Book Keeping Questions and Answers

1. Book-keeping is mainly concerned with–
(a) Designing the system of recording
(b) Recording business data relating to its operation.
(c) Interpreting the data for the users
(d) Summarizing the business data and record preparation

2. Which of the following is not a business transaction –
(a) Bought furniture for business – Rs. 5000
(b) Paid salaries Rs. 10000 for the manager
(c) Paid rent for office building – Rs. 2000
(d) Purchased an almirah for personal use – Rs. 7000

3. Internal users of accounting information are–
(a) Investors
(b) Creditors
(c) Management
(d) employees

4. The last step of accounting process is –
(a) Provide information to interested parties
(b) Record of business transaction in the books
(c) Make summary in the form of financial statement
(d) Classify sub-heads in the ledger

5. A person to whom money is owed by the business is called –
(a) Creditors
(b) Debtors
(c) Promoters
(d) Government

6. Accounting starts where –
(a) The ledger posting has been completed
(b) Book-keeping ends
(c) Transaction are recorded in the books
(d) Journals entries are passed.

7. Goods used by the proprietor is called –
(a) Assets
(b) Stocks
(c) Publicity
(d) drawings

8. Bank over draft is –
a) A long term liability
b) A short term liability
c) A current liability
d) A contingent liability

9. Revenue is generally realized at the terms of sale. Which principle is involved?
a) Matching
b) Full disclosure
c) Revenue recognition
d) Consistency

10. Accounting principles are generally based on:
a) Practicability
b) Subjectivity
c) Convenience in recording
d) Substance over form

11. Book-keeping means –
a) To keep books in cabinets
b) To record business transaction in account books.
c) To record all the activities by a trader in his diaries.
d) To write the necessary books as required.

12. Which is the oldest form of accounting?
a) Management accounting
b) Cost accounting
c) Financial accounting
d) Human Resource accounting

13. Point out the item not included in Accounting cycle –
a) Recording
b) Classification
c) Summarizing
d) Verification

14. Choose the incorrect equation –
(a) Assets = Capital + Liabilities
(b) Capital – Liabilities = Assets
(c) Liabilities = Assets – Capital
(d) Capital = Assets – Liabilities

15. Which of the following transaction, is not of financial character?
(a) Purchase of an asset on credit.
(b) Purchase of a machine in Cash
(c) Withdrawal of cash by the proprietor
(d) Strike launched by the employees to give higher salaries.

16. When a firm maintains a cash book, it is not necessary to maintain –
(a) Journal proper
(b) Cash and Bank account in ledger
(c) Sales book
(d) Purchase book

17. Given: Cash book shows an overdraft of Rs. 2000, on depositing Rs 1000 into the bank and giving a cheque of Rs. 7200 for rent, the balance will be:
(a) Rs. 4800 (Dr)
(b) Rs. 4800 (Cr)
(c) Rs. 800 (Dr)
(d) Rs. 800 (Cr)

18. A furniture of Rs. 2000 invested in the business will be credited to –
(a) Furniture account
(b) Cash account
(c) Capital Account
(d) Investment Account

19. Purchased goods from A Rs. 5000 for cash, less 8% Trade Discount and received 2% Cash Discount. Discount account will be credited with
(a) Rs. 420
(b) Rs. 92
(c) Rs. 100
(d) Rs. 82

20. Payment of wages Rs. 6000 to workman for installation of a machine, should be debited to :
(a) Wages account
(b) Installation account
(c) Machinery account
(d) Workman account

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21. Given: Cash – Rs. 5000, Furniture – Rs. 24000, Stock – Rs. 20000, creditors – Rs. 6000, Outstanding Liabilities – Rs. 2000. Now the amount of Capital will be:
(a) Rs. 49000
(b) Rs. 57000
(c) Rs. 39000
(d) Rs. 41000

22. Discount column of cash book is:
(a) Totaled and not balanced.
(b) Not balanced.
(c) Balanced
(d) Neither totaled nor balanced.

23. The balance of Petty Cash Book is:
(a) Expenses
(b) Liability
(c) Assets
(d) Profits

24. Trade Discount allowed to Rahim Rs. 500 will be debited to –
(a) Trade discount account
(b) Rahim’s account
(c) Sales account
(d) No entry

25. Double Column Cash Book records –
(a) Cash transaction only
(b) All transactions
(c) Cash purchases and credit sales
(d) Cash and bank transactions

26. In purchase book, record is maintained for:
(a) Purchases of assets
(b) All purchases of goods on credit
(c) All cash purchases of goods
(d) All cash and credit purchases

27. Trade Discount is give:
(a) On receipt of cash before time
(b) On sale of goods
(c) On cash payment
(d) On the purchase of goods on credit.

28. Accounts related to property are called –
(a) Nominal accounts
(b) Real accounts
(c) Personal accounts
(d) Outstanding accounts

29. The return of goods by a customer should be debited to:
(a) Customer’s account
(b) Sales return account
(c) Goods account
(d) Return outward account

30. In case of debts becoming bad, the amount should be credited to:
(a) Debtor’s account
(b) Bad Debt account
(c) Sales account
(d) Insolvent’s account

31. A petty cash book maintains records of –
(a) All petty expenses
(b) All expenses
(c) Outstanding expenses
(d) Petty expenses which are paid in cash

32. Shyam’s cheque is dishonoured. It will be debited to –
(a) Cheque account
(b) Cash account
(c) Shyam’s account
(d) Bank account

33. Which one of the following may have Conta entry?
(a) Cheque drawn for personal purposes
(b) Cash deposited into the bank account
(c) Cheque drawn and paid salaries on the same day
(d) Purchased furniture by cheque.

34. Accounting Standards are necessary –
(a) Due to regional business purposes
(b) For National budget accounting
(c) Due to globalization of business
(d) For the preparation of financial statement.

35. Record is maintained in purchase book after –
(a) Deduction of trade discounts
(b) Adding trade discounts
(c) Adding cash discounts
(d) Deducting cash discounts

36. Given: Goods sold to Ratan Rs. 4000 Goods sold to Biren (cash) Rs. 5000 Goods sold to Hari – Rs 7000 The total of Sales Book will be:
(a) Rs. 16000
(b) Rs. 9000
(c) Rs. 11000
(d) Rs. 12000

37. Entry for goods taken away by the proprietor for his private use will be made in –
(a) Purchase book
(b) Journal proper
(c) Return inward book
(d) Return outward book

38. Which account will be credited in giving goods of Rs. 500 in charity?
(a) Sales account
(b) Purchase account
(c) Charity account
(d) Personal account

39. Final balance of sales account is transferred to –
(a) Purchase book
(b) Purchase return book
(c) Trading account
(d) Profit and Loss account

40. Credit Note is written by –
(a) The seller to the buyer
(b) The buyer to the seller
(c) The bank to the customer
(d) The customer to the bank

41. The ledger of a trader is a –
(a) Bills Book
(b) Principal Book
(c) Sales Book
(d) Cash Book

42. The total assets in a business are Rs. 500000 and the total liabilities are Rs. 30000. The difference of Rs. 200000 is called –
(a) Capital
(b) Expenses
(c) Income
(d) Goodwill

43. The debit balances of bank in the pass book shows –
(a) Customer’s money
(b) Bank’s money
(c) Income of the customer
(d) Total amount deposited

44. The trial balance of a business is prepared from the information obtained from –
(a) Journal
(b) Ledger
(c) Cash book
(d) Original records

45. The nominal accounts are closed by transferring to –
(a) Profit and Loss account
(b) Cash account
(c) Balance sheet
(d) Reconciliation Book

46. The main object of keeping the ledger book is –
(a) To see the accuracy of accounts
(b) To know the position of business
(c) To know the collecting results of the business relating to account
(d) To know the positions of retained earnings.

47. The balance of drawing account is transferred to :
(a) Capital account of the trader
(b) Trading account
(c) Profit and Loss account
(d) Debtor’s account

48. Recording of transactions in the ledger is called –
(a) Journalizing
(b) Posting
(c) Casting
(d) adjusting

49. Shamu started business with cash Rs. 15000 and goods Rs. 5000. The posting in Shamu’s Capital account will be –
(a) Debit side by Rs. 20000
(b) Debit side by Rs. 15000
(c) Debit side by Rs. 20000
(d) Debit side by Rs. 5000

50. The balance of personal account is –
(a) Debit Balance
(b) Credit Balance
(c) Neither debit nor credit
(d) Either debit or credit

51. Which of the following is a feature of a Trial Balance?
(a) It is an account
(b) It is prepared on a specific date
(c) It fails up to check up arithmetical accuracy
(d) It is prepared from journal

52. The difference of trial balance is transferred to –
(a) Capital account
(b) Profit and Loss account
(c) Suspense account
(d) Balance sheet

53. Trial balance does not include –
(a) Opening stock
(b) Closing stock
(c) Capital account
(d) drawings

54. which of the following errors is revealed by trial balance?
(a) Error of omission
(b) Error of principle
(c) Error in casting & balancing
(d) Compensating errors

55. Preparation of trial balance is –
(a) Voluntary
(b) Compulsory
(c) Neither voluntary nor compulsory
(d) Either voluntary or compulsory

56. Final accounts are prepared from –
(a) Journal
(b) Ledger accounts
(c) Cash summary
(d) Trial balance

57. Which of the following methods are preparing trial balance is most popular?
(a) Balance method
(b) Total method
(c) Balance and total method
(d) Mixed method

58. Find out the wrong statement –
(a) Error of principle is disclosed by trial balance
(b) Trial balance is not included in final account
(c) Preparation of trial balance is not compulsory
(d) Trial balance is prepared after ledger preparation

59. Principal users of financial statements are:
(a) Investors
(b) Banks
(c) Management
(d) government

60. Depreciation on fixed assets is shown in –
(a) Trading account
(b) Profit and Loss account
(c) Appropriation account
(d) Balance sheet (cr) side

61. The balance of profit and loss account is transferred to –
(a) Cash account
(b) Sales account
(c) Capital account
(d) Investment account

62. Interest on investment is shown in –
(a) Profit and loss account (Cr) side
(b) Profit and loss account (Dr) side
(c) Balance sheet liabilities
(d) Balance sheet assets

63. Apprentice premium is an item of –
(a) Trading account (Dr) side
(b) Balance sheet liabilities side
(c) Profit and loss account (Cr) side
(d) Profit and Loss account (Dr) side

64. Patent is –
(a) A current asset
(b) An intangible asset
(c) A tangible asset
(d) A fictitious asset

65. Return outward appearing in trial balance is deducted from –
(a) Closing stock
(b) Opening stock
(c) Purchases
(d) Sales

66. Amount of sales is Rs. 240000. The gross profit is 20% of cost. Then the cost of goods sold is –
(a) Rs. 2,00,000
(b) Rs. 1,80,000
(c) Rs. 40,000
(d) Rs. 2,20,000

67. Given: Sales – Rs. 20,000, purchase – Rs. 15,000, Closing stock-Rs. 6,000, opening stock – Rs. 4,000, Freight- Rs. 2000. Then the amount of Gross Profit will be –
(a) Rs. 4000
(b) Rs. 5000
(c) Rs. 6000
(d) Rs. 8000

68. If the credit side of Profit and Loss account is move than the debit side, it show –
(a) Gross loss
(b) Net profit
(c) Gross profit
(d) Net loss

69. Net profit is equal to –
(a) Gross profit + Indirect expenses – Indirect incomes
(b) Indirect incomes – Indirect expenses
(c) Gross Loss – Indirect expenses + Indirect incomes
(d) Gross profit + Indirect incomes – Indirect expenses

70. Balance sheet is a part of –
(a) Income statement
(b) Profit and loss account
(c) Final account
(d) Appropriation account

71. Given: Purchase – Rs. 80000
Return inward – Rs. 2000
Direct expenses – Rs. 6000
Total sales – Rs. 820000
Now Gross profit or Gross loss will be:
(a) Rs. 5000
(b) Rs. 6000
(c) Rs. 2000
(d) Rs. 8000

72. A machine was purchased for Rs. 9000. It was depreciated at 10% p.a. under written drawn value method. The balance carried down after two years will be –
(a) Rs. 72900
(b) Rs. 81000
(c) Rs. 70900
(d) Rs. 65610

73. Which of the following is correct?
(a) G.P = Sales – cost of goods sold
(b) G.P. = Sales – Purchase + Direct expenses.
(c) G.P. = Sales – Purchases + opening stock
(d) G.P. = Purchases + Closing Stock – Sales

74. Closing stock is valued at –
(a) Cost or Market price whichever is higher
(b) Cost price
(c) Market price
(d) Market price or cost price whichever is less.

75. Closing stock can be shown in the Trial Balance if –
(a) The purchase is adjusted
(b) The sale is adjusted
(c) The value of closing stock is very less
(d) The value of opening stock increased

76. Item given : Net loss – Rs 7800
Apprentice premium Rs. 500
Interest on investment Rs. 15000
Salary & wages – Rs 6000
Now the amount of Net Surplus will be –
(a) Rs. 1200
(b) Rs. 2400
(c) Rs. 1700
(d) Rs. 2900

77. Choose the correct entry for the closing of sales and closing stock –
(a) Trading A/c Dr To closing stock A/c To sales A/c
(b) Sales A/c Dr Trading A/c Dr To closing stock A/c
(c) Sales A/c Dr Closing A/c Dr To Trading A/c
(d) Trading A/c Dr Closing stock A/c Dr To sales A/c

78. If prepaid expenses and closing stock are excluded from current assets, the balance is called –
(a) Fixed assets
(b) Fictitious assets
(c) Wasting assets
(d) Liquid assets

79. Those assets which do not have any physical existence but having valuable properties are known as –
(a) Tangible assets
(b) Intangible assets
(c) Current assets
(d) Liquid assets

80. Those expenses the benefit will be available in the next accounting year are called –
(a) Prepaid expenses
(b) Outstanding expenses
(c) Unpaid interest
(d) Preliminary expenses

81. Trial balance extract on 31-3-2017,
Sundry debtors – Rs. 30000
Provision for Doubtful debts – Rs. (Cr) 2000
New Bad Debts at 10% on Sundry Debtors are to be created. How much will be changed to profit & loss account during the year?
(a) Rs. 3000
(b) Rs. 2500
(c) Rs. 2000
(d) Rs. 1000

82. Modern Double Entry System was developed by:
(a) R.N. Carter
(b) Lucas Pacioli
(c) E.N. Kohler
(d) J.R. Batliboi

83. Out of the following, which account is not allowed to record in books?
(a) Cash discount
(b) Discount received
(c) Trade discount
(d) Discount allowed

84. Bank overdraft account is –
(a) Personal account
(b) Real account
(c) Nominal account
(d) Representative personal account

85. Which of the following is a real account?
(a) Repairing account
(b) Building account
(c) Charity account
(d) M & Co account

86. What account will be credited on giving goods in donation?
(a) Purchase account
(b) Sales account
(c) Donation account
(d) Cash account

87. Which is the correct entry for the following?
Goods stolen – Cost Rs. 1200, sale price – Rs. 1500.
(a) Purchase A/c Dr Rs. 1500 To Goods A/c Rs. 1500
(b) Loss by theft A/c Dr Rs. 1200 To Purchase A/c Rs. 1500
(c) Purchase A/c Dr Rs. 1500 To sales A/c Rs. 1500
(d) Purchase A/c Dr Rs. 1200 To Closing stock Rs. 1500

88. Convention of prudence takes into account –
(a) All future profit and looses
(b) All amount receivables
(c) All future losses and uncertainties
(d) Neither profits nor losses of the future

89. Cash taken by the proprietor from the business should be credited to –
(a) Capital account
(b) Cash account
(c) Personal account
(d) Drawings account

90. A trader is treated as a separate unit from the business, is under –
(a) Principles of consistency
(b) Entity concept
(c) Objectivity concept
(d) Principle of prudence

91. In Dual aspect concept, the duality principle is expressed under –
(a) Fundamentals of Accounting equation
(b) The three aspects of a transactions
(c) The main aspect of the transaction
(d) The compounded system of the entry

92. From the following, point out the example of dead-stock –
(a) Sundry debtors
(b) Sundry creditors
(c) Land and buildings
(d) investment

93. accrual basis of accounting system is based on –
(a) Materiality concept
(b) Cost concept
(c) Matching concept
(d) Continuity concept

94. Point out the representative personal account –
(a) Unexpired insurance account
(b) Drawings account
(c) United Bank of India
(d) Ram’s Account

95. Goods purchased on credit from Hari, credited to:
(a) Hari’s account
(b) Purchase account
(c) Goods account
(d) Cash account

96. Stock invested by the proprietor worth Rs. 10000 in the business will be debited to –
(a) Cash account
(b) Capital account
(c) Proprietor’s account
(d) Stock account

97. On 1st April 2016 Furniture purchased – Rs. 50000. On 1st Oct 2016 another furniture purchased – Rs 20000. Depreciation allowed at 10% on original cost p.a. Calculate the amount of depreciation on 31st March 2017 –
(a) Rs. 7000
(b) Rs. 6000
(c) Rs. 5000
(d) Rs. 2000

98. Find out a group of individuals not interested in the financial information of the business –
(a) Money lenders
(b) Management
(c) Employees
(d) Officers

99. Which one will be the capital expenditure?
(a) Salaries and wages
(b) Labour charge paid to fit a second hand vehicle for service
(c) Removal charge of a shop to other place
(d) Colouring of a building roof.

100. If goods are returned to suppliers, then we have to prepare –
(a) Credit note
(b) Receipt note
(c) Debit note
(d) Invoice note