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Fundamentals of Accounting - 2

Fundamentals of Accounting

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Questions

Question 1 Multiple Choice (Single Answer)

Which principle is often described as ''Anticipate no profit but provide for all possible losses''?

  1. Consistency Principle
  2. Accrual Principle
  3. Conservatism Principle
  4. Principle of Prudence
Question 2 Multiple Choice (Single Answer)

What amount is to be charged to the account of M/s Shahji & Co. for the transaction of goods worth Rs. 50,000 purchased from M/s Shahji & Co. @ 10% trade discount & 5% cash discount, if half amount is paid by cheque?

  1. Rs. 50,000
  2. Rs. 45,000
  3. Rs. 22,500
  4. Rs. 21,375
Question 3 Multiple Choice (Single Answer)

What is the amount of discount recorded in the books for the transaction of goods worth Rs. 50,000 purchased from M/s Shahji & Co. @ 10% trade discount and 5% cash discount, if half of the amount is paid by cheque?

  1. Rs. 5,000
  2. Rs. 2,500
  3. Rs. 2,250
  4. Rs. 1,125
Question 4 Multiple Choice (Single Answer)

What changes will be noticed in accounting equation for the transaction of purchased goods on credit?

A. Increase in Liabilities side.
B. Decrease in Liabilities side.
C. Increase in Assets side.
D. Decrease in Assets side.

  1. A & D
  2. B & D
  3. A & C
  4. B & C
Question 5 Multiple Choice (Single Answer)

Goods worth Rs. 80,000 are purchased from Rajesh & Sons @ 10% trade discount & 5% cash discount. Which is the correct journal entry for this?

  1. Dr. purchase a/c Rs. 80,000 & Cr. Rajesh & Sons. Rs. 80,000.
  2. Dr. purchase a/c Rs. 72,000 & Cr. Rajesh & Sons. Rs. 72,000.
  3. Dr. purchase a/c Rs. 80,000, Cr. Rajesh & Sons. Rs. 72,000 & trade discount Rs. 8,000.
  4. Dr. purchase a/c Rs. 72,000, Cr. Rajesh & Sons. Rs. 68,400 & discount received a/c Rs. 3,600.
Question 6 Multiple Choice (Single Answer)

Which account needs to be credited for the transaction of goods given as charity worth Rs. 5,000?

  1. Charity a/c
  2. Purchase a/c
  3. Drawings a/c
  4. Cash a/c
Question 7 Multiple Choice (Single Answer)

If the household expenses of Rs. 25,000 of a proprietor are shown as business expenses, what is the impact on the value of profit & the total of balance sheet?

  1. Increase in profit & decrease in the total of balance sheet.
  2. Decrease in both profit and the total of balance sheet.
  3. Decrease in profit and no impact on the total of balance sheet.
  4. No impact on profit and on the total of balance sheet.
Question 8 Multiple Choice (Single Answer)

For the entry ''Purchased furniture from Abbas Furnishers worth Rs. 80,000'', Abbas Furnishers charged Rs. 2,000 as carriage & Rs. 500 as wages. How much amount is recorded in the furniture A/c?

  1. Rs. 80,000
  2. Rs. 82,000
  3. Rs. 82,500
  4. Rs. 77,500
Question 9 Multiple Choice (Single Answer)

The entry ''Sold goods worth Rs. 80,000 to R.K.Traders plus VAT @ 4%'' is passed in the books. After sometime, R.K.Traders becomes insolvent. Only 60% amount is recovered from R.K.Traders. How much amount will be transferred to Bad Debt A/c?

  1. Rs. 32,000
  2. Rs. 48,000
  3. Rs. 33,280
  4. Rs. 49,920
Question 10 Multiple Choice (Single Answer)

The value of opening stock is Rs. 80,000. Purchases & sales during the year are Rs. 8,00,000 & Rs. 7,50,000 (costing Rs. 6,00,000) respectively. Find the value of closing stock.

  1. Rs. 1,30,000
  2. Rs. 2,00,000
  3. Rs. 1,20,000
  4. Rs. 2,80,000
Question 11 Multiple Choice (Single Answer)

The goods worth Rs. 60,000 were sold to Rajesh on 5th April, 2010 and this entry is passed in the books. A cheque of Rs. 60,000 was received from Rajesh on 9th April, 2010 and this entry is passed in the books. On 10th April, 2010, the cheque is sent to the bank for collection. What will be the entry passed on 10th April, 2010?

  1. Dr. Bank a/c & Cr. Rajesh
  2. Dr. Cash a/c & Cr. Bank a/c
  3. Dr. Bank & Cr. Cash
  4. Dr. Cash & Cr. Rajesh
Question 12 Multiple Choice (Single Answer)

What is the correct journal entry for the transaction ''Sold goods worth Rs. 60,000 to Prem Traders plus 4% Value Added Tax (VAT)''?

  1. Dr. Prem Traders Rs. 62,400 & Cr. Sales a/c Rs. 62,400.
  2. Dr. Prem Traders Rs. 60,000 & Cr. Sales a/c Rs. 60,000.
  3. Dr. Prem Traders Rs. 60,000, Dr. VAT a/c Rs. 2,400 & Cr. Sales a/c Rs. 62,400.
  4. Dr. Prem Traders Rs. 62,400, Cr. VAT a/c Rs. 2,400 & Cr. Sales a/c Rs. 60,000.
Question 13 Multiple Choice (Single Answer)

The amount for sale of old newspapers is Rs. 500. Which of the following is the correct entry for this transaction?

  1. Dr. cash a/c & Cr. sales a/c.
  2. Dr. sale of old newspapers a/c & Cr. cash a/c.
  3. Dr. cash a/c & Cr. sale of old newspapers a/c.
  4. Dr. sales a/c & Cr. sale of old newspapers a/c.
Question 14 Multiple Choice (Single Answer)

In which year did ICAI constitute Accounting Standard Board (ASB)?

  1. 1980
  2. 1944
  3. 1949
  4. 1977
Question 15 Multiple Choice (Single Answer)

Girish Mobile Store purchased furniture from ABK Furnishers costing Rs. 60,000. In which book will this entry be recorded for ABK Furnishers?

  1. Purchase Book
  2. Cash Book
  3. General Journal
  4. Purchase Return Book
Question 16 Multiple Choice (Single Answer)

Loss of goods worth Rs. 5,000 due to fire was recorded in the book. Claim is made to Insurance company and is recorded in the book with full amount. Insurance company paid the 80% amount. What is the entry for remaining 20% amount?

  1. Dr. loss by fire a/c & Cr. insurance claim a/c
  2. Dr. purchase & Cr. loss by fire a/c
  3. Dr. profit & loss a/c & Cr. insurance claim a/c
  4. Dr. cash a/c & Cr. loss by fire a/c
Question 17 Multiple Choice (Single Answer)

An asset of Rs. 10,000 is sold for Rs. 8,000 to Vijay. What is the journal entry for this?

  1. Dr. Vijay Rs. 10,000 & Cr. Asset a/c Rs. 10,000
  2. Dr. Vijay Rs. 10,000, Cr. Asset a/c 8,000 & Cr. Loss on Sale of Asset Rs. 2,000
  3. Dr. Vijay Rs. 8,000, Dr. Loss on Sale of Asset Rs. 2,000 & Cr. Asset a/c 10,000
  4. Dr. Vijay Rs. 8,000, Cr. Loss on Sale of Asset Rs. 2,000 & Cr. Asset a/c Rs. 6,000
Question 18 Multiple Choice (Single Answer)

What is the adjustment entry for the salary of Rs. 15,000, which is due as on 31st March, 2010?

  1. Dr. Salaries a/c & Cr. Profit & Loss a/c
  2. Dr. Salaries a/c & Cr. Outstanding Salaries a/c
  3. Dr. Outstanding Salaries a/c & Cr. Salaries a/c
  4. Dr. Salaries & Cr. Cash a/c
Question 19 Multiple Choice (Single Answer)

Prepaid expenses are shown under

  1. current liabilities
  2. current assets
  3. expenses
  4. income
Question 20 Multiple Choice (Single Answer)

The goods are purchased for Rs. 40,000 @ 5% cash discount. What is the nature of discount here?

  1. Asset
  2. Liability
  3. Income
  4. Expense
Question 21 Multiple Choice (Single Answer)

Annual Insurance Premium of Rs. 7,200 is paid on 1st Jan, 2010. What is the amount of Prepaid Insurance Premium, if the books were closed on 31st March, 2011?

  1. Rs. 7,200
  2. Rs. 1,800
  3. Rs. 5,400
  4. Rs. 3,600
Question 22 Multiple Choice (Single Answer)

The goods worth Rs. 40,000 were purchased from Harish and then were sold to Dinesh for Rs. 48,000. Dinesh returned goods worth Rs. 12,000 and these were sent back to Harish. What is the value of the return?

  1. Rs. 28,000
  2. Rs. 12,000
  3. Rs. 10,000
  4. Rs. 36,000
Question 23 Multiple Choice (Single Answer)

M/s Rahul & Sons purchased goods worth Rs. 90,000 from Vinod Tradings. After 2 days, the goods worth Rs. 10,000 were returned to Vinod Tradings. Which document will be sent to Vinod Tradings with these goods?

  1. Purchase Invoice
  2. Credit Note
  3. Sales Invoice
  4. Debit Note
Question 24 Multiple Choice (Single Answer)

Balance as on 1st April, 2010: Sundry Debtors = Rs. 5,20,000 and Bad Debt during the year = Rs. 10,000. Find the value of Provision for Bad Debt @ 10% as on 31st March, 2010.

  1. Rs. 52,000
  2. Rs. 53,000
  3. Rs. 51,000
  4. Rs. 10,000
Question 25 Multiple Choice (Single Answer)

Girish Mobile Store purchased furniture from ABK Furnishers costing Rs. 60,000. In which book will this entry be recorded for Girish Mobile Store?

  1. Purchase Book
  2. Cash Book
  3. General Journal
  4. Purchase Return Book
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