PCO-01:
PREPARATORY COURSE IN COMMERCE
Time:
2 Hours Maximum Marks: 50
Note:
All questions are compulsory, each of which carries one mark.
1. The main
function of Financial Accounting is to:
(1) Find out
Gross Profit only
(2) Find out
Net Profit only
(3) Record
all the transactions
(4) Record,
classify and summarize the business transactions in a significant and systematic
manner.
Ans: (4)
Record, classify and summarize the business transactions in a significant and
systematic manner.
2. Purchases
Book is meant for recording:
(1) All types
of purchases (2) credit purchases of goods
(3) Cash
purchases (4) both cash and credit purchases
Ans: (2)
credit purchases of goods
3. An
expenditure on Repairs of machinery was debited to machinery. What type of error
is this?
(1) Errors of
principle (2) errors of commission
(3) Errors of
omission (4) compensatory error
Ans: (1)
Errors of principle
4. Sales
returns book is kept to record:
(1) Returns
of goods sold
(2) Credit
sales of goods
(3) Credit
purchase of goods
(4) Returns
of goods purchased
Ans: (1)
Returns of goods sold
5. The
balance of cash book is:
(1) An asset
(2) an expense (3) An income (4) a liability
Ans: (1)
An asset
6. Rs. 1,000
paid as wages for establishment of a machine should be debited to:
(1) Machine
A/c
(2) Cash A/c
(3) Wages A/c
(4) Establishment
A/c
Ans: (1)
Machine A/c
7. Trading
account shows the:
(1) Net
profit only
(2) Gross
profit only
(3) Total of
incomes only
(4) Total of
expenses only
Ans: (2)
Gross profit only
8. Wages
outstanding account is:
(1) Real
account
(2) Nominal
account
(3) Representative
personal account
(4) Both real
and nominal account
Ans: (3)
Representative personal account
9. Rent paid
in advance is treated as:
(1) A loss
(2) a gain
(3) An asset
(4) a liability
Ans: (3)
An asset
10. Credit
balance of suspense A/c will be shown in:
(1) Debit
side of trading A/c
(2) Credit
side of trading A/c
(3) The asset
side of balance sheet
(4) The
liability side of balance sheet
Ans: (4)
The liability side of balance sheet
11. Main
objective of preparing a 'Journal' is:
(1) To
ascertain the financial position of the business
(2) To
journalise the cash transactions
(3) To make
posting in ledger
(4) To
prepare a primary record of business transactions
Ans: (4)
To prepare a primary record of business transactions
12. Personal
accounts are related to:
(1) Assets
only (2) Liabilities only
(3) Expenses
only (4) Debtors, creditors etc.
Ans: (4)
Debtors, creditors etc.
13. Real
accounts are related to:
(1) Assets
(2) Expenses, losses and incomes
(3)
Liabilities (4) Gains
Ans: (1)
Assets
14. Nominal
accounts are related to:
(1) Assets
(2) Liabilities
(3) Debtors,
creditors etc. (4) Expenses, losses, incomes and gains
Ans: (4)
Expenses, losses, incomes and gains
15. Goods
given away as donation would be credited to:
(1) Purchase
A/c (2) Sales A/c
(3) Cash A/ c
(4) Donation A/c
Ans: (1)
Purchase A/c
16. What will
be the amount of capital if cash is Rs. 5,000; furniture Rs. 12,000; stock, 30,000
and creditors Rs. 5,000?
(1) Rs. 42000
(2) Rs. 41000
(3) Rs. 52000
(4) Rs. 47000
Ans: (1)
Rs. 42000
17. Rs. 4,000
received from Y whose account was written off as bad debts should be credited to:
(1) Y's A/c
(2) Cash A/c
(3) Bad-debts
A/c (4) Bad-debts recovered A/c
Ans: (4)
Bad-debts recovered A/c
18. Which of
the following is not a current asset?
(1) Prepaid
expense (2) Cash at bank
(3) Closing
stock (4) Goodwill
Ans: (4)
Goodwill
19. Pass Book
is a copy of:
(1) Customer's
A/c in the bank's books
(2) Cash Book
relating to bank column
(3) Cash Book
relating to cash column
(4) Firm's
receipts and payments
Ans: (1)
Customer's A/c in the bank's books
20. Bank
reconciliation statement can be prepared with the balance of which of the
following book (s) as a starting point?
(1) Cash Book
only
(2) Pass Book
only
(3) Either
Cash Book or Pass Book
(4) Neither
Cash Book nor Pass Book
Ans: (3)
Either Cash Book or Pass Book
21.
Unfavourable bank balance refers to:
(1) Credit
balance of the Cash Book
(2) Credit
balance of the Pass Book
(3) Debit
balance of the Cash Book
(4) Favourable
balance of the Cash Book
Ans: (1)
Credit balance of the Cash Book
22. Bank Reconciliation
statement is prepared by:
(1) Auditor
of the bank (2) Creditors
(3) Bank (4)
Customers of the bank
Ans: (4)
Customers of the bank
23. Sale of
typewriter that has been used in office should be credited to:
(1) Sales A/c
(2) Cash A/c
(3) Capital
A/c (4) Typewriter A/c
Ans: (4)
Typewriter A/c
24. Rent paid
to Land lord Rs. 500 was credited to Rent A/c with Rs. 5,000. In the rectifying
entry, Rent A/c will be debited with:
(1) Rs. 5000
(2) Rs. 500
(3) Rs. 5500
(4) Rs. 4500
Ans: (3)
Rs. 5500
25. Purchased
Goods from Y for Rs. 3,600 but it was credited to Y as Rs. 6300. In rectifying entry
Y A/c will be debited with:
(1) Rs. 9900
(2) Rs. 2700
(3) Rs. 3600
(4) Rs. 6300
Ans: (2)
Rs. 2700
26. Goods
returned by Z for Rs. 4,200 were debited to Z as Rs. 2,400. In rectifying entry
Z's A/c will be credited with:
(1) Rs. 1800
(2) Rs. 2400
(3) Rs. 4200
(4) Rs. 6600
Ans: (4)
Rs. 6600
27. Goods
sold to Ram for Rs. 640 was debited to in his A/c as Rs. 460. In the rectifying
entry Ram's A/c will be debited with:
(1) Rs. 180
(2) Rs. 460
(3) Rs. 640
(4) Rs. 1100
Ans: (1)
Rs. 180
28. All the
direct expenses are shown in:
(1) Profit
and loss A/c
(2) Trading
A/c
(3) Profit
and loss appropriation A/c
(4) Balance
sheet
Ans: (2)
Trading A/c
29. Building
is a:
(1) Current
Asset (2) Tangible Fixed Asset
(3)
Intangible Asset (4) Liability
Ans: (2)
Tangible Fixed Asset
30. Bank
overdraft is a:
(1) Current
liability (2) Long-term liability
(3) Current
asset (4) Fixed asset
Ans: (1)
Current liability
31. Sales
Returns Journal is also called:
(1) Day Book
(2) Primary Book
(3) Invoice
Book (4) Returns Inwards Journal
Ans: (4)
Returns Inwards Journal
32. Profit
and loss A/c is prepared to find out:
(1) Gross
Profit (2) Capital
(3) Cost of
Goods sold (4) Net profit/Net loss
Ans: (4)
Net profit/Net loss
33. Trade
marks are treated as a:
(1) Current
asset (2) Fictitious asset
(3) Tangible
asset (4) Intangible asset
Ans: (4)
Intangible asset
34.
Preliminary expenses are shown in balance sheet as a:
(1) Fixed
asset
(2) Tangible
asset
(3)
Fictitious asset
(4)
Intangible asset
Ans: (3)
Fictitious asset
35. Posting
will be done in the:
(1) Trial
Balance
(2) Journal
(3) Ledger
(4) Trading
A/c
Ans: (3)
Ledger
36. Depreciation
on building will be charged to:
(1) Trading
A/c (2) Profit and loss A/c
(3)
Manufacturing A/c (4) Profit and loss appropriation A/c
Ans: (2)
Profit and loss A/c
37. Balance
sheet is a statement containing the assets and liabilities of a business:
(1) On a
particular date (2) On a particular period
(3) Both (1)
and (2) (4) None of the above
Ans: (1)
On a particular date
38. Revenue
is said to be realized when:
(1) The sale
is made (2) Goods is manufactured
(3) Cash is
received (4) both (1) and (2)
Ans: (1)
The sale is made
39. Underwriting
commission is an example of:
(1) Capital
expenditure (2) Capital loss
(3) Revenue
expenditure (4) Deferred revenue expenditure
Ans: (4)
Deferred revenue expenditure
40. Sales are
equal to:
(1) Cost of
goods sold + gross profit
(2) Cost of
goods sold - gross profit
(3) Gross
profit - cost of goods sold
(4) Gross
profit + closing stock
Ans: (1)
Cost of goods sold + gross profit
41. Which of
the following account is prepared to find out the cost of production?
(1)
Manufacturing A/c (2) Trading A/c
(3) Profit
and loss A/c (4) Profit and loss appropriation A/c
Ans: (1)
Manufacturing A/c
42. Which of
the following transactions shall not be recorded in the books of a business unit?
(1) The
manager appointed Ganesh as an assistant
(2) Purchased
a machine for the factory.
(3) The
proprietor took away same goods from his shop
(4) Paid
wages to factory workers.
Ans: (1)
The manager appointed Ganesh as an assistant
43. If the
profit is 1/3rd of cost price, then it is:
(1) 1/4 the
sale price (2) 1/3 the sale price
(3)1/2 of the
sale price (4) 1/5 the sale price
Ans: (1)
1/4 the sale price
44. Interest
on drawings is regarded as:
(1) Expenditure
of the business
(2) Gain for
the business
(3) Profit
for the business
(4) Capital
for the business
Ans: (2)
Gain for the business
45. A firm
pays its manager a commission @ 10% of profits arrived at after charging such commission.
What will be the commission if the profits before charging such commission were
Rs. 22,000?
(1) Rs. 2,000
(2) Rs. 2,200
(3) Rs. 2,445
(4) Rs. 1,100
Ans: (1)
Rs. 2,000
46. Which of
the following is deducted out of the current assets to arrive at the amount of liquid
assets?
(1) Stock (2)
Debtors
(3) B/R (4)
Cash
Ans: (1)
Stock
47. Rent and
taxes are shown on the:
(1) Debit
side of trading A/c
(2) Credit
side of trading A/c
(3) Debit side
of profit and loss A/c
(4) Credit
side of profit and loss A/c
Ans: (3)
Debit side of profit and loss A/c
48. Accrued
income shown in Trial Balance will be shown in:
(1) Trading
A/c
(2) Profit
and Loss A/c
(3)
Manufacturing A/c
(4) Balance
Sheet
Ans: (4)
Balance Sheet
49. Under
which concept the firm should be considered as a continuing unit and not as one
closing down:
(1) Legal
aspect concept (2) Matching concept
(3) Going
concern concept (4) Materiality concept
Ans: (3)
Going concern concept
50. Capital
on 1st January, 2008 was Rs. 50,000 on October 1, 2008 proprietor introduced further
capital of Rs. 10,000. The interest at 5% is to be allowed on capital. The
interest on capital for the year 2008 will be:
(1) Rs. 2625
(3) Rs. 2500
(2) Rs. 2750
(4) Rs. 3000
Ans: (1)
Rs. 2625