THE PROFESSIONALS’ ACADEMY OF COMMERCE

KHYBER CAMPUS PESHAWAR

PRACTICE QUESTIONS

1. Sale of Goods on cash involves following accounting components

A. 1 Asset and 1 Liability
B. 2 Incomes.
C. 1 Asset and 1 Income
D. 1 Asset and 1 Expense

2. What would be the double entry of following business transaction on 30 June 2021 - Sale of 50 Tshirts
to Customer payment to be received on 31 Aug 2021
A. Trade Receivable debit , Inventory credit
B. Trade Receivable debit , Cash credit
C. Trade Receivable debit , Sale credit
D. Sale debit , Inventory credit

3. What would be the double entry of following business transaction on 30 June 2021 -Purchase of
machinery from supplier and cheque issued on the spot
A. Mahinery debit , Trade Payable credit
B. Mahinery debit , Account Payable credit
C. Bank debit , Account Payable credit
D. Machinery debit , Bank credit

4. What would be the double entry of following business transaction on 30 June 2021 – Goods purchased
on credit during May paid in cash
A. Electricity Expense debit, Cash credit
B. Electricity Expense debit, Account Payable credit
C. Account Payable debit, Cash credit
D. Account Payable debit, Electricity Expense cred
5. What would be the double entry of following business transaction on 30 June 2021 - Purchase of Goods
on Cash
A. Purchases debit , Cash credit
B. Purchases debit , Trade Payable credit
C. Cash debit , Purchases credit
D. Trade Payable debit , Purchases credit

6.Expenses paid by a business decrease:

A. Cash
B. Capital
C. Cash and capital
D. Capital and Accounts payable

7.Which of the following is not a business transaction?

A. Incurring interest on a business loan
B. Hiring a new employee
C. Purchasing office supplies
D. Receiving fees for services

8. Cash or goods taken away by the proprietor is called

A. Drawings
B. Sales
C. Charity
D. Expense

9.Bookkeeping deals with which step of processing of a business transaction:

A. Initiation
B. processing
C. recording
D. reporting

10. Which from the following is not a current asset?

A. Equipment
B. Inventory
 C. Cash
D. Trade receivables

11. The investment of cash into the business by owner results in a/an
A. Increase in cash and a decrease in capital
B. Increase in cash and an increase in capital
C. Decrease in cash and an increase in capital
D. Increase in fees earned and an increase in capital
12. MNO Company records the transaction as a debit to Consultant Expense for Rs. 100,000 and an
equivalent credit to Accounts Payable. What would be impact on elements of financial statements?
A. Increase a liability, increase owner’s equity
B. Decrease an asset, decrease a liability
C. Increase a liability, decrease owner's equity/capital
D. Decrease an asset, decrease owner's equity
13. Following is the sequence of an accounting cycle:
1 Transaction
2 Ledgers
3 Financial Statements
4 Trial Balance
5 Books of Prime Entry
A. 1,2,3,4,5
B. 1,3,4,2,5
C. 1,4,2,3,5
D. 1,5,2,4,3

14. Which one of the following can not be an ongoing transaction

A. Purchase of automotive parts for a car manufacturer
B. Sale of motor vehicles to showroom dealers
C. Sale of Assembly Line in replacement of a new assembly line
D. Travel expenditure for marketing in different auto exhibitions

15. For a business of pizza manufacturer which of the following is not a capital expenditure
A. Purchase of delivery bikes
 B. Buying a piece of land for setting up the manufacturing unit
C. Interest on loan for purchase of heavy duty ovens
D. Purchase of Ovens
16. Which of the following is not a financial transaction?
A. Payment of salary to employee
B. Payment of donations to a Non Profit Organisation
C. Signing of loan term contract for purchase of raw material
D. Awarding cash price to needy employees to motivate th
17. A business incurred following costs in relation to the machinery purchased
1 Purchase invoice price of machine -------------------------------------------------------------Rs. 150,000
2 Installation expense -------------------------------------Rs. 25,000
3 Payment of Toll during transportation ---------Rs. 5,000
What is the amount of total capital expenditure incurred?
A. Rs.150, 000
B. Rs.175, 000
C. Rs.180, 000
D. Rs.178, 000

18. A textile company entered into following business transaction

1 Obtained a Loan from bank for purchase of machinery to be paid in 5 years
2 Purchase of machinery from the loan amount
3 Purchase of Machinery on credit
4 Annual repair of the machinery
Which of the following is true?
A. 1&3 are capital expenditure
B. 1&3 are revenue expenditure
C. 2&3 are capital expenditure
D. 3&4 are capital expenditure
19. Purchase of Machinery on credit involves following accounting components
A. 1 Asset and 1 Liability
B. 2 Assets
C. 2 Liabilities
D. 1 Asset and 1 Expense
20. Debtors have increased by Rs. 9,000 and there is a credit sale of Rs. 75,000. What is cash received from
Debtors
Ans: 66000
21. Creditors have decreased by Rs. 5,000 and there is a credit purchase of Rs. 25,000. How much we have
paid to creditors.
Ans: 30000
22. Hereunder is the data of ABC Limited

Cash sales 500,000

Credit sales is 20% more than cash sales
Discount allowed 30,000
Revenue to be reported in Statement of Profit or Loss is________________________.

Ans: 1070000
23. The double entry accounting system is:

a. An accounting system that is useful for small business.

b. An accounting system involving all the interested parties of accounting information.
c. An accounting system in which transactions are recorded from a single aspect.
d. An accounting system in which business transactions are recorded from dual aspects.

24. A business has incurred following costs for the year ended 31 December 2019:

Rs. million

Extension in building 150

Repairs of old building 50

Repainting of old building 15

What is the amount of capital expenditure incurred during the year?

a. a.200
b. 165
c. 150
d. 215

25. One of the items below is not a transaction.

a. Mr. Smith started a business with cash of Rs.100,000

b. Received a price list from suppliers
 c. Received interest from the bank amounting to Rs.5,000
d. Paid salaries of Rs.300

26. A customer returns goods to a supplier. How does the supplier record this in his ledger?

Accounts to be debited Accounts to be credited

a. Customer Purchase returns
b. Customer Sales returns
c. Purchase returns Customer
d. Sales returns Customer

27. A company buys goods for cash from the private fund of a proprietor. What will the effect
be on assets and liabilities?

Effect on assets Effect on liabilities and capital

a. Reduce bank Reduce creditors

b. Increase cash No effect
c. Increase cash Decrease loan
d. Increase stock Increase capital

28. Identify the incorrect statement:

Effect on

Assets Liabilities

a. Paid creditors by cheque - Bank + Creditors

b. Bought goods on credit + Stock + Creditors
c. Received cash from debtor + Cash, - Debtors
d. Sold goods for cash + Cash, - Stock

29. The process of recording business transactions in chronological order is called:

a. Recording
b. Posting
c. Journalizing
d. Classifying

30. The discount calculated on the list price of the goods is called:

a. Cash discount
b. Rebate
c. Discount
d. Trade discount

31. The owner of the business takes Rs.100 cash and goods costing Rs.200 for his family. The
proper journal entry for this transaction is:

a. Drawings Debit; Cash Credit; Purchases Credit

b. Drawings Debit; Cash Credit; Merchandise Credit
c. Drawings Debit; Cash Credit; Sales Credit
d. Cash Debit; Purchases Debit; Drawings Credit
32. The term used for the discount offered by sellers to encourage prompt payments is known
as:

a. Trade discount
b. Relationship discount
c. Payment discount
d. Cash discount

33. Purchase of machinery for cash:

a. Increases total assets

b. Decreases total assets
c. Keeps total assets unchanged
d. Increases assets and liabilities

34. If total assets increase by Rs.20,000 and total liabilities increase by Rs.12,000, the capital
will:

a. Increase by Rs.32,000
b. Increase by Rs.8,000
c. Decrease by Rs.32,000
d. Decrease by Rs.8,000

35. The accounting equation can be written as:

a. Assets + Profits - Drawings - Liabilities = Closing Capital

b. Assets - Liabilities + Drawings = Opening Capital + Profit
c. Assets - Liabilities + Opening Capital + Drawings = Profit
d. Opening Capital + Profit - Drawings - Liabilities = Assets

36. A business can make a profit and yet have a lower bank balance. Which of the following
might cause this to happen?
a. Lengthening of the period of credit given to customers
b. Lengthening of the period on credit taken from suppliers

37. A sole trader has obtained loan worth Rs.5,000 and receives Rs.1,000 from a credit
customer in respect of its account. Which elements of the accounting equation will change
due to this transaction?

a. Assets and liabilities only

b. Liabilities only
c. Assets only
d. Assets, liabilities, and capital

38. A credit balance on a ledger account indicates:

a. an asset or an expense
b. a liability or an expense
c. an amount owing to the organisation
d. a liability or revenue

39. The receivables account at 1 May had balances of Rs.32,750. During May sales of
Rs.125,000 were made on credit. Receipts from receivables amounted to Rs.122,500 and
there is contra settlement of Rs.550 . Refunds of Rs.1,300 were made to customers.

The closing debit balances at 31 May should be:

a. Rs.35,175
b. Rs.35,675
c. Rs.36,000
d. Rs.34,725

40. A credit balance of Rs.917 brought forward on Ys account in the books of X means that:

a. X owes Y Rs. 917

b. Y owes X Rs. 917
c. X has paid Y Rs.917
d. X is owed Rs.917 by Y

41. In a receivables account, which of the following lists is composed only of items which would
appear on the credit side of the account?
a. Cash received from customers, sales returns, irrecoverable debts written off, contras against amounts
due to suppliers in the accounts payable ledger

b. Sales, cash refunds to customers, irrecoverable debts written off, discounts allowed

c. Cash received from customers, discounts allowed, interest charged on overdue accounts, irrecoverable
debts written off

d. Sales, cash refunds tocustomers, interest charged on overdue accounts, contras against amounts due to
suppliers in the accounts payable ledger.

42. You are given the following information:

Rs.

Receivables at 1 January 2018 40,000

Receivables at 31 December 2018 29,000

Total receipts during 2018 (including cash sales of Rs.15,000) 185,000

Return inwards 5,000

Discount Received 10,000

Discount Allowed 8,000

Cheque from customer dishonored 20,000

What are sales on credit during 2018?

a. Rs. 158,000
b. Rs. 160,000
c. Rs. 152,000
d. Rs. 245,000

43. Salman’s Account payable ledger has a balance of Rs. 195,000 credit as on January 1, 2020.
During the month, following transactions were performed:

Rs.

Credit purchases 1,221,000

Cash purchases 185,000

Cheques issued to credit suppliers

(after receiving discount of Rs. 2,000) 1,148,000

Credit Return outward 18,000

 Cash purchases returns 20,000

What is the amount shown in Account payable ledger as on January 31, 2020?

a. Rs. 158,000
b. Rs. 160,000
c. Rs. 248,000
d. Rs. 245,000

44. At the end of accounting period, an entity incurred net loss of Rs. 15,000 it shall be transferred to:
a. Debit side of Capital account
b. Credit side of Capital account
c. Debit side of profit or loss
d. Credit side of profit or loss

45. Asim received a cheque amounting to Rs. 50,000 from Aliv & Co , which he recorded in the cash
book and submitted in the bank account after 2 days Asim's bank called and told him that Alvi & Co's
bank does not have sufficient funds to credit the amount and Please tell Asim what double entry would
he need to record the returned cheque.

a. (Debit.) Receivable, (Credit.) Cash

b. (Debit.) Receivable, (Credit.) Sale

c. (Debit.) Bank, (Credit.) Receivable

d. (Debit.) Receivable, (Credit.) Bank

46. “Goods purchased on cash” is an example of:
A. Simple Transaction
B. Complex Transaction
C. One Off Transaction
D. Capital Receipt

47. Which account will have a debit balance in case of an increase?

a. Drawings account
b. Revenue account
c. Discount received account
d. Capital account

48. Fast Software (FS) is a software house. FS imported 10 Laptops from Japan for their office @ Rs.
50,000 per Laptop. Payment was made through cheque. How this will be recorded in the books of FS?
Account to be debited Account to be credited
a. Purchases Account Bank Account
b. Laptop Account Bank Account
c. Purchases Account Accounts Payable
d. Laptop Account Accounts Payable

49. Zamil Limited applied to bank for an overdraft limit of Rs. 0.5 million, which was accepted by bank
subsequently? Which of the following statement is correct?
a. Bank will transfer Rs. 0.5 million to bank account of Zamil Limited
b. Bank will pay all the cheques issued by Zamil Limited
c. Bank will pay all the cheques of the amount less than 0.5 million.
d. Bank will pay the cheques issued by Zamil Limited provided that account will not be overdrawn by
more than Rs. 0.5 million
50. Which of the following combination includes only liabilities?
a. Machines, Debtors, Cash
b. Creditors, Bank Overdraft, Bills Payable
c. Bank, Payables, Sales
d. Loan Obtained, Loan Issued, Creditors

51. Which of the following combination represents assets only?

a. Debtors, Purchases, Cash in Hand
b. Building, Cash at Bank, Investments
c. Creditors, Insurance, Tax
d. Bank Overdraft, Equipment, Cash in Hand
52. Which of the following is correct representation of accounting equation?

a. 2 Assets – Liabilities = Capital

b. Liabilities – Assets = Capital
c. Capital – Liabilities = Assets
d. Capital – Assets = Liabilities

53. Which of the following is not non-current asset?

 Inventory
 Land and building
 Motor vehicles
 Equipment
 Furniture

54. Adil sublets part of his premises to Abid, the rental income shall be classified as?
a. Capital Receipt
b. Capital Expenditure
c. Revenue Receipt
d. Revenue Expenditure
55. Sultan traders deals in electric fans. The owner of Sultan traders took one electric fan for his home,
which of the following account will be debited?
a. Fans account
b. Purchases account
c. Sales account
d. Drawings account

56. Debit represents all of the following, except:

a. Increase in asset
b. Decrease in liability
c. Decrease in equity
d. Increase in equity

57. Owner’s annual life insurance premium paid from business bank account will be:
a. Debited to insurance account and Credited to bank account
b. Debited to bank account and Credited to drawings account
c. Debited to bank account and Credited to insurance account
d. Debited to drawings account and Credited to bank account

58. Nasir obtained loan from his friend Yasir for his business, by cheque. What journal entry will be
recorded in the books of Nasir?
a. Cash account Debit, Loan from Yasir account Credit
b. Bank account Debit, Loan from Yasir account Credit
c. Loan from Yasir account Debit, Bank account Credit
d. Loan from Yasir account Debit, Yasir account credit

59. New Look Transport Limited (NLTL) purchased a van from Advanced Motors for Rs. 5 million on 1
February 2022. NLTL paid Rs. 2.2 million on the same date and remaining amount will be paid in two
equal installments on 31 March 2022 and 30 April 2022.
What journal entry will be passed in the books of NLTL on 31 March 2023?
a. Advance Motors account Debit Rs. 1.4 million; Bank account Credit Rs. 1.4 million
b. Van account Debit Rs. 5 million; Bank account Credit Rs. 5 million
c. Advanced Motors Debit Rs. 1.4 million; Van account Credit Rs. 1.4 million
d. Van account Debit Rs. 1.4 million; Advanced Motors Credit 1.4 million
60. A debit entry usually represents decrease in:
a. Assets and expenses
b. Liabilities and income
c. Liabilities and expenses
d. Income and assets

61. The goods are given as charity, which of the following is correct effect?
a. Increase in liability, increase in asset
b. Increase in asset, decrease in asset
c. Increase in income, decrease in asset
d. Decrease in asset, increase in expense

62. Suppliers can use the financial statements to assess that:

a. How much credit they can allow to the entity?
b. How much inventory that can be sold to the entity?
c. How much tax company was paying?
d. In order to measure the demand of its products.

63. Income arising in the course of the ordinary activities of the entity is:
a. Revenue
b. Other income
c. Capital Receipt
d. None of the above

64. Financial accounting is a term that describes:

1) Maintaining a system of accounting records for business transactions and other items of a financial nature
2) Reporting the financial position and financial performance of an entity in a
set of financial statements Which of the following statement/s is/are true?
A. Only statement (1)
B. Only statement (2)
C. Both statements
D. None of the above statement

65. “Owner withdrew cash from business for personal use” is business transaction. Which of the
following accounting concept is related to this statement?
a. Going concern
b. Separate entity concept
c. Prudence concept
d. Matching concept

66. Which of the following transaction is NOT a capital transaction?

a. Purchase of property, plant and equipment
b. Improvement in property, plant and equipment which enhances the profit earning capacity of assets
c. Additions to property, plant and equipment
d. Running and ongoing cost of property, plant and equipment
67. Capital of Bhai Bhai Associates (BBA) was Rs. 250,000. Which of the following is correct representation
in statement of financial position?
Assets Liabilities

7
 A. Rs. 240,000 Rs. 10,000
B. Rs. 50,000 Rs. 300,000
C. Rs. 275,000 Rs. 25,000
D. Rs. 30,000 Rs. 280,000

68. Which of the following statement best describes the concept of Equity?
a. Primary right of owners on the assets of the business
b. Residual right of owners on the assets of the business
c. Secondary right of owners on the assets of the business
d. Equity refers to capital employed into business

69. Total assets of business are Rs. 250,000 and current assets are 25% of non-current assets, if the
liabilities of business are Rs. 100,000 and equity was 6 times more than its current liabilities, the value
of net current assets (current assets minus current liabilities) shall be:
A. Rs. 25,000
B. Rs. 37,500
C. Rs. 50,000
D. Cannot be calculated from above data

70. Which of the following is/are examples of financial business transactions:

 Receipt of loan proceeds
 Cash purchases of raw materials
 Order placed for purchase of machine
 Goods taken by owner for personal use
 Payment of electricity bill of residence by owner from his own pocket

71. Which of the following is/are capital expenditure?

 Repairs of vehicle
 Replacement of engine of vehicle
 Purchase of machine for production use in business
 Annual insurance premium paid on machine
72. Borrowing money for business purposes by owner and withdrawal of 50% amount on same day from
borrowing amount is business transaction. The effect on this business transaction on accounting
equation shall be:
a. Increase in asset and increase in liability
b. Increase in asset; increase in liability and decrease in equity
c. 8 Increase in asset and decrease in liability
d. Increase in asset; decrease in equity and decrease in liability

73. The following statements describe the link between statement of comprehensive income and
statement of financial position in accounting equation:
1) Profit in the statement of comprehensive income affects the statement of financial position by adding
 to the owner’s capital
2) Drawings out of profit shall also affects the statement of financial position, by
reducing the owner’s capital Which of the above statement/s is/are correct?
A. Both statements
B. Only statement (1)
C. Only statement (2)
D. No statement is correct

74. Which of the following is capital expenditure?

a. Salaries paid in cash.
b. Equipment purchased on credit.
c. Inventory purchased on credit.
d. Electricity bill received but not yet paid.

75. The current and non-current assets of Rana Enterprises as at 31 January 2022 were Rs. 400,000 and
Rs. 200,000 whereas liabilities were Rs. 250,000. The equity of Rana Enterprises as at 31 January 2022
will be?
A. Rs. 600,000
B. Rs. 350,000
C. Rs. 150,000
D. Rs. 50,000

76. Mukhtar earned profit of Rs. 325,000 during first quarter of 2022 but he withdrew the following:
1) Cash of Rs. 220,000 but he discharged business liability of Rs. 75,000 as well.
2) Goods of Rs. 100,000 of which 40% goods were distributed as free samples (free sample expense has
been included in the calculation of quarterly profit above).
What will be impact on net assets during first quarter of 2022?
A. Net assets increased by Rs. 120,000
B. Net assets decreased by Rs. 5,000
C. Net assets increased by Rs. 210,000
D. Net assets decreased by Rs. 120,000
77. With reference to accounting equation, state which of the following statement is true?
a. Assets should be equal to liabilities
b. Assets should be equal to equity
c. Assets should be equal to liabilities and equity
d. Assets plus liabilities should be equal to equity

78. Which of the following transaction affects accounting equation as “increase in one asset, decrease in
other asset and decrease in equity”:
a. Cash received of Rs. 25,000 against disposal of asset with carrying value of Rs. 20,000
b. Cash received of Rs. 25,000 against disposal of asset with carrying value of Rs. 30,000
c. Cash of Rs. 25,000 was received from sales of inventory at 15% margin
d. Cash of Rs. 25,000 was received from sales of inventory at 10% markup
79. Which of the following best describes the statement of financial position?
a. Includes all cash inflows and outflows during the year
b. Includes all assets, liabilities and equity
c. Includes all assets and liabilities
d. Includes all assets, liabilities, income and expenses

80. Which of the following statement is correct?

a. Revenue minus cost of sales is net profit
b. Revenue minus cost of sales, add other income is net profit
c. Revenue minus operating expenses is gross profit
d. Revenue minus cost of sales is gross profit

81. Which of the following is NOT an example of non-current asset?

a. Furniture
b. Office building
c. Computer for resale purposes
d. Patents

82. Which of the following is not included in definition of Liability in accordance with conceptual framework?
a. Present obligation of the entity
b. Future obligation of the entity
c. As a result of past event
d. The settlement of which is expected to result in an outflow of resources
83. Following information is extracted from the books of Azad Co for
May 2022: Credit Purchases Invoices Rs. 3
million
Cash Purchases Invoices Rs. 2
million

Credit Notes Received Rs. 0.02 million

What was the total of Purchases Journal

for May 2022?
a. Rs. 4.98 million
b. Rs. 5.00 million
c. Rs. 2.98 million
d. Rs. 3.00 million
84. On 1 March, 2022, Cool Limited obtained a bank loan for Rs. 2 million and deposited into bank current
account. On the same day Cool Limited transferred Rs. 1 million from their bank current account to
bank deposit account.
How these transactions will be recorded by Cool Limited?
a. Dr. Bank account Rs. 2 million; Cr. Bank loan Rs. 1 million and Cr. Deposit account Rs. 2 million
b. Dr. Bank account Rs. 1 million; Dr. Bank loan Rs. 1 million and Cr. Deposit account Rs. 2 million
c. Dr. Bank account Rs. 1 million; Dr. Deposit account Rs. 1 million and Cr. Bank loan account Rs. 2 million
d. Dr. Bank loan account Rs. 2 million and Cr. Bank account Rs. 1 million and Cr.
Deposit account Rs. 1 million

85. Nasir bought 20 mobile phones from “Digital Mobiles” at list price of Rs. 5,000 each, subject to 10%
trade discount. Three mobile phones were faulty so returned by Nasir to Digital Mobiles. What
document would Digital Mobiles issue to Nasir on return of these mobile phones?
a. Credit Note for Rs. 15,000
b. Debit Note for Rs. 15,000
c. Credit Note for Rs. 13,500
d. Debit Note for Rs. 13,500

86. Which of the following is/are not necessarily be considered as book of prime entry in small and
medium size businesses?
 Cash book
 Purchase day book
 Sales day book
 Cash receipt book
87. The following partially completed account is taken from the books of Zaryab
Associates. Nayab Traders (Accounts payable)

Date Description Debit Rs. Credit Rs. Balance Rs.

March 03 Purchases 10,000 10,000

March 05 Purchases Return 2,000 8,000

On 31 March, Nayab traders received a cheque of Rs. 4,500 from Zaryab Associates
after allowing the discount Rs. 500.
Which statement is correct after accounting of above transactions?
a. Zaryab Associates owed Nayab Traders Rs. 3,500
b. Nayab Traders owed Zaryab Associates Rs. 3,500
c. Zaryab Associates owed Nayab Traders Rs. 3,000
d. Nayab Traders owed Zaryab Associates Rs. 3,000

88. Which of the following are NOT correctly stated in relation to books of prime entry?
 All sales shall be recorded in sales day book
 Only credit sales shall be recorded in sales day book
 Only cash sales shall be recorded in sales day book
 All sales shall be recorded in cash book

89. Books of prime entry are prepared to record similar nature of transaction in one book. Which of the
following transaction shall NOT be recorded in General Journal:
a. Discount allowed to customer
b. Purchase of plant on credit terms
c. Discount allowed by suppliers
d. Trade discount allowed to customer

90. Mr. Fahad started his business in current year. He wants to record the year-end adjustments in his
accounting books. Which book he may use to record these adjustments?
a. General journal
b. Cash book
c. Sales day book
d. Purchase day book

91. If in three column cash book, cash paid of Rs. 6,000 was recorded in Discount column whereas
discount amount of Rs. 500 was recorded in cash column. Which of the following statement is correct?
a. Cash balance was overstated by Rs. 5,500 whereas discount received was understated by Rs. 500.
b. Cash balance was overstated by Rs. 5,500 whereas discount received was understated by Rs. 5,500.
c. Cash balance was understated by Rs. 5,500 whereas discount received was overstated by Rs. 500.
d. Cash balance was overstated by Rs. 5,500 whereas discount received was overstated by Rs. 5,500.
92. Which of the following affects the balance of receivables account?
a. Sales invoice
b. Sales order
c. Sales quotation
d. Delivery note
93. Which of the following statement(s) is/are correct?
 Cash paid to suppliers will be credited to creditors account.
 Cheques issued to suppliers will be debited to creditors account.
 Contra settlement with debtors will be credited to the creditors account.
94. A merchant bought 100 bags of cement at retail price of Rs. 200 subject to 5% trade discount. 50%
payment was made on spot and balance was agreed to pay in 3 months-time. However, an offer of 2%
discount was made if payment shall be made in 1 month-time. It is reasonably certain that customer
shall not avail this discount. At the time of transaction, businessman shall recognize revenue after
deducting from retail price:
a. Trade discount of Rs. 1,000
b. Cash discount of Rs. 400
c. Cash discount of Rs. 380
d. Trade discount of Rs. 1,000 and cash discount of Rs. 400
95. Which of the following statement/s is/are correct?
1. Inventory returned to supplier will be recorded in purchases return journal.
2. Furniture purchased for use, returned to supplier will be recorded in general journal.
3. Cash sales to customers will be recorded in sales day book
4. Credit purchase from supplier will be recorded in purchase day book
a. 1,
b. 1,2,
c. 1,2,3
d. 1,2,4
96. Journal entry for issuance of petty cash imprest by cheque is:
a. Petty cash Debit Cash Credit
b. Petty cash Debit Bank Credit
c. Bank Debit Petty cash Credit
d. No journal entry will be passed

97. Shadman Traders maintained petty cash float at Rs. 25,000. Petty expenses were paid during the
month of March 2022, amounting to Rs. 18,210. On 31 March 2022, he decided to decrease the petty
cash float to Rs. 20,000.
What amount is required to maintain the cash float of Rs. 20,000?
A. Rs. 13,210
B. Rs. 8,290
C. Rs. 1,790
D. Rs. 6,790
98. Insaf Limited deals in Wood Doors and it purchased 50 wood doors from Wood World at Rs. 2,000 per door on 10
January, 2022, terms were 5/10, n/20. Five defective doors were returned on 12 January, 2022. Insaf Ltd settled
their account on 15 January, 2022.
What is the amount of net purchases and cash paid to the wood world?
a. Net Purchases Rs. 100,000 and cash Paid Rs. 100,000
b. Net Purchases Rs. 90,000 and Cash Paid Rs. 85,500
c. Net Purchases Rs. 85,500 and Cash Paid Rs. 85,500
d. Net Purchases 100,000 and Cash paid Rs. 85,500

99. Super Stores sold goods to Nova Enterprises for Rs. 50,000, terms 5/10, n/30 on 1 January, 2022. Super Stores
expected that Nova Enterprises shall avail the discount. Nova Enterprises settled their account on 8 January, 2022.
What journal entry will be passed in the books of Super Stores on 8 January 2022?
a. Cash account Debit Rs. 50,000, Nova Ltd Credit Rs. 50,000
b. Cash account Debit Rs. 47,500, Sales Debit Rs. 2,500, Nova Ltd Credit Rs. 50,000.
c. Cash account Debit Rs. 50,000, Nova Ltd Credit Rs. 47,500, Sales Credit Rs. 2,500
d. Cash account Debit Rs. 47,500, Nova Ltd Credit Rs. 47,500

100.Which of the following statement is correct in relation to discount allowed that was not expected at the time of
recording sales?
a. Discount allowed shall be charged as business expense
b. Discount allowed shall reduce the sales amount
c. Discount allowed shall be adjusted against receivables balance
d. Double entry of Discount allowed shall be Dr. Discount allowed and Cr. Receivables

101.Chan Traders sold goods to Veer Traders on credit. It sold goods with list price of Rs. 10,000 subject to @10% trade
discount. Veer traders paid in full after receiving the 5% cash discount. Two weeks later, Veer traders returned half
of the goods purchased.
What amount of sales return will be recorded in the books of Chan
Traders?
A. Rs. 4,275
B. Rs. 4,500
C. Rs. 4,750
D. Rs. 5,000

102.Gulsher Limited purchased goods from Shergul Limited for Rs. 70,000 on 20 March, 2022 subject to term 5/10,
n/20. Shergul Limited expected that Gulsher Limited shall not avail the discount. Gulsher Limited paid their account
in full by cheque on 5 April, 2022.
What journal entry will be passed in the books of Shergul Limited on 5 April, 2022?
a. Bank account Debit Rs. 70,000, Gulsher Limited Credit Rs. 70,000
b. Bank account Debit Rs. 66,500, Sales Debit Rs. 4,500, Gulsher Limited Credit Rs. 70,000.
c. Bank account Debit Rs. 70,000, Gulsher Limited Credit Rs. 66,500, Sales Rs. 4,500
d. Shergul Limited Debit Rs. 70,000, Bank account Credit Rs. 70,000
103.Following information is extracted from the books of Dynasty Limited:
 Goods sold to customers for Rs. 35,000 (60% sales were on credit basis)
 Goods purchased from suppliers for Rs. 30,000 (20% purchases were on cash basis)
 Cash deposited into bank Rs. 8,000
Calculate the closing balance of the cash column of cash book.
A. Rs. 7,000
B. Rs. 19,000
C. Rs. 12,000
D. Zero balance

104.Which of the following shall not be shown in receivables ledger account?

 Credit sales
 Cheques collected from customers
 Cash sales returns
 Cash sales

105.Which of the following document shall be source document to record the purchase?
a. Purchase requisition
b. Purchase invoice
c. Purchase order
d. Goods receipt note

106.A balance of Rs. 820 in the recievables ledger is to be set off against a balance of Rs. 280 in the payables ledger.
Journal entry for contra settlement will be passed with:
a. Rs. 820
b. Rs. 280
c. Rs. 540
D. Rs. 1,100

107.Safety Limited purchased a Machine for its production process on 1 February, 2022. Payment will be made after the
installation. The accountant of Safety Limited recorded this in purchases day book, but still confused about
accounting treatment.
Choose the correct option to help him.
a. He has correctly recorded.
b. Transaction will be recorded in cash book.
c. Transaction will be recorded in general journal
d. Transaction will be recorded in assets journal
108.Mr. Sultan is supervisor in production department of a business. He needed an inventory item but that was not
lying in storehouse.
Which primary document should be prepared to initiate the purchase process and which department
is responsible to issue this document?
a. Purchase order issued by purchase department
b. Purchase requisition issued by store department
c. Purchase requisition issued by purchase department
d. Purchase order issued by store department

109.Which of the following is/are not recorded in payable ledger account?

1. Discount allowed
2. Discount received
3. Credit purchase
4. Cash refunded to customer

a. 1,
b. 1,2,
c. 1,2,3
d. 1,,4

110.Mr. Kashan purchased goods from Mr. Zubair for Rs. 12,000. He paid Rs. 10,000 at the time of purchases and
balance amount will be paid in two month-time. Mr. Kashan should record the transaction of purchases in:
a. Purchases day book Rs. 12,000
b. Purchases day book Rs. 10,000, Cash Book Rs. 2,000
c. Purchases day book Rs. 2,000, Cash book Rs. 10,000
d. Cash book Rs. 10,000, General journal Rs. 2,000

111.Double entry for “cash received from supplier against goods returned after clearance of account” shall be:
a. Dr. Purchase Returns and Cr. Creditors
b. Dr. Creditors and Cr. Purchase Returns
c. Dr. Creditors and Cr. Cash
d. Dr. Cash and Cr. Purchase Returns

112.Armaghan Enterprises sold goods to Najma Traders for Rs. 100,000 subject to term 5/10, n/30 on 1 January, 2022.
Armaghan Enterprises expected that Najma Traders shall avail the discount. Payment was received by Armaghan
Enterprises after discount period.
What journal entry will be passed in the books of Armaghan Enterprises?
a. Cash account Debit Rs. 100,000, Najma Traders Credit Rs. 100,000
b. Cash account Debit Rs. 100,000, Najma Traders Credit Rs. 95,000, Sales account Credit Rs. 5,000
c. Cash account Debit Rs. 95,000, Discount allowed Debit Rs. 5,000, Najma Traders Credit Rs. 100,000.
d. Cash account Debit Rs. 100,000, Najma Traders Credit Rs. 95,000, Discount received Rs. 5,000
113.Total of purchases day book represents:
a. Gross credit purchases
b. Net credit purchases
c. Gross total purchases
d. Net total purchases

114.Which of the following document will store keeper receive on receipt of goods from supplier:
a. Goods dispatched note
b. Goods received note
c. Delivery note
d. Invoice

115.Following documents might be used in system designed to account for sales:

1. Sales Quotation
2. Purchase Order
3. Goods Dispatch Note
4. Credit Note Received
5. Sales Invoice

a. 1,
b. 1,2,
c. 1,2,3
d. 1,3,5

116.Mr. Javed received a cheque from a customer for Rs. 10,000 and deposited it into the bank. Bank returned the
cheque due to insufficient funds.
In which books of prime entry, Mr. Javed will record this dishonour cheque?
a. Sales day book
b. Sales return day book
c. Cash book
d. General journal

117.Naseem is customer and supplier of business and he buys and sells goods from/to our business. As per terms of
agreement, the account balances of both accounts shall be cancelled at month-end and remaining balance shall be
paid or received on 5th of month following the month of transaction. As at June 30, 2022 Naseem balance in
receivables ledger showed Rs. 25,500 and in payables ledger Rs. 22,000.
The double entry made at June 30, 2022 shall be:
a. Receivables Dr. 22,000 and Payables Cr. 22,000
b. Receivables Dr. 25,500 and Payables Cr. 25,500
c. Payables Dr. 22,000 and Receivables Cr. 22,000
d. Payables Dr. 25,500 and Receivables Cr. 25,500
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN
118.Which of the following is not a source document?
a. Sales invoice
b. Purchase order
c. Credit note issued
d. Cheque

119.Columns in three column cash book on payment side shall be:

a. Cash, Bank and Discount Allowed
b. Cash, Bank and Discount Received
c. Cash, Discount Allowed and Discount Received
d. Bank, Discount Allowed and Discount Received

120.Which of the following shall be recorded in petty cash book?

a. Cash received from customer
b. Cash paid to supplier
c. Cash purchase
d. Travelling expense

121.Which of the following is NOT a terminology used in maintaining petty cash book system?
a. Imprest System
b. Reimbursement of expenses
c. Cash float
d. Cash budgets

122.Which of the following is/are source document/s for journal entry?

1. Quotation
2. Purchase order
3. Goods dispatched note
4. Statement
A. 1 and 3
B. 2 and 4
C. None of the above
D. All of the above
123.The petty cash balance as at 3 January 2022 was Rs. 2,350 and following transactions were incurred on
4 January 2022.
1. Purchase of tea for office Rs. 250
2. Paid for repairs of water dispenser Rs. 400
3. Paid for travelling bill to peon Rs. 100
The cashier sent all vouchers relating to week ended 4 January 2022 for reimbursement amounting
to Rs. 3,400. The reimbursement was made immediately.
What shall be amount of
petty cash float? A. Rs.
1,600
B. Rs. 3,400
C. Rs. 5,000
D. Rs. 5,750

124.Which of the following best describes the imprest system of operating petty cash?
a. Expenses incurred on weekly basis shall not exceed the set limit
b. The exact amount of expenditure is reimbursed at intervals to maintain fixed float
c. Authorization of all vouchers must not be necessary
d. Regular equal amounts of cash are transferred into petty cash at intervals

125.Which of the following shall cause the debit balance of payable ledger?
a. Goods were returned to supplier after clearing the invoice
b. Payment made to supplier was recorded in short
c. Contra settlement with receivable ledger was omitted
d. Discount received was not entered in the payable ledger

126.Which of the following best describes the purpose of sales invoice?

a. Issued to customer as request for payment on due date
b. Issued as request to receive stock
c. Issued as details of transactions made during specific month
d. Issued to customer as notification of payment

127. At any point of time, sum of imprest must be equal to:

a. Petty cash balance + Amount on invoices - Amount on notes
b. Petty cash balance + Amount on invoices + Amount on notes
c. Petty cash balance - Amount on invoices + Amount on notes
d. Petty cash balance - Amount on invoices - Amount on notes

128.Which of the following book is used to record discount received?

a. Cash receipt book
b. Petty cash book
c. Cash payment book
d. Purchase day book

129.“The purchase and related liability are usually recorded at full cost of the goods.” This is in line with:
a. Separate entity concept
b. Accrual basis
c. Going concern basis
d. Prudence concept

130.The journal entry of settlement discount shall be made in which of the following book of prime entry:
a. Cash payment book
b. General journal
c. Purchases journal and sales journal
d. Trial balance

131.Receipt vouchers are prepared

1. To record the cash receipts
2. To record the cheque receipts
3. To record the collection in bank accounts
4. To record issue of cheque to supplier

a. 1,
b. 1,2,
c. 1,2,4
d. 1,2,3

132.Which of the following statement is NOT true in the context of ‘Chart of Accounts’?
a. Unique code and heading for each account head
b. The structure and heading in the list aims to result in consistent posting of transactions
c. The aim of the chart of accounts is to ensure that all transactions are recognized in accordance
with the requirement of business
d. The aim of the chart of accounts is to calculate profit or loss of business

133.Individual credit Sales invoice are recorded in

a. Sales day book and posted in receivables ledger
b. Cash book and posted in receivables ledger
c. Cash book and posted in general ledger
d. Sales day book and posted in general ledger

134.Which of the following statement/s is/are true with reference to duality concept?
1) There must be only two heads of account in one transaction one should be debit and other is credit
2) There might be more than one debit or credit in one transaction but sum of debit must be equal to
sum of credit.
A. Statement (1) only
B. Statement (2) only
C. Both Statements
D. None of above Statements

135.Which of the following statement is NOT correct with reference to double entry bookkeeping?
a. Recording is the way of entering transactions in Journal or other books of prime entry
b. Process of transferring transaction from Journal or other books of prime entry to ledger is posting
c. The totaling process of ledgers is termed as extraction
d. Extraction is process of moving balances from ledgers to trial balance

136.Following information is extracted from the books of Zamin Stores for the month of January 2022:
1) Goods sold on credit to Abid for Rs. 25,000
2) Goods sold on credit to Sajid for Rs. 15,000
3) Goods sold to Nadir for cash for Rs. 20,000
Goods bought from Javed on credit for Rs. 15,000.

What is the balance of list of customers extracted from receivable ledgers, after
incorporating the above transaction?
A. Rs. 75,000
B. Rs. 60,000
C. Rs. 55,000
D. Rs. 40,000

137.Which of the following are types of ledgers:

 General ledger
 Receivables ledger
 Memorandum ledger
 Payables ledger

138.“Goods returned by customer at Rs. 2,000 previously sold at 20% markup”. The double entry shall be:
a. Dr. Sales returns and Cr. Accounts receivables by Rs. 1,600
b. Dr. Sales returns and Cr. Accounts receivables by Rs. 2,000
c. Dr. Accounts payable and Cr. Purchase returns by Rs. 1,600
d. Dr. Accounts payable and Cr. Purchase returns by Rs. 2,000

139.Which of the following statement/s is/are correct in relation to ‘chart of accounts’?

 Each general ledger is identified by a unique code and heading.
 The chart of accounts can be changed at any time by accounting personnel without specifc writeen
approval of head of department.
 The aim of the chart is to ensure that all transactions are recognised in accordance with the
requirements of the business.
 Each major heading in the financial statements might be given a range of codes from which codes
can be selected for individual general ledger accounts

140.3D Limited recorded the following transactions in their books of prime entry:
1) Goods purchased from Nasir on credit for Rs. 30,000.
2) Goods purchased from Yasir on credit for Rs. 20,000.
3) Furniture purchased for cash Rs. 40,000
4) Goods purchased by cheque, from Sabir for Rs. 10,000.
What is the closing balance of list of suppliers taken from payables ledger, after
posting of the above transactions?
A. Rs. 60,000
B. Rs. 50,000
C. Rs. 90,000
D. Rs. 100,000
141.The statement including balances of ledgers and prepared normally at end of each month is termed as:
a. General ledger
b. Statement of financial position
c. Trial balance
d. Bank reconciliation statement

142.Which of the following head of account balance shall be shown on credit side of trial balance?
a. Carriage Inwards
b. Return Inwards
c. Return outwards
d. Carriage outwards

143.Discount allowed of Rs. 1,500 was recorded on the credit side and discount received of Rs. 1,800 was
recorded on debit side of trial balance.
The difference in trial balance was?
a. No difference
b. Rs. 300
c. Rs. 600
D. Rs. 3,300

144.Which of the following accounts are closed at the end of the financial year to statement of
comprehensive income?
 Assets
 Expenses
 Liabilities
 Income
 Capital

145.Which of the following are carried forward to the next year, at the end of financial year?
 Assets
 Expenses
 Liabilities
 Income
 Capital
Drawings

146.Zohaib purchased goods on credit for Rs. 50,000 from Shadab on 21 January, 2022, on terms 2/10,
n/30. He settled his account by paying cheque on 3 February, 2022 and purchased further goods on
credit for Rs. 20,000 on 20 February, 2022 on same terms.
What were the opening and closing balances of Shadab account in payables ledger for
February 2022?

Opening Balance Closing Balance

A. Rs. 49,000 Rs. 20,000
B. Rs. 50,000 Rs. 20,000
C. Rs. 50,000 Rs. 19,600
D. Rs. 49,000 Rs. 19,600

147.The closing entry of Drawings of Rs. 18,000 at year-end will be

a. Dr. Drawings Rs. 18,000; and Cr. Capital Rs. 18,000
b. Dr. Drawings Rs. 18,000; and Cr. Profit & Loss Rs. 18,000
c. Dr. Capital Rs. 18,000; and Cr. Drawings Rs. 18,000
d. No entry is required

148.Closing entry for expenses at the end of financial year shall be:
a. Expenses account Debit, Statement of comprehensive income
b. Expenses account Debit, Statement of financial position
c. Statement of profit or loss Debit, Expense account Credit
d. Expense account Debit, Statement of profit or loss Credit

149.Which of the following shall provide framework for entity for preparation of financial statements?
a. Trial Balance
b. Ledgers
c. General Journal
d. Books of prime entry

150.Which of the following accounts must be presented on the debit column of a trial balance?
 Sales
 Sales Return
 Purchases
 Purchases Return
 Discount Allowed
 Discount Received
151.Following data is extracted from the books of Zakir Traders as at 30 September 2022:

Accounts Amount Rs.

Non-Current Assets 180,000
Current Asset 120,000
Non-Current Liabilities 70,000
Current Liabilities 80,000
Drawings 50,000
Net Profit 30,000
Capital 170,000

Which of the following statement is true?

a. The total of debit and credit side of trial balance is Rs. 300,000
b. The total of debit side of trial balance is Rs. 400,000 and credit side total is Rs. 300,000
c. The total of debit side of trial balance is Rs. 300,000 and credit side total is Rs. 400,000
d. The total of debit and credit side of trial balance is Rs. 350,000

152.Which of the following statement/s is/are correct in relation to balance of ledger:

 Balance b/d shown on debit side of any ledger represents credit balance
 Balance b/d shown on debit side of any ledger represents debit balance
 Balance c/d shown on debit side of any ledger represents debit balance
 Balance c/d shown on debit side of any ledger represents credit balance

153.An accounting personnel may make change in chart of accounts with the permission of:
a. Head of finance
b. In charge of IT Department
c. Head of internal audit department
d. External Auditor

154.Gulshan Flowers (GF) deals in flowers and bouquet. Junior accountant of GF posted the following
transactions in the account of a customer :

Naveed Account
Date Description LF Debit Rs. Credit Rs. Balance
March 1 Sales 50,000
March 5 Discount allowed 5,000
March 5 Cash received 42,000
March 7 Sales return 5,000

What will be the balance of Naveed’s account after the correction of posting, if any?
a. Rs. 2,000 Debit
b. Rs. 2,000 Credit
c. Rs. 18,000 Debit
d. Rs. 7,000 Credit

155.Following data is taken from the books of Saman:

Rs.

Total sales (including 20% cash sales) 800,000

Cash received from credit customers 297,000

(After allowing 10% settlement discount, sales above was recorded assuming that customers might not avail
settlement discount)

Credit sales return 20,000

What will be the closing balance

of receivables? A. Rs. 290,000
 B. Rs. 330,000
C. Rs. 356,000
D. Rs. 396,000

156.Following data is taken from the books of Mr. Sultan:

Rs.
Total Purchases 900,000
(including Cash purchases which are 50% of credit purchase)
Cash paid to suppliers 300,000
Cheques issued to suppliers 100,000
Discount received 30,000
Credit purchases return 50,000

What will be the closing balance of payables?

A. Rs. 200,000
B. Rs. 150,000
C. Rs. 120,000
D. Rs. 40,000

157.Accounts officer of Maria & Maria (M&M) posted the journal entries into one of its supplier Mr.
Sajid’s account as:

Sajid Account
Date Description LF Debit Rs. Credit Rs. Balance
March 1 Purchases 10,000
March 2 Purchases return 2,000
March 3 Discount received 1,000
March 3 Cheque issued 5,000
What will be the balance of sajid’s account after the correction of posting, if any?
a. Rs. 16,000 Debit
b. Rs. 4,000 Debit
c. Rs. 2,000 Debit
d. Rs. 2,000 Credit

158.Which of the following account shall be balanced off rather than closed off?
a. Furniture
b. Salaries
c. Sales
d. Discount allowed

159.The two objectives of trial balance are:

 To check the arithmetic accuracy of accounts
 To provide framework for preparation of financial statements
 To ensure that financial statements are free of errors and biasness

160.Iqra runs a school system. She had cash in hand Rs. 40,000 at the start of January 2022. During
January 2022 following transactions took place:
1) She purchased a laptop for Rs. 50,000, for office use. She paid Rs. 20,000 in cash and balance
amount will be paid after two months.
2) Student fee received in cash for Rs. 60,000.
3) Rent of building paid in cash for Rs. 20,000.
4) Salaries for the month of December 2022 were paid in cash Rs. 10,000.
5) Electricity bill for the month of January 2022 was received for Rs. 15,000 but not paid till the end
of the month.
What is the balance cash in hand at the end of
January 2022? A. Rs. 60,000
B. Rs. 50,000
C. Rs. 45,000
D. Rs. 35,000
161.Khadim Hussain started business of furniture and after one month he hired his daughter to look after
the accounts of business at Rs. 20,000 per month. The double-entry for payment of remuneration to
his daughter shall be:
a. Dr. Drawings and Cr. Salaries
b. Dr. Salaries and Cr. Capital
c. Dr. Drawings and Cr. Cash
d. Dr. Salaries and Cr. Cash

162.Posting is a process of transferring the transactions from:

a. Books of prime entry to ledgers
b. Ledger to another ledger
c. Ledger to trial balance
d. Books of prime entry to trial balance

163.Bank account of Jameel & Co shows a total on debit side Rs. 12,450 and total on credit side Rs.
14,250. It will be presented in statement of financial position as:
a. Cash at bank Rs. 12,450 as current asset and Bank overdraft Rs. 14,250 as current liability
b. Cash at bank Rs. 12,450 as current asset and Bank overdraft Rs. 14,250 as non-current liability
c. Bank overdraft of Rs. 1,800 as current liability
d. Cash at bank of Rs. 1,800 as current asset

164.Which of the following statements is/are correct?

 T account format of ledgers are balanced after each transaction.
 Running balance account format of ledgers are balanced periodically.
 T account format of ledgers are balanced periodically.
 Running balance account format of ledgers are balanced after each transaction.

165.Which of the following items would NOT appear on same side of trial balance?
a. Carriage inwards and return inwards
b. Carriage outwards and return outwards
c. Drawings and return inwards
d. Capital and rental income

166.Journal entry to record payment of rent by cheque for the month of June 2022 shall be:
a. Dr. Rent Expense and Cr. Cash
b. Dr. Rent Expense and Cr. Bank
c. Dr. Cash and Cr. Rent Expense
Dr. Bank and Cr. Rent Expense

167.Which of the following balances shown on both sides of trial balance are correct?
Debit Balances Credit Balances
a. Furniture, Cash, Accrued expense Capital, bank loan
b. Salaries, Furniture, Cash Bank loan, accrued income
c. Furniture, Salaries, Cash, Accrued income Capital, bank loan, accrued expense
d. Salaries, Drawings, Loan to friend Accrued income, Bank loan

168.Opening balance of Bank account was Rs. 6,200 overdrawn. During the month following transactions
were taken place:
Cheque of Rs. 9,300 was received
from customer. Cheque of Rs 2,400
was paid to supplier.
Cheque of Rs. 2,300 deposited into bank was
dishonoured. Cash is withdrawn from bank
Rs. 500.
Closing balance of bank account shall be:
a. Rs. 2,100 favourable
b. Rs. 2,100 overdrawn
c. Rs. 2,500 favourable
d. Rs. 2,500 overdrawn

169.Mr. Rashid transferred computer from business to home for his kid. The computer was bought one
year ago at Rs. 25,000 but its current market value is equal to its carrying value of Rs. 16,000.
What will be double entry for this transaction?
a. Dr. Capital Rs. 25,000 and Cr. Computer Rs. 25,000
b. Dr. Drawings Rs. 25,000 and Cr. Computer Rs. 25,000
c. Dr. Capital Rs. 16,000 and Cr. Computer Rs. 16,000
d. Dr. Drawings Rs. 16,000 and Cr. Computer Rs. 16,000

170.Double entry for transaction “cash received of Rs. 12,300 from customer against full settlement of
invoice of Rs. 12,500” shall be:
a. Dr. Cash Rs. 12,300; Sales Rs. 200 and Cr. Accounts receivables Rs. 12,500
b. Dr. Cash Rs. 12,300; Discount Received Rs. 200 and Cr. Accounts receivables Rs. 12,500
c. Dr. Cash Rs. 12,300; Sales Rs. 200 and Cr. Accounts payables Rs. 12,500
d. Dr. Cash Rs. 12,300; Discount received Rs. 200 and Cr. Accounts payables Rs. 12,500

171.In “Balance c/d”, c/d stands for and represents:

a. Carried down; opening balance
b. Carried down; closing balance
c. Closing debit; opening balance
d. Closing debt; closing balance
172.Nominal ledger is alternative name of:
a. Receivables ledger
b. Payables ledger
c. General ledger
d. Memorandum ledger

173.Loan taken from friend Rs. 20,000 for 6 months subject to 10% interest thereon. The correct double
entry at time time of obtaining loan shall be:
a. Dr. Cash Rs. 20,000; Interest Rs. 2,000 and Cr. Loan Rs. 22,000
b. Dr. Cash Rs. 20,000; Interest Rs. 2,000 and Cr. Loan Rs. 20,000 and Interest payable Rs. 2,000
c. Dr. Cash Rs. 20,000 and Cr. Loan Rs. 18,000 and interest payable Rs. 2,000
d. Dr. Cash Rs. 20,000 and Cr. Loan Rs. 20,000

174.At year-end, closing entry to close the sales account shall be:
a. Sales account Debit, statement of financial position Credit
b. Sales account Debit, Statement of comprehensive income Credit
c. Statement of financial position Debit, Sales account Credit
d. Statement of comprehensive income Debit, Sales Credit

175.Posting for total of discount received column of cash book is made in the following:
a. Receivables ledger
b. Payables ledger
c. Trial balance
d. General ledger

176.The process of extracting balances can be better explained as:

a. Transferring balances from ledgers to trial balance
b. Transferring balances from journal to ledgers
c. Transferring balances from journal to trial balance
d. Transferring balances from transactions to trial balance

177.Chart of accounts is basically the list of accounts created by the business. Which of the following
statement/s is/are correct.
 Each general ledger account is identified by a unique code and heading.
 A company can prepare its own chart of accounts as per its own requirements.
 Generic chart of account issued by Government must be used by each businessman.

178.Total of debit and credit column of a trial balance should be equal. It indicates that there is no.
a. Omission
b. Fraud
c. Embezzlement
d. Arithmetical error

179.Closing entry for expense at the end of financial year is:

a. Debit Expenses account; Credit statement of comprehensive income
b. Debit Expenses account ; Credit statement of financial position
c. Debit statement of comprehensive income; Credit Expense account
d. Debit statement of financial position; Credit Expense account

180.Credit Sales invoice shall be recorded in:

a. Sales day book and posted in receivables ledger
b. Cash book and posted in receivables ledger
c. Cash book and posted in general ledger
d. Sales day book and posted in general ledger

181.Closing journal entry to transfer the net loss for the year is:
a. Statement of comprehensive income Debit Capital account Credit
b. Capital account Debit Statement of comprehensive income Credit
c. Statement of financial position Debit Capital account Credit
d. Net loss Debit Statement of comprehensive income Credit

182.Which of the following accounting concept allows us to record allowance for doubtful debts, even
the loss has not actually occurred?
a. Prudence
b. Substance over form
c. Going concern
d. Accruals

183.Which of the following net amount is charged to profit and loss account during the year.
a. Bad debts written off + bad debts to be written off + Decrease in allowance – bad debts recovered
b. Bad debts written off + bad debts to be written off + increase in allowance – bad debts recovered
c. Bad debts written off + bad debts to be written off + Decrease in allowance + bad debts recovered
d. Bad debts written off + bad debts to be written off - Increase in allowance – bad debts recovered

184.Journal entry to record decrease in allowance during the year was:

a. Dr. Bad debt expense Cr. Allowance for doubtful debts
b. Dr. Accounts receivables Cr. Allowance for doubtful debts
c. Dr. Allowance for doubtful debts Cr. Bad debt expense
d. Dr. Allowance for doubtful debts Cr. Accounts receivables
185.The accountant has made entry for increase in allowance during the year as “debit allowance for
doubtful debts and credit bad debts expense by Rs. 12,500”.
What was the impact of error?
a. Profit was understated by Rs. 12,500
b. Profit was understated by Rs. 25,000
c. Profit was overstated by Rs. 12,500
d. Profit was overstated by Rs. 25,000

186.Mr. Khan is our customer and supplier as well. The amount due to Mr. Khan was Rs. 25,800 and
amount due from Mr. Khan was Rs. 29,600.
Which of following entry is correct on account of above contra settlement?
a. Dr. Receivables Rs. 3,800 and Cr. Payables Rs. 3,800
b. Dr. Payables Rs. 3,800 and Cr. Receivables Rs. 3,800
c. Dr. Payables Rs. 29,600 and Cr. Receivables Rs. 29,600
d. Dr. Payables Rs. 25,800 and Cr. Receivables Rs. 25,800
187.Which of the following statement/s is/are correct?
 An example of doubtful debts includes customer delaying the payment because of facing
financial difficulties.
 The entry to record doubtful debt is Dr. Bad debts expense and Cr. Accounts receivables
 When an allowance is created against doubtful debts, it is recognised as expense.
 The journal entry of increase in allowance is Dr. Allowance for doubtful debts and Cr. bad debts expense

188.Which of the following statement is correct in relation to direct debit and standing order issued to
bank by a business?
A. Standing order is instruction to make payment whereas direct debit is instruction to collect amount
B. Standing order and direct debit are both instruction to bank for payment and there is no difference
C. Standing order allows for payment for same amount on payment date whereas direct debit
allows for payment for different amount on payment date
D. Standing order allows for payment for different amount on payment date whereas direct debit
allows for payment for same amount on payment date

189.Cheques given to supplier on 20th April 2022 for Rs. 25,000 but supplier has not yet deposited the
cheque into his bank for clearance. The difference in Bank statement and cash book balances will arise
at 30th April 2022, caused by:
a. Dishonoured cheque
b. Unpresented cheque
c. Uncredited cheque
d. Outdated cheque

190.Which of the following item is NOT required to be adjusted in revised cash book?
a. Bank charges shown in bank statement
b. A bank transfer shown in bank statement by one of customer
c. Amount debited in bank statement as per standing instructions
d. Amount debited in bank statement against cheque serial number not related to us

191.Which of the following statements are correct in relation to balance of cash book and bank statement?
1. Favorable balance of cash book shall represent credit balance
2. Favorable balance of bank statement represents credit balance
3. Unfavorable balance of bank statement represents credit balance
4. Unfavorable balance of cash book represents credit balance

a. 1
b. 2.
c. 1,4
d. 1,3
192.Which of the following statement(s) is/are correct about bank reconciliation?
(1) Uncredited amount shall always be deducted from bank reconciliation statement
(2) Expired cheque should be reversed in adjusted cash book
A. Statement (1) only
B. Statement (2) only
C. Both statements
D. None of above Statement

193.Which of the following is NOT shown in bank reconciliation statement?

a. Bank charges
b. Outstanding cheques
c. Outstanding lodgments
d. Bank Error

194.Which of the following statements about bank reconciliations are correct?

1. Bank charges of Rs. 100 shown in bank statement should be credited in adjusted cash book
2. Unpresented cheques of Rs. 3,000 should be added in cash book balance
3. Bank error should be shown in bank reconciliation statement
4. An overdrawn balance in bank statement represents credit balance
A. 1,2,
B. 1,3
C. 1,2,3
D. 2,3,4
195.Which of the following best describes timing difference in bank reconciliation statement?
1. Outstanding cheques
2. Standing order payment not entered in cash book
3. Outstanding lodgment
4. Dishonour cheque not entered in cash book

A. 1,2,
B. 2,3
C. 1,3
196.Which TWO of the following error/omission resulted overstatement of overdraft balance of cash book?
1. Bank charges recorded on debit side of cash book
2. A customer directly deposited amount in our bank account, and not entered in cash book
3. Receipt was recorded on payment side
4. Payment was recorded on receipt side

A. 1,2
B. 1,2,3,
C. 2,3
197.Correction of the following would not result in reduction of favourable balance of cash book, after adjustment?
a. Bank charges recorded twice in cash book
b. Bank charges were not recorded in cash book
c. Standing order payment was omitted to be recorded in cash book
d. Standing order payment was recorded on wrong side of cash book
198.Which of the following shall NOT require adjustment in cash book?
1. Error or omission by bank
2. Error or omission in cash book
3. Unpresented cheques
4. Uncredited cheques

A. 1,2,
B. 1,3,4,
C. 1,3,
D. 1,2,3
199.Which of the following shall require reversal of previously recorded entry in cash book?
a. Unpresented cheques
b. Uncredited cheques
c. Dishonour cheques
d. All of the above

200.The balances of cash book and bank statement were not reconciled as at December 31, 2022. On
investigation, following matters were highlighted:
1. Bank charges of Rs. 1,500 were recorded in cash book as Rs. 5,100.
2. Direct credit of Rs. 1,900 after 10% tax deduction was not recorded in cash book.
3. Unpresented cheques of Rs. 12,400 and uncredited cheques of Rs. 15,200 correctly
identified by accountant.
The difference between cash book and bank statement balance as at December
31, 2022 was:

A. Rs. 8,400
B. Rs. 8,300
C. Rs. 2,800
D. Rs. 2,700

201.Balance of cash book of Rizwan Traders as at 30 November 2022 was Rs. 118,200, which was not
reconciled with balance of bank statement. The following differences were identified:
1. Cheque of Rs.14,300 was issued to supplier, but recorded as Rs. 13,400 in cash book.
2. A page total of payment side of the bank book amounting to Rs. 9,000 was carried forward to the
next page as Rs. 8,000.
3. A cheque of Rs. 4,000 issued to a supplier bearing an incorrect payee's name. The cheque was
 returned and recorded on 5 January 2023.
4. Bank charges of Rs. 1,250 were erroneously charged to our account.
The corrected cash book balance as at 30 November 2022 shall be:
A. Rs. 122,100
B. Rs. 122,300
C. Rs. 121,550
D. Rs. 120,300

202.Which of the following is NOT the reason for difference in cash book and bank statement balances?
a. Cheque of Rs. 15,000 returned from customer, but not recorded in cash book.
b. Bank charges of Rs. 2,500 were debited in bank statement of which Rs.
1,750 were not related to our account. Bank charges of Rs. 2,500 were recorded in cash book.
c. Payment of Rs. 12,500 was recorded on debit side of cash book.
d. Standing order payment of Rs. 12,000 was omitted in cash book.

203.Balance of cash book as at 31 October 2022 was Rs. 19,500 Dr. whereas balance of bank
statement was Rs. 10,500 overdrawn. Which of the following will cause the difference of both
balances?
a. Cheque of Rs. 9,000 was issued but not presented till 31 October 2022.
b. Cheque of Rs. 30,000 was issued but not presented till 31 October 2022.
c. Cheque of Rs. 9,000 was deposited into bank but not credited till 31 October 2022.
d. Cheque of Rs. 30,000 was deposited into bank but not credited till 31 October 2022.
204.Balance of bank statement of JAM Enterprises as at 30 November 2022 was Rs. 125,000 overdrawn.
Following discrepancies were highlighted by accountant of JAM Enterprises.
1. A cheque of Rs. 3,000 drawn in favour of a supplier was recorded in the bank statement as Rs. 30,000.
2. Dividend of Rs. 54,000 after 10% withholding tax deduction was collected by the bank and credited in
bank statement but recorded in cash book at gross amount.
3. The receipt side of the bank book was overcasted by Rs. 9,000.
4. Cheques of Rs. 68,000 issued to suppliers but only Cheques of Rs. 44,000 were presented to the bank
till 30 November 2022.
The unadjusted balance of cash book of JAM Enterprises as at 30
November 2022 was:

A. Rs. 107,000 Dr.

B. Rs. 107,000 Cr.
C. Rs. 113,000 Dr.
D. Rs. 113,000 Cr.
205. The following information relates to a bank reconciliation:
1. The bank balance in the cash book before adjustments was Rs. 14,730 overdrawn.
2. Bank charges of Rs. 1,750 were recorded in cash column of cash book in three column cash book.
3. Bank has credited Rs. 4,200 to our account which was related to another account.
4. Deposit of Rs. 17,140 was recorded in bank book as Rs. 1,740.
5. Cheques of Rs. 22,200 were issued but cheques of Rs. 14,200 were not presented to bank for payment.
The balance of bank statement was:
A. Rs. 17,320 overdrawn
B. Rs. 17,320 balance at bank
C. Rs. 21,400 overdrawn
D. Rs. 21,400 balance at bank