Saved Bookmarks
This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 751. |
State which of the following correctly complete the sentences gibve below: Deposit of cash in bank is recorded in |
|
Answer» Debit of BANK COLUMN and CREDIT of CASH Column. |
|
| 752. |
State which of the following correctly complete the sentences gibve below: Ir Ram has sold goods for cash, the entry will be recorded |
|
Answer» in the CASH Book. |
|
| 753. |
State which of the following correctly complete the sentences gibve below: Debit valance of Rs. 10,000 in the Cash column of the Cash Book shows that |
|
Answer» RS. 10,000 has been paid out. |
|
| 754. |
State which of the following correctly complete the sentences gibve below: Contra entries on the debt side of the Cash Book are posted to |
|
Answer» Debit of BANK ACCOUNT in the Ledger. |
|
| 755. |
State which of the following correctly complete the sentences gibve below: Balance in the Petty Cash Book is |
|
Answer» an EXPENSE. |
|
| 756. |
State which of the following correctly complete the sentences gibve below: Cash Book records |
|
Answer» all CASH receipts and PAYMENTS. |
|
| 757. |
State whether the following statements are True or False with reason: (i) Accounting may be influenced by the personal judgment. (ii) Financial Statements are not comparable. (iii) Accounting Information must be presented in such a way thatonly accounting people understand it. (iv) Accounting Information must be reliable. |
|
Answer» Solution :(i) True: Accountant has to exercise his PERSONAL judgment in respect of various items such as estimating useful life of an asset to charge depreciation. (II) False: Financial Statements of two or more years are comparable or of different firms in the same industry if they adopt the same accounting policies year to year. (III) False: Accounting Information must be presented in a simple and logical manner that they are understood EASILY by the users. (iv) True: Accounting Information must be reliable, i.e., the information must be factual and verifiable. |
|
| 758. |
State whether the following statements are true or false : (i) Accounting is the language of business. (ii) Accounting is helpful in raising loans. (iii) Accounting is not accepteed as evidence in legal matters. (iv) Management of an enterprise is internal user of its accounting information. (v) Accounting makes a recordof qualitative aspectsof business. (vi) Accounting is a service function. (vii) Accounting involves only the recording of business transactions. (viii) Accounts are prepared on the basis of histroical costs. (ix)Only those transactionsare recorded in accounting which can be expressed in terms of money. (x) Book -keeping starts where accounting ends. (xi) Credictors are external users of accounting information. (xiii) A credictor would use an entitie's financial report to determine whether or not credit may be granted to the firm. (xiii) Accounting may be affected to the firm. |
| Answer» | |
| 759. |
State whether the following expenses are capital or revenue in nature: (i) Expenses on whiteashing and painting of a building purchases to make it ready for use. (ii) Rs 10,000 spent on constructing platform for a new maching (iii) Repair expenses of Rs 25,000 incurred for whitewashing of factory building (iv) Insurance premium paid as renewal premium (v) Purchased a new car. |
|
Answer» |
|
| 760. |
State whether the following statements are true or false: Depreciation is a non-cash expense |
| Answer» SOLUTION :T | |
| 761. |
State whether the folling transactions are capital expenditureor revenueexpnditure. Given reasons : (i) ₹5,200 spent onrepairsbeforeusinga second- handcar purchased recentaly. Duringtheyears₹ 3,000 were spent on repairingof various machines.(iii) Freight and cartageonthe new machine ₹1,200, erection charges₹ 600. (iv) A sumof₹ 4,000 was spent on white -washingand painting the new factory. (v) Cost ofannualwhite-washingof building. (vi) Fire insurancepremium was paid on1 st July, 2018 for full one year ₹2,400. Booksareclosed on 31st March every year. (vii) ₹ 20,000 spent towards additionsto the machinery.(viii) ₹ 5,000 were spent in connectionwith the issue of capital and₹ 3,000 wereincurred as legal expenses inraising a debenture loan. |
|
Answer» Solution :(i) Itiscapitalexpenditureandwill bedebitedtoCar Account becausetheexpenses havebeen incurred beforetheCar is put to USE. (ii) Itisrevenue expenditurebecausetheexpenses have been incurred ontherapairs ofexistingmachines.It isanexpenditure ofroutinenature. (iii)₹ 1,800 iscapitalexpenditureand willbe DEBITED to Machinery Account. (iv ) Asthefactoryiswhite- washedand PAINTED forthefirst time, it shouldbetreated as capitalexpenditureandhencedebited tofactoryaccount. (v) It isrevenueexpenditurebecauseit is normalandregularexpenditure incurred with aview to maintain thebuilding. Hence itwill be debited toProfit & LOSS Account. (vi) Fire insurance premiumamountingto₹ 1,800 (i.e.,from1st July,2018 to31 stMarch,2019) isrevenueexpenditureand₹ 600 (i.e.,from1st April,2019) to30 th June,2019) isaprepaid expenseandwill becharged to next yearsrevenue. (vii) It iscapitalexpenditure, since it will result in anincrease intheearningcapacity ofthebusiness. (viii)₹ 8,000 is capitalexpendituresince it isincurred onraisingofcapitalforthebusiness. |
|
| 762. |
State whether the balances of the following accounts should be placed in the debit or the credit columns of the Trial Balance: {:("1.Furniture","6.Carriage Outwards"),("2.Plant and Machinery","10. Carriage Inwards"),("3.Disount Allowed","11.Sales"),("4.Salary","12.Purchases"),("5.Bank Overdraft","13.Discount Received"),("6.Cash in Hand","14.Interest Received"),("7.Creditors","15.Interest Paid"),("8.Sundry Debtors","16.Bad Debts"):} |
Answer» SOLUTION :
|
|
| 763. |
State whether following expenditures are capital or revenue in nature (i) Second -hand car was purchased for a sum of Rs 1,00,000. A sum of Rs 10,000 was spent on its overhauling (ii) Rs 25,000 paid for the installation of a new machine. (iii) Repairs for Rs 5,000 negligence (iv) Cost of annul taxes paid and the car mentioned above (v) Cost of air-conditioning of the office of the General Manager |
|
Answer» Solution :(i) Total EXPENDITURE of Rs 1,10,000 is Capital Expenditure. A sum of Rs 1,00,000 was spent on a capital asset while ANOTHER Rs 10,000 was spent for making the capital asset ready for use. (ii) Cost of installing the NEW machine is a Capital Expenditure because the amonutspent is up to the point when the asset is ready for use. (iii) Repair charges are REVENUE Expenditure since they are for maintaining an asset and not for improving the asset. (iv) Annual taxes and INSURANCE premium paid on the car are Revenue Expenditure because they do not add to the value of the car and their benefit will be exhausted within the year. (v) It is Capital Expenditure because the benefit of this expenditure will be available for a number of years |
|
| 764. |
State whether the following accounts will show debit or credit balance : {:("(i)Purchases Accounts","(ii) Cash"),("(iii)Capital","(iv) Salary"),("(v) Interest received","(vi)Sales Return"),("(vii)Machinery","(viii)Drawings"):} |
|
Answer» |
|
| 765. |
Statewhetherthefollowingexpenditureare Capital,Revenue orDeferred Revenue. Givereasons :(i) Furnitureofthe book value of₹ 10,000 were soldoff at₹ 2,500 andnew furnitureofthe value of₹ 6,000were acquired,cartageon purchase ₹ 50. (ii) Property purchased for₹ 20,00,000 and₹ 1,50,000 paid foritsregistrationand legal fee.(iii) Replacementof old machinebya newone.(iv) Damagespaid byatransportcompanyto itspassengers injured in an accident. (v) Erectionof shedfor parkingofvehiclesat a costof₹ 10 Lac. |
| Answer» Solution :In ITEM No.(i) Loss ofsale₹ 7,500 Will beRevenueexpenditureand₹ 6,050 isCapitalexpenditure. Item Nos.(II) and(iii) are Capitalexpenditure. Item No.(IV) isRevenueexpenditure. ItemNo. (v) Capital EXPENDITURE. | |
| 766. |
State what is the end product of Financial Accounting |
| Answer» SOLUTION :The end product of Financial Accounting is PREPARATION of final accounts, i.e., Trading and Profit and LOSS ACCOUNT and Balance Sheet | |
| 767. |
State what is the end-product fo Financial Accounting. |
| Answer» Solution :FINANCIAL Statements, i.e., (i) Income STATEMENT, (ii) Balance SHEET. | |
| 768. |
State two transactions which may be recoreded in Cash Book but not in Pass Book. |
|
Answer» SOLUTION :Chequesissue but not PRESENTED in the bank for payment (ii) Cheques deposited into bank not CREDITED or collected |
|
| 769. |
State two transactions which may be recorded in Pass Book But notin Cash Book |
|
Answer» Solution :(i) Interest allowed or credited by BANK (II) Bank CHARGES and COMMISSION charged bythe bank |
|
| 770. |
State two points of distinction between Capital Expenditure and Revenue Expenditure |
|
Answer» Solution :(i) CAPITAL Expenditure is incurred for acquisition of FIXED assets for use in business while Revenue Expenditure is incurred to conduct the business. (ii) Capital Expenditure INCREASES the earning capacity of the business while Revenue Expenditure is incurred for earning profits. |
|
| 771. |
State two errors committ ed in Cash Book which arecondidered whilepreparing Bank Reconciliation Statement |
|
Answer» Solution :(i) Overcasting or UNDERCASTING of bank column of THECASH Book (II) WRONG amount recorded in bank column of Cash Book |
|
| 772. |
State to which class of accounts does each of the following relate:- {:(I.,"Cash",,V.,"Creditors"),(II.,"Bank",,VI.,"Commission Received"),(III.,"Trade Marks",,VII.,"Accrued Commission"),(IV.,"Debtors",,VIII.,"Commission Received in Advance"):} |
| Answer» Solution :`{:("Personal Accounts",II","IV","V","VII","VIII"."),("Real Accounts",I","III"."),("NOMINAL Accounts",VI"."):}` | |
| 773. |
State the title of the accounts affected, type of account and the account to be debited and account to be credited : 1. Bhanu commenced business with cash 1,00,000 2. Purchased goods on credit from Ramesh 40,000 3. Sold goods for cash 30,000 4. Paid salaries 3,000 5. Furniture purchased for cash 10,000 6. Borrowed from bank 50,000 7. Sold goods to Sarita 10,000 8. Cash paid to Ramesh on account 20,000 9. Rent paid 1,500 |
|
Answer» Solution :1.Cash account and CAPITAL account, Asserts and Liabilities , Assert increase and capital increase. 2.Purchase account and Ramesh account. Expenses and liabilities , Expenses and Liabilities increases. 3.Cash account and SALES account. Asserts and REVENUES, Asserts and Revenues increases 4.Salaries account and cash account, Expense and Asset , Expenses increases Assets decreases. 5.Furniture account and Bank, Liability and Asset, LIABILITES increases Asset 6.Loan account and Bank , Liability and Asset, Liabilities increases Asset decreases 7 Sarita account and Sales account, Asset and REVENUE, Assets decreases Revenue decreases 8. Ramesh account and Cash, liabilities and Assets, Liabilities decreases Assets increases . 9.Rent account and Cash account , Expense and Assets, Expenses increases Assets decreases. |
|
| 774. |
State the Type of Accounts. |
| Answer» SOLUTION :Accounts of NATURAL Persons means the accounts of human BEINGS. For example, Mohans ACCOUNT. | |
| 775. |
State the nature of account (Personal, Real or Nominal ) and show which will be credited : (i) Rent received (ii) Machinery purchased (iii) Goods purchased (vi) Capital introduced (v) Rent paid (vi) Interest received (vii) Building sold (viii) Discount allowed (ix) Goods sold |
Answer» SOLUTION :
|
|
| 776. |
State the nature of information required by Investors. |
| Answer» Solution :They WANT INFORMATION REGARDING risks and RETURN on their INVESTMENTS in the business enterprise. | |
| 777. |
State the meaning of incomplete records? |
|
Answer» |
|
| 778. |
State the meaning of: (a) Outstanding expenses (b) Prepaid expenses (c) Income received in advance (d) Accrued income |
| Answer» SOLUTION :N/a | |
| 779. |
State the accounts which are not considered while preparing Trial Balance. |
| Answer» Solution :ACCOUNT which do not SHOW balance are not considered while preparing the Trial Balance by Balance Method. | |
| 780. |
State reasons for the following: (i) The balance in the cash column of the Cash Book is always a debit balance waereas than in the bank column can sometimes be credit. (ii) Contra entries in the Two-Column Cash Bank are not posted into the Ledger. (iii) The Cash Account and the Bank Account are not posted in the Ledger. |
| Answer» | |
| 781. |
State one limitation of historicalcost. |
| Answer» Solution :During periods of inflation, the FIGURE of net profit will be DISTORTED because depreciation BASED on historical cost will be charged against revenues at CURRENT prices. | |
| 782. |
State one importance of Trial Balance. |
| Answer» Solution :It facilitates the preparation of FINAL accounts by MAKING AVAILABLE the BALANCES of all the accounts at ONE place. | |
| 783. |
State different kinds of transactions that increase and decrease capital. |
| Answer» SOLUTION :CAPITAL increases by NET profit and fresh capital INTRODUCED, decreases by DRAWINGS and net loss | |
| 784. |
State four reasons when Cash Book balance will be lower than balance as per Bank Statement of Bank Pass Book . |
| Answer» SOLUTION :(i) Cheques issued but not presented for payment.(II) Cheque deposited but not recorded in Cash Book. (iii) Bank charges or interest CHARGED reversed by the bank but not recorded in Cash Book. (IV) Wrong CREDIT given by bank | |
| 785. |
State anytwo reasons of difference between Cash Book and Bank Pass Book balances. |
|
Answer» Solution :(i) Cheques DEPOSITED but not CREDITED. (II) Cheques ISSUED but not presented for PAYMENT. |
|
| 786. |
Stateany six of accounting information Why do they need accounting information ? |
|
Answer» Solution :(i) The owners/shareholders : use them to see if they are getting satisfactory returns on their investment and also to assess the financial HEALTH of their enterprise. (ii) The mangers/directors : use them to ascertain the strengths and weaknesses of the enterprise. The credictors use them to know WHETHER the firm will be able to pay the interest regularly and will be able to pay their debts as they become due. (iv) The prospective investors : use them to assess whether or not to invest their money in this firm. (v) Employes : They need accounting information to claim increase in WAGES, bonus and other benefits. (vi) The government agencies : use them for the PAYMENT of VARIOUS taxes such as Goods and Service Tax (GST) , Income Tax etc. |
|
| 787. |
State any one advantage of maintaining the Petty Cash Book. |
| Answer» SOLUTION :Is SEVES the TIME of CHIEF CASHIER. | |
| 788. |
State any four reasonswhen the Cash Book balance will be higherthan the Pass Bookbalance . |
| Answer» SOLUTION : CashBook balance will be HIGHER than the Pass Book balance in the following situations :(i) Cheques deposited but not collected by the BANK.(ii) Cheque RECORDED in the Cash Book but not deposited in Bank . (iii) Interest DEBITED by bank but not recorded in the Cash Book.(iv) Bank charges debited by bank but bnot recorded in the Cash Book. | |
| 789. |
Srinvas did not maintain the Booksof Accounts properly. From the following data, prepare final accounts for the year ended 31st March, 2019: |{:(,"Rs."),("Opening Stock","1,00,000"),("Creditors on April, 2018"," 40,000"),("Cash in Hand on 31st March, 2018"," 60,000"),("Furniture on 1st April, 2018"," 20,000"),("Salaries"," 68,000"),("Rent"," 24,000"),("Other expenses"," 48,000"),("Cash Sales"," 80,000"),("Credit sales","8,00,000"):}||{:(,"Rs."),("Cash received from debtors","6,40,000"),("Cash paid to creditors","3,60,000"),("Cash purchases"," 40,000"),("Credit purchases","6,00,000"),("Closing stock"," 80,000"),("Debtors on 31st March, 2019","2,40,000"),("Debtos on 1st April, 2018","1,00,000"),("Drawings","1,00,000"),("Discount allowed to debtors"," 20,000"):}| |
Answer» SOLUTION :   
|
|
| 790. |
Solve illustration 07, if the firm maintains furniture disposal account prepared along with furniture account and provision for depreciation on furniture account. |
Answer» SOLUTION : DEPRECIATION , PROVISIONS and RESERVES 
|
|
| 793. |
Single Entry System can be adopted by |
|
Answer» SMALL FIRMS. |
|
| 794. |
Shruti maintains her books of account from Incomplete Records. Her books provide the following information: |{:(,,"1st April, 2015(Rs)","31st March,2016(Rs)"),("Cash ",..................................................................,"1,200","1,600"),("Bills Receivable",..................................................................,"...","2,400"),("Debtors",..................................................................,"16,800","27,200"),("Stock",..................................................................,"22,400","24,400"),("Investments",..................................................................,"...","8,000"),("Furniture",..................................................................,"7,500","8,000"),("Creditors",..................................................................,"14,900","11600"):}| She withdrew Rs. 500 per month for personal expenses. She sold her Investments of Rs. 16,000 at 5% premium and introduced the amount into business. You are required to prepare a Statement of Profit of Loss for the year ending 31st March, 2016. |
|
Answer» |
|
| 795. |
Shown the accounting equationonthe followimgtransacitions: (a) Ram started business with ₹25,000. (b) Purchases goods from Shyam ₹10,000. (c) Sold goods to Sohancosting₹1,500 for ₹1,800. |
|
Answer» |
|
| 796. |
Shyam purchased a building for ₹20 lakh. However, due to boom in the property market, the current market value of the building is ₹28 lakh. State the value at which building should be recorded in the books of accounts. Also, give reasons for the same. |
|
Answer» Solution :Building will be SHOWN in the books at ₹ 17 Lakh. This is because of HISTORICAL Cost Concept according to which assets are shown in the books at cost less DEPRECIATION. |
|
| 797. |
Shown the accounting equationonthe followimgtransacitions: (a) Ram started business with ₹25,000. (b) Purchases goods from Shyam ₹10,000. (c) Sold goods to Sohancosting₹1,500 for ₹1,800. |
|
Answer» |
|
| 798. |
Shownan Accounting Equationon thebasis of thefollowingtransacitons |
|
Answer» |
|
| 799. |
Show the treatment of prepaid expenses depreciation, closing stock at the time of preparation of final accounts when: (a) When given inside the trial balance? (b) When given outside the trial balance? |
| Answer» SOLUTION :N/a | |
| 800. |
Shownan Accounting Equationon thebasis of thefollowingtransacitons |
|
Answer» |
|