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

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

Prem Traders is a debtor so debited & sales & VAT a/c credited.

Multiple choice

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

 20% amount is loss & transfer to profit & loss a/c.

Multiple choice

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

Asset Cost Value is RS. 10,000 & Sale Value is Rs. 8,000 so the value of loss is Rs. 2,000 (10,000 - 8,000).

Multiple choice

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

 Books closed on 31st March, 2010 & insurance premium payment period is belongs to 2 financial years. 1st for 3  months & next for 9 months. So amount of prepaid insurance premium is calculated as it: (7,200 / 12) * 9 = Rs. 5,400.

Multiple choice

Geeta draws a bill on Seeta for Rs. 6,000 on 1st April 2010 for mutual accomodation for 3 months. Seeta accepted the bill. Geeta discounts the bill at 6% and remits one-third of the proceeds to Seeta. Which journal entry will be passed by Geeta for remitting the proceeds to Seeta?
  1. Geeta's A/c Dr 2,000
    To Cash A/c 1,970
    To Discount A/c 30
  2. Seeta's A/c Dr 6,000
    To Cash A/c 5,910
    To Discount A/c 90
  3. Seeta's A/c Dr 2,000
    To Cash A/c 1,970
    To Discount A/c 30

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 As mentioned earlier only 1/3 of Rs 6,000 is remitted. Seeta would be debited by Rs 2,000. Cash sent is Rs 1,970 ( 1/ 3 X 5,910 ) ,Discount debited is Rs 30 ( 1/ 3 X 90 )  So this entry is correct.

Multiple choice

Which of the following is an example of a one-sided error?

  1. Undercasting of return inwards book by Rs. 340

  2. A cheque of Rs. 5,000 received from Rakesh has been credited to Rajesh's account.

  3. A sale of old furniture worth Rs. 2,780 has been credited to sales account.

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

 It is an one-sided error. This is because only sales returns book or return inward book is affected by it. For example, if the total of return inwards book is Rs. 1,040 and it is written as Rs. 700 by mistake, only the return inwards book is affected by it. The Trial Balance would not tally.

Multiple choice

In a businees, the following assets and liabilities are shown as on 31st March, 2010: Cash at Bank Rs. 5,50,000, Furniture Rs. 4,20,000, Plant & Machinery Rs. 20,00,000, Debtors Rs. 1,00,000, Stock in Hand Rs. 1,50,000, Creditors Rs. 1,20,000 and Bank Loan Rs. 10,00,000. What is the difference of amount and where should it be transferred?

  1. Rs. 32,20,000, Capital A/c

  2. Rs. 21,00,000, Cash A/c

  3. Rs. 21,00,000, Capital A/c

  4. Rs. 11,20,000, Cash A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital = Assets - Liabilities. i.e. Capital = 32,20,000 - 11,20,000.