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

Koina Ltd. issued 15,00,000, 12% debentures of Rs. 50 each at premium of 10% payablae as Rs. 20 on application and balance on allotment. Debentures are redeemable at par after 6 years. All the money due on allotment was called up and received. The amount of premium will be

  1. Rs. 3,00,00,000

  2. Rs. 2,25,00,000

  3. Rs. 75,00,000

  4. Rs. 5,25,00,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Premium = 10% of face value. 15,00,000 debentures × Rs. 50 face value × 10% = Rs. 75,00,000. Premium is calculated on total issue value, not amount received. Premium credited to Securities Premium Account.

Multiple choice

Win Ltd. issued 20,000, 8% debentures of Rs. 10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be

  1. Rs. 40,000

  2. Rs. 10,000

  3. Rs. 20,000

  4. Rs. 8,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Redemption premium = 20% of Rs. 2,00,000 = Rs. 40,000. This is a loss written off over debenture life (5 years). Annual charge = Rs. 40,000/5 = Rs. 8,000. Loss on Redemption of Debentures Account debited annually.

Multiple choice

The bank has paid life insurance premium of Rs. 30,000 on behalf of customer, but it is credited in the cash column of Two - Columnar Cash Book. How would it be rectified in the Two - Columnar Cash Book?

  1. Rs. 30,000 is entered in the debit side of cash column only.

  2. Rs. 30,000 is entered in the credit side of bank column and Rs, 30,000 is entered in the debit side of cash column.

  3. Rs. 30,000 is entered in the debit side of bank column, and Rs. 30,000 is entered in the credit side of cash column.

  4. Rs. 30,000 is entered in the credit side of bank column only.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is correct. The bank balance of the customer would be decreased because the bank has paid Rs 30,000 as life insurance premium on behalf of the customer. Hence, it is to be entered in credit side of bank column, but is entered in credit side of cash column. Therefore, Rs. 30,000 which is not entered in credit side of bank column would be entered now in its credit side. Rs. 30,000 which is entered in credit side of cash column by mistake would be entered now in its debit side.

Multiple choice

The bank has charged commission Rs. 1,320 for its sevices provided to Rahul, but Rahul has entered Rs. 1,230 in the credit side of Bank Column. How will Rahul make amendments in the Two - Columnar Cash Book?

  1. Rs. 90 is entered in the debit side of bank column.

  2. Rs. 90 is entered in credit side of bank column.

  3. Rs. 90 is entered in the credit side of cash column.

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

This is correct. Rs. 90 is entered in credit side of bank column. Rahul had to enter Rs.1, 320 in the credit side of bank column because it is the commission charged by bank. But Rahul has entered only Rs. 1,230 in the credit side of bank column. Further, Rs. 90 is entered in credit side of bank column (Rs. 1,320 - Rs. 1,230).

Multiple choice

The machinery is purchased for Rs. 30,000 and the payment is made through cheque, but is entered in credit side of cash column. How to rectify this error in the Cash Book?

  1. Rs. 30,000 is entered in the debit side of bank column only.

  2. Rs. 30,000 is entered in the debit side of cash column and Rs. 30,000 is entered in the credit side of bank column.

  3. Rs. 30,000 is entered in the credit side of bank column only.

  4. No rectification is required as the entry made is correct.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is correct. The payment of machinery is made through cheque. Hence, Rs. 30,000 is to be entered in the credit side of bank column, but we have entered it in the credit side of cash column. So, Rs. 30,000 would be entered in the debit side of Cash Column to nullify the amount of Rs. 30,000. Rs 30,000, which is not entered before in the credit side of bank column, would be entered in its credit side now.

Multiple choice

The bank has collected Rs. 1,640 as dividend on our behalf, but we have entered Rs. 1,460 in the debit side of bank column of Two - Columnar Cash Book. How to rectify this mistake in the Two - Columnar Cash Book?

  1. Rs.180 is entered in the credit side of bank column.

  2. Rs. 180 is entered in the debit side of cash column.

  3. Rs. 1,640 is entered in the debit side of bank column.

  4. Rs.180 is entered in the debit side of bank column.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is correct. The bank has collected dividend of Rs. 1,640 on our behalf, which is going to enhance our cash balance in the bank by Rs. 1,640. But we have entered only Rs. 1,460 in the debit side of bank column. Further, Rs. 180 is entered in the debit side of bank column (Rs. 1,640 - Rs. 1,460).

Multiple choice

The payment of Rs. 1,650 is received as direct cash from our customer, but is entered in the debit side of bank column as Rs. 1,560. How will you rectify this mistake in the Two - Columnar Cash Book?

  1. Rs. 1,650 is entered in the debit side of cash column and Rs. 1,560 is entered in the credit side of cash column.

  2. Rs. 1,650 is entered in the credit side of bank column and Rs.1, 560 is entered in the debit side of cash column.

  3. Rs. 1,560 is entered in the credit side of cash column only.

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

None of these is correct.

Multiple choice

Interest on securities collected by our bank is of Rs. 3,230 but is entered in debit side of cash column as Rs. 3,320. How will you rectify this error in the cash book?

  1. Rs. 3,320 is to be entered in the credit side of cash column and Rs. 3,230 is to be entered in the debit side of bank column.

  2. Rs. 3,320 is to be entered in credit side of cash column only.

  3. Rs. 3,230 is to be entered in debit side of bank column only.

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

This is correct. The interest on securities collected by bank is of Rs. 3,230. Hence, the bank balance would be enhanced by it and is to be entered in the debit side of bank column. But instead of that, Rs. 3,320 is entered in debit side of cash column. Therefore, Rs. 3,320 entered in debit side of cash column by mistake is to be entered in the credit side of cash column to nullify it. Rs. 3,230, which is not entered before in the debit side of bank column would be entered in its debit side now.

Multiple choice

The proprietor introduces fresh capital of Rs. 20,000, but is debited in cash with Rs. 2,000 only. How will this mistake be rectified in the Two - Columnar Cash Book assuming that the entry is made in the correct side of Cash Book?

  1. Rs. 18,000 is to be entered in debit side of cash column.

  2. Rs.18,000 is to be entered in credit side of cash column.

  3. Rs. 18,000 is to be entered in the debit side of bank column.

  4. Rs. 20,000 is to be entered in the debit side of bank column.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct. The proprietor has introduced fresh capital of Rs. 20,000. Hence, cash would be increased by Rs. 20,000 and is to be entered in debit side of cash column as Rs. 20,000. But in the debit side of cash column, it is entered as Rs. 2,000 only as the entry is made in the correct side. Hence, further Rs. 18,000 would be entered in debit side of cash column (Rs. 20,000  -  Rs. 2,000 )

Multiple choice

Dividend of Rs. 200 is collected by bank on behalf of customer, but is entered in the debit side of Bank Column of Two - Columnar Cash Book as Rs. 2,000 by the customer. What will be the rectifying entry made in the Two - Columnar Cash Book?

  1. Rs. 1,800 is to be entered in the credit side of bank column.

  2. Rs. 1,800 is to be entered in the debit side of bank column.

  3. Rs. 1,800 is to be entered in the credit side of cash column.

  4. Rs. 2,000 is to be entered in credit side of bank column.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct.

The dividend collected by bank is of Rs. 200 and hence bank balance would be increased by Rs. 200, which is to be entered in the debit side of bank column. But instead Rs. 2,000 is entered in its debit side. Thus, Rs. 1,800 is entered in excess in the debit side (Rs. 2,000 Rs. 200). Therefore, Rs. 1,800 would now be entered in the credit side of bank column to nullify the mistake made.

Multiple choice

The deficiency of capital of the insolvent partner to the tune of Rs. 80,000 gets distributed among solvent partners B and C where capitals of Rs. 40000, Rs. 40000 respectively between B and C.

  1. True

  2. False

  3. Partly true

  4. Cannot say
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When an insolvent partner cannot contribute their share of capital deficiency (Rs. 80,000), that deficiency is distributed among the solvent partners in proportion to their capital contributions. With B and C having equal capitals (Rs. 40,000 each), they would share the deficiency equally - Rs. 40,000 each.

Multiple choice

What will be the journal entry if credit sales of Rs. 15400 of X Ltd. have been entered in sales day book as Rs. 14500. Which of the following entries will correct this error?

  1. Debit X Ltd. account and credit sales account with Rs. 15400

  2. Debit X Ltd. account and credit sales account with Rs. 900

  3. Debit sales account and credit X Ltd. account with Rs. 900

  4. Debit cash account and credit sales account with Rs. 900

  5. None of these

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Both sales and X Ltd. accounts are understated by Rs. 900. Entries are required to increase the amount due from X Ltd. and increase sales by crediting the sales account.

Multiple choice

A sale of Rs. 7800 to Sohanlal has been posted to Mohanlal. Which of the following journal entries will correct this error?

  1. Debit Mohanlal's account and credit Sohanlal's account with Rs. 15600

  2. Debit Sohanlal's account and credit sales account with Rs. 7800

  3. Debit Sohanlal's account and credit Mohanlal's account with Rs. 7800

  4. Debit sales account and credit Mohanlal's account with Rs. 7800

  5. None of the above entries will correct the error.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is error of ommission and transfer needs to be made between both the accounts. This journal entry is required to be transferred so that their is no unauthorized transfer between two accounts.

Multiple choice

X agreed to exchange with 10 bags of sugar at Rs. 40, 000 for 40 bags of wheat at Rs. 42, 000 and difference of Rs. 2000 in cash and hence it is a contract of sale.

  1. True

  2. False

  3. Partly true

  4. Cannot say
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A barter transaction where goods are exchanged for goods with a cash adjustment for price difference is legally treated as a contract of sale under the Sale of Goods Act. In this case, 10 bags of sugar are exchanged for 40 bags of wheat with Rs. 2000 cash difference, which qualifies as a sale contract.