Book-keeping (Theory and Practical) (Paper III)
Date of Examination 11-03-2019
Question1:-Bookkeeping mainly consists of which part of accounting process?
A:-Analysing
B:-Preparing financial statements
C:-Auditing the books of accounts
D:-Recording financial information
Correct Answer:- Option-D
Question2:-Revenue
A:-Causes an increase in shareholders’ equity
B:-Causes a decrease or an increase in shareholder’s equity
C:-Has no impact on shareholder’s equity
D:-Causes a decrease in shareholder’s equity
Correct Answer:- Option-A
Question3:-Sales invoices are first entered in
A:-Cash book
B:-Purchase journal
C:-Sales journal
D:-Sales account
Correct Answer:- Option-C
Question4:-Double entry book-keeping was started by
A:-F.W. Taylor
B:-Lucas Pacioli
C:-Henry Fayol
D:-Adam Smith
Correct Answer:- Option-B
Question5:-Which of the following describes a record of the transactions?
A:-Journal
B:-Income statement
C:-Balance sheet
D:-General ledger
Correct Answer:- Option-A
Question6:-The ________________ is the first financial statement prepared during the accounting cycle.
A:-Balance Sheet
B:-Income Statement
C:-Expenditure Statement
D:-Cash Flow Statement
Correct Answer:- Option-B
Question7:-The results of business activities are reflected in
A:-Profit and loss account
B:-Profit and loss appropriation account
C:-Balance sheet
D:-None of these
Correct Answer:- Option-C
Question8:-The ____________ summarizes investing activities during a period.
A:-Statement of equity
B:-Income statement
C:-Balance sheet
D:-Statement of cash flows
Correct Answer:- Option-D
Question9:-________________ is the withdrawal of cash and goods by the owner of the business for personal use.
A:-Depreciation
B:-Drawings
C:-Outflow of cash
D:-Appropriation
Correct Answer:- Option-B
Question10:-Debenture carrying charge on particular asset on the company is known as
A:-Fixed
B:-Mortgage
C:-Naked
D:-Floating
Correct Answer:- Option-D
Question11:-The process of entering all transactions from the Journal to Ledger is called
A:-Posting
B:-Entry
C:-Accounting
D:-None of the above
Correct Answer:- Option-A
Question12:-The matching principle attempts to find satisfactory bases of association between
A:-Assets and liabilities
B:-Internal equities and external liabilities
C:-Expenses and revenues
D:-None of these
Correct Answer:- Option-C
Question13:-Which of the following equations represents the balance sheet?
A:-Assets + Liabilities = Shareholders’ equity
B:-Assets = Liabilities = Shareholders’ equity
C:-Assets = Liabilities - Shareholders’ equity
D:-Assets = Liabilities + Shareholders’ equity
Correct Answer:- Option-D
Question14:-Entries in Purchase Journal are:
A:-Purchase invoices
B:-Discount received
C:-Payments to suppliers
D:-Trade discounts
Correct Answer:- Option-A
Question15:-Royalty payable is debited to ______________ by lessee.
A:-Profit and Loss Account
B:-Royalty Account
C:-Trading Account
D:-Landlord Account
Correct Answer:- Option-B
Question16:-The long term assets that have no physical existence but are rights that have value is known as
A:-Current assets
B:-Fixed assets
C:-Intangible assets
D:-Investments
Correct Answer:- Option-C
Question17:-Current ratio =
A:-Quick assets / Current liabilities
B:-Current assets / Current liabilities
C:-Debt / Equity
D:-Current assets / Equity
Correct Answer:- Option-B
Question18:-Balance sheet is a statement which discloses an organization’s
A:-Assets
B:-Liabilities
C:-Owner's equity
D:-All of these
Correct Answer:- Option-D
Question19:-Retained earning is synonymous to:
A:-Operating profit
B:-Profit for the year
C:-Accumulated profit and loss account
D:-Gross profit
Correct Answer:- Option-C
Question20:-‘Calls in advance’ is shown under ___________.
A:-Share capital
B:-Reserve and surplus
C:-Current liabilities
D:-Loans and advances
Correct Answer:- Option-A
Question21:-Which of the following is a liability?
A:-Cash
B:-Equipment
C:-Creditors
D:-Debtors
Correct Answer:- Option-C
Question22:-_____________ is the first phase of accounting cycle.
A:-Identifying an economic event or transaction
B:-Preparing Journal
C:-Posting entries to Ledger accounts
D:-Making decisions about business
Correct Answer:- Option-A
Question23:-Which is the statement of revenues and expenses for a specific period of time?
A:-Trading account
B:-Trial balance
C:-Balance sheet
D:-Profit and loss statements
Correct Answer:- Option-D
Question24:-Lower the Debt Equity ratio:
A:-Lower the protection to creditors
B:-Higher the protection to creditors
C:-It does not affect creditors
D:-None of the above
Correct Answer:- Option-B
Question25:-A voucher is a document __________.
A:-Support an entry made in the books of accounts
B:-Used for an extra-ordinary meeting
C:-To be used if all the directors are out of station
D:-To be used for voating
Correct Answer:- Option-A
Question26:-Companies profit divided among shareholder is:
A:-Interest
B:-Reserve
C:-Dividend
D:-Surplus
Correct Answer:- Option-C
Question27:-Every business transaction affects at least ____________ accounts.
A:-One
B:-Two
C:-Three
D:-Infinite
Correct Answer:- Option-B
Question28:-Which of the following is the current liability?
A:-Bills payable
B:-Outstanding expenses
C:-Bank overdraft
D:-All of the above
Correct Answer:- Option-D
Question29:-The accounts that records expenses, gains and losses are:
A:-Personal accounts
B:-Nominal accounts
C:-Real accounts
D:-None of the above
Correct Answer:- Option-B
Question30:-Balance sheets are prepared:
A:-Monthly
B:-Weekly
C:-Quarterly
D:-Annually
Correct Answer:- Option-D
Question31:-Net profit is calculated in the:
A:-Profit & Loss Account
B:-Balance Sheet
C:-Trial Balance
D:-Trading Account
Correct Answer:- Option-A
Question32:-Bank reconciliation statement is a statement:
A:-Sent by the bank when accountant made an error
B:-Drawn up by the bank to verify the cash book
C:-Drawn up to verify cash book balance with the bank statement balance
D:-Sent by the bank when the account is overdrawn
Correct Answer:- Option-C
Question33:-Sales expenditure budget is prepared by estimating the expenses of
A:-Advertisement
B:-Market analysis
C:-Salesman’s salary
D:-All of the above
Correct Answer:- Option-D
Question34:-The process of recording transactions in different journals is called:
A:-Journalising
B:-Posting
C:-Adjusting
D:-Entry making
Correct Answer:- Option-A
Question35:-The account format that displays debits, credits, balances, and headings.
A:-General Journal
B:-T-Account
C:-General Ledger
D:-Ledger Account
Correct Answer:- Option-B
Question36:-General Journal is a book of ____________ entries.
A:-First
B:-Secondary
C:-Original
D:-Generic
Correct Answer:- Option-C
Question37:-Identify the asset from the following.
A:-Cash and cash equivalent
B:-Creditors
C:-Notes payable
D:-Bank loan
Correct Answer:- Option-A
Question38:-Return on Investment Ratio (ROl) =
A:-(Gross profit / Net sales) × 100
B:-(Gross profit × Sales / Fixed assets) × 100
C:-(Net profit / Total assets) × 100
D:-(Net profit / Sales) × 100
Correct Answer:- Option-C
Question39:-What is the basic accounting equation?
A:-Liabilities — Capital = Assets
B:-Assets + Liabilities = Capital
C:-Capital + Assets = Liabilities
D:-Capital + Liabilities = Assets
Correct Answer:- Option-D
Question40:-Which of the following is not an asset?
A:-Buildings
B:-Loan from Mr. X
C:-Debtors
D:-Cash Balance
Correct Answer:- Option-B
Question41:-Accounts payable is reported as a ____________ on the balance sheet.
A:-Fixed Liability
B:-Contigent Liability
C:-Future Liability
D:-Current Liability
Correct Answer:- Option-D
Question42:-The ______________ reports activity on a specific point in time.
A:-Balance Sheet
B:-Income Statement
C:-Audit
D:-Cash Flow Statement
Correct Answer:- Option-A
Question43:-Working capital is a term meaning:
A:-Capital less drawings
B:-The total of fixed assets — Current assets
C:-The excess of the current assets over the current liabilities
D:-The amount of capital invested by the proprietor
Correct Answer:- Option-C
Question44:-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
Question45:-Patents, Copyrights and Trademarks are
A:-Intangible assets
B:-Fixed assets
C:-Current assets
D:-Investments
Correct Answer:- Option-A
Question46:-Which of the following is a liability?
A:-Motor vehicle
B:-Creditors of goods
C:-Machinery
D:-Cash at bank
Correct Answer:- Option-B
Question47:-Report that lists account balances of only permanent accounts.
A:-Income statement
B:-Cash Flow Statement
C:-Balance Sheet
D:-None of the above
Correct Answer:- Option-C
Question48:-Accounting provides information on
A:-Cost and income for managers
B:-Company’s tax liability for a particular year
C:-Financial conditions of an institution
D:-All of the above
Correct Answer:- Option-D
Question49:-First activity listed on the cash flow statement:
A:-Withdrawals
B:-Future Liability
C:-Operating activities
D:-None of the above
Correct Answer:- Option-C
Question50:-You are to buy an existing business which has assets valued at buildings for Rs.50,000/-, Motor vehicles Rs.15,000/-, Fixtures Rs.5,000/- and Stock Rs.40,000/-. You are to pay Rs.1,40,000/- for the
business. This means that:
A:-Paid Rs.30,000/- for Goodwill
B:-Paid Rs.30,000/- as incentive
C:-Paid Rs.30,000/- as margin
D:-You have made calculation mistake
Correct Answer:- Option-A
Question51:-Identify the nominal account:
A:-Machinery account
B:-Building account
C:-Creditors account
D:-Rent expenses account
Correct Answer:- Option-D
Question52:-Liability and equity accounts have what type of balance?
A:-Debit
B:-Credit
C:-Contra
D:-All of the above
Correct Answer:- Option-B
Question53:-To find the value of closing stock at the end of a period, we:
A:-do this by stock taking
B:-look in the stock account
C:-deduct cost of goods sold from sales
D:-deduct opening stock from cost of goods sold
Correct Answer:- Option-A
Question54:-Goods returned by customer should be debited to which of the following accounts?
A:-Sales income account
B:-Sales account
C:-Return inward account
D:-Expenses account
Correct Answer:- Option-C
Question55:-A firm bought a machine for Rs.3,200/-. It is to be depreciated at a rate of 25% under diminishing method. What would be the remaining book value after 2 years?
A:-Rs.2,400/-
B:-Rs.3,200/-
C:-Rs.1,600/-
D:-Rs.1,800/-
Correct Answer:- Option-D
Question56:-All financial statements have ______________ that display the company name, name of the report, and date of activity.
A:-Notes
B:-Headings
C:-Statements
D:-Declarations
Correct Answer:- Option-B
Question57:-Return on Investment Ratio (ROl) =
A:-(Net profit / Total assets) × 100
B:-(Gross profit × Sales / Fixed assets) × 100
C:-(Net profit / Sales) × 100
D:-(Gross profit / Net sales) × 100
Correct Answer:- Option-A
Question58:-Which financial statement displays the revenues and expenses of a company for a period of time?
A:-Balance Sheet
B:-Income Statement
C:-Cash Flow Statement
D:-Statement of stockholder’s equity
Correct Answer:- Option-B
Question59:-Which of these is not included as a separate item in the basic accounting equation?
A:-Assets
B:-Liabilities
C:-Revenues
D:-Stockholder’s Equity
Correct Answer:- Option-C
Question60:-The financial statement that is based on the accounting equation:
A:-Income Statement
B:-Profit & Loss Statement
C:-Cash flow statement
D:-Balance sheet
Correct Answer:- Option-D
Question61:-A contra asset account has what type of balance?
A:-Debit
B:-Credit
C:-Contra
D:-All of the above
Correct Answer:- Option-B
Question62:-__________ is also called as sales ledger.
A:-Personal Ledger
B:-Creditors Ledger
C:-Nominal Ledger
D:-Debtors Ledger
Correct Answer:- Option-D
Question63:-Which of the following best describes the meaning of ‘Purchases’?
A:-Goods paid for
B:-Goods bought on credit
C:-Goods bought for resale
D:-Items bought
Correct Answer:- Option-C
Question64:-The sales income of a business during a given period is called
A:-Turnover
B:-Sales Returns
C:-Transactions
D:-Purchase Returns
Correct Answer:- Option-A
Question65:-Gross profit is:
A:-Cost of goods sold + Opening stock
B:-Net profit less expenses
C:-Sales less purchases
D:-Excess of sales over cost of goods sold
Correct Answer:- Option-D
Question66:-What is equity?
A:-Owner’s claim on total assets
B:-Liability of a business
C:-Cash from the business
D:-Owner’s claim on total liabilities
Correct Answer:- Option-A
Question67:-Which of the following best describes a trial balance?
A:-Shows all the entries in the books
B:-It is a special account
C:-It is a list of balances on the books
D:-Shows the financial position of a business
Correct Answer:- Option-C
Question68:-Discount allowed is:
A:-Loss of business
B:-Expense of business
C:-Income of business
D:-Abnormal loss of business
Correct Answer:- Option-B
Question69:-Only personal account and cash account are opened in ____________.
A:-Accrual system
B:-Double entry system
C:-Single entry system
D:-Mercantile system
Correct Answer:- Option-C
Question70:-The accounting process involves recording
A:-Non quantifiable economic event
B:-Quantifiable economic event
C:-All of them
D:-None of them
Correct Answer:- Option-B
Question71:-Which of the following statement is incorrect?
A:-Assets — Capital = Liabilities
B:-Assets — Liabilities = Capital
C:-Liabilities + Capital = Assets
D:-Liabilities + Assets = Capital
Correct Answer:- Option-D
Question72:-‘Posting’ the transactions in book keeping means:
A:-Making the second entry of a double entry transaction
B:-Entering items in a cash book
C:-Making the first entry of a double entry transaction
D:-Something other than above
Correct Answer:- Option-A
Question73:-Errors are corrected via the journal because:
A:-It saves the accountant’s time
B:-It provides a good record explaining the double entry records
C:-It saves entering them in the ledger
D:-It is much easier to do
Correct Answer:- Option-B
Question74:-The assets that can be converted into cash within a short period are known as
A:-Investments
B:-Fixed assets
C:-Intangible assets
D:-Current assets
Correct Answer:- Option-D
Question75:-A Receipts and Payments Account is one:
A:-In which the surplus of income over expenditure is calculated
B:-Which is accompanied by a balance sheet
C:-In which the opening and closing cash balances are shown
D:-In which the profit is calculated
Correct Answer:- Option-C
Question76:-Which of the following accounts can be classified as a real account?
A:-Cash account
B:-Rent expense account
C:-Insurance expense account
D:-Rent income account
Correct Answer:- Option-A
Question77:-_____________ is a separate legal entity whose total capital can be divided into many shares.
A:-Partnership
B:-Proprietorship
C:-Company
D:-Non-profit organization
Correct Answer:- Option-C
Question78:-In accounting, an economic event is referred to as
A:-Transaction
B:-Bank statement
C:-Cash
D:-Exchange of money
Correct Answer:- Option-A
Question79:-Balance sheet is a statement of:
A:-Assets
B:-Liabilities
C:-Capital
D:-All of the above
Correct Answer:- Option-D
Question80:-The owner of consignment stock is called:
A:-Debtor
B:-Consignor
C:-Consignee
D:-Principal
Correct Answer:- Option-B
Question81:-Capital of a business increases if there is an increase in:
A:-Drawings
B:-Interest on capital
C:-Expenses are greater than income
D:-Revenue
Correct Answer:- Option-D
Question82:-Discounts received are:
A:-Deducted when we receive cash
B:-Given by us when we will sell goods on credit
C:-Deducted by us when we pay our accounts
D:-None of the above
Correct Answer:- Option-C
Question83:-The debts which are to be repaid within a short period are known as
A:-Fixed liabilities
B:-Current liabilities
C:-Contingent liabilities
D:-All of the above
Correct Answer:- Option-B
Question84:-Introduction of capital by owner of business is recorded on which side of a cash book?
A:-Receipts
B:-Payments
C:-Income
D:-Expenditure
Correct Answer:- Option-A
Question85:-Financial statement used to compute the gross profit margin.
A:-Profit and Loss Statement
B:-Trading Account
C:-Balance Sheet
D:-Cash flow statement
Correct Answer:- Option-B
Question86:-Suppliers’ personal accounts are found in the:
A:-Purchase ledger
B:-Sales ledger
C:-Nominal ledger
D:-General ledger
Correct Answer:- Option-A
Question87:-Accrued expenses are considered as:
A:-Asset
B:-Gain
C:-Liability
D:-Income
Correct Answer:- Option-C
Question88:-If we take goods for own use we should:
A:-Debit Purchase Account: Credit Drawing Account
B:-Debit Sales Account: Credit Stock Account
C:-Debit Drawing Account: Credit Stock Account
D:-Debit Drawing Account: Credit Purchases Account
Correct Answer:- Option-D
Question89:-Capital expenditure is:
A:-Money spent on buying fixed assets or adding value to them
B:-The cost of running the business on a day to day basis
C:-Money spent on selling fixed assets
D:-The extra capital paid by the proprietor
Correct Answer:- Option-A
Question90:-Accounts payable, accruals and notes payables are listed on balance sheet as:
A:-Accrued liabilities
B:-Current liabilities
C:-Accumulated liabilities
D:-Non current liabilities
Correct Answer:- Option-B
Question91:-Wages and salaries of employees which company owns in the accounts are called:
A:-Accrued expenses
B:-Accruals accounts
C:-Both (1) and (2)
D:-Zero liabilities
Correct Answer:- Option-C
Question92:-Purchases + Opening stock — Closing stock =
A:-Net income
B:-Amount of sale
C:-Gross profit
D:-Cost of goods sold
Correct Answer:- Option-D
Question93:-All indirect expenses are charged against:
A:-Profit and Loss Account
B:-Trading Account
C:-Manufacturing Account
D:-None of the above
Correct Answer:- Option-A
Question94:-Direct material costs are added into direct manufacturing costs, to calculate:
A:-Product Cost
B:-Manufacturing Cost
C:-Production Cost
D:-Prime Cost
Correct Answer:- Option-D
Question95:-Matching concept means:
A:-Assets = Capital + Liabilities
B:-Expenses should be matched with the revenue of the period
C:-Transactions recorded at accrual concept
D:-Anticipate no profit but recognize all losses
Correct Answer:- Option-B
Question96:-An asset was purchased for Rs.10,000/- with the down payment of Rs.2,000/- and bills accepted for Rs.8,000/-. What would be the effect on the total asset and total liabilities in the balance sheet?
A:-Assets increased by Rs.10,000/- and liabilities increased by Rs.8,000/-
B:-Assets increased by Rs.8,000/- and liabilities decreased by Rs.8,000/-
C:-Assets increased by Rs.8,000/- and liabilities increased by Rs.8,000I-
D:-Assets decreased by Rs.8,000/- and liabilities increased by Rs.8,000/-
Correct Answer:- Option-C
Question97:-Mr. X is a dealer in Home appliances. He purchased two air conditioners and installed in his showroom. In the books the cost of two airconditioners will be debited to:
A:-Fixed assets account
B:-Drawing account
C:-Capital account
D:-Purchase account
Correct Answer:- Option-A
Question98:-A trader purchases goods for Rs.25,00,000/-, of these 70% of goods were sold during the year. At the end of the Financial Year, market value of such goods were Rs.5,00,000/-. But the dealer
recorded in his books for Rs.7,50,000/-. Which of the following concept is violated?
A:-Money measurement
B:-Conservatism
C:-Consistency
D:-None of these
Correct Answer:- Option-B
Question99:-The process of recording financial data upto trial balance is:
A:-Classifying
B:-Analyzing
C:-Book keeping
D:-Summarising
Correct Answer:- Option-C
Question100:-
Balance sheet as at 31 March 2018 In Rs.
Non-current assets 20,000
Inventories 5,000
Trade receivables 3,000
Investments 1,500
Cash and bank 500
Bank overdraft 1,650
Trade payables 6,000
Taxation 1,000
Dividend proposed 200
Loan 1,000
Ordinary shares 4,000
Share premium 4,650
Retained earnings 11,500
What is the total liabilities?
A:-Rs.20,150
B:-Rs.8,850
C:-Rs.11,500
D:-Rs.9,850
Correct Answer:- Option-D