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 commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

R draws a bill of exchange on S for $Rs. 8,000$ for $4$ months. He got it discounted with a Bank at $12$% p.a. The net proceeds to be received from bank will be _______.

  1. $Rs. 7900$
  2. $Rs. 7680$
  3. $Rs. 8000$
  4. $Rs. 7650$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Discount = 8,000 * 0.12 * (4/12) = 320. Net proceeds = Face Value - Discount = 8,000 - 320 = 7,680.

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 draws an accommodation bill on B. The proceeds are to be shared by A and B in the ratio of 3:1. The amount of bill is Rs. 6,000, discounting charges Rs. 100. Discount borne by A will be ________.

  1. Rs. 75

  2. Rs. 100

  3. Rs. 83

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

The discount charges are shared in the ratio of the proceeds. Since the ratio is 3:1, A bears 3/4 of the discount. 100 * (3/4) = 75.

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

For mutual accommodation of A and B, B accepted a bill drawn on him by A for 2 months Rs. 12,000. The said bill is discounted at 12% p.a and remitted 1/3rd of the proceeds to B. The amount remitted by A to B will be _________.

  1. Rs. 4,000

  2. Rs. 3,920

  3. Rs. 3,840

  4. Rs. 3,800
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Discount = 12,000 * 0.12 * (2/12) = 240. Net proceeds = 12,000 - 240 = 11,760. B's share is 1/3 of the proceeds: 11,760 / 3 = 3,920.

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 Bobby sold goods worth Rs. $25,000$ to Mr Bonny. Bonny immediately accepted a bill on $1.11.01$, payable after $2$ months. Bobby discounted this bill @ $18\%$ p.a. on $15.11.01$. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and $50$ paise in a rupee is recovered from Bombay's estate. How much amount of bad debt will be recorded in the books of Bobby.

  1. $12,500$
  2. $9,437$
  3. $11,687$
  4. $13,650$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The bill was for 25,000. When Bonny becomes insolvent, the amount recoverable is 50 percent of the face value. Bad debt = 25,000 * 0.50 = 12,500.

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

Ram drew a bill on Shyam for Rs. 4,500 for mutual accommodation in the ratio 2:1. Shyam accepted the bill and returned to Ram. Ram discounted the bill for Rs. 4,230 and remitted 1/3rd proceeds to Shyam. Before the due date, not having funds to meet the bill, Shyam drew a bill on Ram for Rs. 6,300 on the same terms as to mutual accommodation. The second bill was discounted for Rs. 6,120. The first bill was honoured on the due date and a net amount of Rs. 1,080 was remitted to Ram by Shyam. What will be the proportionate discount charged on the second bill to be borne by Ram?

  1. Rs. 180

  2. Rs. 150

  3. Rs. 300

  4. Rs. 120
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The second bill is for 6,300 and discounted for 6,120, meaning the discount is 180. The ratio is 2:1. Ram bears 2/3 of the discount: 180 * (2/3) = 120.

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

Ram draws on Mohan a bill for Rs. 60,000 on April 1,2005, for two months. Mohan accepts the bill and sends it to Ram, who gets the bill discounted for Rs. 58,800. Ram remits Rs. 19,600 to Mohan. On the due date Ram being unable to remit due amount to Mohan, agrees to accept a bill for Rs. 84,000 for two months. This bill is discounted by Mohan, for Rs. 82,200. Mohan remits Rs. 14,800 to Ram. What will be the discount borne by Ram on second bill?

  1. Rs. 1,200

  2. Rs. 1,800

  3. Rs. 1,100

  4. Rs. 800
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The second bill is for 84,000 and discounted for 82,200, so the discount is 1,800. The ratio is 2:1. Ram bears 2/3 of the discount: 1,800 * (2/3) = 1,200.

Multiple choice installments banking business and commercial activities economics maths

Volkswagen decides to sell its best-selling car under following different schemes:

Scheme Selling Price InitialPayment ProcessingFee Rate ofInterest Duration
$80\%$ Finance Rs. $4{,}00{,}000$ $20\%$ $0.5\%$ $10\%$ $2$ years
$100\%$ Finance Rs. $4{,}00{,}000$ $0\%$ $1\%$ $12.5\%$ $1$ years
$0\%$ Interest Rs. $4{,}00{,}000$ $3$ EMIsin advance $1\%$ $0\%$ $2$ years


What is the total amount that need to be paid in the $100\%$ Finance Scheme?

  1. Rs. $4{,}34{,}000$
  2. Rs. $4{,}67{,}000$
  3. Rs. $4{,}54{,}000$
  4. Rs. $4{,}27{,}000$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For $100\%$ finance scheme:


$\text{Processing fee=1% of 4,00,000=Rs. 4,000}$

$\text{Initial payments=0%=0}$

$SI=\dfrac{PRT}{100}=\dfrac{4,00,000\times 12.5\times 1}{100}=Rs.\ 50,000$

Hence, total amount that need to be paid is

$Rs.\ (4,00,000+50,000+4,000)=Rs.\ 4,54,000$

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

Following information is available of PQR for year ended March, 20XX: 4, 000 units in process, 3, 800 units output, 10% of input is normal wastage, Rs 2.50 per unit is scrap value and Rs 46, 000 incurred towards total process cost then amount on account of __________.

  1. Rs 2, 500

  2. Rs 2, 000

  3. Rs 4, 000

  4. Rs 3, 500
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

A ten-year bond was issued at par for Rs.25,000 cash. This transaction should be shown in a statement of cash flows under ______________.

  1. Investing activities

  2. Financing activities

  3. Non-cash investing and financing activities

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

As per AS-3, financing activities are activities that result in changes in the size and composition of the owner's capital and borrowings of the enterprise. Separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of funds to the enterprise.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

The fixed asset of a company is double of the current assets and half of capital. If the current assets are Rs. $3,00,000$ and investment Rs. $4,00,000$ calculate the current liabilities assuming that there are no other items in the balance sheet.

  1. Rs. $2,00,000$
  2. Rs. $1,00,000$
  3. Rs. $3,00,000$
  4. Rs. $4,00,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

A company sells goods on credit valued at Rs 25000 to a customer. At what point in the sales cycle should this sale be recognized in the accounts?

  1. When the customer's order is received.

  2. When the goods are ready for dispatch to the customer.

  3. When the goods are sent, accepted and invoiced.

  4. When the customer pays.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Sales is completed only when the legal title of the goods passed to the buyer. 

In such case, goods sent and accepted by the buyer along with the invoice is considered as point of sale. 

Multiple choice elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

A bills receivable of Rs $10,000$ which was received from a debtor in full settlement for a claim will be recorded in ______________.

  1. Bills receivable book

  2. Journal Proper (General Journal)

  3. Purchases return book

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

A bill receivable received from a debtor is recorded in the Bills Receivable Book.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements outstanding and prepaid expenses outstanding expenses need for adjustment, closing stock and outstanding expenses

Discuss the effect of the following transaction:

Ms. Pooja earns Rs. 2,000 per month. Her salary account is debited by Rs. 30,000 at the end of the year.  

  1. Rs. 6,000 is the outstanding expense

  2. Rs. 30,000 is asset

  3. Rs. 6,000 is the prepaid expense

  4. Rs. 30,000 is liabilities
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The necessary adjustment in respect of prepaid expenses is made by recording the following entry:

Prepaid expense A/c Dr.
      To Concerned expense A/c
The effect of the above adjustment entry is that the amount of prepaid part is deducted from the total of the particular expense, and the new account of prepaid expense is shown on the assets side of the balance sheet.

Ms. Pooja earns Rs. 2,000 per month. Her salary account is debited by Rs. 30,000 at the end of the year. This implies that Pooja has over payment of Rs. 6,000 in his salary account. Hence, correct expense on account of salary during the current period will be Rs. 24,000 instead of Rs. 30,000. 
Rs. 24,000 is to be shown as expense on account of salary in profit and loss account and recognize a current asset of Rs. 6,000 as an advance salary.
 It will be termed as prepaid expense.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements outstanding and prepaid expenses outstanding expenses need for adjustment, closing stock and outstanding expenses

Ascertain the amount of prepaid expense if insurance of Rs. 10000 paid for one year ending on 30.06.2018 and firm closes the books on 31.03.2018.

  1. 5000

  2. 4500

  3. 2500

  4. 2000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Amount of Prepaid expense for year ending 30th june ,2018 

 =  10000 * 3 / 6
= 5000

Multiple choice book keeping and accountancy adjustments in preparation of financial statements outstanding and prepaid expenses outstanding expenses need for adjustment, closing stock and outstanding expenses

A club paid subscription fees of Rs. 1,400, out of which Rs. 200 is prepaid. In such case _________________.

  1. P & L A/c is debited with Rs.1,400

  2. P & L A/c is debited with Rs. 1,200

  3. Rs. 200 is shown as current asset

  4. Both (B) and (C)

  5. Both (A) and (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Subscription fees prepaid is a current asset as its benefit will be received within a period of one year. 

Also, we debit expenses only related to the current financial year to the Profit and loss account.
Thus, the journal entry will be:
Profit and Loss A/c   .....Dr.                1200
Prepaid Subscription fees A/c ......Dr. 200
To Subscription fees A/c                               1400
Thus, option D is correct.