1) The root of financial accounting system is a) Social accounting b) Stewardship accounting c) Management accounting d) Responsibility accounting 2) Which one of the following is not a main objective of accounting? a) Solving tax disputes with tax authorities b) Systematic recording of transactions c) Ascertainment of the profitability of the business d) Ascertainment of the financial position of the business 3) Which one of the following is not a branch of accounting? a) Financial accounting b) Management accounting c) Human resources accounting d) None of the above. 4) Financial position of a business is ascertained on the basis of a) Journal b) Trial balance c) Balance Sheet d) Ledger 5) Who is considered to be the internal user of the financial information? a) Creditor b) Employee c) Customer d) Government 6) The business is liable to the proprietor of the business in respect of capital introduced by the person according to a) Business entity concept b) Dual aspect concept c) Money measurement concept d) Cost concept 7) The concept which assumes that a business will last indefinitely is a) Conservatism b) Business Entity c) Going concern d) Periodicity 8) GAAPs are: a) None of these b) Generally Accepted Accounting Policies c) Generally Accepted Accounting Principles d) Generally Accepted Accounting Provisions 9) The rule of stock valuation ‘cost price or realisable value’ whichever is lower is based on the accounting principle of: a) Accrual b) Conservatism c) Materiality d) Money measurement 10) In India, Accounting Standards are issued by a) The Institute of Chartered Accountants of India b) Reserve Bank of India c) The Cost and Management Accountants of India d) Supreme Court of India 11) Accounting equation signifies a) Assets of a business are equal to the total of capital and liabilities b) Capital of a business is equal to assets c) Liabilities of a business are equal to assets d) Capital of a business is equal to liabilities 12) ‘Cash withdrawn by the proprietor from the business for his personal use’ causes a) Increase in asset and decrease in capital b) Decrease in assets and decrease in owner’s capital c) Increase in one asset and decrease in another asset d) Increase in one asset and increase in liabilities 13) A firm has assets of Rs 1,00,000 and the external liabilities of Rs 60,000. Its capital would be a) Rs 60,000 b) Rs 1,60,000 c) Rs 1,00,000 d) Rs 40,000 14) The incorrect accounting equation is a) Assets = Liabilities + Capital b) Assets = Capital + Liabilities c) Liabilities = Assets + Capital d) Capital = Assets – Liabilities 15) Accounting equation is formed based on the accounting principle of a) Dual aspect b) Consistency c) Going concern d) Accrual 16) Real account deals with a) Individual persons b) Expenses and losses c) Assets d) Incomes and gains 17) Which one of the following is representative personal account? a) Building A/c b) Outstanding salary A/c c) Mahesh A/c d) Balan & Co 18) Prepaid rent is a a) Nominal A/c b) Personal A/c c) Real A/c d) Representative personal A/c 19) Withdrawal of cash from business by the proprietor should be credited to a) Drawings A/c b) Cash A/c c) Capital A/c d) Purchases A/c 20) In double entry system of book keeping, every business transaction affects a) Minimum of two accounts b) Same account on two different dates c) Two sides of the same account d) Minimum three accounts 21) Main objective of preparing ledger account is to a) Know the balance of each ledger account b) Ascertain the financial position c) Ascertain the profit or loss d) Ascertain the profit or loss and the financial position 22) The process of transferring the debit and credit items from journal to ledger accounts is called a) Journalising b) Posting c) Casting d) Balancing 23) J.F means a) Ledger page number b) Journal page number c) Voucher number d) Order number 24) The process of finding the net amount from the totals of debit and credit columns in a ledger is known as a) Casting b) Journalising c) Posting d) Balancing 25) If the total of the debit side of an account exceeds the total of its credit side, it means a) Credit balance b) Debit balance c) Nil balance d) Debit and credit balance 26) The amount brought into the business by the proprietor should be credited to a) Cash account b) Drawings account c) Capital account d) Suspense account 27) Trial balance is a a) Statement b) Account c) Ledger d) Journal 28) After the preparation of ledger, the next step is the preparation of a) Trading account b) Trial balance c) Journal d) Profit and loss account 29) The trial balance contains the balances of a) Only personal accounts b) Only real accounts c) Only nominal accounts d) All accounts 30) Which of the following is/are the objective(s) of preparing trial balance? a) All the above b) Serving as the summary of all the ledger accounts c) Helping in the preparation of final accounts d) Examining arithmetical accuracy of accounts 31) A list which contains balances of accounts to know whether the debit and credit balances are matched is a) Journal b) Day book c) Trial balance d) Balance sheet 32) Which of the following method(s) can be used for preparing trial balance? a) Balance method b) Total method c) Total and Balance method d) All the above 33) While preparing the trial balance, the accountant finds that the total of the credit column  is short by Rs 200. This difference will be a) Adjusted to any of the debit balance b) Adjusted to any of the credit balance c) Debited to suspense account d) Credited to suspense account 34) The account which has a debit balance and is shown in the debit column of the trial balance is a) Capital account b) Bills payable account c) Sundry creditors account d) Drawings account 35) The difference of totals of both debit and credit side of trial balance is transferred to: a) Trading account b) Difference account c) Suspense account d) Miscellaneous account 36) Trial balance is prepared: a) At the end of the year b) On a particular date c) For a year d) None of the above 37) Purchases book is used to record a) all purchases of good b) all credit purchases of assets c) all credit purchases of goods d) all purchases of assets 38) A periodic total of the purchases book is posted to the a) debit side of the purchases account b) debit side of the sales account c) credit side of the purchases account d) credit side of the sales account 39) Sales book is used to record a) all sales of goods b) all credit sales of assets c) all credit sales of goods d) all sales of assets and goods 40) The total of the sales book is posted periodically to the credit of a) Sales account b) Cash account c) Purchases account d) Journal proper 41) Purchase returns book is used to record a) None of the above b) returns of goods to the supplier for which cash is not received immediately c) returns of assets to the supplier for which cash is not received immediately d) returns of assets to the supplier for which cash is received immediately 42) Sales return book is used to record a) Returns of assets by the customer for which cash is paid immediately b) Returns of goods by the customer for which cash is paid immediately c) Returns of goods by the customer for which cash is not paid immediately d) Returns of assets by the customer for which cash is not paid immediately 43) Purchases of fixed assets on credit basis is recorded in a) Purchases book b) Sales book c) Purchases returns book d) Journal proper 44) The source document or voucher used for recording entries in sales book is a) Debit note b) Credit note c) Invoice d) Cash receipt 45) Which of the following statements is not true? a) 3 grace days are added while determining the due date of the bill b) Cash discount is recorded in the books of accounts c) Assets purchased on credit are recorded in journal proper d) Trade discount is recorded in the books of accounts 46) Closing entries are recorded in a) Cash book b) Ledger c) Journal proper d) Purchases book 47) Cash book is a a) Subsidiary book b) Principal book c) Journal proper d) Both subsidiary book and principal book 48) The cash book records a) All cash receipts b) All cash payments c) Both All cash receipts and All cash payments d) All credit transactions 49) When a firm maintains a simple cash book, it need not maintain a) Sales account in the ledger b) Purchases account in the ledger c) Capital account in the ledger d) Cash account in the ledger 50) A cash book with discount, cash and bank column is called a) Simple cash book b) Double column cash book c) Three column cash book d) Petty cash book 51) In Triple column cash book, the balance of bank overdraft brought forward will appear in a) Cash column debit side b) Bank column debit side c) Cash column credit side d) Bank column credit side 52) Which of the following is recorded as contra entry? a) When bank charges interest b) Withdrew cash from bank for personal use c) Withdrew cash from bank for office use d) Direct payment by the customer in the bank account of the business 53) If the debit and credit aspects of a transaction are recorded in the cash book, it is a) Contra entry b) Compound entry c) Single entry d) Simple entry 54) The balance in the petty cash book is a) An expense b) A profit c) An asset d) A liability 55) Petty cash may be used to pay a) Purchase of raw materials b) The expenses relating to postage and conveyance c) Salary to the Manager d) Purchase of furniture and fixtures 56) Small payments are recorded in a book called a) Cash book b) Purchase book c) Bills payable book d) Petty cash book 57) A bank reconciliation statement is prepared by a) Bank b) Business c) Debtor to the business d) Creditor to the business 58) A bank reconciliation statement is prepared with the help of a) Bank statement b) Cash book c) Bank statement and bank column of the cash book d) Petty cash book 59) Debit balance in the bank column of the cash book means a) Credit balance as per bank statement b) Debit balance as per bank statement c) Overdraft as per cash book d) None of the above 60) A bank statement is a copy of a) Bank column of the cash book b) Cash column of the cash book c) A customer’s account in the bank’s book d) Cheques issued by the business 61) A bank reconciliation statement is prepared to know the causes for the difference between: a) The balance as per petty cash book and the cash book b) The balance as per the cash column of the cash book and bank column of the cash book c) The balance as per the bank column of the cash book and the bank statement d) The balance as per the cash column of the cash book and bank statement 62) When money is withdrawn from bank, the bank a) Credits customer’s account b) Debits customer’s account c) Debits and credits customer’s account d) None of these 63) Which of the following is not the salient feature of bank reconciliation statement? a) Reconciliation statement is prepared only at the end of the accounting period b) Any undue delay in the clearance of cheques will be shown up by the reconciliation c) Reconciliation statement will discourage the accountant of the bank from embezzlement d) It helps in finding the actual position of the bank balance 64) Balance as per cash book is Rs 2, 000. Bank charge of Rs 50 debited by the bank is not yet shown in the cash book. What is the bank statement balance now? a) Rs 1,950 credit balance b) Rs 1,950 debit balance c) Rs 2,050 credit balance d) Rs 2,050 debit balance 65) Balance as per bank statement is Rs 1, 000. Cheque deposited, but not yet credited by the bank is Rs 2, 000. What is the balance as per bank column of the cash book? a) Rs 3,000 overdraft b) Rs 1,000 favourable c) Rs 3,000 favourable d) Rs 1,000 overdraft 66) Which one of the following is not a timing difference? a) Wrong debit in the cash book b) Cheque deposited but not yet credited c) Cheque issued but not yet presented for payment d) Amount directly paid into the bank

+1 Acc Qly L 1 - L 8 EM Prepared by M.MuthuSelvam 9842104826

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