Basic Accounting Principles
- Furniture dealer sold furniture for Rs. 25,000/- to Sunil for cash. In the books of the dealer A/c is debited and A/c is credited :
(a) Cash, Fixed Asset
(b) Cash, Furniture
(c) Cash, Sales
(d) Cash, Sunil. - Mr. X is a dealer in electronic goods (such as refrigerators, air conditioners, washing machines, televisions etc.) He purchased 2 air conditioners and installed in his showroom. In the books of ‘X’ the cost of these 2 air conditioners will be debited to:
(a) Drawing A/c
(b) Capital A/c
(c) Fixed Asset A/c
(d) Purchases A/c - X sold goods to Y at cost + 10 % profit. Y sold goods to Z at 20 % profit on sales. If cost of the goods to X is Rs. 50,000. What is the cost of the goods to Z?
(a) Rs. 66,000
(b) Rs. 68,750
(c) Rs. 65,000
(d) Rs. 69,450 - A diamond ring worth Rs.1,00,000 was stolen from the shop of M/s Shine Jewelers on 25- 03-2012. Insurance claim of Rs. 60,000 was admitted, but not paid by the insurance company till 31-03-2012. In this regard, no entry was passed in the books of account. The correct journal entry to be passed while preparing the final accounts on 31-03-2012 is :
(a) Profit & Loss A/c Dr. 1,00,000
To Purchases A/c 1,00,000
(b) Insurance claim Receivable A/c Dr. 40,000
Loss by theft A/c Dr. 60,000
To Purchases A/c 1,00,000
(c) Profit & Loss A/c Dr. 40,000
Insurance claim Receivable A/c Dr. 60,000
To Purchases A/c 1,00,000
(d) None of the above - The cost of the furniture lost by fire is Rs. 18,000; Provision for depreciation on the date of fire is Rs. 2,700; Insurance claim accepted Rs. 12,000 ; Amount of loss to be debited to Profit & Loss A/c is :
(a) Rs. 6,000
(b) Rs. 15,300
(c) Rs. 3,300
(d) Rs. 18,000 - Goods in stock worth Rs. 800 are destroyed by fire and the Insurance Co. is accepted the claim for Rs. 600. Adjustment would involve :
(a) Debit of Rs. 800 to Trading Account and credit of Rs. 600 and Cr. 200 to insurance company and Profit and Loss Account respectively
(b) Deduct the Rs. 800 from closing stock in the Trading Account
(c) Credit insurance company for Rs. 600
(d) Debit of Rs. 600 and Rs. 200 to insurance company and Profit and Loss Account respectively and credit of Rs. 800 to Trading Account - Rs. 1,250 paid for the residential telephone bill of the proprietor which of these accounts will be debited :
(a) Household A/c
(b) Drawings A/c
(c) Telephone A/c
(d) None - Goods distributed as free samples worth Rs.50,000 for advertisement. Which of the following entry should be passed :
(a) Advertisement A/c ……………….. Dr.
To Purchases A/c
(b) Purchases A/c ……………………. Dr.
To Advertisement A/c
(c) Advertisement A/c ……………………Dr.
To Sales A/c
(d) None of the above - The debts written off as bad, subsequently collected by the proprietor and retained by him for his personal use. What is the accounting treatment for this transaction?
(a) Debit Drawings A/c & Credit Debtors A/c
(b) Debit Cash A/c & Credit Bad debts recovered A/c
(c) Simply ignore the Transaction
(d) Debit Drawings A/c & Credit Bad debts recovered A/c - M/s Stationery Mart will debit the purchase of stationery to :
(a) Purchases A/c
(b) General Expenses A/c
(c) Stationery A/c
(d) None - Goods worth Rs. 10,000 were purchased by B on which the traders allowed Rs. 500 trade discount and offer to give 5% cash discount if immediate payment is made. The Purchase A/c will be debited by —
(a) Rs. 10,000
(b) Rs. 9,800
(c) Rs. 9,000
(d) Rs. 9,500 - Z Ltd. Paid wages of Rs. 8,000 for erection of machinery. The journal entry for the transaction is
(a) Debit wages and credit cash
(b) Debit machinery and credit cash
(c) Debit wages and credit erection charges
(d) Debit machinery and credit erection charges - X a debtor is declared insolvent and only 25 paise in a rupee is recovered from his estate. If X owes Rs. 5,000 to Y, Y would debit Cash A/c by :
(a) Rs. 5,000
(b) Rs. 25
(c) Rs. 1,250
(d) Rs. 2,500 - Goods returned from Y is entered as :
(a) Debit Y A/c ; Credit Purchase Return A/c
(b) Debit Y A/c ; Credit Cash A/c
(c) Debit Sales Return A/c ; Credit Y A/c
(d) Debit Y A/c ; Credit Sales A/c - Interest on drawings is debited to :
(a) Debited to Profit and Loss Account
(b) Credited to Profit and Loss Account
(c) Debited to Capital Account
(d) Debited to Profit and Loss Appropriation Account - Why do accountants record transactions in the journal?
(a) To ensure that all transactions are posted to the ledger
(b) To ensure that total debits equal total credits
(c) To have a chronological record of all transactions
(d) To help prepare the financial statements - Goods worth Rs. 10,000 are withdrawn by the proprietor for his personal use. The account to be credited is :
(a) Sales Account
(b) Drawings Account
(c) Purchases Account
(d) Expenses Account - Cash of Rs. 2,000 is withdrawn for personal expenses. This will be debited to which account:
(a) Drawing A/c
(b) Creditors A/c
(c) Capital A/c
(d) Cash A/c - If one of the cars purchased by a car dealer is used for personal purpose, instead of resale, then it should be recorded by
(a) Dr. Drawings A/c & Cr. Purchases A/c
(b) Dr. Office Expenses A/c & Cr. Motor Car A/c
(c) Dr. Motor Car A/c & Cr. Purchases A/c
(d) Dr. Motor Car & Cr. Sales A/c - When interest is charged on drawings which of the following is true with respect of accounting equation?
(a) Both assets and capital will increase with the same amount
(b) Liabilities will decrease and capital will increase with the same amount
(c) Capital will increase and decrease with the same amount
(d) Liabilities will increase and capital will decrease with the same amount