FINAL ANSWER KEY
Paper: Book-keeping and Accountancy (Paper III)
Medium of Question: English
Date of Examination 07-03-2019
Question1:-A person who owes money to the firm is a __________.
A:-Creditor
B:-Debtor
C:-Proprietor
D:-Share holder
Correct Answer:- Option-B
Question2:-Book Keeping is concerned with ___________.
A:-recording of transactions
B:-Analysis of transactions
C:-Classification of transactions
D:-Summarising of transactions
Correct Answer:- Option-A
Question3:-Current Assets are also known as ___________.
A:-Fixed Assets
B:-Floating Assets
C:-Fictitious Assets
D:-Tangible Assets
Correct Answer:- Option-B
Question4:-Short term liabilities which become due and payable within a period of _____________ years/years. A:-1
B:-2
C:-3
D:-4
Correct Answer:- Option-A
Question5:-The Rules and guidelines used in preparing accounting reports are termed as _____________. A:-Accounting rules
B:-Accounting standards
C:-Generally accepted accounting principles
D:-Accounting concepts
Correct Answer:- Option-C
Question6:-In India accounting standards are issued by ____________.
A:-Institute of Chartered Accountants of India
B:-Indian Accounting Bureau of standards
C:-International Accounting standards Committee
D:-Accounting standards Board constituted by ICAI
Correct Answer:- Option-D
Question7:-Which Financial Statement displays the revenues and expenses of a company for a period of time? A:-Income Statement
B:-Balance Sheet
C:-Cash Flow Statement
D:-Cash Book
Correct Answer:- Option-A
Question8:-What is the main purpose of financial accounting?
A:-Minimise company taxes
B:-Provide useful informations to the outsiders
C:-Keep track of company expenses
D:-Organise financial informations
Correct Answer:- Option-D
Question9:-Asset accounts have what types of balance?
A:-Credit
B:-Contra
C:-Debit
D:-Debit and credit
Correct Answer:- Option-C
Question10:-___________ is used to record a business event as they occur throughout the year. A:-Ledger
B:-Cash book
C:-Journal Entry
D:-Day book
Correct Answer:- Option-C
Question11:-Which account is not a liability account?
A:-Bills Payable
B:-Accrued expense
C:-Cash
D:-Salary Outstanding
Correct Answer:- Option-C
Question12:-The _______ summarises the accounting equations.
A:-Cash book
B:-Balance Sheet
C:-Profit and Loss account
D:-Ledger
Correct Answer:- Option-B
Question13:-Interest is an example of ___________ income reported on the Income Statement. A:-Capital
B:-Operating
C:-Non-operating
D:-Deferred revenue
Correct Answer:- Option-C
Question14:-Profit and loss is calculated at the stage of
A:-Recording
B:-Posting
C:-Classifying
D:-Summarising
Correct Answer:- Option-D
Question15:-Accounts Payable is a __________, reported on the Balance Sheet.
A:-Current liability
B:-Permanent liability
C:-Current asset
D:-Capital asset
Correct Answer:- Option-A
Question16:-The modern system of accounting owes its origin to _____________.
A:-Luca Pacioli
B:-Alfred Pitman
C:-E.L. Kohler
D:-Adam Smith
Correct Answer:- Option-A
Question17:-The value of assets and liabilities are depicted in the _____________.
A:-Profit and Loss Account
B:-Receipts and Payments Account
C:-Income and Expenditure Account
D:-Balance sheet
Correct Answer:- Option-D
Question18:-__________ is an example of intangible asset.
A:-Land
B:-Goodwill
C:-Building
D:-Stock of goods
Correct Answer:- Option-B
Question19:-Assets which are held for a short period are known as _____________.
A:-Capital Assets
B:-Tangible Assets
C:-Current Assets
D:-Intangible Assets
Correct Answer:- Option-C
Question20:-_____________ is the amount earned by a business concern through sale of products or providing services to customers. A:-Profit
B:-Revenue
C:-Income
D:-Gain
Correct Answer:- Option-B
Question21:-Amount spent for acquisition of fixed asset is a ____________expense.
A:-Capital
B:-Revenue
C:-Deffered revenue
D:-Nominal
Correct Answer:- Option-A
Question22:-Withdrawal of goods or cash from the business by the owner for personal use is called _____________. A:-Liability
B:-Prepaid Expense
C:-Drawings
D:-Reserve
Correct Answer:- Option-C
Question23:-Assets-Liabilities = ___________.
A:-Profit
B:-Income
C:-Closing Stock
D:-Capital
Correct Answer:- Option-D
Question24:-A business unit is assumed to have an indefinite life comes under __________ concept.
A:-Business entity
B:-Going concern
C:-Accounting entity
D:-Accounting period
Correct Answer:- Option-B
Question25:-In the ___________ each account is opened preferably on a separate page.
A:-Journal
B:-Day Book
C:-Book of original entry
D:-Ledger
Correct Answer:- Option-D
Question26:-The process of transferring entries from books of original entry to the ledger is called ____________. A:-Transfer entry
B:-Accounting
C:-Journal entry
D:-Posting
Correct Answer:- Option-D
Question27:-The statement prepared with the balance of ledger accounts to test their arithmetical accuracy is called a _______________. A:-Source document
B:-Trial balance
C:-Journal entry
D:-Receipts and Payment A/c
Correct Answer:- Option-B
Question28:-The documents on the basis of which transactions are recorded in the books of accounts are known as___________. A:-Source document
B:-Narration
C:-Journal
D:-Trial balance
Correct Answer:- Option-A
Question29:-A collection of all accounts is a ____________.
A:-Trial balance
B:-Journal
C:-Cash Book
D:-Ledger
Correct Answer:- Option-D
Question30:-The process of recording transactions in a ____________ is called journalising.
A:-Ledger
B:-Cash Book
C:-Journal
D:-Profit and Loss A/c
Correct Answer:- Option-C
Question31:-_________is the technique and process of ascertaining cost.
A:-Invoicing
B:-Costing
C:-Financial accounting
D:-Management accounting
Correct Answer:- Option-B
Question32:-The assets which are not generally regarded as being readily convertible into cash are ____________.
A:-Current assets
B:-Capital Assets
C:-Fixed assets
D:-Tangible assets
Correct Answer:- Option-C
Question33:-Any form of money which can be used as a medium of exchange is called ____________.
A:-Bills of Exchange
B:-Promissory note
C:-Cheque
D:-Currency
Correct Answer:- Option-D
Question34:-An allowance made by the receiver of cash to the payer for prompt Payment is known ______________.
A:-Cash discount
B:-Trade discount
C:-Rebate
D:-Bonus
Correct Answer:- Option-A
Question35:-A debit balance on _______________on any date would mean the value the particular asset in hand on that date. A:-Personal account
B:-Real account
C:-Nominal account
D:-Fictitious account
Correct Answer:- Option-B
Question36:-A credit balance on a ___________ account would mean that the income or gain from a particular head has exceeded the expense or loss under t A:-Personal
B:-Sales
C:-Nominal
D:-Real
Correct Answer:- Option-C
Question37:-Select from the following that does not form part of Book of original entry
A:-Purchase Book
B:-Sales Book
C:-Salaries Account
D:-Returns Inwards Account
Correct Answer:- Option-C
Question38:-It is usual for the party returning the goods to send a ___________ containing description and price of the goods returned. A:-Credit Note
B:-Invoice
C:-Proforma Invoice
D:-Debit Note
Correct Answer:- Option-D
Question39:-____________ is maintained by a business to record the smaller cash transactions that occur frequently.
A:-Petty Cash Book
B:-Day Book
C:-Ledger Account
D:-Journal Entry
Correct Answer:- Option-A
Question40:-A purchase of Fixed Asset on account is first recorded in the ___________.
A:-Cash book
B:-General journal
C:-Petty cash book
D:-Ledger Account
Correct Answer:- Option-B
Question41:-A cash account will always show a ____________ balance.
A:-Credit
B:-Debit
C:-Both debit and Credit
D:-None of these
Correct Answer:- Option-B
Question42:-Sale of old furniture for cash will be first entered in the ___________.
A:-Journal Proper
B:-Petty Cash Book
C:-Cash Book
D:-Special Journal
Correct Answer:- Option-C
Question43:-When cash discount is allowed to a customer _______________ account is debited and ___________ account is credited. A:-Discount Received and Customer's
B:-Customer’s and Discount Received
C:-Customer’s and Discount Allowed
D:-Discount Allowed and Customer’s
Correct Answer:- Option-D
Question44:-Nominal accounts are also called ____________ account.
A:-Impersonal
B:-Real
C:-Personal
D:-Artificial personal
Correct Answer:- Option-A
Question45:-Purchase of equipment for cash ____________.
A:-Decreases total assets
B:-Increases total assets
C:-Keeps total assets unchanged
D:-None of the these
Correct Answer:- Option-C
Question46:-If liabilities exceeds assets, the difference is called _____________.
A:-Sundry debtors
B:-Sundry creditors
C:-Over draft
D:-Capital
Correct Answer:- Option-D
Question47:-Capital as increased by profit or decreased by loss is called ____________.
A:-Net worth
B:-Reserve
C:-Dividend
D:-Equity
Correct Answer:- Option-A
Question48:-In Double entry system every transaction is recorded in ____________.
A:-Two different accounts
B:-Two sides of the same account
C:-The Cash Book
D:-Debit side of two accounts
Correct Answer:- Option-A
Question49:-Loss of goods by fire may be credited to __________account.
A:-Loss of goods by fire
B:-Purchase
C:-Sundry creditors
D:-Sundry debtors
Correct Answer:- Option-B
Question50:-The entry that begins a new set of books is called __________.
A:-Journal entry
B:-Double entry
C:-Opening entry
D:-Compound journal entry
Correct Answer:- Option-C
Question51:-Sales Returns are also called _________________.
A:-Returns outwards
B:-Carriage outwards
C:-Carriage inwards
D:-Returns inwards
Correct Answer:- Option-D
Question52:-Goods returned to suppliers are credited to __________account.
A:-Purchase returns
B:-Returns inwards
C:-Sales Returns
D:-Sales
Correct Answer:- Option-A
Question53:-Personal drawings of goods by the proprietor is credited to _______________.
A:-Drawings account
B:-Purchase account
C:-Capital account
D:-Sales account
Correct Answer:- Option-B
Question54:-The cost of Air Conditioner of the Manager’s office will be a _____________.
A:-Revenue expenditure
B:-Deferred revenue expenditure
C:-Capital expenditure
D:-Direct expenditure
Correct Answer:- Option-C
Question55:-The total tax of an assessee has been computed as Rs. 25,423.40. After rounding off, the total tax will be taken as _______________. A:-Rs. 25,420
B:-Rs. 25,425
C:-Rs. 25,430
D:-Rs. 25,400
Correct Answer:- Option-A
Question56:-Which of the following is an example of fictitious asset?
A:-Machinery
B:-Stock
C:-Preliminary expense
D:-Patent
Correct Answer:- Option-D
Question57:-What is the main purpose of Bank Reconciliation?
A:-To reconcile the cash book and bank balance
B:-To find out the pass book balance
C:-To find out the cash balance
D:-To find out the bank balance
Correct Answer:- Option-A
Question58:-Company's profit divided among shareholders is known as ______________.
A:-Reserve
B:-Dividend
C:-Surplus
D:-Bonus
Correct Answer:- Option-B
Question59:-Profit after deducting normal operating expenses including depreciation
A:-Operating profit
B:-Gross profit
C:-Net profit
D:-Profit earned
Correct Answer:- Option-A
Question60:-As per this concept the business unit is assumed to have an indefinite life
A:-Matching
B:-Accrual
C:-Money measurement
D:-Going concern
Correct Answer:- Option-D
Question61:-Opening stock : 20000
Purchase : 80000
Cost of goods sold : 110000
Sales : 150000
Profit = ?
A:-50000
B:-60000
C:-40000
D:-30000
Correct Answer:- Option-C
Question62:-The matching principle attempts to find satisfactory bases of association between
A:-Assets and liabilities
B:-Expenses and revenue
C:-Debit and Credit
D:-Profit and loss
Correct Answer:- Option-B
Question63:-Current liabilities need to be paid _____________.
A:-Within two years
B:-Within three years
C:-Beyond one accounting cycle
D:-Within one accounting cycle
Correct Answer:- Option-D
Question64:-Which financial statement is used to show what the firm owns?
A:-Income statement
B:-Receipts and Payments account
C:-Balance sheet
D:-Income and Expenditure account
Correct Answer:- Option-C
Question65:-Retained earning is synonymous to __________.
A:-Gross Profit
B:-Accumulated Profit and Loss a/c
C:-Operating profit
D:-Net Profit
Correct Answer:- Option-B
Question66:-Earnings are the result of the difference between
A:-Revenue and expense
B:-Assets and liabilities
C:-Revenue and liabilities
D:-Expense and Assets
Correct Answer:- Option-A
Question67:-Which of the following describes a record of the transaction?
A:-Income statement
B:-General ledger
C:-Balance sheet
D:-Journal
Correct Answer:- Option-D
Question68:-Prepaid rent given in the Trial balance will be treated as _____________.
A:-Asset
B:-Liability
C:-Deferred revenue
D:-Deferred expense
Correct Answer:- Option-A
Question69:-Which of the following is wrong?
A:-Each account is opened separately in ledger
B:-Nominal accounts are transferred to P and L account
C:-All real and personal accounts are transferred to Balance sheet
D:-Rent is personal account and outstanding rent is nominal account
Correct Answer:- Option-D
Question70:-Balance sheet is a statement which discloses an organisation's ____________.
A:-Liabilities
B:-Assets
C:-Owners equity
D:-All of these
Correct Answer:- Option-D
Question71:-In which order does the journal list transactions?
A:-Chronological order
B:-Alphabetical
C:-Ascending order
D:-Descending order
Correct Answer:- Option-A
Question72:-Which of the following is not a current asset?
A:-Accounts receivable
B:-Inventory of finished products
C:-Land
D:-Closing stock
Correct Answer:- Option-C
Question73:-Carriage paid on purchase of a machinery is wrongly debited to carriage account. This is an example of __________. A:-Error of commission
B:-Error of principle
C:-Error of omission
D:-Compensating error
Correct Answer:- Option-B
Question74:-All indirect expenses are charged against
A:-Profit and Loss account
B:-Trading account
C:-Manufacturing account
D:-Balance sheet
Correct Answer:- Option-A
Question75:-The proprietor of the business is treated as a creditor for the Capital introduced by him due to __________ concept. A:-Money measurement
B:-Accounting entity
C:-Going concern
D:-Accounting period
Correct Answer:- Option-B
Question76:-Provision for discount on debtors is calculated on the amount of debtors :
A:-After deducting provision for doubtful debts
B:-After adding actual bad and doubtful debts
C:-Before deducting provision for doubtful debts
D:-Before deducting bad and provision for doubtful debts
Correct Answer:- Option-A
Question77:-Which of the following is not a real account?
A:-Investments
B:-Cash
C:-Outstanding rent
D:-Purchase
Correct Answer:- Option-C
Question78:-Small items like pencils, pens, files etc.. are written off within a year according to __________ concept. A:-Consistency
B:-Realisation
C:-Materiality
D:-Entity
Correct Answer:- Option-C
Question79:-If the market value of closing inventory is less than its cost price, inventory will be shown at A:-Fair market value
B:-Marketable value
C:-Cost price
D:-Selling price
Correct Answer:- Option-B
Question80:-A ___________ is both a journal and ledger.
A:-Double entry
B:-Cash account
C:-Receipts and payments A/c
D:-Cash book
Correct Answer:- Option-D
Question81:-Change in the Capital account of the Proprietor may occur due to
A:-Profit earned
B:-Loss incurred
C:-Drawings
D:-All of these
Correct Answer:- Option-D
Question82:-Fixed assets are held by business for __________.
A:-Resale
B:-Generating revenue
C:-Converting to cash
D:-None of these
Correct Answer:- Option-B
Question83:-If nothing is given in the financial statement about the accounting assumptions, then it is to be treated as it is ____________. A:-Assumed that it is not followed
B:-Assumed to be followed in the next period
C:-Assumed to be followed to some extent
D:-Assumed to be followed
Correct Answer:- Option-D
Question84:-__________ is an example of source document.
A:-Journal
B:-Ledger
C:-Cash book
D:-Invoice
Correct Answer:- Option-D
Question85:-Commenced business with cash. Journal entry will be
A:-Cash A/c Dr
To Capital A/c
B:-Capital A/c Dr
To cash A/c
C:-Drawings A/c Dr
To Cash
D:-Cash A/c Dr
To purchase A/c
Correct Answer:- Option-A
Question86:-As it is drawn in the form of an account and the balance can be extracted from it, _________ is also called as ledger. A:-Journal
B:-Trial balance
C:-Receipts and Payments A/c
D:-Cash Book
Correct Answer:- Option-D
Question87:-The items come both on the debit side and credit side of Cash Book are called ________ items. A:-Counter
B:-Contra
C:-Journal accounts
D:-Double entry
Correct Answer:- Option-B
Question88:-__________ is a formal record of all transactions relating to change in a particular item.
A:-A Balance sheet
B:-An account
C:-A Journal
D:-A ledger
Correct Answer:- Option-B
Question89:-________ form the source document for sales returns.
A:-Credit note
B:-Debit note
C:-Proforma invoice
D:-Delivery note
Correct Answer:- Option-A
Question90:-The market price of goods is declined than the cost price, then the concept that plays a key role is __________. A:-Consistency
B:-Going concern
C:-Realisation
D:-Materiality
Correct Answer:- Option-C
Question91:-A __________ balance in Cash book means bank overdraft.
A:-Debit
B:-Credit
C:-Debit or credit
D:-Closing
Correct Answer:- Option-B
Question92:-Cheque issued but not presented for payment reduces the balance/s as per _________.
A:-Cash book
B:-Both cash book and pass book
C:-Pass book
D:-Cash and Bank book
Correct Answer:- Option-C
Question93:-The cash flow statement consists of which of the following sections?
A:-Operating and non-operating
B:-Operating, investing and financing
C:-Current and non-current
D:-Trading and financial
Correct Answer:- Option-B
Question94:-Onam advance given to an employee is
A:-Not an expenditure
B:-Revenue expenditure
C:-Deferred revenue expenditure
D:-Capital expenditure
Correct Answer:- Option-A
Question95:-The process of recording financial data upto trial balance is
A:-Summarising
B:-Classifying
C:-Book keeping
D:-Analyzing
Correct Answer:- Option-C
Question96:-Rohit carrying on real estate business sold a piece of land for Rs. 4,00,00,000 (cost Rs. 3,50,00,000) then the type of receipt is _______ nature a A:-Capital and transferred to capital reserve
B:-Revenue and transferred to P and L A/c
C:-Capital and transferred to P and L a/c
D:-Revenue and transferred to general reserve
Correct Answer:- Option-B
Question97:-Interpretation means
A:-Systematic analysis of recorded data
B:-Concerned with preparation and presentation of classified data
C:-Explanation of meaning and significance of the data in Financial statements
D:-Methodical classification of data given in Financial statements
Correct Answer:- Option-C
Question98:-The rule debit all expenses and losses and credit all income and gains relates to
A:-Personal account
B:-Real account
C:-Nominal account
D:-Impersonal account
Correct Answer:- Option-C
Question99:-Any change in the relationship among the partners amounts to ______________ of the partnership firm. A:-Dissolution
B:-Resolution
C:-Reconstruction
D:-Reconstitution
Correct Answer:- Option-D
Question100:-The Minimum number of persons required to form a partnership is __________.
A:-Two
B:-Three
C:-Five
D:-Seven
Correct Answer:- Option-A