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1. Journal is a book of :
(a) Original entry
(b) Secondary entry
(c) Only cash transactions
(d) All of the above
Journal is the book & original entry is which preliminary recorded of a business transaction are recorded in chronological order. So, (a) is right answer.
2. Who is the profounder of Double Entry System?
(a) Lucas Pacilio
(b) Henry Fayol
(c) Henry Ford
(d) Adam Smith
Double entry system is developed by Lucas Pacioli of Italy in the 15th century. So, we can easily say that only Lucas Pacioli is the propounded of double entry system. Hence, (a) is the right answer.
3. What is the first stage of accounting?
(a) Journal
(b) Ledger
(c) Trial Balance
(d) Final Account
Recording of transactions in Journal book is the first stage of accounting process. So (a) is right answer.
4. Which account is credited on commencement of business?
(a) Cash
(b) Bank
(c) Asset
(d) Capital
Any account of money or goods with which business is commenced is called Capital. So, Capital is the first account created on commencement of business. So (d) is the correct answer.
5. Accounts of debtor and creditor are
(a) Personal Accounts
(b) Real Accounts
(c) Trading Accounts
(d) Income and Expenditure Accounts
The debtors and creditors represent personal accounts. So (a) is the correct answer
6. The system of recording of transactions based on dual aspect is called
(a) Single entry
(b) Double entry
(c) Double account system
(d) Cash system
Double entry system is the system which recognizes and records both the aspects of transactions (called dual aspect). So (b) is the correct answer.
7. Which of the following way, a Compound Journal Entry may be passed
(a) One particular account may be debited while several other accounts may be credited
(b) One particular account may be credited while several other accounts may be debited
(c) Several accounts may be debited and several other accounts may also be credited
(d) Any of the above
Normally, or journal entry may have one debit and one credit. But, sometimes a journal entry may have more than one debit or more than one credit. This type of journal entry is called Compound Journal entry. So, option (a), (b) and (c) all of the above are true. So (d) is the correct answer.
8. Debit means
(a) An increase in asset
(b) An increase in liability
(c) A decrease in asset
(d) An increase in proprietor’s equity
Increase in asset means the asset account should be debited. So (a) is the correct answer.
9. On purchase of a machine Rs.10, 000 paid to workers as wages for installing the machine
(a) Wages A/c be debited
(b) Machinery repair A/c be debited
(c) Machinery A/c be debited
(d) None of these
The wages directly related to the machinery installation. will increase the cost of machinery. Thus, the machinery account will be debited. Hence, (d) is correct answer.
10. Which of the following is correct?
(a) Opening Capital = Closing Capital + Additional Capital – Drawings – Profit
(b) Opening Capital = Closing Capital + Drawings – Additional Capital – Loss
(c) Opening Capital = Closing Capital + Drawings – Additional Capital – Profit
(d) Opening Capital = Closing Capital Drawings + Additional Capital + Profit
Closing Capital = Opening Capital + Additional Capital + Profit – Drawings.
So, Opening Capital = Closing Capital + Drawings – Additional Capital – Profit
As per this formula, option (c) is the correct answer.
11. The assets on 31. 12.2006 Rs.1,60,000 and capital is Rs.1,45,000. Its liabilities on that date shall be :
(a) Rs.1, 60,000
(b) Rs.3, 05,000
(c) Rs.15, 000
(d) Rs.1, 45,000
Capital + Liabilities = Assets, or
Liabilities = Assets – Capital = 1,60,000 – 1,45,000 = 15000. So, (c) is the correct answer.
12. Ram has assets of Rs.10, 000 and liabilities of Rs.4, 000. His capital would be :
(a) Rs.10, 000
(b) Rs.14, 000
(c) Rs.6, 000
(d) Rs.4, 000
As we know that capital = assets – Liabilities
So, Capital = Rs.(20,000 – 14,000) i.e. Rs.6,000. So, option (c) is the correct answer.
13. A business transaction affects
(a) At least one account
(b) At least two account
(c) Maximum of two accounts
(d) Maximum of three accounts
According to double entry system, every business transaction has two-fold aspects – debit and credit and both the aspects are to be recorded in the books of accounts. So, option (b) is the correct answer.
14. When goods are withdrawn from stock by the owner of the business for personal use should be recorded by debiting
(a) Drawings account and crediting cash account
(b) Drawings account and crediting purchases account
(c) Capital account and crediting drawings account
(d) Purchases account and crediting drawings account
When the owner withdraws some goods from the business for his personal use, then “Drawings Account” is debited and “Purchase Account” is credited because the proprietor draws the goods purchased. Drawings A/c Dr to Purchase A/c Cr is correct. So, option (b) is the right answer. So, option (b) is the right answer.
15. Advance Salary to Monoj Account is:
(a) Real Account
(b) Artificial Personal Account
(c) Representative Personal Account
(d) Any of them
Representative personal accounts are those accounts which are represented as personal account. In this case, Advance Salary is represented by employees personal account. So, option (c) is correct answer.
16. A journal is also known by
(a) Sales Day Book
(b) Book of original entry
(c) Purchase day book
(d) All of the above.
Journal entry is the initial record i.e. books of original entry of every transactions and event. So, option (b) is the correct answer.
17. What is the rule for debit and credit for Personal Accounts?
(a) Debit the receiver, credit the giver
(b) Debit all expenses and losses, credit all incomes and gains.
(c) Debit what comes in, credit what goes out
(d) All of the above.
The rule for Personal Accounts – Debit the receiver and Credit the giver. So, option (a) is correct answer.
18. Which of the following is an artificial personal A/c?
a) Bank A/c
(b) Cash A/c
(c) Mohan A/c
(d) Building A/c
Bank a/c is the artificial personal account (as bank is not a real person) representing the bank. Hence option (a) is the correct answer.
19. Which of the following transaction would cause decrease in owner’s equity?
(a) Cash withdrawn for self use by the proprietor
(b) Goods withdrawn for self use by the owner
(c) Payment of personal expenses of the proprietor by the business
(d) All of them.
Owner equity i.e. Capital would be decreased when cash or goods withdrawn for personal use or when any payment is made for personal expenses from the business. So, all of the above three statements are correct. So, option (d) is the correct answer.
20. Carriage outward is an
(a) Expense
(b) Income
(c) Both income and expenses.
(d) None of the above.
Carriage outward is an expense (indirect expenses) incurred for effecting sales and distribution of sold goods. So, option (a) is the correct answer.
21. Trading account contains :
(a) Personal accounts
(b) Real accounts
(c) Nominal accounts
(d) None.
Trading account contains only Nominal accounts. So, option (c) is the correct answer
22. Which of the followings is an example of non-operating expense?
(a) Miscellaneous expenses
(b) Depreciation of plant and machinery
(c) Interest on debentures
(d) None of the above.
Interest on debenture is finance expenses. So, option (c) is the correct answer.
23. Wages paid for installation of machinery affect
(a) Only Machinery A/c
(b) Only Wages A/c
(c) Profit & Loss A/c
(d) Both Machinery A/c and Wages A/c.
When wages paid for installation of machinery, then the machinery account is only debited (not the Wages a/c). So, only machinery A/c would be affected. So, option (a) is the correct answer
24. Loss on Sale of old furniture and fitting is debited to
(a) Depreciation A/c
(b) Profit and Loss A/c
(c) Furniture and fitting A/c
(d) Sale of old Furniture A/c.
The loss of sale of old furniture should be debited to P & L A/c. So, option (b) is the correct answer
25. When a supplier is paid by cheque then the accounts affected are :
(a) Sales A/c and Debtors A/c
(b) Bank A/c and Sales A/c
(c) Bank A/c and Creditor A/c
(d) Bank A/c and Debtor A/c.
When a creditor is paid by cheque then the journal entry is Creditor A/c. Dr to Bank A/c Cr. So, Bank and Creditor both A/c should be affected. So, option (c) is the correct answer
26. Payment of salary by cheque is recorded by
(a) Debiting salary A/c, crediting Bank A/c
(b) Debiting cash A/c, crediting salary A/c
(c) Debiting employee A/c, crediting cash A/c
(d) Debiting cash Ac, crediting employee A/c.
The journal entry for payment by cheque is –
Salary A/c Dr to Bank A/c.
So, option (a) is the correct answer.
27. ———– is the Accounts book containing chronological records of all business transactions.
(a) Journal
(b) Cash Book
(c) Subsidiary Books
(d) Ledger
Journal book is the Accounts book where all business transactions are recorded in chronological order. So, option (a) is the correct answer
28. If the liabilities of a business are Rs.12, 000 and the owner’s equity is Rs.15, 000, the business assets will be:
(a) Rs.3,000
(b) Rs.27,000
(c) Rs.12,000
(d) Rs.15,000
Assets = Total owner’s equity + All other liabilities. i.e. Rs. (15,000 + 12,000) = Rs.27, 000. So, option (b) is the correct answer.
29.The process of recording is done
A) Half Yearly
B) Once in a month
C) Throughout the accounting period
D) At the end of accounting period
The process of recording is done throughout the accounting period. Hence Option is (c ) is correct
30. Journal is a book of _______ entries
A) First
B) Original
C) Secondary
D) Generic
Journal is a book of Original entries
Hence Option is (B ) is correct
31. The process of recording transactions in different journals is called
A) Posting
B) Entry making
C) Adjusting
D) Journalizing
The process of recording transactions in different journals is called Journalizing
Hence Option is (D) is correct
32. Every business transaction affects at least ________ accounts
A) One
B) Two
C) Three
D) Infinite
Every business transaction affects at least Two accounts. Hence Option is (B) is correct
33. Discount allowed is a kind of deduction from _____
A) Account payable
B) Account receivable
C) Cash account
D) Discount account
Discount allowed is a kind of deduction from Account Receivable. Hence Option is (B) is correct
34. The other name of journal is
A) Ledger
B) T account
C) Day book
D) Cash book
The other name of journal is Day Book. Hence Option is (C) is correct
35. A journal entry in which two or more account is debited or credited is referred as
A) Journal entry
B) Multi entry
C) Additional entry
D) Compound entry
A journal entry in which two or more account is debited or credited is referred as Multi entry Journal. Hence Option is (D) is correct
36. Discount allowed is
A) Expense of business
B) Income of business
C) Loss of business
D) Abnormal loss of business
Discount allowed is Expense of business. Hence Option is (A) is correct
37. Which of the following will be debited if a business purchases goods on credit?
A) Cash
B) Debtor
C) Creditor
D) Purchases
If a business purchases goods on credit, Purchases will be debited. Hence Option is (D) is correct
38. Which of the following accounts will be debited if the business’s owner withdraws cash from business for his personal use?
A) Drawings
B) Cash
C) Business
D) Stock
When the business’s owner withdraws cash from business for his personal use, Drawings Account will be debited. Hence Option is (A) is correct
39. Journal Books are also referred as
A) Books of Accounts
B) Books of original entries
C) T account
D) Books of Accounting events
Journals are also referred as Books of original entries. Hence Option is (B) is correct
40. Which of the following accounts will be credited if a company purchases Car in cash?
A) Capital account
B) Purchase account
C) Motor car account
D) Cash account
When the company purchases Car in cash, then Cash Account would be credited
Hence Option is (D) is correct
41. Discount allowed to Debtor for quick repayment is normally referred as
A) Trade discount
B) Prompt payment discount
C) Cash discount
D) Bulk discount
Discount allowed to Debtor for quick repayment is normally referred as Cash Discount. Hence Option is (C) is correct
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