Essentials of Accounting Examination
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Questions and Answers

What should have been the correct posting for the goods purchased from a merchant valued at Rs 545?

  • Rs 454 should be debited to the merchant's account
  • Rs 545 should be debited to the merchant's account
  • Rs 454 should be credited to the merchant's account
  • Rs 545 should be credited to the merchant's account (correct)

    • How much should have been credited for the Rs 420 received from Desai that was previously written off as bad debt?

  • Rs 420 should have been debited
  • Rs 420 should be credited to his account (correct)
  • Rs 420 should not have been recorded
  • Rs 420 should be recorded as a loss

    • What incorrect amount was posted in the Returns Outwards book for the goods returned to Gauri?

  • Rs 130 was the correct invoice value (correct)
  • Rs 145 should be the invoice value
  • Rs 145 was the correct amount
  • Rs 130 was the incorrect amount

    • What were the implications of not recording the goods worth Rs 250 taken by the proprietor?

    <p>It leads to an overstatement of inventory</p> Signup and view all the answers

    In the scenario of the defaulting cashier, what transactions were not recorded in the books of account?

    <p>Rs 2000 received from customers and Rs 1000 from cash sales</p> Signup and view all the answers

    How much was the trade discount on the goods purchased from Raghunath?

    <p>Rs 900</p> Signup and view all the answers

    What was the total amount of goods sold to Ramesh before any returns?

    <p>Rs 525</p> Signup and view all the answers

    What amount was credited to the Bank account mistakenly due to a dishonored bill receivable?

    <p>Rs 400</p> Signup and view all the answers

    What was the total amount of goods returned by Zakir Husain?

    <p>Rs 45</p> Signup and view all the answers

    Which account was affected by the error related to the discount from a creditor?

    <p>Discount account</p> Signup and view all the answers

    What was the net amount of sales after deducting returns from Ram Saran?

    <p>Rs 450</p> Signup and view all the answers

    If total goods purchased from Mangal were Rs 700, what was the net amount after returns?

    <p>Rs 600</p> Signup and view all the answers

    Which of the following transactions involves a trade discount?

    <p>Purchased goods from Raghunath</p> Signup and view all the answers

    What is the value of the closing stock as provided?

    <p>Rs 1,00,000</p> Signup and view all the answers

    How much was the total debtors mentioned in the particulars?

    <p>Rs 1,02,000</p> Signup and view all the answers

    What percentage is allocated for the reserve for bad debts?

    <p>5%</p> Signup and view all the answers

    What amount was recorded for Dutta's drawings?

    <p>Rs 50,000</p> Signup and view all the answers

    What is the total amount for 'Purchases' as per the particulars?

    <p>Rs 4,00,000</p> Signup and view all the answers

    How much interest on capital is allowed?

    <p>5%</p> Signup and view all the answers

    What amount is set aside as reserve for discount on creditors?

    <p>Rs 2,000</p> Signup and view all the answers

    What is the amount for prepaid rent recorded in the adjustments?

    <p>Rs 500</p> Signup and view all the answers

    What is meant by the accrual basis of accounting?

    <p>Recording transactions when they are earned or incurred, regardless of cash movement.</p> Signup and view all the answers

    Which of the following types of accounts is primarily used to track personal wealth?

    <p>Personal accounts</p> Signup and view all the answers

    What defines a contra entry?

    <p>An entry that involves both debit and credit in the same account.</p> Signup and view all the answers

    Which of the following is NOT an example of a one-sided error?

    <p>Entering a payment twice in the expenses.</p> Signup and view all the answers

    What is an advantage of a bank reconciliation statement?

    <p>It identifies any errors or omissions between the bank and cash book.</p> Signup and view all the answers

    How does a balance sheet differ from a trial balance?

    <p>A balance sheet shows assets, liabilities, and equity, while a trial balance shows all account balances.</p> Signup and view all the answers

    What constitutes fixed capital system compared to fluctuating capital system?

    <p>Fixed capital does not change, whereas fluctuating capital includes both stability and growth in investments.</p> Signup and view all the answers

    Which of the following best describes prepaid expenses?

    <p>Payments made for services to be received in the future.</p> Signup and view all the answers

    Study Notes

    Essentials of Accounting - Examination

    • Section A (Answer any five): Each question in this section carries 2 marks.
      • Question 1: Accrual basis of accounting is explained.
      • Question 2: Various types of accounts are detailed.
      • Question 3: Contra entry is defined.
      • Question 4: Four examples of one-sided errors are provided.
      • Question 5: Advantages of a bank reconciliation statement are discussed.
      • Question 6: Prepaid expenses are described with an example.
      • Question 7: Limited liability partnership concept is elaborated.

    Section B (Answer any four): Each question in this section carries 5 marks.

    - **Question 8:** Fixed and fluctuating capital systems are differentiated.
- **Question 9:** Examines a scenario involving a cash book and bank reconciliation to identify discrepancies in a company's cash transactions due to differences between cash book and passbooks. Includes cheque issues, bill receipts, and bank charges.
- **Question 10:** Contrast between a balance sheet and a trial balance is presented.
- **Question 11:** A case study focuses on errors in a ledger, their impact on the trial balance, subsequent error identifications, journal entries to correct discovered errors, and creating a suspense account.  Includes sales book overstatement, purchase errors, incorrect posting, and cash sale errors.
- **Question 12:** Detailed transactions for goods sold to Ramesh on credit are recorded in subsidiary books for a company "Ram".

    Section C (Answer any one): This section has one question carrying 10 marks.

    - **Question 13:** A bookkeeper's errors in balancing accounts necessitate correcting entries. A suspense account is opened, which carries forward errors to be reconciled later in the next accounting period.  Errors include dishonored bills receivable, plant sales, discount received not posted, returned goods recorded incorrectly, error in item posted, goods taken by proprietor, and bad debt errors.

    Section D (Compulsory Question): This section has one question, with a case study of ten marks.

    - **Question 14:** Preparation of trading and profit & loss account and balance sheet, using a given trial balance of Mr. Sanjay for the year ending 31st March 2016. This involves adjustments for closing stock, outstanding expenses, prepayments, investments, and reserves for bad debts and discounts. Includes a thorough review of various accounts such as capital, drawings, purchases, sales, expenses, and assets.
- **Question 15:** Creation of trading and profit & loss account and balance sheet for "Rajendra Kumar Gupta & Co." from extracts given in the balance sheet .Includes opening stock, sales, depreciation, commission. insurance, carriage inward, furniture, printing charges, carriage outward, capital, creditors (accounts payable), bills payable.  The document details adjustments for closing stock, outstanding expenses, prepayments, investments, and reserves for bad debts and discounts.

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    Essentials of Accounting Past Paper PDF 2019

    Description

    Test your knowledge of accounting principles and practices with this examination on Essentials of Accounting. It covers key concepts including accrual accounting, types of accounts, errors, and reconciliation statements. Prepare to answer a mix of short and detailed questions that will challenge your understanding of fundamental accounting topics.

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