account (b) Profit and Loss Account

(c) P/L Appropriation account (d) Balance Sheet

83. A started business with ` 10,000 cash. Sales amounted to ` 50,000 including ` 5,000 cash sale.` 10,000 sales were outstanding at the end of the year. Purchases amounted to ` 30,000 including`10,000 cash purchase ` 15,000 has been paid to credito` Salaries paid amounted to ` 3,000,Rent ` 2,400, Stationery ` 900.

Drawings were 4,000. Miscellaneous expenses ` 1,000 and machines purchased `8,000. Cashbalance will be


84. A machinery of cost price of ` 4,000 was sold for ` 5200. Depreciation provision to date was `500 and Commission paid to the selling agent was 420 and wages paid to workers for removingthe machine was ` 150. Profit on sale of machinery will be

(a) `1130 (b) `1000 (c) `1200 (d) None of the three.

85. A manager gets 5% commission on net profit after charging such commission. Gross profit `48000 and expenses of indirect nature other than manager’s commission are ` 6000. Commissionamount will be


86. What shall be the commission of the manager in the above question if the rate of commission is5% on net profit before charging such commission. Commission amount will be


87. A trader sells goods at a profit of 25% on sale. In a particular month, he sold goods costing `34,200. Rate of profit on cost will be -

(a) 33-1/3% (b) 30% (c) 35% (d) None of the three

FINAL ACCOUNT 389

88. G’s trial balance contains the following information –

Bad debts ` 4000; Provision for Bad debts ` 5000; Sundry debtors ` 25000 It is desired to createa provision for Bad debts at 10% on Sundry debtors at the end of the year. Sundry debtors willappear in the balance sheet at


89. From the following figures prepare balance sheet of the Mr. X as on Dec. 31, 2006.

` `

Goodwill 70000 Debtors 35000

Plant & Machinery 60000 Furniture 10000

Investments 25000 Bills payable 10000

Outstanding 5000 Bills Receivable 9000

expenses Cash 6000

Closing stock 25000 Drawings 12000

Creditors 45000 Capital 155000

Net Profit 22000

Bank overdraft 15,000

Balance sheet total will be


90. Trial Balance shows the following balance

Dr. Cr.

Capital - 50,000

Income tax 10,000

Income tax advance payment 1,600

Interest on advance payment of tax 40

Capital a/c balance will be


91. `

Jan 1, 2006 Provision for doubtful debts A/c 990

Dec. 31, 2006 Bad Debts 1,850

Dec. 3, 2006 Debtors 30,000

Information


(i) Make a provision for bad debts 5% on debto`

(ii) Make a provision for discount on debtors 2%.

Provision for discount on debtors will be


92. Loan A/c credit balance on Dec. 31, 2006 15,000

Loan paid on June 30,2006 4,000

Loan paid on Sept. 30, 2006 5,000

Interest on loan is to be charged 9% p.a.

Interest amount will be

(a) `1867.50 (b) `1800 (c) `2000 (d) None of the three

93. Ram, the manager, is entitled to get a commission of ` 25 per article sold plus ¼th of theamount by which the gross sales proceeds less total commission there on exceed a sum at therate of ` 125 per article sold. Ram sold 450 articles at ` 73800.

commission amount will be -


94. Capital introduced in the beginning by Shyam ` 12,000; Further capital introduced during theyear ` 4,000. He made drawings of ` 3000 and closing capital is ` 16430. The amount of profitor loss for the year will be


95. Ramesh, an employee got a salary ` 10,000 and withdrew goods of ` 7,000 (cost price ` 6,000)for personal use and got salary ` 6000. The excess payment will be


96. Income earned but not received is shown in

(a) Asset side of the Balance Sheet (b) Liability of the Balance Sheet

(c) Profit and Loss A/c (Dr. balance) (d) None of the above

97. A manager gets 5% commission on net profit after charging such commission, gross profit `58,000 and expenses of indirect nature other than manager’s commission are ` 16,000.

Commission amount will be

(a) `2,900 (b) `2,000 (c) `1,500 (d) `2,200

FINAL ACCOUNT 391

98. Particulars Amount Particulars Amount

Salaries 4,000 Interest on investment received 1,200

Interest on loan 5,000 Freight inward 2,000

Bad debts 1,200

Wages 1,000

Gross Profit 25,000

Net Profit will be

(a) `15,300 (b) `13,000 (c) `17,200 (d) `16,000

99. Ankur purchased goods costing ` 5,000 at an invoice price, which is 50% above cost. On invoiceprice he enjoyed 15% trade discount and ` 375 cash discount on cash payment of goods inlump sum at the time of purchase. The purchase price to be recorded in the books before cashdiscount will be

(a) `5,000 (b) `7,500 (c) `6,375 (d) `6,000

100. Following figures have been taken from the trial balance of a trader

Gross Purchase ` 60,000 Gross Sales ` 1,00,000

Purchase Returns ` 5,000 Sales Returns ` 7,000

Duty Drawback ` 6,000 Sales Tax ` 12,000

The amount of G.P. will be

(a) `32,000 (b) `38,000 (c) `40,000 (d) `26,000

101. A debit note for ` 500 issued by Mr. Marshall to Mr. Fisher for goods returned by Mr. Marshallis to be accounted for

(a) Bill receivable Book (b) Purchases Return Book

(c) Purchase Book (d) Journal Proper

102. An amount of ` 5,000 received from Pankaj credited to Pooja would affect

(a) Pooja’s A/c (b) Pankaj’s A/c

(c) Pankaj’s A/c and Pooja’s A/c (d) Cash A/c and Pooja’s A/c

103. Sale of office furniture should be credited to

(a) Furniture A/c (b) Sales A/c (c) Cash A/c (d) Purchase A/c


104. Sundry debtors on 31st March, 2010 are ` 1,05,000. Further bad debts are ` 5,000, sales returnrecorded in the books ` 10,000. Old provision for bad debts is ` 4,000. Provision for doubtfuldebts is to be made on debtors @ 10% and also provision of discount is to be made on debtors @3%. What will be the amount of bad debts charged in Profit and Loss A/c after consideringprovisions for bad debts?

(a) `2,700 (b) `11,000 (c) `12,700 (d) `6,000

105. From the following figures ascertain the gross profit/loss


Cost of good sold = ` 2,20,000

Freight on purchase = ` 1,20,000

Sale = ` 3,00,000

(a) `80,000 (b) `8,000 (c) `20,000 (d) `68,000

106. Closing capitals of Amit, Sumit and Vineet were ` 50,000, ` 45,000 and ` 30,000 respectively.Their drawings during the year were ` 10,000, ` 5,000 and ` 12,000 respectively. Amount ofnet profit earned during the year was ` 18,000 which was distributed in the ratio of 3:2:1.Opening capital of Vineet will be

(a) `45,000 (b) `39,000 (c) `56,000 (d) `44,000

107. Sohan runs a departmental store. He renovates his shop to increase its space. The amount of `75,000 was incurred on renovation. The amount to be charged to Profit and Loss A/c is

(a) `75,000 (b) `10,000 (c) NIL (d) None of the above

108. If sales is ` 10,000 and the rate of gross profit on cost of goods sold is 25%, then the cost ofgoods sold will be

(a) `2,000 (b) `8,000 (c) `2,500 (d) `10,000

109. Ankur purchased a computer costing ` 24,000. Repairing expenses `1,500 & other charges(loading & unloading) ` 1,500 were incurred by him. He sold the computer at 25% margin onselling price. The profit on sale will be

(a) `8,500 (b) `9,000 (c) `10,000 (d) `11,500

110. Goods distributed as free samples is debited to

(a) Advertisement A/c (b) Charity A/c

(c) Purchases A/c (d) Goods A/c

FINAL ACCOUNT 393

111. A Club paid subscription fees of ` 1,800 out of which ` 400 is prepaid. In such case

(a) P & L A/c is debited with ` 1,400 (b) ` 400 is shown as current assets

(c) Both (a) and (b) (d) None of the above.

112. If goods worth ` 2,000 returned to a supplier is wrongly entered in sales return books as `1,500 then

(a) Gross profit will decrease by ` 4,000 (b) Gross profit will increase by ` 3,500

(c) Gross profit will decrease by ` 3,500 (d) None of the above

113. In case opening stock was ` 15,000, purchases ` 25,000, factory lighting ` 5,000 and closingstock ` 10,000. Then, the cost of goods sold had been

(a) `30,000 (b) `45,000 (c) `35,000 (d) `25,000

114. If total assets of the firm is ` 2,00,000; outside liabilities is ` 1,60,000, then capital contributedby the owner will be

(a) `60,000 (b) `40,000 (c) `3,60,000 (d) None of the above

115. B’s trial balance contains the following information-

Make provision at the end of the year ` 10,000

Provision for bad debts at the

beginning of the year ` 4,000

Bad Debts ` 6,000

The amount to be debited to Profit & Loss A/c

(a) `20,000 (b) `8,000 (c) `12,000 (d) NIL

116. A trial balance at 31st March contains the following information: 15% Loan ` 30,000; Interestpaid ` 3,000 ; Interest debited to the P & L A/c is

(a) `1,500 (b) `4,500 (c) `6,000 (d) Nil

117. Naresh is drawing ` 2,000 per month at the end of the month. If the rate of interest is 10% p.a.the total interest chargeable from him in the accounting year will be

(a) `2,400 (b) `1,200 (c) `1,100 (d) None of the above

118. A manager gets 10% commission on sales. Cost price of goods sold is `80,000 which he sold ata margin 20% on sale. Amount of commission will be

(a) `16,000 (b) `9,600 (c) `10,000 (d) `6,000


119. General Manager gets 10% commission on net profit after charging such commission. Grossprofit ` 70,000 and General expenses other than manager commission are ` 12,000.

Commission amount will be

(a) `5272.72 (b) `6072.72 (c) `5372.72 (d) `5172.72

120. Rent ` 10,000; Provision for bad debts (old) ` 10,000

Salaries ` 8,000 Apprentice Premium (credit) ` 12,000

Gross profit ` 70,000


(a) `74,000 (b) `64,000 (c) `54,000 (d) `52,000

121. An old motor car was purchased for ` 1,00,000. It was repaired for ` 10,000 and ` 15,000spent on its painting. Machinery repairs A/c will be debited by

(a) `25,000 (b) `10,000 (c) `15,000 (d) NIL

122. Shyam started business on 1.4.09 with a capital of ` 2,00,000 for which he borrowed ` 30,000from a friend. He earned a profit of ` 1,00,000 during the year and withdrew cash ` 50,000 forprivate use. What is his capital at the end of the year?

(a) `2,80,000 (b) `2,50,000 (c) `3,00,000 (d) `3,80,000

123. A seller sells goods at a profit of 25% on sales. In a particular month, he sold goods costing45,000. Sales price of goods will be

(a) `56,250 (b) `65,000 (c) `55,000 (d) `60,000

124. Salary has been paid for 9 months from April to December 2009 amounting ` 72,000. Theamount of outstanding salary shown in the balance sheet will be

(a) `48,000 (b) `8,000 (c) `24,000 (d) `72,000

125. X started business with ` 1,00,000 cash and furniture ` 20,000. He bought goods worth `3,00,000 on credit basis. Sales amount to ` 5,00,000 including ` 50,000 cash sales.

Out of credit sales, ` 1,00,000 were outstanding at the end of the year. Cash balance aftergiving affect of above transactions will be

(a) `4,50,000 (b) `3,50,000 (c) `5,00,000 (d) `2,00,000

126. An old furniture appearing in the books at ` 10,000 is to be exchanged for a new furniture of `10,000. The old furniture has been valued at ` 2,000 for exchange purpose. Loss on exchangewill be

(a) `18,000 (b) `22,000 (c) `8,000 (d) `7,000

FINAL ACCOUNT 395

127. Capital on April 1, 2009 ` 20,000

Capital on April 1, 2010 ` 25,000

Drawings during the year ` 5,000

Additional capital introduced ` 6,000

during the year

Net Profit of the year will be

(a) `6,000 (b) `5,000 (c) `4,000 (d) `3,000

128. Following balances are given in trial balance

10% loan on (1.04.2009) ` 70,000 (Cr.)

Interest on loan 3,500

Interest outstanding at the end of the year will be

(a) `3,500 (b) `10,500 (c) `7,000 (d) `3,000

129. On April, 2009, Gita invested capital of ` 60,000. She withdrew ` 5,000 on the first day of eachmonth interest on drawing is provided @ 20%. The amount of interest on drawings deductedfrom capital will be

(a) `6,000 (b) `12,000 (c) `6,500 (d) `1,000

130. If total sales during the year ` 1,00,000; Cash sales ` 20,000 and outstanding debtors at the endof the year ` 30,000 then cash received from debtors during the year will be

(a) `70,000 (b) `50,000 (c) `1,10,000 (d) `90,000

131. Net profit before charging manager’s commission is ` 24,000 and the manager is to be alloweda commission of 20% on the profit after charging such commission. Commission amount willbe

(a) `4,000 (b) `4,800 (c) `4444.44 (d) None of the above

132. Ram sells goods at cost plus 40%. Total sales were ` 21,000. Cost price of the goods will be

(a) `8,400 (b) `15,000 (c) `12,600 (d) `20,000

133. Net profit before commission has been ` 1,20,000. Manager’s commission is 20% of net profitafter charging such commission. The amount of manager’s commission is

(a) `22,000 (b) `25,000 (c) `24,000 (d) `20,000


134. Following figures have been taken from the trial balance of a trader

Purchases (Adjusted) ` 30,000

Sales ` 40,000

Closing Stock ` 5,000

The amount of profit will be

(a) ` 10,000 (b) ` 15,000

(c) ` 12,000 (d) None of the above

*********

FINAL ACCOUNT 397

1 (c) current assets (d) fictitious assets · in the cash of the sole proprietorship, assets in...

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