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 accountancy provisions and reserves reserves provisions provision and reserves

Sundry Debtors closing balance Rs. 20000 , Further Bad debts Rs. 1000 , Provision for Bad Debts 5% , Ascertain the amount of Provision______.

  1. 1900

  2. 800

  3. 850

  4. 950
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Solution to the given problem is as under:


Sundry Debtors                                                  Rs.20000
Less: Further Bad Debts                                    Rs. 1000
                                                                           -----------------
Net Debtors                                                       Rs.19000

Provision for Bad Debts @ 5%  on Rs.19000   Rs.950.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

The company maintains provision for bad debts at $5\%$ and its outstanding debtors at the end of the year was Rs 3,00,000. During the year, opening balance of provision for bad debt was Rs. 5000 and bad debt during the year was Rs. 10,000. The debit to profit and loss account for the year ended in respect of provision for debtors will be: 

  1. Rs. 50,000

  2. Rs. 25,000

  3. Rs. 20,000

  4. Rs. 15,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

New provision = 300000*5/100 = 15000
Old provision = 5000

Bad debts during the year = 10000
Calculation of charge in profit and loss account is : - 
New Provision + Bad debts - previous year Provision
 = 15000 + 10000 - 5000 
 = 20000

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Opening balance of debtors is Rs. 18,000. $5\%$ provision for bad debt is required to be provided on debtors. If the debtor's balance is increased during the year by Rs. 5,000 and the provision for bad debt has a debit balance of Rs. 350 after transferring bad debts, the charge against the profit and loss account is:

  1. Rs. 1950

  2. Rs. 1500

  3. Rs. 650

  4. Rs. 550
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Option B is correct. 
New provision = 23000*5/100 = 1150 
new provision = 1150
old provsion = (350)
Charge against profit and loss is = New provision - old provision
                                                         1150 - ( -350)
                                                       = 1500

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

A Trial balance contains the following information: Discount allowed Rs.1,500. Provision for discount on debtors Rs.1,100. It is desired to make a provision for discount on debtors of Rs.1,800 at the end of the year.The amount to be debited to the Profit and loss Account is :

  1. Rs. 2,200

  2. Rs. 4,200

  3. Rs. 1,700

  4. Rs.3,200
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The amount to be debited to the P&L account is the new provision (1,800) plus the actual discount allowed (1,500), minus the old provision (1,100). Calculation: 1,800 + 1,500 - 1,100 = 2,200.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

It is supposed that on $31-12-2015$, the sundry debtors are amounted to Rs. $40,000$. On the basis of past experience, it is estimated that $5\%$ of the sundry debtors are doubtful. Also suppose that during the year $2014$ actual bad debts were Rs. $1,600$. What entry will be passed to create provision for doubtful debts?

  1. Profit & Loss a/c Rs. $2,000$(Dr.) & Provision for doubtful debts A/c Rs. $2,000$(Cr.)
  2. Provision for doubtful debts A/c Rs. $2,000$(Dr.) & Profit & Loss A/c Rs. $2,000$(Cr.)
  3. Provision for doubtful debts A/c Rs. $1,600$ (Dr.) & Profit & Loss A/c Rs. $1,600$(Cr.)
  4. Profit & Loss A/c Rs. $1,600$(Dr.) & Provision for doubtful debts A/c Rs. $1,600$(Cr.)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The provision for doubtful debts is calculated as 5% of 40,000, which is 2,000. The entry to create this provision is to debit the Profit & Loss account and credit the Provision for Doubtful Debts account.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Consider the following data and identify the amount which will be deducted from sundry debtors in balance sheet.

Particulars Rs.
Bad debts(from trial balance) $1,600$
Provision for doubtful debts(old) $2,000$
Current years' provision(new) $800$
  1. Rs. $400$
  2. Rs. $800$
  3. Rs. $2,000$
  4. Rs. $2,400$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the balance sheet, the new provision for doubtful debts (the current year's provision) is the amount deducted from the sundry debtors.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Debtors are of $Rs.30000$
Bad debts are of $Rs. 6000$
Rate of provision for bad debt is $20$%
State what is the amount of Provision?

  1. $Rs.4800$
  2. $Rs.5000$
  3. $Rs.4000$
  4. $Rs.7000$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Provision for bad debts is created towards anticipated bad debts based on a certain percentage. 

Amount of provision for bad debts is calculated on the net debtors i.e. after deducting the actual bad debts from the debtors. 
Solution to the given problem is as under:

Debtors                           $Rs.30000$
Less: Bad Debts             $Rs. 6000$
                                        ----------------
Balance debtors             $Rs.24000$
                                       -----------------
Provision for bad debts @$20$% on $Rs. 24000$= $Rs.4800$

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Debtors are of $Rs.20000$
Bad debts are of $Rs. 3000$
Rate of provision for bad debt is $10$%
State the amount for Provision?

  1. $Rs.1800$
  2. $Rs.2000$
  3. $Rs.1700$
  4. $Rs.2500$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Provision for bad debts is created towards anticipated bad debts based on a certain percentage. 

Amount of provision for bad debts is calculated on the net debtors i.e. after deducting the actual bad debts from the debtors. 
Solution to the given problem is as under:

Debtors                           $Rs.20000$
Less: Bad Debts             $Rs. 3000$
                                        ----------------
Balance debtors             $Rs.17000$
                                       -----------------
Provision for bad debts @$10$% on $Rs.17000$= $Rs.1700$

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Debtors are of $Rs.20000$
Bad debts are of $Rs.5000$
Rate of provision for bad debt is $15$%
State the amount for Provision?

  1. $Rs.5000$
  2. $Rs.2250$
  3. $Rs.3500$
  4. $Rs.2000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Provision for bad debts is created towards anticipated bad debts based on a certain percentage. 

Amount of provision for bad debts is calculated on the net debtors i.e. after deducting the actual bad debts from the debtors. 
Solution to the given problem is as under:

Debtors                           $Rs.20000$
Less: Bad Debts             $Rs. 5000$
                                        ----------------
Balance debtors             $Rs.15000$
                                       -----------------
Provision for bad debts @$15$% on $Rs.15000$= $Rs.2250$

Multiple choice elements of book keeping and accountancy accounting for depreciation need and methods of charging depreciation using straight line method straight line method straight line method and written down method

On the basis of the information given below answer the following question.
In the year 2014-15 C Ltd. purchased a new machine and made the following payments in relation to it:-

Particulars Rs
Cost as per supplier's listAgreed discountDelivery chargedErection chargesAnnual maintenance chargesAdditional maintenance chargesAdditional component to increase capacity of machineAnnual insurance premium 5,20,00050,00010,00020,00030,00040,0005,000

If depreciation is provided @ 10 %  p.a, SLM depreciation for 3rd year will be:-

  1. Rs$54,000$
  2. Rs$54,5000$
  3. $47,000$
  4. $55,000$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Calculation of cost of the machinery:- 
Cost as per supplier                                                                        =  5,20,000
Add:- delivery charges                                                                   =      10,000
          erection charges                                                                   =     20,000
          Additional component to increase capacity of machine    =     40,000
                                                                                                          -------------------
                                                                                                          = 5,90,000
Less:- Agreed discount                                                                   =   (50,000)
                                                                                                         ----------------------
Cost of the machinery :-                                                                =  5,40,000

Depreciation on machinery (SLM Basis) = Cost of machinery x rate 
                                                                   = 5,40,000 x 10/100
                                                                   = 54,000.
Note:- All the cost that are incurred to bring the machinery in the running condition when purchased will be added to the cost of the machinery. Costs like annual maintenance charges, insurance charges, additional maintenance charges etc will not be included in the cost of the machinery.



Multiple choice elements of accounts ratio analysis liquidity ratios accounting ratio's accounting ratios

Current liabilities of a company were Rs. 1,75,000 and its current ratio was 2: 1. It paid Rs. 30,000 to a creditor. Calculate current ratio after payment :

  1. 2: 1

  2. 1: 1

  3. 1: 5: 1

  4. 2.21: 1
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Given,
Current liabilities = Rs-1,75,000
Current Ratio = 2:1

If 30,000 is paid to a creditor it will reduce both current assets as well as current liabilities as cash is being paid and creditors are reduced. Hence, new ratio will be:- 

Current Ratio = Current Assets
                       -------------------------     
                        Current liabilities

                      =  3,50,000 (WN 1) - 30,000

                         --------------------------------------
                           1,75,000 - 30,000
                      = 3,20,000
                          --------------
                          1,45,000
                     = 2.2 : 1

Working note 1) = Current assets 
Current Ratio = Current Assets

                       -------------------------     
                        Current liabilities
Current Assets = Current liabilities x current ratio 
                         = 1,75,000 x 2
                         = 3,50,000.

                  

Multiple choice elements of accounts ratio analysis liquidity ratios accounting ratio's accounting ratios

Given that,
Current Ratio = 2.5
Acid-test ratio = 1.5
Net working capital = Rs. 60,000
The value of current liabilities will be ___________ .

  1. Rs. 15,000

  2. Rs. 40,000

  3. Rs. 60,000

  4. Rs. 1,00,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Given,
Current ratio = 2.5 : 1
Quick Ratio = 1.5 : 1
Net working capital  = 60,000

Net working capital = Current assets - Current liabilities
Current Assets        = Net working capital + Current liabilities
                                 = 60,000 +  Current liabilities (1) 
Current ratio           = Current assets
                                 -------------------------
                                 Current liabilities
Current Assets      = Current liabilities x 2.5 (2) 
Merging equation (1) and (2)
60,000 + Current liabilities = 2.5Current liabilities 
60,000                                 = 2.5 current liabilities - Current liabilities
60,000                                 = 1.5 Current liabilities
Current liabilities                 = 60,000
                                              --------------
                                                1.5 
                                              = 40,000 
Therefore, current liabilities = 40,000. 
Multiple choice elements of accounts ratio analysis liquidity ratios accounting ratio's accounting ratios

Current Ratio $2.5$, Liquid Ratio $1.5$ and Working Capital $Rs. 60,000$. What is  the amount of Current Assets?

  1. $Rs. 60,000$
  2. $Rs. 80,000$
  3. $Rs. 1,00,000$
  4. $Rs. 1,20,000$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Current Ratio = Current Assets (C.A)/ Current Liabilities (C.L)  = $2.5$

So, CA= $2.5$ CL

Now, Working Capital = Current Assets(C.A) minus Current Liabilities (C.L) = $Rs.60000$
So, C.A - C.L = $60000$
       $2.5$ C.L-CL = $60000$
        C.L = $Rs. 40000$

Now, C.A = $2.5$ x $40000$ = $Rs. 100000$

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

On 30-9-2015 overdraft as per pass book of S. Ltd was Rs. 32,400.The bank had directly collected dividend of other companies Rs. 1,750 and interest Rs. 1,200. As standing instruction bank had paid bills of Rs. 2,454. Cheque deposited for Rs. 8,929.60 was not credited in pass book. Balance as per cash book should be _____________.

  1. overdraft of Rs.23,966.40

  2. overdraft of Rs.46,733.60

  3. overdraft of Rs.40,833.60

  4. overdraft of Rs.18,066.40
Reveal answer Fill a bubble to check yourself
A Correct answer