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Section –I (10*1= 10)

1. Which of the following is not a fixed asset:

a. Building
b. Bank balance
c. Plant
d. Patents
e. Goodwill

2. Capital is shown under liabilities because of the:

a. Conservatism concept
b. Accrual concept
c. Entity concept
d. Revenue recognition concept
e. Matching concept

3. Payment of salary is recorded by:

a. Debiting salary a/c, crediting cash a/c
b. Debiting cash a/c, crediting salary a/c
c. Debiting employee a/c, crediting cash a/c
d. Debiting cash a/c, crediting employee a/c
e. Debiting employee a/c, crediting salary a/c

4. A supermarket pays the wages of its staff by credit transfer from its bank account.
The entries in the supermarket's accounts should be:

A. Debit : Wages Credit: Bank

B. Debit : Bank Credit: Wages
C. Debit : Wages Credit: Cash
D. Debit : Wages Credit: Staff creditors

5. If prepaid insurance appears in trial balance, it should be

a. debited to trading account

b. credited to profit & loss account
c. debited to profit & loss account
d. shown on the libiality side of the balance sheet
e. Shown on the asset side of the balance sheet.
6. Arielle W. bought furniture on credit from Chanel. Which of the following journal
entries will be made for this transaction in Arielle W. books?
(A) Dr. Furniture Cr. Cash
(B) Dr. Purchases Cr. Arielle W.
(C) Dr. Arielle W. Cr. Purchases
(D) Dr. Furniture Cr. Chanel

7. Which of the following accounting equation is correct?

A) Cash+ Other assets=Capital-Liabilities

B) Capital+ Liabilities=Assets+ Income

C) Assets-Liabilities=Capital

D) Assets+ Capital=Liabilities

8. If Cash=Rs1000 inventories=Rs4000 Debtors=Rs5000 fixed assets=?

Capital+ Liabilities=Rs15000. What is the Amount of total assets?

A) Rs5000

B) Rs10,000

C) Rs15,000

D) Rs20,000

9. 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

10. Which of the following is the correct terminology for the right hand side of a hand-
written ledger account?

A. Negative
B. Positive
C. Debit
D. Credit

Section –II (10*2 = 20)

11. State whether the following will have debit or credit balance ?
(a) Sales (b) Purchase Return (c) Capital (d) Salary (e) Rent Paid (f) Purchases

12. The purchase of a motor car on credit from Toy Automotive Company for use in a
firm should be recorded as
(A) Dr. Maintenance of vehicle expense
Cr. Toy Automotive Company

(B) Dr. Purchases

Cr. Toy Automotive Company

(C) Dr. Motor vehicle

Cr. Toy Automotive Company

(D) Dr. Motor vehicle

Cr. Cash

Based on the following information answer question 14,15,16

 The follwing transcations took place in the business of A for the month of April
 Ram investes Rs 10,000/- in cash.
 He bough goods worth Rs 2000/- from Shyam.
 He bought a machine fro Rs 5000/- from Laxaman on account.
 He paid to Laxman Rs 2000/- .
 He sold goods for cash Rs 3000/-.
 He solds goods to A on account Rs 4000/-.
 He apid to Shyam Rs 1000/-.
 He received amount from A Rs 2000/-.

14. The balances in cash account at the end of month is

a. Rs 10,000/- debit.
b. Rs 15000/- credit.
c. Rs 12000/- debit.
d. RS 11000/- debit.
e. RS 14000/- debit.
15. The balances in sales account at the end of the month is

a. Rs 7000/- debit.
b. Rs 3000/- credit.
c. Rs 4000/- credit.
d. Rs 4000/ - debit.
e. Rs 7000/- credit.

16. The balace in Laxman account at the month end is

a. Rs 5000/- credit.
b. Rs 5000/- debit.
c. Rs 3000/- debit.
d. Rs 3000/- credit.
e. Rs 2000/- credit


Particulars Rs
Opening Capital 80,000/-
Closing Capital 120,000/-
Net Profit during th year 20,000/-

The trader has :

a. Drawings of Rs 20000/-.
b. Brought addition capital of Rs 20000/-.
c. Brought additional capital Rs 40000/-.
d. Drawings of Rs 40000/-.
e. Both a & c above.

18. Mr Mohan sold goods to Mr Raju for Rs 900/-. Mr Mohan offered a discount of Rs
50/- for spot payment of cash. Mr Raju took delivery of goods by paying cash the
journal entry to record the transcations in the books of Mr Mohan is

Rs Rs
a Cash a/c Dr. 900
To sales a/c 900

Rs Rs
b Cash a/c Dr. 850
Discount a/c Dr. 50
To sales a/c 900
Rs Rs
c Cash a/c Dr. 850
To sales a/c 850

Rs Rs
d Mr. Raju’s a/c Dr. 850
To sales a/c 850

19. a trader purchsed goods woth Rs 50,000/- and paid Rs 1000/- as carrige on them.
He sold the goods for Rs 65000/- and paid Rs 1000/- towards carriegs on them. He also
incurred Rs 9000/- towards other general expenditure. The gross profit of the trader is

a. Rs 15000/-.
b. Rs 6000/-
c. Rs 14000/-
d. Rs 13000/-
e. Rs 4000/-.

20. if the capital of a business is increased by Rs 40000/- and drawings amounted to Rs

10000/- during the year 2002-2003,the profit of the business for the year is

a. Rs 30000/-
b. Rs 40000/-
c. Rs 10000/-
d. Rs 50000/-
e. Rs 60000/-

Section –III (20*1 = 20)

21. The following trial balance have been taken out from the books of XYZ as on 31st
December, 2005.
Dr. Cr. Remarks
Rs Rs
Plant and Machinery 100,000 BS/A
Opening stock 60,000 TRADING/EXP
Purchases 160,000 TRAD/EXP
Building 170,000 BS/ASSET
Carriage inward 3,400 TRADING/EXP
Carriage outward 5,000 P&L/EXP
Wages 32,000 TRAD/EXP
Sundry debtors 100,000 BS/ASSET/
Salaries 24,000 PL/EXP
Furniture 36,000 BS/ASSET
Trade expense 12,000 PL/EXP
Discount on sales 1,900 PL/EXP
Advertisement 5,000 PL/EXP
Bad debts 1,800 PL/EXP
Drawings 10,000 BS/EQ
Bills receivable 50,000 BS/ASSET
Insurance 4,400 PL/EXP
Bank balances 20,000 BS/ASSET
Sales 480,000 TRAD/INC
Interest received 2,000 PL/INC
Sundry creditors 40,000 BS/LIAB
Bank loan 100,000 BS/LIAB
Discount on purchases 2,000 PL/INC
Capital 171,500 BS/EQ

795,500 795,500

Closing stock is valued at Rs 90,000

Required: Prepare the trading and profit and loss account of the business for the year
ended 31.12.2005 and a balance sheet as at that date.