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

An invoice of purchase from Ajit for Rs. 20,000 was not recorded in the books. Which is the correct rectifying entry, if the error is found after the preparation of the Balance Sheet?

  1. Dr. purchase A/c and Cr. cash A/c

  2. Dr. purchase A/c and Cr. Ajit A/c

  3. Dr. purchase A/c and Cr. suspense A/c

  4. Dr. profit and loss adjustment A/c and Cr. Ajit A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

No record of purchase  means increase in the profit, so to adjust the profit  we need to open the profit and loss adjustment A/c and the party's a/c is not affected. So there is no need to record it through party's a/c.

Multiple choice

A furniture costing Rs. 20,000, purchased on credit from ABC Furnitures, has been entered in the purchase book. What is the rectifying entry?

  1. Dr. purchase A/c and Cr. ABC Furnitures

  2. Dr. ABC Furnitures and Cr. purchase A/c

  3. Dr. furniture A/c and Cr. ABC Furnitures

  4. Dr. furniture A/c and Cr. purchase A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is the error of principle because capital expense is treated as revenue expense. So the purchase A/c has to be credited and the furniture A/c has to be debited.

Multiple choice

Which of the following is the example of an error of commission?

  1. A sum of Rs. 12,000 spent on the extension of a building was debited to building repairs A/c

  2. A sum of Rs. 2,000 received from S & Co. has been entered as received from R & Co.

  3. Machinery was purchased for Rs. 1,00,000 but the transaction was not recorded

  4. Rahul's A/c debited with Rs. 1,500 instead of Rs. 1,200 and Vijay's A/c debited with Rs. 1,700 instead of Rs. 2,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is the error of commission. It means the posting of an item is made to the correct side but of a wrong a/c i.e. here R & Co.'s a/c instead of S & Co.'s a/c.

Multiple choice

A sum of Rs. 12,000, spent on the extension of a building, was debited to building repairs A/c. What rectifying entry is to be passed?

  1. Dr. building A/c and Cr. cash A/c

  2. Dr. building repairs A/c and Cr. cash A/c

  3. Dr. building A/c and Cr. building repairs A/c

  4. Dr. building repairs A/c and Cr. building A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is the rectifying entry because we need to debit the building account and buidling repairs A/c needs to be credited.

Multiple choice

Which of the following is an example of compensatory error?

  1. A sum of Rs. 12,000 spent on the extension of a building was debited to building repairs A/c

  2. A sum of Rs. 2,000 received from S & Co. has been entered as received from R & Co.

  3. Machinery was purchased for Rs. 1,00,000 but the transaction was not recorded

  4. Rahul's A/c debited with Rs. 1,500 instead of Rs. 1,200 and Vijay's A/c debited with Rs. 1,700 instead of Rs. 2,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

 This is a compensatory error because in the first transaction Rs. 300 have been debited more, whereas in the second transaction Rs. 300 have been debited less.

Multiple choice

The purchase book is overcast by Rs. 2,000 and the sales book is undercast by Rs. 3,000. Both the errors are found only after the preparation of final accounts. What amount of profit is to be transferred to the profit and loss adjustment account after rectification of both the errors?

  1. Dr. profit and loss adjustment account by Rs. 2,000

  2. Cr. profit and loss adjustment account by Rs. 3,000

  3. Dr. profit and loss adjustment account by Rs. 5,000

  4. Cr. profit and loss adjustment account by Rs. 5,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The overall impect on profit after rectification of both the errors is an increase of Rs. 5,000, so we need to credit the profit and loss adjustment account.

Multiple choice

Repair charges of Rs. 500 for building are incorrectly charged to the building account. Which rectifying entry needs to be passed?

  1. Dr. building account Rs. 500 and Cr. repairs account Rs. 500

  2. Dr. repairs account Rs. 500 and Cr. building account Rs. 500

  3. Dr. suspense account Rs. 500 and Cr. repairs account Rs. 500

  4. Dr. building account Rs. 500 and Cr. suspense account Rs. 500
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The expense is a revenue expense so we need to debit the account of expense and not the asset .

Multiple choice

Rectify the following error: 'Sales day book is undercast by Rs. 650'.

  1. Dr. sales account by Rs. 650 and Cr. suspense account by Rs. 650

  2. Dr. suspense account by Rs. 650 and Cr. sales account by Rs. 650

  3. Dr. sales account by Rs. 1,300 and Cr. suspense account by Rs. 1,300

  4. Dr. suspense account by Rs. 1,300 and Cr. sales account by Rs. 1,300
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 This is a one-side error, so we need to open suspense account.

Multiple choice

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.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The amount for Dr. & Cr. is workout by deducting trade discount i.e. 80,000 - 10% of 80,000 = 72,000.

Multiple choice

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
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

on 9th April, 2010 the cheque is treated as a cash & on 10th April, 2010 cash deposited in form of cheque; so Bank is debited & cash is credited.