ACCOUNTING

Journal Entries:

Q1.

(i) Rs.6000 was stolen from the safe of the firm.

(ii) Received an order from Kapil for the supply of goods worth Rs. 240000. In this
connection we received Rs. 120000 as Advance.
(iii)Goods sold for cash Rs. 60000. Also received 7 % sales tax.
(iv) Given as Charity: Cash Rs. 6000, Goods Rs. 18000 & Sofa-set worth Rs. 24000.
(v) Goods worth Rs. 4200 stolen by an employee.
(vi) Purchase two House worth Rs. 110000 for the business.
(vii) Goods given to proprietor daughter Rs. 1800.
(viii) Goods worth Rs. 6000 Destroyed by fire.
(ix) Goods worth Rs. 12000 distributed as sample.
(x) Bricks worth Rs. 600000 purchased for the construction of building.
(xi) Received cash from Rita against bad debt Rs. 22000 written off last year, Rs. 19800.
(xii) Place an order with Raj & Co. For the supply of goods costing Rs. 100000. In the
connection, we paid 10 % advance.

Date Particular L/F Dr. Cr.

Amount Amount
1 Loss by thief a/c..........................................Dr. 6,000
To cash a/c 6,000
(Being, Cash was stolen from the safe of the firm)
2 Cash a/c......................................................Dr. 1,20,000
To Kapil a/c
(Being, Cash received in Advance for the supply of goods) 1,20,000
3
Cash a/c........................................................Dr. 64,200
To Sales a/c
(Being, Goods sold for cash & received in sales tax) 64,200
4 Charity Fond a/c..........................................Dr. 48,000
To Cash a/c
6,000
To Purchased Goods a/c
18,000
To Furniture a/c
24,000
(Being, Give charity fond Cash, Goods & Furniture)
5 Loss by Employee a/c.............................Dr. 4,200
To Purchase a/c
(Being, Goods stolen by an Employee) 4,200
6 Purchase a/c...........................................Dr. 1,10,000
To Cash a/c
(Being, Purchase two House for the business use) 1,10,000
7 Drawing a/c...........................................Dr.
To Purchase a/c 1,800
1,800
(Being, Goods given to proprietor daughter)
8 Loss Due to Fire a/c............................Dr. 6,000
To Purchase a/c 6,000
(Beings,
9 Sample Expense a/c..............................Dr. 12,000
To Purchase a/c 12,000
 (Beings, 6,00,000
6,00,000
10 Bricks a/c..............................................Dr.
To Cash a/c 19,800
(Being, 19,800
11 Bad Debt Recovered a/c..........................Dr. 10,000
To Rita a/c 10,000
(Being, Bad Debt recovered from Rita)
12 Raj & Co. a/c...........................................Dr.
To Cash a/c
(Beings,
Total........................................................................................ 10,02,000 10,02,000

Q2.

1. Started business with Cash Rs.2, 00,000

2. Purchased Goods from Amit Suppliers on credit of Rs.1, 50,000.
3. Deposit Cash in to Bank Rs. 25,000
4. Sold goods to Dynamic Traders Pvt. Ltd. of Rs. 1, 30,000
5. Received a cheque of Rs. 1, 27,000 from Dynamic Traders Pvt. Ltd.
6. Issued a cheque of Rs. 1, 00,000 as a partial payment to Amit Suppliers.
Date Particular L/F Dr. Cr.
Amount Amount
1

2 Mr. R a/c………………………………………..Dr. 54000

To Sales a/c 54000
(Being,
3 Mr. H a/c………………………………………..Dr. 30000
To Sales a/c
(Being, 30000
4 Purchased a/c…………………………………Dr.
To Mr. R a/c 25000
(Being, 25000
4 Mr. H a/c………………………………………..Dr.
To Sales a/c 40000
(Being,
40000
5 Mr. R a/c……………………………………….Dr.
To Purchase Return a/c
(Being, 5400
6 Mr. H a/c……………………………………..Dr. 5400
To Sales a/c
(Being, 10000
7 Cash a/c…………………………………..…Dr. 10000
Bank a/c…………………….…………….…..Dr.
Discount a/c………………..………….…….Dr.
24775
To Mr. H a/c
20000
(Being,
225
8 Mr. R a/c………………………………………Dr.
To Bank a/c 45000
To Discount Received a/c
(Being, 78600
9 Bank a/c……………………………………..Dr.
Bad Debt a/c……………………………….Dr. 77600
To Mr. H a/c 1000
(Being,
 5000
40000
45000
Total…………………………………………………………………….

Q3.
April-2 Ram started his business with Cash Rs. 70000.
April-3 Deposited in to Bank Rs. 50000.
April-4 Purchased goods for cash from Mr. X Rs. 5000.
April-5 Bought goods on credit from Mr. Y Rs. 6000.
April-6 Returned goods to Mr. Y Rs. 1000.
April 10 Sold goods for cash to Mr. A Rs. 6000.
April-15 Sold goods to Mr. B Rs. 6000.
April-16 Mr. B returns goods Rs. 1000.
April-17 Drew from Bank for personal use Rs. 5000.
April-25 Paid to Mr. Y in full Settlement by Cheque Rs. 4800.
April-26 Received a cheque from Mr. B in full settlement Rs. 4900.
April-27 Draw cash from bank for office use Rs. 10000.
April-30 Draw cash for personal purpose Rs. 5000.
April-30 Paid salary to staff Rs. 5000.
April-30 Issued a cheque for Rs. 3000 in favour of Shri Devi a landlady towards rent for
April.
April-30 Withdraw goods for personal use Rs. 1000.

Date Particular L/F Dr. Cr.

Amount Amount
April-2 Cash a/c.............................................Dr. 70000
To Capital a/c 70000
(Being, Ram Started business with Cash)
April-3 Bank a/c.............................................Dr. 50000
To Cash a/c
(Being, Cash deposit in to Bank) 50000
April-4 Purchased a/c....................................Dr.
To Cash a/c 5000
(Being, Purchased goods for cash from Mr. X) 5000
April-5 Purchased a/c...................................Dr.
To Mr. Y a/c 6000
(Being, Bought goods on credit from Mr. Y)
6000
April-6 Mr. Y a/c..........................................Dr.
To Purchased Return a/c
(Being, Returned goods to Mr. Y) 1000
April-10 Cash a/c...........................................Dr. 1000
To Sales a/c
(Being, Sold goods for cash to Mr. A) 6000
April-15 Mr. B a/c...............................................Dr. 6000
To Sales a/c
(Being, Sold goods to Mr. B on Credit)
April-16 Sales Return a/c.....................................Dr.
To Mr. B a/c 6000
(Being, Mr. B returns goods) 6000
April-17 Drawing a/c..........................................Dr.
To Bank a/c 1000
(Being, Drawing from Bank for personal use) 1000
April-25 Mr. Y a/c.................................................Dr.
To Bank a/c 5000
To Discount Received a/c
5000
(Being, Paid to Mr. Y in full Settlement by Cheque &
allowed him discount)
April-26 Bank a/c..................................................Dr. 5000
Discount Allowed a/c..............................Dr. 4800
To Mr. B a/c 200
(Being, Received a cheque from Mr. B in full settlement &
April-27 Cash a/c..................................................Dr.
To Bank a/c
(Being, Draw cash from bank for office use)
April-30 Drawing a/c............................................Dr. 4900
To Cash a/c 100
(Being, 5000
April-30 Salary a/c................................................Dr.
To Cash a/c
(Being, Paid salary to staff)
10000
April-30 Rent a/c..................................................Dr.
To Bank a/c 10000
(Being, Issued a cheque for Rs. 3000 in favour of Shri
Devi a landlady towards rent for April.) 5000
April-30 Drawing a/c............................................Dr. 5000
To Purchase a/c
(Being, Withdraw goods for personal use) 5000
5000

3000
3000

1000
1000

Total............................................................................................. 184000 184000

Q4.

1. Business started with cash in Hand Rs. 5,00,000, Nabil Bank Balance Rs.
40,0000, Citizen Bank Balance Rs. 1,00,000 And Loan From Nepal Rastra Bank Rs.
2,00,000.
2. Goods purchased from Ganesh Traders of Rs. 30,000 on Credit.
3. Goods Sold to Him star Enterprises Pvt. Ltd. Of Rs. 30,000 & Cash received
Rs. 16,000.
4. Electricity Charges Paid at the end of April 1st month Rs. 4,000 & Telephone
Charges Rs. 2,500 on the same date.
5. Plant & Machinery purchased from Ramesh Agro & Sales Co. of Rs. 2,
50,000 & Made partial Payment of Cash Rs. 1, 00,000.
6. Furniture purchase on Cash Rs. 20,000.
7. Interest on Investment money was collected Rs.2800 & Paid in to Nabil Bank
by Cheque No. 1285.
8. A cheque of Rs. 1700 as commission provided to us by an Agent for
providing him services of solution for technology.
9. Nabil Bank charges the Amount of Interest Rs. 20,000.
10. Furniture Purchase for Rs. 20,000.
11. Depreciation charge on Plant & machinery Rs. 8000 during the year.
12. Furniture Purchase for Rs. 20,000 was depreciated @ 10% per annum.
13. Salary due was recorded Rs. 35,000 during the end of year.
14. Cash paid for the travelling expenses Rs. 2000.
15. Cash paid for Audit fee Rs. 20,000.
16. Cash paid for rent Rs. 15,000.
17. Cash paid for salary Rs. 80,000.
18. Cash paid for goods purchased on cash Rs. 3, 00,000.
19. Interest received Rs. 2500.
20. Cash sales made of Rs. 4, 00,000.
Date Particular L/F Dr.Amount Cr.
Amount
1 Cash a/c……………………………………Dr. 12,00,000
To Capital a/c 10,00,000
To NRB Loan a/c 2,00,000
(Being,
2 Purchased a/c…………………………….Dr. 30,000
To Manocamana Traders a/c
30,000
(Beings,
3 Cash a/c……………………………………Dr.
Him Star a/c……………………………….Dr. 16,000
To Sales a/c 14,000
(Beings, 30,000
4 Electricity Charge a/c……………………….Dr. 4,000
To Cash a/c 4,000
(Beings,
4 Telephone Charge 2,500
a/c…………………………Dr.
2,500
To cash a/c
(Beings,
2,50,000
5 Purchased a/c……………………………….Dr.
To Cash a/c 1,00,000
To Krishna & Sales Agro a/c 1,50,000
(Beings,
6 Furniture a/c………………………………..Dr. 20,000
To Cash a/c 20,000
(Beings,
7 Accrued Income a/c………………………Dr. 2,800
To Interest on Investment a/c 2,800
(Beings,
7 Nabil Bank a/c……………………………Dr.
2,800
To Bank a/c
(Beings, 2,800
8 Commission Received a/c…………………Dr. 2,700
To Bank a/c 2,700
(Beings,
9 Nabil Bank a/c……………………………..Dr. 20,000
To Interest on Cash a/c 20,000
(Beings,
10 Furniture a/c……………………………..Dr. 20,000
To cash a/c
 (Beings, 20,000
8,000
11 Depreciation a/c……………………..Dr. 8,000
To Plant & Machinery a/c
(Beings,
2,000
12 Depreciation on Furniture a/c……………Dr. 2,000
To Furniture a/c
(Beings,
13 Salary a/c…………………………………Dr. 35,000
To Outstanding Salary a/c 35,000
(Beings,
14 Travelling Expenses a/c………………………Dr. 2,000
To Cash a/c 2,000
(Beings,
15 Audit fee 20,000
a/c………………………………………Dr. 20,000
To cash a/c
(Beings,
16 Rent a/c……………………………………..Dr. 15,000
To cash a/c 15,000
(Beings,
17 Salary 80,000
a/c………………………………………..Dr. 80,000
To Cash a/c
(Beings, 3,00,000
18 Purchased a/c………………………………..Dr. 3,00,000
To cash a/c
(Beings,
19 Accrued Income a/c………………………….Dr. 2,500
To Interest Received a/c 2,500
(Beings,
20 Cash 4,00,000
a/c…………………………………………Dr. 4,00,000
To Sales a/c
(Beings,

Total………………………………………………………………

Q5.
Enter the following transaction in to journal and post in to ledger
Jan-1 Assets are cash in hand Rs.22, Bank Rs.38, Plant & Machinery Rs.5, Furniture &
Fixture Rs.99 and liability are Mr.Rs.2000, capital Rs.10000.
Jan-2 Sold goods by cash to Ram Rs.100
Jan-3 Sold goods to shyam Rs.200
Jan-4 Goods return by Shyam Rs.14
Jan-5 carriage outward paid Rs.50
 Jan-6 Carriage in ward paid Rs.100
Jan-7 Cheque paid to Mr. Rs 1980 in full settlement of his Account.
Jan-8 Sold goods by cash Rs.80, Paid telephone bill Rs.500, purchased goods from Mr.
Y Rs.20
Journal Entries As on..........
Date Particular L/F Dr. Amount Cr. Amount
Jan1 Cash a/c..............................Dr 22
Bank a/c..............................Dr 38
Machinery a/c.....................Dr 5
Furniture& fixture a/c........Dr 99
Good will a/c......................Dr 11836
To capital a/c 10000
To Mr. a/c 2000
(Being,
Jan2 Cash a/c............................Dr
100
To Sales a/c 100
(Being,
Jan3 Shyam a/c......................Dr
To sales a/c 200
200
(Being,
Jan4 Sales return a/c ........................Dr
To Shyam a/c 14
(Being, 14
Jan5 Carriage outward a/c....................Dr
To cash a/c
50
(Being, 50
Jan6 Carriage in ward a/c..........................Dr
To cash a/c
(Being, 100
100
Jan7 Mr. a/c...........................................Dr
Discount received a/c....................Dr
To Bank a/c 1980
(Being, 20
Jan8 Cash a/c............................Dr 2000
To Sales a/c
(Being, 80
Jan8 Telephone Expenses a/c.......................Dr 80
To Cash a/c
(Being,
Jan8 Purchase a/c............................Dr 500
500
To Mr. Y a/c
(Being,
20
20

Total.......................................................................................

Q6.

Mr. A starts business by introducing capital of Rs.2000000 in Cash.

2. Mr. A deposited 1500000 in to the Bank.
 3. Mr. A purchased would & other necessary material of Rs.800000 by making
payment by cheque.
4. Mr. A purchased wood cutting machine of Rs.300000 by making payment in cash.
5. Mr. A purchased furniture for resale of Rs.500000 from m/s furniture suppliers in
credit.
6. Mr. A Purchased furniture for Own (Business) use of Rs. 100000 by making
payment by cheque.
7. Mr. A sold furniture of Rs.800000 in cash.
8. Mr. A sold furniture of Rs. 400000 to Mr. B in credit.
9. Mr. B returns furniture worth Rs.200000
10. Mr. A pay rent of Rs. 50000 in cash.
11. Mr. A paid wages for the labor of rs.80000 in Cash.

Journal Entries As on..........

Date Particular L/F Dr. Amount Cr. Amount
1 Cash a/c………………………………….Dr. 20,00,000
To Capital a/c 20,00,000
(Being,
2 Bank a/c………………………………….Dr. 15,00,000
To Cash a/c
15,00,000
(Being,
3 Purchased a/c…………………………….Dr.
To Bank a/c 8,00,000
(Being, 8,00,000
4 Machinery a/c…………………………….Dr. 3,00,000
To cash a/c 3,00,000
(Being,
5 Purchased a/c……………………………..Dr. 5,00,000
To M/s Furniture a/c 5,00,000
(Being,
6 Furniture a/c………………………….….Dr. 1,00,000
To Bank a/c
1,00,000
(Being,
7 Cash a/c………………………………….Dr.
To Sales a/c 8,00,000
(Being, 8,00,000
8 Mr. B a/c………………………………….Dr.
To Sales a/c 4,00,000
(Being, 4,00,000
9 Sales Returns a/c…………………………Dr.
To Mr. B a/c 2,00,000
(Being,
2,00,000
10 Rent a/c……………………………….…Dr.
To Cash a/c
(Being, 50,000
11 Wages a/c……………………………….Dr. 50,000
To Cash a/c 80,000
(Being, 80,000

Total……………………………………………………………
 MCQs

1) We can say that the business is in profit, when:

A) Assets exceed Expenditure

B) Income exceeds Liabilities

C) Income exceeds Expenditure

D) Income exceeds Liabilities

2) According to the double entry system of accounting, an account that obtains benefit
is:
A) Credit

B) Debit

C) Income

D) No need to show as accounting record

3) Term "Credit" means_______ by the business.

A) Receiving of benefits

B) It has no effect on business

C) Providing of benefits

D) It depends upon items

4) When a Liability is reduced or decreased, it is recorded on the:

A) Left or credit side of the account

B) Right or debit side of the account

C) Right or credit side of the account

D) Left or debit side of the account

5) When Capital is increased by an amount, it is recorded on the:

A) Right or debit side of the account

 B) Left or credit side of the account

C) Left or debit side of the account

D) Right or credit side of the account

6) What type of expenses are paid out of Gross Profit?
A) General Expenses

B) Financial Expenses

C) Selling Expenses

D) All of the given options

7) Which of the following shows summary of a company's financial position at a
specific date?

A) Profit & Loss Account

B) Cash Flow Statement

C) Balance Sheet

D) Income & Expenditure Account

8) Which of the following is NOT an example of intangible assets?

A) Franchise rights

B) Goodwill

C) Patents

D) Land
9) Which of the following is an example of business liability?

A) Land

B) Building

C) Cash
 D) Creditors
10) The unfavorable balance of Profit and Loss account should be:
A) Added in liabilities

B) Subtracted from current assets

C) Subtracted from capital

D) Subtracted from liabilities

11) The Basic accounting equation is
A) Asset=Expense +Income

B) Assets=Cash+Capital

C) Assets=Capital+Liabilities

D) Assets=Expenses+Capital
12) Find out the value of assets if: Liabilities=$5000 and Capital=$1000

A) $4000

B) $6000

C) $7000

D) $3000
13) Calculate the amount of cash if: Total assets=$10,000 Total liabilities=$10,000 Total
Capital=$5000

A) $6000

B) $10,000

C) $5000

D) $1000
14) Capital increases if ______ increases

A) Expenses
 B) Drawings

C) Interest on capital

D) Revenue
15) Capital of a business decreases if there is an increase in

A) Drawings

B) Income

C) Gains

D) Fresh capital
16) If the total liabilities of a business decrease by $5000 what will be the effect on total
asset? (assuming the amount of capital remain same)

A) Remain constant

B) Decrease by $5000

C) Increase by $5000

D) Increase by $10,000
17) Net income equal to Revenues minus

A) Gains

B) Depreciation

C) Expenses

D) Capital expenditures
18) If credit side of a bank account is greater than the debit side, it indicates which of
the following?

A) Bank overdraft

B) Cash at bank
 C) Bank balance

D) Current Asset
19) The normal balance of asset account is

A) Credit balance

B) Debit balance

C) Cash balance

D) Neither debit nor credit balance

20) Which of the following is not regarded as the fundamental concept that is identified
by IAS-1

A) The going concern concept

B) The separate entity concept

C) The prudence concept

D) Correction concept
21) Using "lower of cost and net realisable value" for the purpose of inventory
valuation is the implementation of which of the following concepts?

A) The going concern concept

B) The separate entity concept

C) The prudence concept

D) Matching concept
22) The concept of separate entity is applicable to which of following types of
businesses?

A) Sole proprietorship

B) Corporation
 C) Partnership

D) All of them
23) The revenue recognition principal dictates that all types of incomes should be
recorded or recognized when

A) Cash is received

B) At the end of accounting period

C) When they are earned

D) When interest is paid

24) The matching concept matches which of the following?

A) Asset with liabilities

B) Capital with income

C) Revenues with expenses

D) Expenses with capital

25) The allocation of owner's private expenses to his/her business violates which of the
following?

A) Accrual concept

B) Matching concept

C) Separate business entity concept

D) Consistency concept
26) American companies prepare their financial statement in dollars whereas Japanese
companies produce financial statements in yens. This is an example of:

A) Stable monetary unit Concept

B) Unit of measurement Concept

C) Money value concept

 D) Current swap concept
27) The process of recording is done

A) Two times a year

B) once a year

C) Frequently during the accounting period

D) At the end of an accounting period

28) General journal is a book of _______ entries

A) First

B) Original

C) Secondary

D) Generic
29) The process of recording transactions in different journals is called

A) Posting

B) Entry making

C) Adjusting

D) Journalizing
30) Discount allowed is a kind of deduction from

A) Account payable

B) Account receivable

C) Cash account

D) Discount account
31) The term 2/10-n/30 implies that ______ % discount will be given if the payment is
made within _____ days or full amount is receivable within 30 days
 A) 2,10

B) 10,2

C) 10,30

D) 3,15
32) Discount allowed is

A) Expense of business

B) Income of business

C) Loss of business

D) Abnormal loss of business

33) Financial statements are prepared mainly for

A) Internal users of financial information

B) External users of financial information

C) Creditors of the business

D) Managers of the business

34) Net profit is computed in which of the following?

A) Balance sheet

B) Income statement

C) Cash flow statement

D) Statement of changes in equity

35) Which of the following should be the most appropriate order of current asset in a
balance sheet?

A) cash, debtor, bank, stock

 B) Bank, cash, stock, debtor

C) Stock, bank, cash, debtor

D) Cash, bank, debtor, stock

36) In income statement, gross profit is always equal to

A) Sales-expenses

B) Incomes-expenses

C) Sales-cost of goods sold

D) Sales-selling costs
37) Office equipment is a ________ asset for a computer manufacturer and the same
office equipment is a _________ asset for a company that deals in these equipments

A) Current, Fixed

B) Fixed, intangible

C) Tangible, intangible

D) Fixed, current
38) Identify the external user of financial information or financial statements

A) Management of the business

B) CFO of the business

C) Employees of the business

D) Investors of the business

39) A statement or report that records the fluctuation in business's capital is referred as

A) Balance sheet

B) Income statement

C) Cash flow statement

 D) Statement of changes in equity
40) Purchases+opening stock-closing stock=?

A) Amount of sales

B) Gross profit

C) Cost of goods sold

D) Net income
41) Assets minus liabilities equal to

A) Goodwill

B) Working capital

C) Net income

D) Capital
42) Goodwill is classified as which one of the following assets?

A) Fixed

B) Long term

C) Current

D) Intangible
43) Which of the following does not appear in Balance sheet?

A) Building

B) Cash

C) Goodwill

D) Rent expenses
44) Which of the following lists down the balances to asset accounts, liability accounts
and capital account balances?
 A) Income statement

B) Balance sheet

C) Cash flow statement

D) Statement of changes in equity

45) The expenses related to the main operations of business are referred as
A) Administration expense

B) Non-administration expense

C) Selling expenses

D) Operating expenses
46) Cash receipt from the sales fixed assets is recorded under the heading of

A) Operating activities

B) Financing activities

C) Investing activities

D) Other activities
47) A current asset that is convertible to cash within 3 months can be referred to as

A) Cash asset

B) Operating asset

C) Intangible asset

D) Cash equivalent
48) Under which depreciation method the amount of depreciation expenses remains
same throughout the useful life of a fixed asset

A) Straight line method

B) Reducing balance method

 C) Number of units produced method

D) Machine hours method

49) A company purchased a vehicle for ₹6000. It will be used for 5 years and its residual
value is expected to be ₹1000. What is the annual amount of deprecation using SLM
of depreciation?

A) ₹1000

B) ₹2000

C) ₹3000

D) ₹3300

50) Accounting provides information on

(A) Cost and income for managers

(B) Company’s tax liability for a particular year

(C) Financial conditions of an institution

(D) All of the above