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 elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

Listed in random order are the balance sheet figures of Mr. Q as at 31st March, 2015.

Trade receivables Rs. $50,000$
Trade payables Rs. $30,000$
Building Rs. $90,000$
Capital Rs. $1,00,000$
Bank loan Rs. $40,000$
Inventories Rs. $10,000$
Cash Rs. $20,000$
Reserves Rs. $50,000$
Intangible assets Rs. $30,000$
Shares Rs. $20,000$
Equipment Rs. $40,000$
Retained earnings        Rs. $40,000$


Determine the owner's equity?

  1. Rs. $2,10,000$
  2. Rs. $1,90,000$
  3. Rs. $1,20,000$
  4. Rs. $1,70,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Owner's equity is the sum of Capital, Reserves, and Retained Earnings. 1,00,000 + 50,000 + 40,000 = 1,90,000.

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

Which of the following accounting equation is correct?

  1. Capital (Rs. $15,000$)$=$Fixed Assets(Rs. $12,000$) $+$ Cash ($4,000$)
  2. Trade Payable (Rs. $3,000$) $+$ Capital (Rs. $17,000$) $+$ Bills Payable (Rs. $4,000$) $=$Fixed Assets (Rs. $20,000$)
  3. Capital (Rs. $15,000$) $=$Cash ($3,000$) $+$ Fixed Assets (Rs. $9,000$)
  4. Trade Payable (Rs. $8,000$) $+$ Capital (Rs. $7,000$) $=$Fixed Assets (Rs. $8,000$)$+$ Cash at bank (Rs. $4,000$)$+$Cash (Rs. $3,000$)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting Equation :- Total Assets = Capital+ Liabilities 

                                    = 15000 = 15000
Option D is Correct

Multiple choice commerce goods and services tax goods and service tax study of gst goods and services tax (gst)

GST is applicable to all dealers with a turnover of over ______.

  1. Rs. 10 lakh

  2. Rs. 20 lakh

  3. Rs. 40 lakh

  4. Rs. 50 lakh
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A business whose aggregate turnover in a financial year exceeds Rs 20 lakhs has to mandatorily register under Goods and Services Tax. This limit is set at Rs 10 lakhs for North Eastern and hilly states flagged as special category states. 

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

Mr. N returns the goods of Rs $50,000$ purchases on credit to Mr. Z. This transaction will be recorded by Mr. N in __and by Mr. Z in _____.

  1. Sales Return Book , Purchases Return Book

  2. Purchases Return Book, Sales Return Book

  3. Sales Return Book, Sales Book

  4. Purchases Return Book, Purchase Book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When Mr. N returns goods purchased on credit, he records it in his Purchase Return Book. Mr. Z, who sold the goods, records the return in his Sales Return Book.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

A second hand car is purchased for Rs. 20,000, the amount of Rs. 3,000 is spent on its repairs, 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

The cost of an asset includes the purchase price and all expenses incurred to bring it to a usable condition. 20000 + 3000 + 1000 + 2000 = 26000.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

A machine was purchased for Rs. 10, 000 and its life was estimated to be 3 years, and at the end of its life, its book value was Rs. 5, 120. If depreciation is calculated according to Diminishing Balance Method, the rate of depreciation would be?

  1. 25%

  2. 15%

  3. 20%

  4. 10%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 

Calculation of depreciation

Particulars | Details | Amount | | --- | --- | --- | --- | | I | Value of Machine |   | 10000 | |   | Depreciation 20% | (2000) |   | | II | WDV on 2nd year |   | 8000 | |   | Depn 20% | 1600 |   | | III | WDV on 3rd year |   | 6400 | |   | Depn 20% | 1280 |   | |   | Book value of machine |   | 5120 |

 

Multiple choice income tax direct taxes commerce black money and tax evasion meaning of tax

Manohar sold his house property for Rs. 50 lakhs. This income is chargeable under the head of __________.

  1. Income from other sources

  2. Income from House Property

  3. Profits and Loss from Business or Profession

  4. Income from Capital Gains
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
 Any profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to income-tax under the head capital gains. Examples of assets are a flat or apartments, land, shares, mutual funds, gold among many others. There are two types of capital gains:
  • Short-term capital gain: capital gain arising on transfer of short term capital asset.
  • Long-term capital gain: capital gain arising on transfer of long term capital asset.
Multiple choice book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

Given : Stock of stationery on Jan. 1, 2015 Rs 400
Stock of stationery on Dec. 31, 2015 Rs 100
Payment for stationery during 2015 Rs 1,200
Creditors for stationery on Dec. 31, 2015 Rs 150.
What is the amount of stationery that will be posted to the Income and Expenditure A/c for the year ending Dec. 31, 2015?

  1. Rs 1,150

  2. Rs 1,650

  3. Rs 850

  4. Rs 1,050
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Calculation of Amount of stationary for the year ended 31st March, 2015

Opening stock of stationary ,1st Jan 2015  =   400
+ Payment made during the year                =  1200
+ Creditors for stationary on 31st Dec         =  150
-  Closing stock as on 31st Dec ,2015          =  (100)
                                                                       =  1650 Rs.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

In case of an Issue of a debenture of Rs$100$ at $Rs110$, Rs$10$ is to be credited to:

  1. Securities Premium A/c

  2. Debenture Premium A/c

  3. Capital Redemption Reserve A/c

  4. Debenture Redemption Reserve A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If debentures are issued at a price more than its nominal value (face value) such an issue is called issue at a premium.

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

X and Y have capitals of Rs. 20,000 and Rs. 10,000 respectively and share profits and losses equally. On dissolution of firm all creditors are paid off and a balance of cash left is Rs. 5,000. It will be distributed as follows :

  1. Rs. 5,000 to X

  2. Rs. 5,000 to Y

  3. Rs. 2,500 each to X and Y

  4. Rs. 3,333 to A and Rs. 1,667 to B
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to piecemeal distribution of cash, partners whose capitals are more than proportionate to other partner's capital should first be refunded to bring down their capitals to proportionate levels. After that amount left unpaid be shared in profit sharing ratio. In this, X and Y share profits and losses equally. So their capitals should also be equal. To make capital equal X will be paid first. So Rs. 5000 will be paid to X. 

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

On the date of retirement of a partner Furniture Sundry debtors and provisions bad debtors stand in the books of A/c at Rs.50,000,Rs 45000, and Rs 4500 respectively. The  partner decided to revalue assets as under furniture to be  reduced to 85 % ,provision for bad debts to be brought to 20% of sundry debtors. The entry for revaluation of furniture in trade will be _______________.

  1. revaluation A/c Dr. Rs.4250,to furniture by Rs.4250

  2. profit and loss A/c Dr. Rs.5000, stock in trade credit by Rs.5000

  3. partners Capital A/c Dr. Rs 7500 to revaluations A/c 7500

  4. revaluation A/c Dr. Rs.7500, furniture Cr .Rs.7500
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Revaluation account is an account prepare at the time of retirement or death of a partner. In this account, increase in value of assets or decrease in liabilities is recorded at credit side and decrease in value of asset and increase in liabilities recorded at debit side. Difference between both sides is calculated and transfer to partner's capital account.

In the given question, revaluation of furniture will be journalise as follows:
        Revaluation A/c                   Dr.                       7500
                 To Furniture   A/c                                          7500
(being value of furniture decreased by 15%)

Multiple choice commerce discharge and breach of a contract discharge of contract performance, discharge, breach and remedies of contract business law and contract act

A person incurred expenses of RS. 5,000 for the necessaries supplied to a Minor. Which of the following is true?

  1. Cannot claim the expenses.

  2. Minor can be held liable for the necessaries supplied to him.

  3. It is not a valid claim.

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under the Indian Contract Act, a minor is not personally liable for necessaries, but their estate is liable to reimburse the supplier. Therefore, the claim is valid against the minor's property.

Multiple choice introduction of business laws business law and contract act business studies

A purchased an old computer costing Rs. 10,000 and incurred Rs. 1,000 on its repairs and Rs. 500 on its packing. He sold the computer at 20% margin on selling price. The sales value will be:

  1. Rs. 12,500

  2. Rs. 11,000

  3. Rs. 14,375

  4. Rs. 13,800
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Total cost = 10,000 + 1,000 + 500 = 11,500. If the margin is 20% on the selling price (S), then Cost = 80% of S. So, 11,500 = 0.8 * S. S = 11,500 / 0.8 = 14,375.

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

Mr. X accepted a bill of exchange of $Rs. 1500$ drawn by Y and payable in $3$ months. He got it discounted from bank at $2$% discount. The discounting charges amounted to __________.

  1. $30$
  2. $25$
  3. $7.5$
  4. $22$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A bill is drawn by the drawer(debtor) on the drawee (creditor) so as to give him a sense of  security for the receivables. But in case the drawer does not want to wait till the maturity period of the bill or rather he has some urgent need of funds, what he will do is get the bill discounted by a bank. When the bill is discounted by the bank, it pays the drawer an amount after deducting a certain percentage, because they are giving the drawer the funds he needs before the date of maturity of the bill and the discount is a type of fee for their service. So here in this case the amount of discount is calculated as follows:

Discount = $Rs. 1500$ x $2/100$= $Rs. 30$
Remember here the discount percentage is in not expressed as per annum so do not multiply it with the number of months. 

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

A draw a bill of exchange on $B$ for $Rs. 3,000$ for $4$ months. He got it discounted with a Bank at $12$% p.a. The discount charged by the bank will be _________.

  1. $Rs. 120$
  2. $Rs. 360$
  3. $Rs. 125$
  4. $Rs. 154$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Discount = Face Value * Rate * Time. Discount = 3,000 * 0.12 * (4/12) = 3,000 * 0.12 * (1/3) = 1,000 * 0.12 = 120.