Explore topic-wise InterviewSolutions in Current Affairs.

Correct option is (c) Debit side of Trading Account (deducted from purchase) and Assets side of Balance Sheet

Correct option is (a) Expense

Class 11 Accountancy MCQ Questions of Accounts from Incomplete Records with Answers available here. This may also permit you to recognize and check your pieces of knowledge. Students can also practice the Important Multiple Choice Questions of Class 11 Accountancy. Each question has 4 alternatives accompanied by the proper answer. These MCQ Questions are prepared by the latest examination pattern and syllabus as introduced by CBSE. We have provided Accounts from Incomplete Records Class 11 Accountancy 

MCQ Questions with Answers to assist college students to apprehend the concepts very well. Practice MCQ Questions for Class 11 Accountancy with Answers on an each-day basis and score more in exams. Know your education level with MCQ Questions for Class 11 with Answers. Refer to more MCQ Questions for Accountancy Class 11 with Answers from Incomplete Records as per the present day syllabus issued through CBSE.

1. A system of accounting which is not based on double entry system is called-

(a) Cash system
(b) Mahajani system of accounting
(c) Incomplete accounting system
(d) None of these.

2. Accounts which are maintained under single entry system-

(a) Personal accounts
(b) Impersonal accounts
(c) (a) & (b) both
(d) None of these.

3. Statement of affairs is prepared to-

(a) Know about assets
(b) Know about liabilities
(c) Calculate capital
(d) Know financial position

4. Liabilities and assets amount to Rs. 50,000 and Rs. 78,000 respectively. The difference amount will represent-

(a) Creditors
(b) Debentures
(c) Profit
(d) Capital.

5. Generally incomplete records are maintained by-

(a) Trader
(b) Society
(c) Company
(d) Government.

6. Bills Receivable endorsed dishonoured are debited to   
(a) Debtors Account.
(b) Bills Receivable Account.
(c) Creditors Account.
(d) Bank Account.

7. Accounts are usually held using a single entry scheme by:

(a) Society
(b) Company
(c) Sole Trader
(d) Government

8. Single Entry System of book keeping is:

(a) Unscientific
(b) Unsystematic
(c) Inaccurate
(d) All of these

9. Single Entry System of book keeping is : 

(A) Inaccurate
(B) Unsystematic
(C) Unscientific
(D) All of these

10. When closing capital exceeds opening capital, this means:

(a) Profit
(b) Profit, if there is no introduction of fresh capital
(c) No Profit no Loss
(d) Loss

11. In case of net worth method of Single Entry System, profit is ascertained by 

(a) comparing the capital in the beginning of the accounting period and the capital at the end of the accounting period.
(b) Preparing a Profit and Loss Account.
(c) Preparing a Balance Sheet.
(d) None of these

12. Sales are calculated by adding

(a) Cash sales and cash received from debtors.
(b) Credit sales and cash received from debtors.
(c) Cash sales and credit sales.
(d) None of the above.

13. When closing capital falls short of opening capital, it means:

(a) Profit
(b) Loss, if there is no no drawing
(c) Loss
(d) None of the above

14. Statement of affairs is a _______.

(a) Statement of income and expenditure

(b) Statement of assets and liabilities

(c) Summary of cash transactions

(d) Summary of credit transactions

15. Generally, incomplete records are maintained by ______.

(a) Trader

(b) Society

(c) Company

(d) Government

16. If the opening capital is Rs. 60,000, drawings Rs. 5,000, capital introduced during the period Rs. 10,000, closing capital Rs. 90,000. The value of profit earned during the period will be ______.

(a) Rs. 20,000

(b) Rs. 25,000

(c) Rs. 30,000

(d) Rs. 40,000

17. Liabilities and assets amount to Rs. 50,000 and Rs. 78,000 respectively. The difference amount will represent ______.

(a) Creditors

(b) Debentures

(c) Profit

(d) Capital

18. A system of accounting that is not based on a double-entry system is called ______.

(a) Cash system

(b) Mahajani system of accounting

(c) Incomplete accounting system

(d) None of these

19. Credit purchase during the year is ascertained by preparing _______.

(a) Total creditor’s account

(b) Total debtor’s account

(c) Cash account

(d) Opening statement of affairs

20. Opening capital is ascertained by preparing

(i) Total debtor’s account
(ii) Total creditor’s account
(iii) Cash account
(iv) Opening statement of affairs

21. Accounts are usually held using a single entry scheme by:

(i) Society
(ii) Company
(iii) Sole Trader
(iv) Government

22. Credit purchase, during the year is ascertained by preparing :

(i) Total creditor’s account
(ii) Total debtor’s account
(iii) Cash account
(iv) Opening statement of affairs

23. Statement of affairs is prepared to-

(i) Know about assets
(ii) Know about liabilities
(iii) Calculate capital
(iv) Know financial position.

24. Single Entry System of book keeping is:

(i) Unscientific
(ii) Unsystematic
(iii) Inaccurate
(iv) All of these

25. If opening capital is Rs.(i)0,000 & closing capital is Rs. (i) 5,000 then profit or loss:

(i) Loss of Rs.5,000
(ii) Profit of Rs.2,500
(iii) Profit of Rs.5,000
(iv) None of these

Answer:

1. Answer (c) Incomplete accounting system

2. Answer (a) Personal accounts

3. Answer (c) Calculate capital

4. Answer (d) Capital.

5. Answer (a) Trader

6. Answer (a) Debtors Account.

7. Answer (c) Sole Trader

8. Answer (d) All of these

9. Answer (D) All of these

10. Answer (b) Profit, if there is no introduction of fresh capital

11. Answer (a) comparing the capital in the beginning of the accounting period and the capital at the end of the accounting period.

12. Answer (c) Cash sales and credit sales.

13. Answer (b) Loss, if there is no drawing

14. Answer (c) Summary of cash transactions

15. Answer (a) Trader

16. Answer (b) Rs. 25,000

17. Answer (d) Capital

18. Answer (c) Incomplete accounting system

19. Answer (a) Total creditor’s account

20. Answer (iv) Opening statement of affairs

21. Answer (iii) Sole Trader

22. Answer (i) Total creditor’s account

23. Answer (iii) Calculate capital

24. Answer (iv) All of these

25. Answer (iii) Profit of Rs.5,000

Trading Account: An account Is prepared to know the gross profit or gross loss of the business, at the end of the accounting year. which is known as Trading Account. Trading Account indicates profit or loss only for transactions related with goods. therefore the result is known as gross profit or gross loss.
Following particulars to be shown In Trading Account:

1. Debit side: OpenIng stock of goods. Net purchases of goods (total purchases minus purchase returns and Goods going out other than sales). direct expenses relating to purchase of goods (like wages, carriage inward, freight. octroi, etc.) are shown I recorded on the debit side of Trading Account.

Note: If it is a manufacturing unit, the expenses related to productions are also shown on debit side of Trading Account. e.g., productive wages, royalty, factory expenses. depreciation of factory building. plant and machinery, oil, grease,
etc.

2. CredIt side: Net sales (total sales minus sales returns), sale of Scrap goods and Closing stock of goods are shown on the Credit side of Trading Account.

Closing Entries: Trading account is an account which include the matter which is nothing but a posting of some journal entry. These journal entries are the closing entries for the accounts like purchase of goods, sales, purchase return, sales-return, direct expenses of purchase (Accounts-related with the goods and expenses of purchase), etc. And the Trading Account is prepared with the help of posting of the above accounts.

(1) The closing entry, for opening stock, purchase, sales return, direct expenses of the purchase like wages, carriage inward, etc. which have debit balance, is as follow:
Trading A/c Dr …………………..
To Opening stock A/c …………………..
To Purchase A/c …………………..
To Sales return A/c …………………..
To Wages A/c …………………..
To Carriage inward A/c …………………..
To Other direct expenses A/c …………………..
(Being the closing entry to close the accounts of debit side of Trading Account.)
Effect: As a result of this journal entry, all the accounts which are shown on credit side (which have debit balance) will be closed and to be written on the debit side of the Trading Account.

(2) The closing entry for sales, purchase return, goods going out for any other reason other than sales (like stolen away, burnt by lire, withdrawn for personal use, given for charity, given as samples), etc. which have credit balance in the book, is as follows :
Sales A/c Dr …………………..
Purchase return A/c Dr …………………..
To Trading A/c …………………..
(Being closing entry to close the accounts of the credit side of Trading account.)
Effect: As a result of this journal entry, Sales A/c, Purchase return A/c and goods going out for the other reason will be closed and balance of the concern account will be recorded on credit side of the Trading Account.

(3) For closing stock, brought into the books of accounts:
Closing stock A/c Dr …………………..
To Trading A/c …………………..
(Being the adjustment entry passed for the closing stock.)

Explanation: Closing stock of goods account is not there in any book. At the end of the accounting year, to prepare the final accounts, a list of the goods in stock is prepared and the value of it, is decided. This decided value, normally, is based on purchase value. Therefore, while writing the account regarding closing stock value, the market value or book value whichever is less, is to be considered. For this, a journal entry is to be passed which is known as adjustment entry. For the closing stock, one effect is to be given on the credit side of Trading Account and another effect is to be given on the Assets side of Balance Sheet, because closing stock is considered as an asset.

(4) A journal entry to close the Trading Account: If this account shows the credit balance, then it is known as Gross profit and if it shows the debit balance, then it is known as Gross loss. By transferring the Gross profit or Gross loss to Profit and Loss Account, Trading Account will be closed as below:
(A) If Gross profit is there :
Trading A/c Dr …………………..
To Profit and Loss A/c …………………..
(Being gross profit transferred to Profit and Loss account.)

(B) If Gross loss is there :
Profit and Loss A/c Dr …………………..
To Trading A/c …………………..
(Being gross loss transferred to Profit and Loss Account.)

Final Accounts: At the end of accounting year. 1.0 know the business result and financial position of the business, accounts and statements are prepared. They are known as Final or Annual Accounts. Another meaning of Final Accounts is to prepare the Trading Account. Profit and Loss Account and Balance Sheet, Generally. these types of accounts are prepared at the end of the accounting year, therefore, they are known as Final (Annual) Accounts. But sometimes at the end of six or nine months also these types of the accounts are prepared. Institutes like Bank. prepares such interim accounts at the end of six months also, which are known as Final Accounts.

Objectives: According to the meaning, Final (Annual) Accounts have two main objectives:
1. To know the business result and
2. To know the financial position of the business.

1. To know the business result: At the end of the accounting year, to know the result of the business. Trading Account and Profit and Loss Account are prepared. By comparing the expenses and incomes of the business, profit or loss can be found out. From the Trading account Gross profit or Gross loss and from the Profit and Loss Account. Net profit or Net loss can be known.

2. To know the financial position of the business: At the end of the accounting year, a statement is prepared which is known as Balance Sheet. In Balance Sheet. total assets and total liabilities are shown to get the Idea of the financial position of the business. Balance Sheet is a statement showing the financial position of the business.

Other objectives: Other objectives of the Final Accounts are explained below:

• To know the amount of Net capital in the business.
• To know the amount of Non-current Assets and Current Assets.
• To know the amount of Non-current liabilities and current liabilities.
• To know the amount of Reserves and Surplus.
• To know the amount receivable from various debtors.
• To know the amount payable to various creditors.
• To know the Trading profit. Operating profit and Abnormal gains and losses.
• To find out or ascertain the amount of various taxes. i.e.. service tax. income tax. VAT. wealth tax, etc. payable to the State and Central Government.
• To calculate the various ratios for the purpose of financial analysis.
• To enable businessmen to take policy decisions in respect to future business activities.

In the Final Accounts. Trading Account, Profit and Loss Account and a Balance Sheet are prepared. Trading Account and Profit and Loss Account are accounts, while Balance Sheet is statement or a list.

Correct option is (d) Net loss

Wages or expenses incurred on the goods due to wastage is called Kharajat expenses.

Correct option is (b) Gross profit – Operating expenses

Gross loss is shown on the debit side of Profit and Loss account.

1. Meaning of Gross Profit: Gross profit means difference between selling price and cost price of the goods sold. In other words, the credit balance of trading account is known as Gross profit.

2. Meaning of Operating Profit: Operating profit means difference between Gross profit and Operating expenses.
Operating profit = Gross profit – Operating expenses
Where. Operating expenses = General administrative expenses + Selling and Distribution expenses + Depreciation

3. Meaning of Net Profit: Net profit means difference between the total of all incomes and the total of all expenses. In other words, the credit balance of Profit and Loss Account is known as Net profit.

Correct option is (b) Total Assets

Trading account is the part of Profit and Loss account.

Profit and Loss account is prepared to ascertain nct profit or net loss.

Difference between gross profit and operating expenses is called operating profit.

Donation, Depreciation on assets, Loss by fire or theft, Loss on sale of fixed assets, Loss on sale of investment, Bad debts, provision for expense or loss, etc. are the other expenses and losses.

The increasing trend of net profit ratio suggest the increase in net/total profitability of a business unit.

Current assets means which is in the cash form or cash equivalent or which can be converted into cash within 12 months or which can be converted into cash equivalent.

Liquidity ratios are

• current ratio and
• liquid ratio.

Correct option is (A) Liquid ratio

Liquidity means the ability of business unit to pay short term liabilities. Short term liabilities means current liabilities.

Liquidity ratios are

1. Current ratio
2. Liquid ratio.

Explanation of Current Ratio: Current ratio shows the relationship between current assets and current liabilities. If the proportion of current assets is higher than current liabilities then the liquidity position of business entity is good and more liquidity means more short-terms solvency.

Formula : Current ratio =  Currrent Assets / Current Liabilities 
Current assets means that which is in the cash form or cash equivalent or which can be converted into cash within 12 months or which can be converted into cash equivalent. Examples of Current Assets: Current investment, stock (Excluding loose tools), trade receivables, cash and cash equivalent, short term lendings and advances, expenses paid in advance, incomes outstanding, taxes paid in advance etc.
Current liabilities means such liabilities which are payable within the time period of 12 months.

• Examples of Current Liabilities: Short term borrowings, trade payables, interest payable on long term liabilities, due but not paid liability, due but not paid interest, expenses outstandings, uncalled dividend, Installments received in advance, short-term provisions etc.
• Proportions for liquidity ratio 2: 1 is desirable
• The difference of current assets and current liabilities is known as working capital.

Liquidity ratio shows the capacity of business unit to pay short term liabilities.

Correct option is (D) measurement of liquidity

(b) Withdrawal of cash from bank for office use

(b) Normal rate of return

This statement is True.

When the expenses are made for the purchase of goods, and for the manufacturing process, they are known as a direct expense. Salary does not fall in that category and so it comes under the indirect expense category.

(a) different

Automated accounting is an approach to maintain up-to-date accounting records with the aid of accounting software.

Correct option is (d) Profit

The applications of CAS are as follows :

1. Maintaining accounting records 

2. Inventory management 

3. Pay – roll preparation

4. Report generation 

5. Data Import/Export 

6. Taxation

(c) Bills payable accepted during the year

(d) the sacrificing partners

(b) Sacrificing ratio

(b) Cash A/c

The following adjustments are necessary at the time of admission of a partner. 

1. Distribution of accumulated profits, reserves and losses 

2. Revaluation of assets and liabilities

3. Determination of new profit sharing ratio and sacrificing ratio 

4. Adjustment for goodwill 

5. Adjustment of capital on the basis of new profit sharing ratio

(b) necessary

1. Depreciation on assets – Debited 

2. Unrecorded liability – Debited 

3. Provision for outstanding expenses – Debited 

4. Appreciation of assets – Debited

(b) new share

(b) Nominal A/c

(b) Old partnership has to be dissolved

As per AS-26, goodwill should be shown as an asset in the books only when some consideration is paid for goodwill. Internally generated goodwill should not be shown in the books of accounts.

(i) When partners decide to distribute the balances of reserves and accumulated profits and losses at the time of admission of a new partner : These balances must be distributed among old partners in their old profit-loss ratio even if no instruction is given in ‘ the question regarding reserves and accumulated profit and loss consequently, these balances will not be shown in the balance sheet of the new firm.

(ii) If partners decide not to make any change in the balance of reserves, accumulated profit and loss and fictitious assets and show the balances in the new balance sheet at their old values, in this situation if the net amount of such balances is credit, it is debited to the capital accounts of gaining partner including new partner by the amount of gain and credited to sacrificing partners capital accounts by the amount of sacrifice. If net amount of such balances is debit, it is credited to the gaining partner’s capital accounts by the amount of gain and debited to sacrificing partners capital accounts by the amount of their sacrifice.

Correct option is  (B) Current/capital account of partners

When there is gain/profit at the time of revaluation, Revaluation A/c is credited and when there is loss at the time of revaluation, Revaluation A/c is debited.

Old Partners Capital A/c  Dr.

To Goodwill A/c

(Being old goodwill written off among old partners)

Memorandum Profit and Loss Adjustment Account will be opened when the assets and liabilities are revalued, revised values are not to be shown in the books of accounts.

(b) incoming partner

Due to revaluation of assets and liabilities net change can be adjusted in the old partners capital accounts, and accounting effect of profit/loss arising from revalued assets and liabilities can be given.

Goodwill = Super Profit x   Number of Years' Purchase.