1. A businessman purchased goods for Rs. 25,00,000 and sold 70% of such goods during
the accounting year ended 31st March, 2005. The market value of the remaining goods
was Rs. 5,00,000. He valued the closing stock at Rs. 5,00,000 and not at Rs. 7,50,000
due to
(a) Money measurement
(b) Conservatism
(c) Cost
(d) Periodicity

2. Opening stock Rs. 3,700, Purchases Rs. 20,800, Closing stock Rs. 2,500. Cost of goods
sold will be _______
(a) Rs. 22,000
(b) Rs. 25,000
(c) Rs. 18,000
(d) Rs. 30,000

3. Original cost Rs. 25,000, salvage value Rs. 1,000, useful life 10 years. Annual
depreciation under SLM will be
(a) Rs. 2,000
(b) Rs. 2,400
(c) Rs. 3,000
(d) Rs. 2,500

4. Rs. Rs.
Gross Profit 50,000 Provision for Bad Debts (old) 2,000
Rent paid 6,000 Apprentice Premium (Credit) 4,000
Salaries 5,800
Net profit of the firm will be
(a) Rs. 42,200
(b) Rs. 40,000
(c) Rs. 42,000
(d) Rs. 45,000

5 A started business with Rs. 20,000 cash and Rs. 11,000 stock. Cash sales & cash
purchases were Rs. 10,000 & Rs. 5,000. Total sales and purchases amounted to Rs.
70,000 & Rs. 50,000. Outstanding creditors were Rs. 15,000 and Debtors Rs. 25,000.
Expenses paid Rs. 17,000. Machine was purchased for Rs. 10,000 out of which Rs.
8000 has been paid. Trial Balance total will be ___________
(a) Rs. 1,18,000
(b) Rs. 1,20,000
(c) Rs. 1,25,000
(d) Rs. 1,40,000

6. Capital introduced in the beginning by Ram Rs. 15,2000, further capital introduced
during the year Rs. 2,000. Drawings Rs. 400 per month and closing capital is Rs. 16,900.
The amount of profit or loss for the year is _______
(a) Loss Rs. 3,000
(b) Loss Rs. 2,500
(c) Profit Rs. 5,000
(d) Profit Rs. 4,500

7. Goods purchased Rs. 1,00,000, sales Rs. 90,000 Margin 20% on sales. Closing stock is
_____
(a) Rs. 10,000
(b) Rs. 25,000
(c) Rs. 28,000
(d) None of the above

8. Mohan paid Rs. 500 towards a debit of Rs. 2,500, which was written off as bad debt in
the previous year. Mohan’s account will be credited with
(a) Rs. 2,500
(b) Rs. 2,000
(c) Rs. 500
(d) None of the three

9. Income tax liability of the proprietor Rs. 1200 was paid out of petty cash. Journal entry
will be ________
(a) Dr. drawings and Cr. Cash A/c Rs. 1200
(b) Dr. drawings and Cr. Petty Cash Rs. 1200
(c) Dr Income tax and Cr Cash A/c Rs. 1200
(d) None of the above

10. An old, machine was purchased for Rs. 60,000. It was repaired for Rs. 5,000 and Rs.
5,000 paid on its installation. Machinery repairs a/c will be debited by -
(a) Rs. 10,000
(b) Rs. 5,000
(c) Rs. 15,000
(d) None of the three

11. Ras started business on 01.01.06 with a capital of Rs. 20,000 and he borrowed Rs. 3,000
from a friend. He earned a profit of Rs. 10,000 during the year and withdrew cash Rs.
5,000 for private use. What is his capital at the end of the year?
(a) Rs. 25,000
(b) Rs. 28,000
(c) Rs. 30,000
(d) Rs. 27,000

12. Capital introduced by Mr. A on 01.01.2005 Rs. 100000. Further capital introduced during
the year was Rs. 50,000. Mr. A withdrew Rs. 200 per month on the last date of each
month. Interest on drawings was charged @ 5%. Profit earned during the year was Rs.
10,000. Capital on 31.12.05 will be _______
(a) Rs. 157545
(b) Rs. 157000
(c) Rs. 160000
(d) Rs. 155000

13. Opening Stock 20,000
Closing Stock 18,000
Purchases 85,800
Carriage inwards 2,300
Carriage out 3,000
Office Rent 5,000
Sales 1,40,700
Gross profit will be _____
(a) Rs. 50,000
(b) Rs. 47,500
(c) Rs. 42,600
(d) Rs. 50,600

14. Goods costing Rs. 1000 supplied to Ramesh at the invoice price of 10% above cost and
a Trade Discount for 5%. The amount of Sales will be
(a) Rs. 1045
(b) Rs. 1050
(c) Rs. 1100
(d) Rs. 1060

15. A & B purchased a piece of land for Rs. 60,000 and sold it for Rs. 80,000. A had
contributed Rs. 40,000 and Rs. 20,000. The profit on venture will be -
(a) Rs. 30,000
(b) Rs. 20,000
(c) Rs. 60,000
(d) NIL

16. A second hand car is purchased for Rs. 15000, the amount of Rs. 1000 is spent on its
repairs, Rs. 500 is incurred to get the car registered in owners name and Rs. 1200 is
paid as dealers commission. The amount debited to car account will be _____
(a) Rs. 17700
(b) Rs. 16000
(c) Rs. 16500
(d) Rs. 17000

17. A trader purchased a machinery costing Rs. 1,00,000 on 1st Oct. 2005. Transportation
and installation charges were incurred amounting Rs. 10,000 and Rs. 4,000 respectively.
Dismentling charges of the old machine in place of which new machine was purchased
amounted Rs. 10,000. Market value of machine was estimated at Rs. 1,20,000 on March
31, 2006, while finalizing the annual accounts. Trader values the machinery at Rs.
1,20,000 in his books which of the following concepts was violated by the trader?
(a) Cost concept
(b) Matching concept
(c) Realisation
(d) Periodicity concept

18. Accounting has certain norms to be observed by the accountants in recording of
transactions and preparation of final statements. These norms reduce the vagueness and
chances of misunderstanding by harmonizing the varied accounting practices. These
norms are ______
(a) Accounting regulations
(b) Accounting guidance notes
(c) Accounting standards
(d) Accounting frame work

19. Opening Stock 8,500
Purchases 30,700
Direct Expenses 4,800
Indirect Expenses 5,200
Closing Stock 9,000
Cost of goods sold will be:
(a) Rs. 30,000
(b) Rs. 35,000
(c) Rs. 32,000
(d) Rs. 40,000

20. A new firm commenced business on Jan. 1, 2006 purchased goods costing Rs. 19,500
during the year. A sum of Rs. 400 was spent on carriage inward and Rs. 1000 on wages.
At the end of the year the cost of goods still unsold was Rs. 12,000. Sales during the
year Rs. 25,000. What is the gross profit earned by the firm _________
(a) Rs. 16,100
(b) Rs. 18,200
(c) Rs. 20,000
(d) Rs. 15,100

21..
Cost of goods sold 1,50,000 —
Closing Stock — 40,000
Debtors — 60,000
Fixed Assets 50,000 —
Opening Stock 60,000 —
Sundry Expenses — 20,000
Sales — 2,00,000
Capital 90,000 —
3,50,000 3,50,000
Total of current trial balance will be ________
(a) Rs. 3,20,000
(b) Rs. 3,60,000
(c) Rs. 3,00,000
(d) Rs. 4,00,000

22. Journal entry for wages paid Rs. 2000 for installation of machinery will be ______
(a) Dr. wages A/c and Cr. Cash A/c Rs. 20000
(b) Dr. Machinery A/c and Cr. Cash A/c Rs. 20000
(c) Dr. machinery repairs A/c and Cr. Cash A/c Rs. 20000
(d) None of the above

23. Capital introduced in the beginning by Syam Rs. 40,000, further capital introduced during
the year Rs. 1000 Drawings Rs. 200 per month and closing capital is Rs. 53,600. The
amount of profit or loss for the year is _________
(a) Rs. 15,000 profit
(b) Rs. 5,000 loss
(c) Rs. 20,000 profit
(d) Information is insufficient for any comment.

24. Goods purchased Rs. 1,00,000. The goods were sold Rs. 80,000. Margin 20% on sales.
Closing stock is _______
(a) Rs. 36,000
(b) Rs. 40,000
(c) Rs. 50,000
(d) None of the above.

25. Following balances are given in trial balance
Debenture redemption fund 50,000
Debenture redemption fund investment 50,000
Interest on debenture redemption fund Investment 3,000
Increase in Debenture redemption fund by 10,000
Debenture redemption fund in Balance Sheet will be _______
(a) Rs. 60,000
(b) Rs. 63,000
(c) Rs. 50,000
(d) Rs. 65,000

26. X sells goods at Cost plus 60%. Total sales were Rs. 16,000. cost price of the goods will
be:
(a) Rs. 12,000
(b) Rs. 10,000
(c) Rs. 13,000
(d) None of the three

27. A trader sells goods at a profit of 25% on sale. In a particular month he sold goods
costing Rs. 34,200 sale price of goods will be
(a) Rs. 45,000
(b) Rs. 45,600
(c) Rs. 45,500
(d) Rs. 42,000

28. A manager gets 5% commission on sales, cost price of goods sold is Rs. 40,000 which
he sells at a margin of 20% on sale. Manager Commission will be
(a) Rs. 2000
(b) Rs. 2500
(c) Rs. 2800
(d) None of the three

29. A manager gets 5% commission on net profit after charging such commission. If gross
profit is Rs. 48,000 and expenses of indirect nature other than manager's commission are
Rs. 6,000. Commission amount will be _________
(a) Rs. 2100
(b) Rs. 2000
(c) Rs. 2200
(d) Rs. 2400

30. On January 1, Mohan paid wages amounting Rs. 10,000. This is
(a) An event.
(b) A transaction.
(c) Either (a) or (b).
(d) Neither (a) nor (b).

31. Omega Stationers used Stationery for business purposes Rs. 300. Amount will be
credited to:
(a) Sales A/c
(b) Purchases A/c
(c) Cash A/c
(d) None of the three

32. A machinery of Rs. 3,000 was sold for Rs. 4200. Depreciation provision to date was Rs.
400 and commission paid to the selling agent was Rs. 420 and wages paid to the
workers for removing the machine was Rs. 30. Profit on sale of machinery will be
_________
(a) Rs. 1200
(b) Rs. 1000
(c) Rs. 1150
(d) None of the three

33. Cost of goods sold 158600
Stock in hand at the close of the year 25,400
Stock in hand at the beginning of the year 44,000
Purchases amount will be
(a) Rs. 1,40,000
(b) Rs. 1,35,000
(c) Rs. 1,30,000
(d) Rs. 1,45,000

34. Opening balance of Capital Rs. 5,000
Net profit 2,770
Income tax 550
Drawings 650
Interest on capital 500
Interest on Drawings 120
Capital at end will be
(a) Rs. 6950
(b) Rs. 6000
(c) Rs. 6500
(d) Rs. 6600

35. Trial balance of a trader shows the following balances
Rs.
Opening Stock 9600
Purchases less returns 11850
Salaries and wages 3200
Commission on Purchases 200
Carriage out 300
Sales 24900
Closing Stock 3500
Gross profit will be
(a) Rs. 6750
(b) Rs. 6500
(c) Rs. 3250
(d) Rs. 3200

36. Jan 1,2006 Provision for Bad Debts 2,500
Dec. 31, 2006 Bad debts 1,870
Debtors 20,000
Make a provision for bad debts
Debts 5% on debtors. Provision for bad debts in Profit and Loss A/c will be
(a) Rs. 370
(b) Rs. 400
(c) Rs. 500
(d) None of the three

37. Goods destroyed by fire Rs. 25000 and Insurance company admitted full claim. Claim
receivable will be recorded in _______
(a) Trading A/c
(b) P/L Account
(c) Balance Sheet
(d) P/L Appropriation A/c

38. If sales revenue are Rs.4,00,000, cost of goods sold is 3,10,000 and operating expenses
are Rs.60,000, the gross profit is
(a) Rs. 90,000
(b) Rs. 30,000
(c) Rs. 3,40,000
(d) Rs.60,000

39. Rs. 35,000 was spent on painting the new factory. It is a ______
(a) Capital expenditure
(b) Revenue expenditure
(c) Deferred revenue expenditure
(d) None of the above

40. The total cost of goods available for sale with a company during the current year is Rs.
12,00,000. Total sales during the period are Rs. 13,00,000. If the gross profit margin is
31 33 % on cost. Closing inventory of the current year will be ______
(a) Rs. 4,00,000
(b) Rs. 3,00,000
(c) Rs. 2,25,000
(d) Rs. 2,50,000

41. Opening Debtors Rs.10,200
Cash Received from debtors during the year
(as per cash book) Rs. 30,400
Returns Inwards Rs. 2,700
Bad debts Rs. 1,2 00
Debtors at end Rs. 13,800
Cash Sales (As per cash book) Rs. 28,400
Total Sales will be
(a) Rs. 66,300   (b) Rs. 66,000
(c) Rs. 65,000   (d) Rs. 66,500

42. A company wishes to earn 20% profit margin on selling price. Which of the following is
the profit mark upon cost, which will achieve the required profit margin?
(a) 25%   (b) 30%   (c) 20%   (d) None of the above.

43. Some funds are required for conducting day to day operations of an enterprise. They are
represented by excess of current assets over current liabilities. Here, Current assets are
those assets which are converted into cash or consumed within a years time. (Debtors
and stock are examples of current assets). While current liability falls due for payment in
a relatively short period, normally not more than twelve months. Such funds are termed
as ______
(a) Working capital    (b) Opening capital
(c) Closing capital     (d) None of the three

44. A bill of exchange matures on 16th July. It is a public holiday. Bill will mature on
(a) 17th July    (b) 15th July
(c) 16th July   (d) 18th July

45. On Jan 1, 2001 the position of V. Mathur was as follows
Stock in hand Rs. 2400; Bills payable Rs. 400; Cash at Bank Rs. 1800; Plant and
machinery Rs. 1000; Owing by debtors Rs. 500; Owing to creditors Rs. 800; Investments
2000; Loan from Raja Ram Rs. 1500.
V. Mathur's capital on the above date will be
(a) Rs. 5000    (b) Rs. 4000 
(c) Rs. 6000    (d) None of the three

46. Goods worth Rs. 1000 taken by the proprietor for personal use should be credited to
(a) Sales A/c               (b) Purchase A/c
(c) Expenses A/c        (d) Proprietor's personal A/c

47. The profit and loss account shows
(a) The financial position of the concern
(b) The degree of honesty with which accounting work has been done
(c) The capital invested in business
(d) Profit earned or loss suffered by the firm

48. The trial balance checks
(a) Arithmetical accuracy of books
(b) The honesty of the book keeper
(c) The valuation of closing stock
(d) None of the three

49. Unexpired insurance is
(a) Real A/c            (b) Personal A/c
(c) Nominal A/c      (d) None of the three

50. In the beginning of 2001 person has goods worth Rs. 4000 in his godown. During the
year he purchased goods worth Rs. 20,000. His sales during the year were Rs. 30,000
and there were goods still lying in his godown worth Rs. 3000. Profit has been made
(a) Rs. 9000
(b) Rs. 8000
(c) Rs. 10000
(d) Rs. 9500

51. Total sales during the year amounted to Rs. 70,000; Cash sales Rs. 10,000; Outstanding
debtors at the end of the year Rs. 25,000. Cash received from debtors during the year
will be
(a) Rs. 35,000
(b) Rs. 30,000
(c) Rs. 37,000
(d) Rs. 32,000

52. Cost of goods sold Rs. 15,00,000
Closing Stock Rs. 4,00,000
Opening Stock Rs. 6,00,000
Amount of Purchases will be
(a) Rs. 12,00,000
(b) Rs. 13,00,000
(c) Rs. 10,00,000
(d) Rs. 14,00,000

53. Balance as per Pass Book is Rs. 2,430
Cheques paid but not yet credited Rs. 1,390
Bank Charges entered in pass book Rs. 260
Cheques issued but not presented for payment Rs. 1,710
Balance as per Cash Book will be
(a) Rs. 2370
(b) Rs. 2500
(c) Rs. 2300
(d) Rs. 2380

54. Overdraft as per Cash Book Rs. 6,340
Cheque deposited but not credited Rs. 2,360
Cheques issued but not presented for payment Rs. 2,368
Overdraft as per Pass Book will be
(a) Rs. 6,332
(b) Rs. 6000
(c) Rs. 6300
(d) Rs. 6330

55. Following figures have been taken from the trial balance of a trader –
Opening Stock Rs. 14,500
Purchases Rs. 75,995
Carriage Inward Rs. 1,700
Wages Rs. 825
Sales Rs. 93,750
Goods sent on Consignment Rs. 20,000
Amount of profit will be
(a) 20730
(b) 20500
(c) 20200
(d) 21000

56. Jan. 2006 Balance of Provision for Doubtful debts Rs. 1,200
Bad debts during the year Rs. 1,000
Debtors at the end of the year Rs. 20,000
Make a provision for Bad Debts 5% on debtors Provision amount debited to P/L A/c will
be
(a) Rs. 1,000
(b) Rs. 800
(c) Rs. 700
(d) Rs. 600

57 A trader purchased furniture on Jan 1, 2004 for Rs. 5,200. Its scrap value is 200 and life
10 years. Depreciate furniture according to fixed instalment method. Balance of furniture
a/c at the end of third year will be
(a) Rs.3500
(b) Rs.3700
(c) Rs.4000
(d) Rs.3400

58. A seven years lease has been purchased for a sum of Rs. 60,000 and it is proposed to
depreciate it under annuity method charging 4% interest. Reference to annuity table, Rs.
9996.55 should be charged to depreciation A/c. Balance of lease A/c at the end of the 1st
year will be
(a) Rs. 52403.45
(b) Rs. 52000
(c) Rs. 50000
(d) None of the above

59. After preparing the trial balance the accountant find that the total of the credit side is
short by Rs. 1500. This difference will be -
(a) Credited to suspense account
(b) Debited to suspense account
(c) Adjusted to any of the debit balance a/c
(d) Adjusted to any of the credit balance a/c

60. On 01.12.06, X draws a bill on Y for 30 days after sight. The date of acceptance is
08.12.06. The due date of the bill will be -
(a) 8.01.07
(b) 10.01.07
(c) 11.01.07
(d) 09.10.07

61. Capital introduced in the beginning by Ram Rs. 16,080; further capital introduced during
the year in the form of machinery Rs. 2000; personal expenses during the year –
Drawings in cash Rs. 3,000
Life Insurance Premium Rs. 250
Closing capital Rs. 21,925
The amount of profit or loss for the year will be
(a) Profit 7095
(b) Profit 7085
(c) Loss 5000
(d) Loss 6000

62. The total of debit and credit side of Mr. Raja Ram as on 31st March, 2006 were Rs.
20,000 and Rs. 10,000 respectively. The difference was transferred to suspense A/c. On
4th April 2006, it was found that the total of sales book was carried forward as 5,000
instead of 4,000. The balance of suspense A/c after rectification of this error will be -
(a) Rs.11,000
(b) Rs. 10,000
(c) Rs. 9,000
(d) Rs. 12,000

63. The total of 'Discount allowed' column in the cash book for the month of September, 2006
amounting to Rs. 250 was not posted Rectifying entry for the same will be -
(a) Suspense A/c Dr 250; To Discount A/c 250
(b) Discount A/c Dr. 250; To Suspense A/c 250
(c) Discount A/c Dr. 250; To Customer A/c 250
(d) None of the three

64. Closing entry for transfer of Net profit Rs. 6300 to capital A/c will be
(a) Capital A/c Dr 6300; To P/L A/c 6300
(b) P/L A/c Dr. 6300; To Capital A/c 6300
(c) Trading A/c Dr. 6300; to P/L A/c 6300
(d) None of the three

65. Gross profit is the difference between
(a) Sales and purchases
(b) Sales and cost of sales
(c) Sales and total expenses
(d) None of the three

66. Credit balances in the ledger will be
(a) A revenue or an asset
(b) An expense or on asset
(c) A revenue or a liability
(d) None of the three

67. Miss Rakhi consigned 1,000 Radio sets costing Rs. 900 each to Miss Gita, her agent on
July 1, 2006. Miss Rakhi incurred the following expenses.
Carriage Freight Insurance
Rs. 650 Rs. 7,000 Rs. 3,250
Miss Gita received the delivery of 950 radio sets. 750 sets were sold for Rs. 9,00,000
and Miss Gita incurred total expenses Rs. 13,000. Agents commission 6% on sales.
Insurance company admitted claim of Rs. 35,000. Consignment stock was valued Rs.
1,84,391. Consignment Profit will be -
(a) 152036
(b) 152000
(c) 150000
(d) None of the three

68. Amount spent on "Structural alterations" under pressure of law is a
(a) Capital expenditure
(b) Revenue expenditure
(c) Deferred revenue expenditure
(d) Capital loss

69. Goodwill is to be calculated at one year’s purchase of the average of the last 3 years
profit. The profit of the first year was Rs. 6,000, second year twice the profit of the first
year and the third year one and half times of the profit of the second year goodwill
amount will be -
(a) Rs.10,000
(b) Rs.12,000
(c) Rs.11,000
(d) Rs.13,000

70. A, B and C entered into a joint venture with equal risks contributing Rs. 20,000, Rs.
27,500 and Rs. 35,000 respectively. The amounts were banked in a joint account. Joint
Transactions were as follows:
Purchase of goods Rs. 66,600
Expenses on goods purchased Rs. 6,629
Total sales Rs. 89,000
C, who effected these transactions, was allowed 6% commission on sales. Profit on joint
venture will be -
(a) Rs. 10,431
(b) Rs. 10,000
(c) Rs. 11,000
(d) Rs. 12,000