Commerce Accountancy · Economics

Journal Entries and Depreciation

650 Questions

Journal entries and depreciation are core accountancy topics involving the systematic recording of financial transactions and the calculation of asset value reduction over time. Students must solve problems related to bad debts, provision calculations, and error rectification. These questions are essential for candidates appearing in commerce and accounting competitive exams.

Bad debts provisionAsset depreciation calculationPurchase return errorsTrial balance rectificationDebenture issuance

Journal Entries and Depreciation Questions

Multiple choice general knowledge math & puzzles

A man went into a restaurant and ate a meal costing Rs. 105, giving the accountant a Rs. 500 note. He kept the change, came back a few minutes later and had some food packed for his friend. He gave the accountant a Rs. 100 note and received Rs. 20 in change. Later the bank told the accountant that both the Rs. 500 and the Rs. 100 notes were counterfeit. How much money did the restaurant lose? Ignore the profit of the food restaurant.

  1. 600

  2. 500

  3. 415

  4. 495
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The restaurant lost the value of the food provided and the real cash given back as change. First transaction: 105 (food) + 395 (change) = 500. Second transaction: 80 (food) + 20 (change) = 100. Total loss = 500 + 100 = 600. Since we ignore profit, the cost of food is treated as a direct loss.

Multiple choice general knowledge

TCS acquired Comicorm of Chile for Banking BPO for the amount of __________.
  1. US$26mn
  2. US$80.4mn
  3. US$505mn
  4. US$23.7mn
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

TCS acquired Comicorm, a Chilean company specializing in banking Business Process Outsourcing (BPO), for approximately US$23.7 million. This acquisition was part of TCS's strategy to expand its BPO capabilities in Latin America and strengthen its presence in the banking BPO segment.

Multiple choice general knowledge culture

All believed that corporate culture has min. of scams. Scam amount 8000 crore one of the biggest in india. How was it done.....the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (Rs 50.40 billion) as against Rs 5,361 crore (Rs 53.61 billion) reflected in the books ."

  1. Ramalinga Raju

  2. A Raja

  3. Harshad Mehta

  4. Ketan Parekh
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Ramalinga Raju, the chairman of Satyam Computer Services, confessed to inflating the company's balance sheet. The balance sheet as of September 30 showed non-existent cash and bank balances of Rs 5,040 crore, making it one of India's biggest corporate scams (Rs 8,000 crore scale).

Multiple choice general knowledge math & puzzles

The value of a machine depreciates at the rate of 12 percent per annum. It was purchased three years ago. Its present value is Rs. 29644.032, what was the purchase price of the machine?

  1. Rs 48,700

  2. Rs 38,900

  3. Rs 43,500

  4. 39000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Using the formula P = A / (1 - r)^n: P = 29644.032 / (0.88)^3. 0.88 cubed is 0.681472. 29644.032 / 0.681472 = 43,500. The machine was purchased for Rs. 43,500.

Multiple choice

Closing stock of work in progress Rs. 30, 000, cost of manufactured goods Rs. 1, 00, 000, opening stock of finished goods Rs. 20, 000, closing stock of finished goods Rs. 25, 000. The manufacturing cost of finished goods sold is

  1. Rs. 95, 000

  2. Rs. 1, 05, 000

  3. Rs. 65, 000

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Manufacturing cost of goods sold = Cost of manufactured goods + Opening stock of finished goods - Closing stock of finished goods = Rs. 1,00,000 + Rs. 20,000 - Rs. 25,000 = Rs. 95,000. The closing stock of work in progress is already factored into the cost of manufactured goods figure.

Multiple choice

Sundry debtors of Mr. R amounts to Rs. 25, 000 and additional bad debts, not recorded Rs. 3, 000. R provides for doubtful debts @ 2% and for discount @ 1%. The amount of net debtors to be shown in the balance sheet will be

  1. Rs. 21, 560

  2. Rs. 22, 000

  3. Rs. 21, 780

  4. Rs. 21, 344
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Calculation: Debtors after bad debts = Rs. 25,000 - Rs. 3,000 = Rs. 22,000. Less provision for doubtful debts @ 2% = Rs. 22,000 - Rs. 440 = Rs. 21,560. Less discount @ 1% = Rs. 21,560 - Rs. 216 = Rs. 21,344. The provision and discount are calculated after writing off bad debts.

Multiple choice

C's Trial Balance provides you the following information: Bad debts Rs. 800, Provisions for doubtful debts Rs. 2, 000. It is desired to maintain a Provision for doubtful debts of Rs. 1, 000. The accounting treatment of these adjustments is

  1. Rs. 1, 800 to be debited to the profit to the Profit & Loss Account

  2. Rs. 200 to be credited to the profit to the Profit & Loss Account

  3. Rs. 200 to be debited to the profit to the Profit & Loss Account

  4. Rs. 4, 200 to be debited to the profit to the Profit & Loss Account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Current provision for doubtful debts is Rs. 2,000, desired provision is Rs. 1,000, so we reduce the provision by Rs. 1,000 (credit to P&L). Bad debts of Rs. 800 are written off (debit to P&L). Net effect: Rs. 800 debit - Rs. 1,000 credit = Rs. 200 credit to Profit & Loss Account. Option B correctly shows this credit.

Multiple choice

The trial balance of M/s R Ltd. shows closing stock of Rs. 5, 00, 000. It will be recorded in

  1. trading account

  2. profit and loss account

  3. profit and loss appreciation account

  4. balance sheet
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Closing stock is an unsold asset at year-end and appears in the balance sheet on the assets side. It is shown in the trading account only for calculating gross profit, but its final recording destination is the balance sheet. Option D correctly identifies this.

Multiple choice

Annual Fire Insurance (of Building) Rs. 12, 000, paid on 1st January 2006 during accounting year ending on 31.3.2006 is

  1. capital expenditure

  2. revenue expenditure for current year Rs. 3,000, prepaid revenue exp. for next year Rs. 9, 000.

  3. deferred revenue expenditure

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 Annual expenditure= 12,000Monthly= 1,000Year ending= 31st march 2006, Amount paid on january 1, 2006Therefore, the amount paid for the current year is 3,000( Jan + Feb+ March)and rest of the amount is prepaid, which is (12,000 - 3000) = Rs. 9,000

Multiple choice

A second hand car is purchased for Rs. 20, 000, the amount of Rs. 3, 000 is spent o its repair, Rs. 1, 000 is incurred to get the car registered in owner's name and Rs. 2, 000 is paid as dealer's commission. The amount debited to car account will be

  1. Rs. 20, 000

  2. Rs. 23, 000

  3. Rs. 24, 000

  4. Rs. 26, 000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

 Amount debited to the Car account will be all the expenditure that has been incurred on the car. =(20,000+3,000+1,000+2,000)= Rs. 26,000