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 commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

An entry for the goods sold to Madhav for Rs. 1,020 was posted to his account as Rs. 1,200. If rectification is done before preparation of trial balance then which of the following is correct? 

  1. Supense A/C Dr. 180
    To Madhav A/C 180

  2. Profit & Losdd Adj. A/c Dr. 180
    To Madhav A/c 180

  3. Credit Madhav with Rs. 180 saying "By Excess debit for sales Rs. 180"

  4. Debit Madhav with Rs. 180 saying "To Excess debit for sales Rs. 180"
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The sale was 1,020 but recorded as 1,200, meaning Madhav's account was over-debited by 180. To rectify this before the trial balance, we must credit Madhav's account to reduce the balance, noting the reason for the adjustment.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Total sales during the financial year amounted to Rs. 25 lakh out of which Rs. 20 lakh accounted for in the same financial year and remaining in next financial year when the debtors were realized. The firm is following ______ system of Accounting.

  1. Mercantile

  2. Cash

  3. Hybrid

  4. Ad-hoc system
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash accounting is an accounting method in which payment receipts are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Bank balance as per cash book of ABC Enterprises as on 31st March, 2013 is f 1,500. Cheques deposited with bank but not cleared amount to f 100 and cheques issued but not presented for payment amount to f 150. The bank allowed interest amounting to Rs.50 and collected dividend Rs.50 on behalf of ABC Enterprises. Balance as per pass book should be ____________.

  1. Rs. 1,600

  2. Rs. 1,850

  3. Rs. 1,450

  4. Rs. 1,650
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Cash book balance = 1500. Add cheques issued but not presented (+150). Subtract cheques deposited but not cleared (-100). Add interest allowed (+50). Add dividend collected (+50). 1500 + 150 - 100 + 50 + 50 = 1650.

Multiple choice economics emerging issues in indian economy industrial development in india need and growth of industrialisation secondary sector : industry

The approximate breakup of Revenue from Freight Segment and Passenger Segment of Indian Railways is?

  1. $50\%-50\%$
  2. $10\%-90\%$
  3. $90\%-10\%$
  4. $70\%-30\%$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Indian Railways generates the majority of its revenue from the freight segment, which accounts for approximately 70 percent, while the passenger segment contributes about 30 percent.

Multiple choice commercial studies concept of market and marketer meaning and importance of marketing meaning and definition of market introduction to marketing marketing environment meaning and definition of marketer role of marketing

Choose the correct answers from the following alternatives given
Arun had deposited a bag in the cloak room of a railway station by paying Rs. 650. On the face of the ticket, issued to him were inscribed see reverse for terms & conditions. Clause 10 of the printed Terms & Conditions limited the liability of the company for loss of a baggage to Rs. 100. The bag was lost and Arun claimed Rs. 650 as its value.

  1. Arun was not bound by the conditions on the back of the ticket as he had not read them at all.

  2. Arun was bound by the conditions on the back of the ticket even if he had not read them.

  3. Arun was not bound by the conditions on the back of the ticket as his claim was 13 times more than the compensation offered to him by the railway company.

  4. Arun was bound by the conditions on the back of the ticket as he had not read them in full.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under contract law, if a person accepts a ticket with terms and conditions printed on it, they are bound by those terms even if they did not read them, provided the ticket gave reasonable notice.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Purchase of furniture on cash for  Rs $1,50,000$ will be recorded in _____________.

  1. Sales Book

  2. Purchase Book

  3. General journal

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

Any transaction involving the payment or receipt of cash must be recorded in the cash book. Even though furniture is an asset, because it was purchased for cash, it is entered in the cash book rather than the purchase book (which is only for credit purchases of goods) or the general journal.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

An allowance of Rs $50$ was offered for an early payment of cash of Rs $1,050$. It will be recorded in ____________.

  1. Sales Book

  2. Purchase Book

  3. Journal Proper(General Journal)

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

Cash discounts (allowances for early payment) and the associated cash receipts or payments are recorded directly in the cash book, specifically in the discount column of a multi-column cash book. Therefore, this transaction is recorded in the cash book.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Received cash of Rs $2,00,000$ from debtors for settlement of credit sales will be recorded in ______________.

  1. Sales Book

  2. Purchase Book

  3. Journal Proper (General Journal )

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

Any transaction that results in an actual receipt of cash is recorded in the cash book. Since cash is received from debtors, this transaction is entered on the receipt (debit) side of the cash book.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Rs $3,50,000$ cash paid to creditors for settlements of credit purchases will be recorded in _______________.

  1. Sales Book

  2. Purchase Book

  3. Journal Proper (General Journal)

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

Any transaction involving a cash payment is recorded on the payment (credit) side of the cash book. Since this transaction involves paying cash to creditors, it must be recorded in the cash book.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Sold furniture on cash for Rs $1,50,000$ will be recorded in ______________.

  1. Sales Book

  2. Purchase Book

  3. Journal Proper (General Journal)

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

The sale of an asset like furniture for cash results in a cash receipt, which must be recorded in the cash book. The sales book is only used for recording credit sales of goods (trading inventory), not cash sales of fixed assets.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Salary paid in cash - Rs $50,000$ will be recorded in ____________.

  1. General Journal

  2. Cash Book

  3. Purchases Return Book

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

Paying salary in cash is a cash outflow transaction. All cash payments are recorded on the credit side of the cash book, making the cash book the correct book of original entry for this transaction.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Investment was sold in cash for Rs $1,00,000$ at par will be recorded in ____________.

  1. Cash book

  2. General Journal

  3. Purchases return book

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

When an investment is sold for cash, it results in a cash receipt. All cash receipts and payments are recorded in the Cash Book, making it the correct book of entry.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Goods worth Rs. 45,000 sold to Tarun for cash will be recorded in_________.

  1. Cash book

  2. Sales book

  3. Journal book

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

Cash book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the cash or bank balances at the beginning of the period. Generally, it is made on monthly basis. 


This is very popular book and is maintained by all organisations, big or small, profit or not-for-profit. It serves the purpose of both journal as well as the ledger (cash) account. It is also called the book of original entry. 

When a cash book is maintained, transactions  of cash are not recorded in the journal, and no separate account for cash or bank is required in the ledger. 

For example, goods worth Rs. 45,000 sold to Tarun for cash will be recorded in the cash book.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

A discount of Rs. 2000 was given to a supplier on his prompt repayment of debt but the cashier did not enter in the cash book. What should be the adjustment in cash to work out the correct balance of cash book? 

  1. Rs.2000 will be debited in cash book

  2. Rs.2000 will be credited in cash book

  3. Rs.4000 will be debited in cash book

  4. Rs.4000 will be credited in the cash book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In a three-column cash book, discount received from a supplier is recorded in the discount column on the credit side. Since the cashier omitted this entry, the correct adjustment is to credit the discount amount of Rs. 2000 in the cash book. This ensures that the discount received is properly accounted for alongside the payment.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

A company was entered in hire purchase agreement and had to pay Rs.1000 per month. Three payment we accounted but no entry was found in cash book. Identify the correct adjustment in cash book. 

  1. Rs. 1000 will be added to cash book balance

  2. Rs. 2000 will be deducted from cash book balance

  3. Rs. 3000 will be added to cash book balance

  4. Rs. 3000 will be subtracted from cash book balance
Reveal answer Fill a bubble to check yourself
A Correct answer