THE CASPIAN COLLEGE

PRACTICE PAPER
Subject: Accounting Class: XI – Commerce
Teacher Name: Sir Sameer Hussain Max. Marks: 100 Marks

SECTION “A” (MULTIPLE CHOICE QUESTIONS) (20 Marks)

Q.1. Choose the correct answer for each from the given options:
(1) The act of recording transaction in journal is called:
* Posting * Reconciling * Closing * Journalizing
(2) An outstanding expense is a/an:
* Current asset * Current liability * Owner’s equity * Expense
(3) This account normally has credit balance:
* Purchases * Sales return and allowances * Sales discount * Sales
(4) Commission received in advance is a/an:
* Income * Liability * Asset * Owner’s equity
(5) Cost of goods sold is equal to sales minus:
* Purchases * Merchandise inventory * Operating expenses * Gross profit
(6) The financial position of a business is shown by:
* Income statement * Cash book * Balance sheet * Bank statement
(7) Cash discount allowed to customer is recorded in:
* Cash book * Sales journal * Purchase journal * Cash account
(8) If assets and liabilities of business are Rs.180,000 and Rs.50,000 respectively, its
owner’s equity will be Rs.:
* 230,000 * 180,000 * 130,000 * 50,000
(9) Depreciation is charged on:
* Office supplies * Office equipment * Land * Merchandise
(10)Transportation paid for delivering the goods to the customer is included in:
* Operating expenses * Non – operating expenses * Cost of goods sold * Sales
(11)This account does not relate to income statement:
* Rent expense * Salaries expense * Sales * Unexpired insurance
(12)Gross profit is excess of sales revenue over:
* Cost of goods sold * Ending inventory * Beginning inventory * Operating expenses
(13)This is prepared to check arithmetic accuracy of double entry:
* General journal * Ledger * Trial balance * Cash book
(14)A cheque deposited into bank but not yet credited by bank is called:
* Direct deposit * Outstanding cheque * Dishonoured cheque * Deposit in transit
(15)Credit memo No. is entered in:
* Purchase journal * Purchase returns journal
* Sales journal * Sales returns journal
(16)Gross profit – operating expenses = :
* Cost of sales * Net profit/loss * Sales * Ending inventory
(17)If net profit is 25% of gross profit of Rs.5,000; the operating expenses should be Rs.:
* 1,250 * 3,750 * 4,150 * 6,250
(18)Closing entries are recorded before preparing:
* Adjusting entries * Post – closing trial balance
* Financial statement * Adjusted trial balance
(19)Net profit or loss is transferred to:
* Cash account * Capital account * Income summary account * Bank account
(20)Accrued salaries are reported on the balance sheet in the section of:
* Current assets * Fixed assets * Current liabilities * Owner’s equity

SECTION “B” (SHORT-ANSWER QUESTIONS) (50 Marks)

Note: Attempt any FOUR questions from this section. All questions carry equal marks.
Q.No.2 GENERAL JOURNAL
Following are the transactions related to the business of Mr. Hammad Khan for April 2015:
April 01: Mr. Hammad Khan started business with investment of cash Rs.300,000 and furniture
worth Rs.200,000.
April 05: Purchased merchandise from Mr. Zafar Rs.25,000 on credit and Rs.10,000 for cash.
April 10: Paid rent for the month Rs.30,000.
April 15: Paid cash to Mr. Zafar Rs.15,000.
April 20: Sold merchandise for cash Rs.15,000.
April 25: Mr. Hammad made additional investment in cash Rs.100,000.
REQUIRED
Record the above transactions in standard form General Journal giving explanation below each entry.
 THE CASPIAN COLLEGE
PRACTICE PAPER
Q.No.3 ACCOUNTING EQUATION
(a) For each of the following, determine the underline missing items:
(i) The liabilities of a business entity, having assets of Rs.550,000 and owner’s equity Rs.400,00.
(ii) The owner’s equity of a business entity, having assets of Rs.600,000 and liabilities Rs.120,000.
(iii) The expenses of a business entity, having revenue Rs.210,000 and net loss Rs.25,000.

(b) Enlist the complete accounting cycle.

Q.No.4 CASH BOOK

Mr. Abdul Rehman Zaki uses three column cash book. On February 1, 2015 he had cash in hand
Rs.70,000 and cash at bank Rs.90,000. During February, the following transactions were completed:
February 05: Sold merchandise for Rs.8,000 and received a cheque for the amount.
February 10: Issued a cheque to Mr. Iqbal after discount deduction @ 2% in full settlement of
Rs.20,000.
February 15: Received a cheque from Mr. Imran for Rs.10,000 and allowed discount Rs.50.
February 20: Bank informed that a customer Mr. Atique made direct deposit in bank Rs.2,500.
February 25: Withdrew cash form bank Rs.1,700 for business use and Rs.500 for personal use.
February 26: Paid salaries expense by cheque Rs.7,000.
REQUIRED
Prepare a three column cash book. Balance it on February 28 and bring down the balances on March
1, 2015.

Q.No.5 BANK RECONCILIATION STATEMENT

Comparison of cash book and bank statement of Akber Tobacco on June 10, 2015 revealed the
following:
(i) Bank balance as per cash book Rs.10,780.
(ii) Bank balance as per bank statement Rs.11,757.
(iii) Cheques for Rs.5,380 were deposited into bank out of which a cheque of Rs.2,380 has been
collected.
(iv) Cheques for Rs.4,250 were issued, out of which a cheque of Rs.2,250 has been paid by the bank.
(v) Bank charges debited by bank Rs.40.
(vi) Interest credited by bank Rs.80.
(vii) A customer deposited Rs.2,000 direct into the bank without giving information to the firm.
(viii) A cheque of Rs.692 issued to Ali & Co. was recorded in cash book as Rs.629.
REQUIRED
Prepare bank reconciliation statement.

Q.No.6 SPECIAL JOURNALS

The following transactions were completed by Mr. Taha during April 2014:
April 02: Sold merchandise on account for Rs.1,850 to Mr. Saeed.
April 09: Sold merchandise on account for Rs.1,700 to Mr. Adeel.
April 15: Defective merchandise returned by Mr. Saeed Rs.150.
April 18: Sold merchandise on account for Rs.2,000 to Mr. Sheikh.
April 19: Inferior merchandise returned from Mr. Adeel Rs.200.
REQUIRED
Enter the above transactions in sales journal and sales returns and allowances journal. Total the
journals and making posting to the general ledger skeleton T accounts. Also prepare accounts
receivable subsidiary ledger of each customer.

Q.No.7 CORRECTION OF ERRORS

The following errors were made by a book-keeper and were discovered before closing the books:
(i) Purchase of furniture for Rs.9,000 was debited to purchase account.
(ii) Return of defective goods worth Rs.2,000 to the supplier was credited to purchase account.
(iii) Ordinary repair costing Rs.1,000 to office equipment was debited to office equipment account.
(iv) Depreciation was overcharged by Rs.3,000 through the allowance for depreciation account.
(v) Purchase of office supplies on credit for Rs.10,000 was recorded as Rs.1,000.
(vi) Drawings of Rs.1,000 for personal use of the proprietor was recorded twice.
REQUIRED
Give entries in General Journal to correct each of the above errors.
 THE CASPIAN COLLEGE
PRACTICE PAPER
SECTION “C” (DETAILED-ANSWER QUESTIONS) (30 Marks)
Note: Attempt the following question, which is compulsory.

Q.No.8 FINANCIAL STATEMENTS

The following have been balances taken from pre-closing trial balance of UWH Traders of December
31, 2017:
Particulars Debit Credit
Cash Rs.140,00
0
Bank 100,000
Accounts receivable 75,000
Merchandise inventory (opening) 35,000
Unexpired insurance 25,000
Purchases 230,000
Equipment 60,000
Purchase returns Rs.15,000
Transportation – in 5,000
Sales discount 5,000
Accounts payable 60,000
Bank loan 130,000
Rent expense 60,000
Sales 305,000
Sales returns 5,000
Unearned commission 17,000
Capital 237,000
Drawings 24,000
Total 764,000 764,000
Data for Adjustment on December 31, 2017:
(i) Merchandise inventory at December 31, 2017 Rs.60,000.
(ii) Unpaid rent Rs.2,000.
(iii) Insurance expired Rs.12,000.
(iv) Depreciation on equipment estimated at Rs.4,000.
(v) Bad debts expense for the period was estimated at Rs.2,000.
(vi) Commission unearned was Rs.2,000.
REQUIRED
(1) Income statement for the year ended December 31, 2017.
OR
Adjusting and closing entries in general journal.
(2) Balance sheet as on December 31, 2017.