1)which qualitative characteristic of accounting information is reflected when accounting

information is clearly presented?

A) reliability B)relevance

C)comparability d)Understandability

2)Purchase refers to the buying of

A)stationary for office use B)assets for the factory

C)goods for resale D)Investment

3)A concept that a business enterprise will not be sold or liquidated in the near future is known as

A)going Concern B)Economic Entity

C)Monetory unit D)None of these

4)Bad debts earlier written off and now received are credited to

A)Bad debts A/c B)Bad debts recovered A/c

C)Miscellaneous Income A/c D)Debtors A/c

5)Distinguish between Book keeping and accounting on the basis of scope and objectives.

BOOK KEEPING ACCOUNTING

-Book keeping is maintained by junior staff -Accounting is managed by senior staff

-book keeping is the primary stage -Accounting is the secandory stage

-it is concerned with recording of -it is based on book keeping

Day-day transaction

6)Explain in brief any two of the following accounting convention:

(i) Full Disclorsure (ii)Consistency (iii)Conservatism

(iii) Conservatism: predictable losses should be accounted while predictable incomes should
not be accounted.
(ii) Consistency: accounting practices once selected and adopted should be consistently
applied year after year.

7) Use accounting equation to show the effect of the following transactions

of M/s Royal Traders:

(a) Started business with cash 1,20,000.

(b) Purchased goods for cash 10,000.
(c) Rent received 5,000.
(d) Salary outstanding 2,000.
(e) Sold goods for cash (costing 5,000) 7,000.
(f) Goods destroyed by fire 500.

8) Viraj started business for buying and selling of readymade garments with ₹ 8,00,000
as an initial investment. Out of this he paid ₹ 4,00,000 for the purchase of garments
and ₹ 50,000 for furniture and ₹ 50,000 for computers and the remaining amount was
deposited into the bank. He sold some of the ladies and kids garments for ₹ 3,00,000 for
cash and some garments for ₹ 1,50,000 on credit to Adwaith.

Subsequently, he bought men's garments of ₹ 2,00,000 from Mr. Ganesh. In the first
week of the next month, a fire broke out in his office and stock of garments worth ₹
1,00,000 was destroyed. Later on, some garments which cost ₹ 1,20,000 were sold for ₹
1,50,000. Expenses paid during the same period were ₹ 25,000. Viraj withdrew ₹ 20,000
from business for his domestic use. 
From the above, answer the following:
(i) What is the amount of capital with which Viraj started the business?
(ii) What fixed assets did he buy?
(iii) What is the value of the goods purchased?
(iv) Who is the creditor and state the amount payable to him?
(v) Who is the debtor and what is the amount receivable from him?
(vi) What is the total amount of expenses?
(vii) What is the amount of drawings of Viraj?
(i) Initial Investment made by Viraj for starting the business of "Readymade Garments" is Rs
8,00,000.

(ii) Total Fixed Assets bought by him = Furniture + Computer

= 50,000 + 50,000
= Rs 1,00,000

(iii) = 4,00,000 + 2,00,000

= Rs 6,00,000
(vi) Mr. Ganesh is the creditor of business with Rs 2,00,000.

(v) Adwaith is the debtor of the business with Rs 1,50,000.

(vi) Total amount of Expenses = Rs 25,000.

(vii) withdrew Rs 20,000 for domestic use (Drawings).

9) Following transactions of Ramesh for April, 2019 are given below. Journalise them.

2019 ₹
1,00,00
April 1 Ramesh started business with cash
0
April 2 Paid into bank 20,000
April 3 Bought goods for cash 50,000
April 4 Drew cash from bank for office use 10,000
April 13 Sold goods to Krishna 15,000
April 20 Bought goods from Shyam 22,500
April 22 Krishna returned goods 2,000
April 24 Received from Krishna 12,500
Allowed him discount 500
April 28 Paid cash to Shyam 21,500
Discount received 1,000
April 30 Sold for cash to Mohan, Rakesh and Mayank 80,000
April 30 Depriciation charged on Machinery 5,000
April 30 Paid salary 10,000

Ans)
Debit Credit
Date Particulars L.F. Amount Amount
(₹) (₹)
2019
Apr Cash A/c Dr. 1,00,000
01
To Capital A/c 1,00,000
(Started business with
cash)

Apr Bank A/c Dr. 20,000

02
To Cash A/c 20,000
(Paid into bank)

Apr Purchases A/c Dr. 50,000

03
To Cash A/c 50,000
 (Goods purchased)

Apr Cash A/c Dr. 10,000

04
To Bank A/c 10,000
(Drew from bank for
office use)

Apr Cash A/c Dr. 15,000

13
To Sales A/c 15,000
(Goods sold to Kirshna
for Cash)

Apr Purchases A/c Dr. 22,500

20
To Cash A/c 22,500
(Goods purchased for
cash)

Apr Sales Return A/c Dr. 2,000

22
To Cash A/c 2,000
(Goods sold to Krishna
returned)

Apr Cash A/c Dr. 12,500

24
Discount Allowed A/c Dr. 500
To Krishna A/c 13,000
(Received from
Krishna)

Apr Shyam A/c Dr. 22,500

28
To Cash A/c 21,500
To Discount Received 1,000
A/c
(Paid to Shyam)

Apr Cash A/c Dr. 80,000

30
To Sales 80,000
(Cash sales for the
month of April)

Apr Rent A/c Dr. 5,000

30
To Cash A/c 5,000
 (Paid rent)

Apr Salary A/c Dr. 10,000

30
To Cash A/c 10,000
(Paid salary)