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

Which of the following errors is an error of principle?

  1. Total sales figure was taken as Rs. 19,373 instead of Rs. 19,733.

  2. A discount of Rs. 30 avowed to Mr. A was not recorded in the discount allowed account.

  3. Legal charges for acquisition of building for Rs. 500 were entered in the Legal Expenses Account.

  4. Rs. 1,000 received from Mr. X was posted to the credit of Mr. M.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct Answer: When a revenue item is shown as capital item and vice versa, it is error of principle.

Multiple choice

While checking the accounts of ABC, the following discrepancies were noticed, even though the Trial Balance was made to balance by putting the difference to Suspense Account.

(i) Sales day book for the month of June 2012 was found overcast by Rs. 7,000. (ii) A credit purchase of Rs. 3,000 was omitted to be recorded in the days book. (iii) Rs. 4,300 received from A credited to A's account as Rs. 3,400. (iv) Purchase of Office Equipment worth Rs. 5,000 included in trading purchases.

From the above details, what would have been the difference in Trial Balance which was made to balance by opening Suspense Account?

  1. Debit side short by Rs. 9,100

  2. Credit side short by Rs. 9,100

  3. Debit side more by Rs. 7,900

  4. Credit side more by Rs. 6,100
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Correct Answer:

(i)   Sales credited more by Rs. 7,000 (ii)  No suspense account (iii) A's account under credited by Rs. 900 (iv) No suspense account.  Thus, credit side is more by Rs. 6,100.

Multiple choice

Which of the following errors is an error of omission?

  1. Purchase of Rs. 2,000 has been recorded in the Sales Return Book.

  2. Repairs to machinery have been debited to Machinery Accounts.

  3. The total of purchase journal has not been posted to the Purchase Account.

  4. Legal charges paid to Mr. Lawyer have been debited to his account.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct Answer: The total of purchase journal has not been posted to the Purchase Account. When an entry is not posted, it is error of omission.

Multiple choice

A purchase of Rs. 6800 has been made by the firm but the amount has been posted to creditor’s account for Rs. 6000. For rectification, the journal entry would be

  1. debit creditor and credit purchase account with Rs. 800

  2. debit purchase account and credit suspense account with Rs. 800

  3. debit suspense account and credit creditor’s account with Rs. 800

  4. debit creditor’s account and credit suspense account with Rs. 800
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Since creditor's account is undercredited by Rs. 800, so debit suspense account and credit creditor’s account with Rs. 800.

Multiple choice

An amount of Rs. 6,000 is credited twice in the bank column of cash book. Taking credit balances as per pass book as the starting point, what adjustment needs to be done to arrive at the balance as per cash book?

  1. Add Rs. 12,000 to the balance as per pass book.

  2. Add Rs. 8,000 to the balance as per cash book.

  3. Deduct Rs. 6,000 from the balance as per pass book.

  4. Add Rs. 4,000 to the balance as per pass book.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Since cash book has subtracted Rs. 6,000 extra, so deduct 6,000 from the balance as per pass book.

Multiple choice

Purchase of Rs. 1,870 by cheques has been wrongly posted in the cashbook as Rs. 1,780. This has the effect of

  1. increasing the bank balance and undervaluation of stock consumed by Rs. 90.

  2. decreasing the bank balance and stock consumed by Rs. 90

  3. increasing the bank balance and stock consumed by Rs. 180

  4. decreasing the bank balance and stock consumed by Rs. 180
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Since purchase account is underdebited and bank account is undercredited, so (1) is the correct answer.

Multiple choice

The following details relate to a trading concern for the year 2010:

Opening stock Rs. 4,000. Purchases and sales during the year Rs. 36,000 and Rs. 35,000, respectively. Profit on sales is 20%. 50% of the closing stock was found to be obsolete and estimated to fetch only 50% of cost. The value for the closing stock at the end of the year will be

  1. Rs. 9,000

  2. Rs. 12,000

  3. Rs. 6,000

  4. Rs. 10,500
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Opening stock Rs. 4,000 + Purchase Rs. 36,000 - Cost of goods sold Rs. 28,000 (35,000 - 20%) Thus, stock left Rs. 12,000, out of which 50% stock is obsolete and valued at 50%, i.e. Rs. 3,000. This stock along with other goods of Rs. 6,000 will amount to Rs. 9,000.

Multiple choice
     
Rs. Rs.
Goodwill 70,000 Debtors 35,000
Plant and Machinery 60,000 Furniture 10,000
Investments 25,000 Bills payable 10,000
Outstanding Expenses 5,000 Bills receivable 9,000
Closing Stock 25,000 Cash 6,000
Creditors 45,000 Drawings 12,000
Net Profit 22,000 Capital 1,55,000
Bank overdraft 15,000

Balance sheet total will be

  1. Rs. 2,40,000

  2. Rs. 2,50,000

  3. Rs. 2,30,000

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

Assets = Goodwill + Plant + Investments + Stock + Debtors + Furniture + B/R + Cash, i.e. Rs. 2,40,000. The same are liabilities which are (Capital + N.P. - Drawings) + o/s expenses + creditors + bank overdraft + B/P

Multiple choice

From the following details, find out the amount to be debited to Profit and Loss Account as provision for bad & doubtful debts during 2012-13:

Debtors Rs. 30,000 as on 31.03.2013; Bad debt during the year Rs. 1,500; Provision for bad debts as on 01.04.2012 Rs. 2,000; Provision for doubtful debts to be kept at 5% of total debtors.

  1. Rs. 1,500

  2. Rs. 1,000

  3. Rs. 3,000

  4. Rs. 2,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

There are bad debts of Rs. 1,500 which are to be added by new provision of Rs. 1,500 (30,000 x 5%). Then old provision of Rs. 2,000 is subtracted. Thus, 1,500 + 1,500 - 2,000 = Rs. 1,000.

Multiple choice

Sundry debtors on 31st March, 2006 are Rs. 55,200. Further bad debts are Rs. 200. Provision for doubtful debts is to be made on debtors at the rate of 5% and also, provision of discount is to be made on debtors at the rate of 2%. The amount of provision of doubtful debts will be

  1. Rs. 1,045

  2. Rs. 2,750

  3. Rs. 1,100

  4. Rs. 2,760
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Out of debtors Rs. 55,200, Rs. 200 are bad debts and provision is to be created on balance of Rs. 55,000 at the rate of 5%, i.e. Rs. 2,750.

Multiple choice

A bad debt of Rs. 770 is written off. The correct entry is
  1. Bad debts A/c Dr 770
    To debtor's A/c 770
  2. Cash A/c Dr 770
    To debtor's A/c 770
  3. Debtors A/c Dr 770
    To bad debts A/c 770

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

Bad debts is a loss and loss is always debited. Since debtors is an asset, and it has decreased, which means it has gone out, so we would credit debtors.

Multiple choice

Bill received of Rs. 3600, whose maturity date is after 3 months, is discounted today at the rate of 6% p.a. The correct entry is
  1. Bad Debts A/c Dr 3,600
    To Cash A/c 3,546
    To Discount A/c 54
  2. Cash A/c Dr 3,600
    To B/R A/c 3,600
  3. Cash A/c Dr 3546
    Discount A/c Dr 54
    To B/R A/c 3600

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

Cash is received, so it would be debited (3600 - 54 = 3546). Discount is a loss, since the payment is received after deducting it. Hence, it would also be debited. Discount = 3,600 X 6/100 X 3/12 = Rs. 54. B/R has gone out, so it would be credited.