PC0-01:
PREPARATORY COURSE IN COMMERCE
Time:
2 Hours Maximum Marks: 50
Note:
All questions are compulsory, each of which carries one mark.
1. The concept of conservatism
takes into account:
(1) All expected income but no
losses
(2) All expected losses but no
expected income
(3) No expected profits and
losses
(4) All expected incomes and
losses
Ans: (2) All expected losses but
no expected income
2. Which of the following
equations is correct?
(1) Capital + Liabilities =
Assets
(2) Liabilities = Assets —
Capital
(3) Capital = Assets —
Liabilities
(4) All of the above
Ans: (4) All of the above
3. Radha started business with
Rs 2, 00,000. She purchased goods on credit from Krishan for Rs. 25,000. Her
total assets will be:
(1) Rs. 2, 25,000 (2) Rs. 2,
00,000 (3) Rs. 1, 75,000 (4) Rs. 1, 50,000
Ans: (1) Rs. 2, 25,000
4. Commission outstanding
account is a:
(1) Personal A/C (2) Nominal A/C
(3) Real A/C (4) Both personal
and nominal A/C
Ans: (1) Personal A/C
5. Shruti purchased a building
from her friend for Rs. 3, 00,000. Its market value is Rs. 4, 00,000. What
amount will she record in her books?
(1) 4, 00,000 (2) 1, 00,000 (3)
3, 00,000 (4) 7, 00,000
Ans: (3) 3, 00,000
6. Nominal Accounts are related to:
(1) Liabilities only
(2) Expenses, incomes, losses
and gains
(3) Assets only
(4) Expenses and losses only
Ans: (2) Expenses, incomes,
losses and gains
7. Which of the following
accounts normally shows a debit balance?
(1) A debtor's A/C (2) Purchases
A/C
(3) Discount allowed A/C (4) All
of the above
Ans: (4) All of the above
8. A system of advancing a fixed
amount to the petty cashier periodically is called:
(1) Double entry system (2)
Imprest system
(3) Single entry system (4)
Hybrid system
Ans: (2) Imprest system
9. Single entry system of book -
keeping is a system of:
(1) Incomplete records (2)
Reliable records
(3) Providing true financial
position (4) Helping in locating errors
Ans: (1) Incomplete records
10. Machine Purchased on cash
should be debited to:
(1) Cash A/C (2) Goods A/C (3)
Machine A/C (4) Furniture A/C
Ans: (3) Machine A/C
11. Which of the following
accounts is a real account?
(1) Bank A/C (2) Cash A/C (3)
Loan A/C (4) Capital A/C
Ans: (2) Cash A/C
12. The credit balance of a
personal account indicates:
(1) Amount payable (2) Amount
receivable
(3) cash at Bank (4) Cash in
hand
Ans: (1) Amount payable
13. Which of the following is
not entered in the books of account?
(1) Cash discount (2) Rent
received
(3) Trade discount (4)
commission received
Ans: (3) Trade discount
14. Which book is used for
recording credit sales of goods?
(1) Cash Book (2) Sales Book
(3) Petty Cash Book (4)
Purchases Book
Ans: (2) Sales Book
15. Opening stock is Rs. 50,000,
Purchases are Rs. 30,000 and direct expenses are Rs. 20,000. The amount of
closing stock is Rs. 10,000. Cost of sales will be:
(1) Rs. 50,000 (2) Rs. 80,000
(3) Rs. 90,000 (4) Rs. 70,000
Ans: (3) Rs. 90,000
16. Income received in advance
appearing in Trial Balance will be shown in:
(1) Trading A/C (2) Profit and
loss A/C
(3) Assets side of Balance Sheet
(4) Liabilities side of Balance Sheet
Ans: (4) Liabilities side of
Balance Sheet
17. Bad debts given in
adjustments will be shown in:
(1) Profit and loss A/C only
(2) Balance sheet only
(3) Both trading A/C and Balance
sheet
(4) Both Profit and loss A/C and
Balance sheet
Ans: (4) Both Profit and loss A/C
and Balance sheet
18. Goods returned worth Rs.
35,000 by Rohan and Co. were taken into stock for Rs. 3,500. It is an error of:
(1) Commission (2) Principle (3)
Omission (4) Compensating
Ans: (1) Commission
19. The process of transferring
the debit and credit balances from their respective accounts to a statement is
termed as:
(1) Posting (2) Preparing a
Trial Balance
(3) Journalising (4) Balancing
Ans: (2) Preparing a Trial
Balance
20. Depreciation on furniture is
charged to:
(1) Trading A/C (2)
Manufacturing A/C
(3) Profit and loss A/C (4)
Suspense A/C
Ans: (3) Profit and loss A/C
21. Sale of old newspapers will
be recorded in:
(1) Liabilities side of Balance
Sheet (2) Trading A/C
(3) Profit and loss A/C (4)
Assets
Ans: (3) Profit and loss A/C
22. Sales tax is charged to:
(1) Trading A/C (2) Profit and
loss A/C
(3) Manufacturing A/C (4)
Balance Sheet
Ans: (2) Profit and loss A/C
23. Carriage inwards shown in
Trial Balance will be recorded in:
(1) Trading A/C (2) Profit and
loss A/C
(3) Assets side of Balance Sheet
(4) Liabilities side of Balance Sheet
Ans: (1) Trading A/C
24. Small Donation received for
general purpose is to be taken as:
(1) Capital receipts (2) Capital
expenditure
(3) Revenue receipts (4) Revenue
expenditure
Ans: (3) Revenue receipts
25. Bank Reconciliation
Statement is prepared by:
(1) Debtors (2) Creditors
(3) Bank (4) Customers of the
bank
Ans: (4) Customers of the bank
26. Bank overdraft reflects:
(1) Debit balance in the Pass
Book
(2) Debit balance in the Cash
Book
(3) Credit balance in the Pass
Book
(4) No balance in the Pass Book
Ans: (1) Debit balance in the
Pass Book
27. Goods sold to Mahesh for Rs.
715 were recorded in his account as Rs. 175. In the rectifying entry, Mahesh
A/C will be debited with:
(1) Rs. 715 (2) Rs. 890 (3) Rs.
540 (4) Rs. 175
Ans: (3) Rs. 540
28. Fixed Assets do not include:
(1) Good will (2) Furniture (3)
Prepaid expenses (4) Loose tools
Ans: (3) Prepaid expenses
29. Current liabilities do not include:
(1) Outstanding expenses (2)
Proposed dividend
(3) Bank overdraft (4) Accrued
income
Ans: (4) Accrued income
30. Purchase of goods from Vishnu
on credit basis should be credited to:
(1) Purchases A/C (2) Sales A/C
(3) Vishnu's A/C (4) Cash A/C
Ans: (3) Vishnu's A/C
31. Main objective of preparing
a 'Journal' is:
(1) To journalise the cash
transactions
(2) To prepare initial record of
business transactions
(3) To make posting in the
ledger
(4) To ascertain the financial
position of the business
Ans: (2) To prepare initial
record of business transactions
32. Cash given away as charity
shall be debited to:
(1) Cash A/C (2) Purchases A/C
(3) Sales A/C (4) Charity A/C
Ans: (4) Charity A/C
33. Goods given away as charity
shall be credited to:
(1) Charity A/C (2) Sales A/C
(3) Purchases A/C (4) Cash A/C
Ans: (3) Purchases A/C
34. If cash is Rs. 10,000, Land
Rs. 2, 00,000, debtors Rs. 7,000 and creditors Rs. 17,000, the amount of
capital would be:
(1) Rs. 2, 00,000 (2) Rs. 2,
34,000 (3) Rs. 2, 14,000 (4) Rs. 2, 17,000
Ans: (1) Rs. 2, 00,000
35. Rs. 6,000 received from
Meera whose account was written off as bad debt in the previous year should be
credited to:
(1) Meera's A/C (2) Bad debts
A/C
(3) Provision for bad debts A/C
(4) Bad debts recovered A/C
Ans: (4) Bad debts recovered A/C
36. Contra entry appears on both
the sides of:
(1) Purchases Book (2) Sales
Book
(3) Cash Book (4) Balance Sheet
Ans: (3) Cash Book
37. Effect of Salary paid on
accounting equation shall be:
(1) Only cash will increase
(2) Only cash will decrease
(3) Only capital will decrease
(4) Cash and capital both will
decrease
Ans: (4) Cash and capital both
will decrease
38. Premium received on issue of
shares is treated as a:
(1) Current Asset (2) Current
liability
(3) Fixed Asset (4) Capital
profit
Ans: (4) Capital profit
39. A copy of customer's A/C
given by bank is called:
(1) Sales Book (2) Cash Book
(3) Pass Book (4) Cheque Book
Ans: (3) Pass Book
40. Manufacturing A/C is
prepared to find out:
(1) Cost of goods sold (2) Cost
of Goods Produced
(3) Net Profit (4) Net Loss
Ans: (2) Cost of Goods Produced
41. Depreciation on Fixed Assets
is treated as a:
(1) Revenue expenditure (2)
Capital expenditure
(3) Deferred revenue expenditure
(4) Capital loss
Ans: (1) Revenue expenditure
42. Expenditures paid in advance
will be shown in Balance Sheet as:
(1) Fixed asset (2) Current
asset
(3) current liability (4) Long
term liability
Ans: (2) Current asset
43. Sales Returns Journal is
also called:
(1) Sales Journal (2) Invoice
Book
(3) Return Inwards Journal (4)
Return Outwards Journal
Ans: (3) Return Inwards Journal
44. Which of the following is
not a liquid asset?
(1) Cash (2) Bank Balance (3)
Closing Stock (4) Short Term Securities
Ans: (3) Closing Stock
45. Interest on drawings is
shown on the:
(1) Debit side of Trading A/C
(3) Credit side of P and L A/C
(2) Debit side of P and L A/C
(4) Credit side of Trading A/C
Ans: (3) Credit side of P and L
A/C
46. Cost of goods purchased is
Rs. 80,000, Net sales are Rs. 1, 00,000 and closing stock is Rs. 20,000. The
gross profit would be:
(1) Rs. 20,000 (2) Rs. 40,000
(3) Rs. 80,000 (4) Rs. 1, 00,000
Ans: (2) Rs. 40,000
47. Sales are equal to:
(1) Cost of goods sold + grosses
profit
(2) Cost of goods sold — gross
profit
(3) Opening stock + purchases —
closing stock
(4) Opening stock + gross profit
Ans: (1) Cost of goods sold +
grosses profit
48. Brokerage / Commission
received are shown on the:
(1) Debit side of Trading A/C
(2) Credit side of P and L A/C
(3) Asset side of Balance Sheet
(4) Liabilities side of Balance Sheet
Ans: (2) Credit side of P and L
A/C
49. Revenue is said to be
realized when:
(1) Cash is received
(2) The sale is made
(3) Goods are manufactured
(4) Offer to sale is made
Ans: (2) The sale is made
50. A firm pays commission to
its manager @ 10%. Of profits arrived at after charging such commission. What
will be the amount of commission if the profits before charging such commission
were Rs. 22,000?
(1) Rs. 2,200 (2) Rs. 1,100 (3)
Rs. 2,000 (4) Rs. 1,000
Ans: (3) Rs. 2,000