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CBSE, New Pattern, Accountancy, Class 11, , (Term I)

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ARIHANT PRAKASHAN (School Division Series), , © Publisher, No part of this publication may be re-produced, stored in a retrieval system or by any, means, electronic, mechanical, photocopying, recording, scanning, web or otherwise, without the written permission of the publisher. Arihant has obtained all the information, in this book from the sources believed to be reliable and true. However, Arihant or its, editors or authors or illustrators don’t take any responsibility for the absolute accuracy of, any information published and the damage or loss suffered thereupon., , All disputes subject to Meerut (UP) jurisdiction only., Administrative & Production Offices, Regd. Office, ‘Ramchhaya’ 4577/15, Agarwal Road, Darya Ganj, New Delhi -110002, Tele: 011- 47630600, 43518550, , Head Office, Kalindi, TP Nagar, Meerut (UP) - 250002, Tel: 0121-7156203, 7156204, , Sales & Support Offices, Agra, Ahmedabad, Bengaluru, Bareilly, Chennai, Delhi, Guwahati,, Hyderabad, Jaipur, Jhansi, Kolkata, Lucknow, Nagpur & Pune., , ISBN : 978-93-25793-72-9, PO No : TXT-XX-XXXXXXX-X-XX, Published by Arihant Publications (India) Ltd., For further information about the books published by Arihant, log on to, www.arihantbooks.com or e-mail at [email protected], Follow us on, , CBSE, New Pattern

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Contents, Chapter, Introduction to Accounting, , -, , Chapter, Theory Base of Accounting, , -, , Chapter, Source Documents and Accounting Equation, , -, , Chapter, Journal and Ledger, , -, , Chapter, Special Purpose Books, , -, , Chapter, Bank Reconciliation Statement, , -, , Chapter, Depreciation, Provisions and Reserves, , -, , Practice Papers, , -, , CBSE, New Pattern, , -

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Syllabus, Theory :, , Marks, , Time :, , Units, , Minutes, Marks, , PART A, , FINANCIAL ACCOUNTING-I, , Unit, , Theoretical Framework:, Introduction to Accounting, Theory Base of Accounting, , Unit, , Accounting Process:, Recording of Business Transactions,, Bank Reconciliation Statement,, Depreciation, Provisions and Reserves, Total, Project Work Part-, , :, , Marks, , PART A FINANCIAL ACCOUNTING - I, UNIT -, , Theoretical Framework, Introduction to Accounting, — Accounting- concept, objectives, advantages and limitations,, types of accounting information; users of accounting information, and their needs. Qualitative Characteristics of Accounting, Information. Role of Accounting in Business., — Basic Accounting Terms- Business Transaction, Capital, Drawings., Liabilities Non Current and Current . Assets Non Current,, Current ; Fixed assets Tangible and Intangible , Expenditure, Capital and Revenue , Expense, Income, Profit, Gain, Loss,, Purchase, Sales, Goods, Stock, Debtor, Creditor, Voucher, Discount, Trade discount and Cash Discount, Theory Base of Accounting, — Fundamental accounting assumptions: GAAP: Concept, — Business Entity, Money Measurement, Going Concern, Accounting, Period, Cost Concept, Dual Aspect, Revenue Recognition,, Matching, Full Disclosure, Consistency, Conservatism, Materiality, and Objectivity, , CBSE, New Pattern

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— System of Accounting. Basis of Accounting: cash basis and accrual basis, — Accounting Standards: Applicability in IndAS, — Goods and Services Tax GST : Characteristics and Objective., , UNIT -, , Accounting Process, Recording of Business Transactions, — Voucher and Transactions: Source documents and Vouchers,, Preparation of Vouchers, Accounting Equation Approach: Meaning and, Analysis, Rules of Debit and Credit., — Recording of Transactions: Books of Original Entry- Journal., — Special Purpose books, — Cash Book: Simple, cash book with bank column and petty cashbook, — Purchases book, — Sales book, — Purchases return book, — Sales return book, Note : Including trade discount, freight and cartage expenses for simple, GST calculation., — Ledger: Format, Posting from journal and subsidiary books, Balancing, of accounts, Bank Reconciliation Statement, — Need and preparation, Depreciation, Provisions and Reserves, — Depreciation: Concept, Features, Causes, factors, — Other similar terms: Depletion and Amortisation, — Methods of Depreciation:, i. Straight Line Method SLM, ii. Written Down Value Method WDV, Note : Excluding change of method, — Difference between SLM and WDV; Advantages of SLM and WDV, — Accounting treatment of depreciation, i. Charging to asset account, ii. Creating provision for depreciation accumulated depreciation, account, , CBSE, New Pattern

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— Provisions and Reserves: Difference, — Types of Reserves:, i. Revenue reserve, ii. Capital reserve, iii. General reserve, iv. Specific reserve, v. Secret Reserve, — Difference between capital and revenue reserve, , Project Work, The project work would be divided into two parts i.e. Term I, marks and, Term II, marks for the purpose of assessment and will be covered as, detailed below., Comprehensive project of any sole proprietorship business. This may state with, journal entries and their ledger postings, preparation of Trial balance. Trading and, Profit and Loss Account and Balance Sheet. Expenses, incomes and profit loss ,, assets and liabilities are to be depicted using pie chart bar diagram., , TERM I, Particulars, Project Till Ledger Posting and Balancing of Accounts, , Syllabus (Rationalised), PART A: FINANCIAL ACCOUNTING - I, Unit-2: Accounting Process, Bank Reconciliation Statement:, l Bank Reconciliation Statement with Adjusted Cash Book, Depreciation, Provisions and Reserves:, l Treatment for Disposal of Asset, , CBSE, New Pattern, , Marks

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CBSE New Pattern ~ Accountancy XI (Term I), , 03, , 01, Introduction to, Accounting, Quick Revision, 1. Meaning of Book-keeping It is an art of, recording in the books of accounts, the, monetary aspect of commercial and financial, transactions. Book-keeping is concerned with, record keeping or maintenance of books of, accounts., 2. Meaning of Accounting It is the process of, identifying, recording, classifying,, summarising, interpreting and communicating, financial information relating to an, organisation to the interested users for, judgement and decision-making. Accounting, is a wider concept than book-keeping. It starts, where book-keeping ends., 3. Meaning of Accountancy Accountancy, refers to the entire body of the theory and, practice of accounting. It is the systematic, knowledge of accounting. It tells us why and, how to prepare the books of accounts and, how to summarise the accounting information, and communicate it to the interested parties., 4. Objectives of Accounting, (i), (ii), (iii), (iv), , Systematic recording of business transactions, Calculation of profit and loss, Ascertainment of financial position, Providing accounting information to its users, for decision-making, , 5. Functions of Accounting, (i) Maintaining systematic records, (ii) Communicating the financial results for, decision-making, (iii) Meeting government regulation, (iv) Protecting business assets, (v) Assistance to management, (vi) Stewardship or trusteeship, (vii) Control, , 6. Accounting Process and Cycle Accounting, process starts with identifying financial, transactions, involves recording, classifying, and summarising and ends with interpreting, accounting information and communicating, the result to various concerned parties by, preparing final accounts., The complete sequence, beginning with the, recording of the transactions and ending with, the preparation of the final accounts, is called, accounting cycle., 7. Is Accounting a Science or an Art?, Accounting is both an art as well as a science., Accounting is an art of recording, classifying, and summarising financial transactions. It, helps us in ascertaining the net profit and, financial position of the business enterprise.

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CBSE New Pattern ~ Accountancy XI (Term I), , 04, Accounting is also a science as it is an, organised body of knowledge based on, certain principles., 8. Advantages of Accounting, (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), , Financial information about the business, Assistance to management, Replaces memory, Facilitates comparative study, Facilitates settlement of tax liabilities, Facilitates raising loans, Acts as an evidence in court, Helps at the time of insolvency, Helps in ascertaining the value of, business, (x) Helps in ascertaining the net result of, operations, (xi) Helps in ascertaining financial position, , 9. Limitations of Accounting, (i) Accounting does not indicate the, realisable value, (ii) Ignores the qualitative elements, (iii) Ignores price level changes, (iv) Window dressing, (v) Not free from bias, , 10. Branches of Accounting, (i) Financial Accounting The process of, identifying, measuring, recording,, classifying, summarising, analysing,, interpreting and communicating the, financial transactions and events is, known as financial accounting. The, purpose of this branch of accounting is to, keep a record of all financial transactions., (ii) Cost Accounting It is the process of, ascertaining and controlling the cost of a, product, operation or function. The, purpose of cost accounting is to analyse, the expenditure, so as to ascertain the, cost of various products manufactured by, the firm and fix the prices. It also helps in, controlling the costs and providing, necessary costing information to, management for decision-making., , (iii) Management Accounting It is the use of, accounting techniques for providing, information to help all levels of management in, planning and controlling the activities of, business to enable decision-making., The purpose of management accounting is to, assist the management in taking rational policy, decisions and to evaluate the impact of its, decisions and actions. Management accounting, not only includes cost accounting but also, covers other areas such as capital expenditure, decisions, capital structure decisions, dividend, decisions etc., (iv) Social Responsibility Accounting It is the, process of identifying, measuring and, communicating the social effects of business, decisions to various users to enable judgements, and decision-making by them. It is accounting, for social costs and social benefits., (v) Human Resource Accounting It is the, process of identifying, measuring and, communicating the value of investments made, in human resources of an enterprise., , 11. Different Roles of Accounting in Business, (i), (ii), (iii), (iv), , As a language, As a historical record, As current economic reality, As an information system, , 12. Accounting Information Accounting is a, service activity as it provides necessary financial, information about the business. Accounting, information is basically a qualitative information,, which is financial in nature, about economic, entities that is intended to be useful in making, economic decision., 13. Qualitative Characteristics of Accounting, Information, (i) Reliability, (iii) Understandability, , (ii) Relevance, (iv) Comparability, , 14. Types of Accounting Information, (i) Information relating to profit or surplus, (ii) Information relating to financial position, (iii) Information about cash flow

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CBSE New Pattern ~ Accountancy XI (Term I), , 15. Users of Accounting Information Users of, accounting information may be categorised, into internal users and external users., (i) Internal Users, (a) Owners, (b) Management, (c) Employees and workers, (ii) External Users, (a) Investors and potential investors, (b) Unions and employee groups, (c) Lenders and financial institutions, (d) Suppliers and creditors, (e) Customers, (f) Government and other regulators, (g) Social responsibility groups, (h) Competitors, , 16. Need of Accounting Information by Users, The purpose of financial statements is to cater, for the needs of the users that could lead them, to make better financial decisions. These, needs are as follows, (i) Owners Owners use the accounting, information for analysing the viability and, profitability of their investments, to pay, dividends and to determine any future, course of action., (ii) Management Management needs the, accounting information to evaluate the, performance of the organisation and position, also for planning, controlling and, decision-making process., (iii) Employees Employees use the accounting, information to find out the financial health,, amount of sales and profitability of business, to determine their job security, the, possibility of future remuneration, retirement, benefits and employment opportunities., (iv) Investors They need information to assess, whether to buy, hold or sell their, investments. Also they are interested to, know the ability of the business to survive,, prosper and to pay dividend., (v) Lenders They are interested to know, whether their loan principal and interest will, be paid when due., (vi) Suppliers and Creditors They are also, interested to know the ability of the, enterprise to pay their dues, that helps them, , 05, to decide the credit policy for the relevant, concern, rates to be charged and so on., , 17. Basic Accounting Terms, (i) Business Transaction It means a, transaction or event entered into by various, parties and recorded in the books of, accounts. It can be a cash transaction or a, credit transaction., (ii) Account It is a summarised record of, transactions relating to a particular head at, one place. In an account, not only the, amount of transactions are recorded but, their effects and directions are also recorded., (iii) Capital Capital is the amount invested by, the owner in the business. It may be in the, form of cash or kind. In accounting, ‘business’ and ‘owner’ are separate and, distinct entities. Hence, capital is a liability, of the business towards the owners., In accounting, such liability is also called, internal liability or internal equity or owner’s, equity., (iv) Drawings It is the amount withdrawn by, the owner in cash or assets from the business, for personal use. Drawings reduce the capital, of the owner in the business., (v) Liabilities It means the amount owed, (payable) by the business to outsiders and to, owners. Liabilities to outsiders are called, external or outside liabilities or simply, liabilities. e.g. creditors, bank overdraft, etc., These are the obligations or debts that an, enterprise has to pay at sometime in future., Liabilities can be classified as, Current Liabilities These are the liabilities, which are payable within a year. e.g., creditors, bills payable, short-term loans, etc., Non-current Liabilities Anything not, classified as current liability is non-current, liability. These are payable after a period of, more than one year. e.g. debentures,, long-term loans, etc., (vi) Assets Assets are property (movable or, immovable) or legal rights owned by an, individual or business. These are the, economic resources of an enterprise that can, be usefully expressed in monetary terms.

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06, Assets can be classified into, Current Assets These are the assets which, are purchased to convert them into cash, within a short period of time, i.e. one year., e.g. debtors, stock, etc., Non-current Assets Anything not classified, as current asset is non-current asset. These, are the assets held by the business not with, the purpose to resell but are held either as, investment or to facilitate business, operations, e.g. fixed assets such as land,, building, machinery, long-term investments,, etc., (vii) Fixed Assets There are following two types, of fixed assets, Tangible Assets These are the assets which, have a physical existence, i.e. they can be, seen or touched, e.g. land, buildings,, furniture, vehicle, etc., Intangible Assets These are the assets, which do not have physical existence, i.e., they cannot be seen or touched, e.g., trademarks, copyrights, patents, goodwill, etc., (viii) Receipts The amount received or receivable, by selling assets, goods or services is known, as receipts., The receipts are categorised into two parts, Capital Receipts The amount received or, receivable by selling assets is known as, capital receipts. e.g. sale of building,, furniture, etc. These receipts are, non-recurring., Revenue Receipts The amount which is, received or receivable against the sale of, goods or services is known as revenue, receipts. These receipts are recurring., (ix) Expenditure It is the amount spent or, liability incurred for acquiring assets, goods, and services., Types of expenditures are, Capital Expenditure It is the expenditure, incurred to acquire assets or improving the, quality of existing assets which will increase, the earning capacity of the business. These, expenditures give benefit to the business for, more than one accounting year, e.g. purchase, of machinery. It is non-recurring., , CBSE New Pattern ~ Accountancy XI (Term I), , Revenue Expenditure It is the amount, spent to purchase goods and services that, are consumed during the accounting period., Revenue expenditure does not increase the, earning capacity rather maintains the, existing earning capacity. It is recurring., Deferred Revenue Expenditure It is, revenue expenditure in nature but provides, benefits for more than one accounting, period, e.g. heavy advertising expenditure, to promote a new product will give benefit, for more than one accounting period and, hence, is a deferred revenue expenditure., (x) Expenses Cost incurred by a business in, the process of earning revenue are known as, expenses. It is a value which has expired, during the accounting period. It may be, (a) Prepaid expense, (b) Outstanding expense, (xi) Income It is increase in economic benefits, during an accounting period in the form of, inflow of assets or decrease of liabilities, that, result in increase in internal equity other than, those relating to contribution from equity, participants., (xii) Profit Excess of revenue of a business over, its cost is termed as profit. Profits are, generally of two types, Gross Profit It means excess of operating, revenues over direct/ operating expenses., Net Profit It means the excess of revenue, over expenses and losses. It increases, owner’s equity., (xiii) Gain It is a profit of irregular or, non-recurring nature. It is a profit that arises, from events or transactions which are, incidental to business such as sale of fixed, assets, winning a court case, appreciation in, the value of an asset, etc., (xiv) Loss The excess of expenses of a period, over its related revenues is termed as loss. It, decreases owner’s equity. It also refers to, money or money’s worth lost (or cost, incurred) without receiving any benefit in, return. e.g. cash or goods lost by theft or a, fire accident, etc. It also includes loss on, sale of fixed assets.

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CBSE New Pattern ~ Accountancy XI (Term I), , 07, , (xv) Goods Goods are the articles or things in, which a business deals. It is a term that, applies to all the items held for sale. They, are thus stock-in-trade of an enterprise which, is purchased or manufactured with a purpose, of selling. For a furniture dealer, furniture is, good, for a vehicle dealer, vehicle is goods., , others. It includes debtors and bills, receivables. These are, Debtors Debtors are persons and/or other, entities who owe to the enterprise an amount, for buying goods and services on credit. The, total amount standing against such persons, and/or entities on the closing date, is shown, in the balance sheet as sundry debtors on the, asset side., Bills Receivable It means a bill of, exchange accepted by a debtor, the amount, of which will be received on future specified, date., Trade Payables The term ‘payables’, includes the amounts due to others., Accounts payable includes trade creditors as, well as bills payable and promissory notes., These are, Creditors Creditors are persons and/or, other entities who have to be paid by the, enterprise an amount for providing the, enterprise goods and services on credit., The total amount standing to the favour of, such persons and/or entities on the closing, date, is shown in the balance sheet as sundry, creditors on the liabilities side., Bills Payable It means a bill of exchange, the amount of which will be payable on the, specified date., Cost The amount of expenditure incurred, or attributable to a specified article, product, or activity is known as cost., Discount It is any type of reduction in the, price of the goods sold., Discount is generally of two types, Trade Discount It is offered at an agreed, percentage of list price, at the time of selling, goods. The objective of allowing trade, discount is to persuade the buyer to buy, more goods., Cash Discount The objective of allowing, cash discount is to encourage the debtor to, pay the dues promptly., Voucher It is a documentary evidence in, support of a transaction, e.g. cash memo,, invoice or bill, receipts, debit/credit notes,, etc., , (xvi) Purchases The term ‘purchases’ is used for, purchases of goods and not fixed assets., Goods are articles purchased for resale or for, producing the finished product which are, also to be sold., The term ‘purchases’ includes both cash and, credit purchases of goods. Goods purchased, for cash are termed as cash purchases and, goods purchased on credit are termed as, credit purchases., (xvii) Purchase Return Goods purchased may be, returned when they are not as per, specification, are defective or due to any, other reasons. Goods returned are known as, purchases return or return outwards., (xviii) Sales It means sale of goods. Sales are total, revenues from goods or services sold or, provided to customers. Sales includes both, cash and credit sales. When goods are sold, for cash, they are termed cash sales and, when sold on credit, they are termed as, credit sales., (xix) Sales Return Goods sold when returned by, the purchaser are termed as sales return or, return inwards., (xx) Stock It is the goods which are held by an, enterprise for the purpose of sale in the, ordinary course of business or for the, purpose of using it in the production of, goods meant for sale., Stock are of following kinds, Stock of Raw Material It includes stock of, raw material used for manufacturing of, goods, e.g. stock of cloth to be used for, making shirts., Work-in-progress It is a stock that is in the, process of being finished, i.e. they are partly, finished goods., (xxi) Trade Receivables The term ‘receivables’, includes the outstanding amount due from, , (xxii), , (xxiii), , (xxiv), , (xxv)

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CBSE New Pattern ~ Accountancy XI (Term I), , 08, , Objective Questions, Multiple Choice Questions, 1. By the nature of multiple definitions, given for accounting, which of these is a, feature of accounting?, (a), (b), (c), (d), , Communicating financial information, Assisting in decision–making, Helping interested users in judgement, All of the above, , 2. Which of these concepts is a process of, give and take with ‘event’ as the end, result of it?, (a), (b), (c), (d), , Measurement, Financial information, Transactions, Communication, , 3. In measurement, what type of, transactions are considered (during the, process of accounting)?, (a) Quantitative, (c) Both (a) and (b), , (b) Qualitative, (d) Can’t say, , 4. Which of the following is the process of, entering business transactions of, financial character in the books of, original entry in terms of money?, (a) Classifying, (c) Interpretation, , (b) Summarising, (d) None of these, , 5. Accounting starts with …… financial, transactions and ends with ……, accounting information., (a), (b), (c), (d), , recording, communicating, classifying, analysing, identifying, analysing, identifying, communicating, , 6. Book keeping is a wider concept than, accounting., (a) True, (c) Partially true, , (b) False, (d) Partially false, , 7. …… refers to the entire body of the, theoretical knowledge of accounting., (a), (b), (c), (d), , Financial management, Accounting, Accountancy, None of the above, , 8. Accounting and Accountancy are one, and the same thing., (a) True, (c) Partially false, , (b) False, (d) Can’t say, , 9. The objectives of accounting are varied., Which of the following are the, objectives of accounting?, (i) Maintain systematic and complete, record of business transactions., (ii) Ascertain financial position of, business., (iii) Provide useful information to various, interested parties., (a) Only (i), (c) (i) and (ii), , (b) Only (iii), (d) All of these, , 10. Accounting information is used to, compare the result of current year with, the previous year to analyse the changes., (a), (b), (c), (d), , True, False, Partially true, Can’t say, , 11. Although accounting provides lot of, advantages to the business, it suffers, from certain limitations., Which of these is not a limitation of, accounting?, (a), (b), (c), (d), , It ignores quantitative elements, It is historical in nature, It is not free from personal bias, It is affected by window dressing

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CBSE New Pattern ~ Accountancy XI (Term I), , 12. One of the limitations of accounting is, that the figure given in financial, statements ignore the effects of changes, in price level., (a) True, (c) Partially false, , (b) False, (d) Can’t say, , 13. Which of the following statements is, not true?, (i) Accounting depends on book, keeping., (ii) Accountancy depends on book, keeping and accounting., (iii) Accounting includes summarising the, classified transactions., (iv) Accountancy is narrow in scope., (a) (i), (ii), (iv), (c) Only (iv), , (b) (ii), (iv), (d) None of these, , 14. …… function is routine and clerical in, nature and is increasingly done by, computers now-a-days., (a) Accounting, (c) Book keeping, , (b) Accountancy, (d) Both (a) and (c), , 15. Accounting function is……… in nature., (a) clerical, (c) analytical, , (b) routine, (d) Both (b) and (c), , 16. Recording, classifying and summarising, are also termed as ……… ., (a), (b), (c), (d), , Accounting cycle, Process of accounting, Both (a) and (b), Book keeping, , 17. ……… is the process of grouping the, transactions of one nature at one place,, in a separate account., (a) Recording, (c) Summarising, , (b) Classifying, (d) Interpretation, , 18. What kind of business are required to, perform the ‘recording’ of transaction, in terms of ‘money’?, (a) Small sized, (c) Large sized, , (b) Medium sized, (d) All of these, , 09, 19. Summarising is the art of presenting the, …… in an understandable manner., (a) business information (b) transactions, (c) classified data, (d) All of these, , 20. Accounting indirectly helps the, government agencies., (a) True, (c) Partially true, , (b) False, (d) Partially false, , 21. Which of the following is not, considered as a main branch of, accounting?, (a), (b), (c), (d), , Cost accounting, Management accounting, Financial accounting, Corporate accounting, , 22. The main purpose of which branch of, accounting is to record the business, transactions in a systematic manner and, to ascertain the profit or loss of the, accounting period?, (a), (b), (c), (d), , Cost accounting, Corporate accounting, Financial accounting, Profit and loss accounting, , 23. Each and every branch has its separate, set of objectives. Which of these branches, of accounting directly or indirectly helps, in management decisions?, (i) Cost accounting, (ii) Management accounting, (iii) Financial accounting, (a) Only (ii), (c) (i) and (iii), , (b) (i) and (ii), (d) All of these, , 24. The main purpose of cost accounting is, to ascertain …. of …… rendered by, business., (a), (b), (c), (d), , total cost, goods, per unit cost, goods, per unit cost, services, total cost and per unit cost, goods and, services

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CBSE New Pattern ~ Accountancy XI (Term I), , 10, 25. Cash flow statement is a technique of, management accounting., (a) True, (c) Partially true, , (b) False, (d) Partially false, , 26. Which of this is not an internal user of, acounting?, (a) Owners, (c) Management, , (b) Employees, (d) Potential investors, , 27. Public is not a user of accounting., (a) True, (c) Partially True, , (b) False, (d) Partially false, , 28. …… need information to form policies, at the macro level and for providing, subsidies., (a), (b), (c), (d), , Tax authorities, Competitors, Management, Government and its agencies, , 29. Which of these are example(s) of, short-term creditors?, (a), (b), (c), (d), , Financial institutions, Suppliers of goods and services on credit, Both (a) and (b), None of the above, , 30. Accounting is a means to determine the, current worth of a business enterprise, on the basis of its profit earning, capacity. The given statement highlights, which of the role of accounting?, (a), (b), (c), (d), , As a language, As current economic policy, As a historical record, As an information system, , 31. Information provided by accounting, should be factual and rerifiable. It, should be free from error and bias. It, should be such that users can depend, upon the information provided., The given description describes an, essential qualitative characteristic of, accounting information. Name it., (a) Relevance, (c) Comparability, , (b) Reliability, (d) Understandability, , 32. Which of the following describes, ‘Qualitative characteristic, understandability’ in the best manner?, (a) Decision makers must interpret the, information in the same sense as it was, described to them, (b) Accounting reports must be of common, period, (c) Information must be available in time, (d) None of the above, , 33. Match the columns., Column I, , Column II, , A. Workers, , (i) External users, , B. Employee unions (ii) Internal users, C. Relevancy, , (iii) Available in time, , D. Comparability, , (iv) Common period, related, information, , Codes, A, (a) (i), (b) (i), (c) (ii), (d) (ii), , B, (ii), (ii), (i), (i), , C, (iii), (iv), (iii), (iv), , D, (iv), (iii), (iv), (iii), , 34. A business transactions is an economic, activity of the business that changes its, financial position. A business, transaction is the consequence of event., (a), (b), (c), (d), , True, False, Partially true, Partially false, , 35. Accounts are generally divided into, different segments. In how many, segments, all accounts are divided, based on the nature of transactions?, (a) 2, (c) 4, , (b) 3, (d) Can’t say, , 36. Pick the odd one out., (a), (b), (c), (d), , Owner’s equity, Drawings, Net worth, Net assets

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CBSE New Pattern ~ Accountancy XI (Term I), , 37. The following equations shows the, relationship between assets, liabilities, and capital. Which of the following is, the correct equation?, (a), (b), (c), (d), , Capital = Liabilities − Assets, Liabilities = Capital − Assets, Assets = Liabilities + Capital, Capital = Assets + Liabilities, , (b) Bills payable, (d) Creditors, , 39. Intangible assets are those assets which, do not have a physical existence and, cannot be seen and felt. Therefore,, intangible assets are not valuable assets., (b) False, (d) Can’t say, , 40. Which of the following assets is/are, known as ‘active assets’?, (a), (b), (c), (d), , Tangible assets, Intangible assets, Current assets, Both (a) and (b), , True, False, Partially false, None of the above, , 44. Which of the following defines loss in, the correct manner?, (i) Result of the business for a period, when total expenses exceed the total, revenues., (ii) Loss due to fire, theft, accident against, which the firm receives no benefit., (a), (b), (c), (d), , Only (i), Only (ii), Both (i) and (ii), Neither (i) nor (ii), , the suppliers, these returns are termed as, ……… ., , realised in cash or no further benefit, can be derived from these assets., Realisable assets, Nominal assets, Current assets, Real assets, , 42. Match the columns., Column I, , (a), (b), (c), (d), , 45. When purchased goods are returned to, , 41. …… are those assets which cannot be, (a), (b), (c), (d), , A B C D, (b) (ii) (iii) (iv) (i), (d) (iv) (i) (ii) (iii), , gain are the same thing., , liabilities?, , (a) True, (c) Partially false, , Codes, A B C D, (a) (i) (ii) (iii) (iv), (c) (iii) (iv) (i) (ii), , 43. In the context of business, profit and, , 38. Which of these is not a part of current, (a) Bank overdraft, (c) Debentures, , 11, , Column II, , (a) Return inwards, (c) Return outwards, , (b) Inward returns, (d) Outward returns, , 46. X is a part of inventory of a firm. X, needs further processing for converting, into finished products i.e X consists of, partly finished goods or semi-finished, goods. Identify X., (a), (b), (c), (d), , Inventory of raw material, Inventory of work-in-progress, Inventory of finished goods, Inventory of stock-in-trade, , A. Capital expenditure, , (i) Advertising, , B. Revenue, Expenditure, , (ii) Cost of goods, sold, , C. Deferred Revenue, Expenditure, , (iii) Building, , bills of exchange drawn on ………, received by way of endorsement from, them., , D. Expenses, , (iv) Benefit, received in, one year, , (a), (b), (c), (d), , 47. Bills ……… is an accounting term for, , payable, debtors, receivable, creditors, payable, creditors, receivable, debtors

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CBSE New Pattern ~ Accountancy XI (Term I), , 12, 48. Discounts are recorded in books of, accounts., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , 49. Stores is one of the accounting terms, used to describe certain kind of materials, in the production process. Which of the, followng is an example of stores?, (a), (b), (c), (d), , Lubricants, Spare parts of machinery, Packing materials, All of the above, , 50. A person or an enterprise which is not, in a position to pay its debts is called, ……… ., (a), (b), (c), (d), , Solvent, Insolvent, Bad debtor, Both (b) and (c), , Assertion-Reasoning MCQs, Direction (Q. Nos. 51 to 55) There are, two statements marked as Assertion (A), and Reason (R). Read the statements and, choose the appropriate option from the, options given below, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct, explanation of Assertion (A), (c) Assertion (A) is false, but Reason (R) is true, (d) Assertion (A) is true, but Reason (R) is false, , 51. Assertion (A) Accounting is an art as it, involves recording, classifying,, summarising business transactions with, a view to ascertain the net profit., Reason (R) Accounting is a science, since it is based on certain specified, principles and accounting standards., , 52. Assertion (A) Environmental, protection groups are one of the, multiple external users of accounting, information., , Reason (R) Social responsibility groups, want to know the impact of business on, environment and steps taken by an, enterprise for the protection of, environment., , 53. Assertion (A) Book keeping involves, summarising the classified transactions, in the form of profit and loss account, and balance sheet., Reason (R) Book keeping is an art of, recording in books of accounts, the, monetary aspect of commerical or, financial transactions. It is concerned, with record keeping maintenance of, books of accounts., , 54. Assertion (A) If Cash = ` 20,000,, , Machinery = ` 30,000, Stock = ` 10,000,, Creditors = ` 40,000, then net worth of, firm = ` 20,000., Reason (R) Capital = Liabilities − Assets., , 55. Assertion (A) Prepaid expenses are a, part of current assets., Reason (R) Current assets involves, assets which can be converted into cash, within one year as well as assets for, which service or benefit will be, available against these assets without, further repayment., , Case Based MCQs, Direction Read the following case study, and answer questions 56 to 60 on the, basis of the same., Sen and Shetty are two friends who both have, just attended their first class of accountancy., The friends were intrigued by the different, branches of accounting and their widespread, application., Sen personally liked the branch of accounting, in which fund flow statement and budgetary, control is used and that branch helps in, planning and controlling of operations.

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CBSE New Pattern ~ Accountancy XI (Term I), , As the concept of accounting was further, explored, they began discussing the different, users of accounting. Sen said that he finds it, interesting that even the employees demand, information relating to business., Shetty said he finds more interesting the fact, that even competitors want information on, the relative strengths and weaknesses of the, enterprise and for making comparisons., Shetty further said that even accounting helps, owners to compare one year’s costs,, expenses, and sales with those of other years., However, they were quite shocked by the fact, that the management-worker relations was, not taken into consideration in the, accounting., Meanwhile, Sen and Shetty had an argument, at the end of the discussion. Sen was saying, that accounting is an art whereas Shetty was, saying that accounting is a science. Their, teacher came in and said something to them, which made them stop the argument., , 56. Which branch of accounting is liked by, Sen?, (a), (b), (c), (d), , Financial accounting, Cost accounting, Management accounting, Tax accounting, , 57. Shetty talked about which type of users, of accounting?, (a), (b), (c), (d), , Internal users, External users, Both (a) and (b), None of these, , 58. Which advantage of accounting is being, talked by Shetty in last part of first para?, (a), (b), (c), (d), , Provides information regarding profit and loss, Provides completes and systematic record, Enables comparative study, Evidence in legal matters, , 13, 59. Which limitation of accounting is being, talked by them?, (a), (b), (c), (d), , Influenced by personal judgement, Omission of qualitative information, Incomplete information, Based on historical costs, , 60. What might have their teacher said to, solve their argument?, (a) Sen, please understand, Shetty is correct in, this situation, (b) Shetty, please understand, Sen is correct in, this situation, (c) Both are correct, (d) None is correct, , Direction Read the following case study, and answer questions 61 to 65 on the, basis of the same., Ben and Jones started with Cash `10,000 and, Machinery `1,00,000. They decided to set up, a production line for PPE kits for the, protection from Covid 19 virus. As their, demand expanded, they decided to purchase, one more machinery. For the same, they took, bank overdraft and purchased the machinery., The quality of the company’s product was, very high and therefore, it could develop a, reputation for itself in the market and, business was flourishing., After 1.5 years, their old machinery turned, obsolete so they decided to sell the same., They sold it and got some cash proceeds. To, further increase the brand presence among, the concerned stakeholders, they decided to, run advertisements from the cash proceeds of, machinery sold., As more and more customers demanded their, product, they decided to launch a discount for, bulk purchases. The discount was not to be, recorded in the books of accounts. This, campaign was successful and they earned lot, of profits from the same.

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CBSE New Pattern ~ Accountancy XI (Term I), , 14, 61. What was the capital initially invested?, (a) ` 10,000, (c) ` 1,10,000, , (b) ` 1,00,000, (d) Can’t be determined, , 62. Which type of liability is discussed in, the passage?, (a) Non-current, (c) Both (a) and (b), , (b) Current, (d) Can’t be determined, , (a) Tangible, (c) Current, , (b) Intangible, (d) Both (a) and (c), , 64. The passage involves capital receipts, (apart from initial capital invested)., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , 65. Which type of discount is being, discussed in the last part of passage?, , 63. Which asset is discussed in the line,, “The quality of the company’s product, was very high and therefore, it could, develop a reputation for itself in the, market and business was flourishing”?, , (a), (b), (c), (d), , Trade discount, Cash discount, Both (a) and (b), Can’t be determined, , ANSWERS, Multiple Choice Questions, 1. (d), 11. (a), 21. (d), , 2. (c), 12. (a), 22. (c), , 3. (a), 13. (c), 23. (d), , 4. (d), 14. (c), 24. (d), , 5. (d), 15. (c), 25. (a), , 6. (b), 16. (c), 26. (d), , 7. (c), 17. (b), 27. (b), , 8. (b), 18. (d), 28. (d), , 9. (d), 19. (c), 29. (b), , 10. (a), 20. (a), 30. (b), , 31. (b), 41. (b), , 32. (a), 42. (c), , 33. (c), 43. (b), , 34. (b), 44. (c), , 35. (a), 45. (c), , 36. (b), 46. (b), , 37. (c), 47. (d), , 38. (c), 48. (c), , 39. (b), 49. (d), , 40. (c), 50. (b), , 53. (c), , 54. (d), , 55. (a), , 58. (c), , 59. (b), , 60. (c), , 61. (c), , 62. (b), , 63. (b), , 64. (a), , 65. (a), , Assertion-Reasoning MCQs, 51. (b), , 52. (a), , Case Based MCQs, 56. (c), , 57. (c), , EXPLANATIONS, 2. In transactions, there is money paid/received, in exchange of good/service rendered/, received., , 3. Only those transactions which can be, measured in monetary terms are considered., , 4. The process/step described in the question is, ‘recording’., , 6. Accounting is a wider concept than book, keeping as it starts where book keeping ends., Moreover, book keeping is a part of, accounting., , 8. Accountancy is the theory part of accounting, whereas accounting relates to applying the, knowledge of accountancy practically., , 11. Accounting ignores qualitative information/, elements., , 13. Accountancy is broader in scope., 20. Accounting performs the function of helping, government agencies by supplying them the, business information and helps in deciding, the tax and other laws., , 23. Cost accounting helps the management in, exercising strict control over cost., Management accounting presents management, information to assist in the proces of planning, and controlling of operations., Financial accounting provides information, about profit to management.

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CBSE New Pattern ~ Accountancy XI (Term I), , 27. Public at large is interested in knowing future, plans of enterprises as a source of, employment and provider of amenities in the, locality., , 34. An event is the consequence of transaction., 35. Based on the nature of transaction, account, has debit side and credit side., , 36. Three of the options are other names of, capital., , 38. Debentures are non-current liabilities because, their payment falls due after more than one, year., , 39. Intangible assets are valuable assets., Intangible assets help the firm in earning, profits as much as tangible assets., , 43. Profit is defined as the excess of total revenues, over total expenses of a business whereas gain, is a monetary benefit, profit or advantage, resulting from events or transaction which are, incidental to business., , 48. Discounts are of two types: Trade discount, and cash discount. Trade discounts are never, recorded in books of accounts whereas cash, discounts are always recorded in the books of, accounts., , 49. Stores are materials held by an enterprise for, the purpose of consumption in business and, not for sale., , 15, 51. Art is the technique of achieving some, pre-determined objectives and accounting is, also done with some pre-determined, objectives., , 53. Accounting involves summarising the, classified transactions in the form of profit, and loss account and balance sheet., , 54. Capital = Assets − Liabilities, ∴Net Worth (Capital), = ( 20, 000 + 30, 000 + 10, 000 ) − 40, 000, = ` 20, 000, , 59. Line “……… the management-worker, relations was not taken into consideration in, the accounting”., , 60. Accounting is an art as well as science., 61. Total Assets – Liabilities, = 10,000 + 1,00,000 – 0 = ` 1,10,000., , 62. The passage talks about bank overdraft., 63. The given line point towards goodwill which, is an intangible (non-current) asset., , 64. The passage talks about amount received, from sale of fixed asset in the line, “After 1.5, years, their old machinery turned obsolete, so they decided to sell the same. They sold, it and got some cash proceeds.”, , 65. The passage says, “The discount was not to, be recorded in the books of accounts”. This, is an characteristic of trade discount.

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16, , CBSE New Pattern ~ Accountancy XI (Term I), , 02, Theory Base of, Accounting, Quick Revision, Theory base of accounting comprises of, concepts, conventions, principles, rules,, standards and guidelines developed, to, provide uniformity and consistency to, accounting records and enhance its utility, to, various users (i.e. internal and external) of, accounting information., 1. Generally Accepted Accounting, Principles (GAAP) It refers to the rules or, guidelines adopted, for recording and, reporting of business transactions, in order to, bring uniformity in the preparation and, presentation of financial statements., 2. Fundamental Accounting Assumptions, (i) Going Concern Concept/Assumption, According to this concept, it is assumed that, the business firm would continue its, operations indefinitely, i.e. for a fairly long, period of time and would not be liquidated in, the foreseeable future. All the transactions are, recorded in the books on the assumption that, it is a continuing enterprise., (ii) Consistency Concept/Assumption, According to the consistency concept,, accounting practices once chosen and, followed should be applied consistently over, the years., It directly helps the financial statements to, be more understandable and comparable., , This concept is particularly important when, alternative accounting practices are equally, acceptable., (iii) Accrual Concept/Assumption According, to this concept, a transaction is recorded at, the time, it takes place and not at the time, when settlement is done., In other words, revenue is recorded when, sales are made or services are rendered and, it is irrelevant as to when cash is received, against such sales., Similarly, expenses are recorded at the time, they are incurred and it is irrelevant as to, when payment is made in cash for such, expenses., , 3. Accounting Principles, (i) Business Entity or Accounting Entity, (Separate Entity) Principle According to, this principle, business is treated as a, separate entity distinct from its owners., Recording of accounting information is, done, considering this principle., A separate account by the name of ‘capital’, is maintained for the money invested by the, owner in the business., Business owes money to the owner to the, extent of his capital just like it owes money, to lenders and creditors who are outside, parties to the business.

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17, , CBSE New Pattern ~ Accountancy XI (Term I), , (ii) Money Measurement Principle, According to this principle, only those, transactions which can be expressed in, terms of money are recorded in the books, of accounts e.g. sale of goods, payment of, expenses, receipt of income, etc., Another aspect of this principle is that the, transactions that can be expressed in terms, of money have to be converted in terms of, money before being recorded., (iii) Accounting Period Principle Accounting, period refers to the span of time at the end, of which the financial statements of an, enterprise are prepared, to know whether it, has earned profits or incurred losses during, that period and what exactly is the position, of its assets and liabilities at the end of that, period. It is also known as periodicity, principle or time period principle., According to this principle, the life of a, business is divided into smaller periods so, that its performance can be measured on, regular basis or intervals., (iv) Full Disclosure Principle According to, this principle, there should be reporting of, all the significant information relating to the, economic affairs of the business and it, should be complete and understandable., The information disclosed should be, material and significant which in turn, results in better understanding., (v) Materiality Principle Materiality principle, states the relative importance of an item or, an event with respect to the particular, business., An information is material, if it has the, ability to influence or affect the, decision-making of various parties, interested in accounting information, contained in financial statements., It is a matter of judgement to decide, whether a particular information is material, for a business or not. Also, it depends on, the nature and/or amount of that item., (vi) Prudence or Conservatism, Principle The concept of conservatism, (also called ‘prudence’) provides guidance, for recording transactions in the books of, accounts and is based on the policy of, playing safe., , This principle states that ‘Do not anticipate, profits but provide for all possible losses’., In other words, we should make provisions, for probable future expenses and ignore any, future probable gain until it actually accrues., (vii) Cost Concept or Historical Cost Principle, According to this principle, assets are, recorded in the books at the price paid to, acquire it. Assets are recorded in the books of, accounts at their cost price which includes, cost of acquisition, transportation, installation, and making the asset ready for use and this, cost is the basis for all subsequent accounting, of such assets., (viii) Matching Cost or Matching Principle, According to this principle, expenses, incurred in an accounting period should be, matched with revenues during that period,, i.e. when a revenue is recognised in a period,, then the cost related to that revenue also, needs to be recognised in that period to, enable calculation of correct profits of the, business., The matching concept thus, states that all, revenues earned during an accounting year,, whether received during that year or not and, all costs incurred, whether paid during the, year or not should be taken into account, while ascertaining profit or loss for that year., (ix) Dual Aspect or Duality Principle Dual, aspect is the foundation or basic principle of, accounting. According to this principle, every, transaction entered by a business has two, aspects i.e., debit and credit. There may be, more than one debit or there may be more, than one credit., However, the total of all debits and total of all, credits will always be equal. In other words,, we can say that for every debit, there is, always an equal credit. This principle gives, rise to the following accounting equation., Assets = Capital + Liabilities, (x) Revenue Recognition Principle, (Realisation Principle) The concept of, revenue recognition requires that the revenue, for a business transaction should be included, in the accounting records only when it is, realised.

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18, , CBSE New Pattern ~ Accountancy XI (Term I), , Revenue is assumed to be realised when a, legal right to receive it arises, i.e. the point, of time when goods have been sold or, service has been rendered., According to this principle, revenue is, considered to have been realised at the time, when a transaction has been entered and, the obligation to receive the amount has, been established., (xi) Verifiable Objective Concept/, Objectivity Concept (Objective by, principle) According to this principle,, accounting information should be verifiable, and should be free from personal bias., Every transaction should be based on, source documents such as cash memo,, invoices, sales bills, etc., These evidences should be objective which, means that they should state the facts as, they are, without any bias towards either, side., , 4. System of Accounting The system of, recording transactions in the books of, accounts are generally classified into two types, (i) Double Entry System Double entry, system is based on the principle of ‘dual, aspect’ which states that every transaction, has two aspects, i.e. debit and credit., The basic principle followed is that every, debit must have a corresponding credit., Thus, one account is debited and the other, is credited., (ii) Single Entry System This system is not a, complete system of maintaining records of, financial transactions. It does not record, two fold effect of each and every, transaction. Only personal accounts and, cash book are maintained under this system, instead of maintaining all the accounts., No uniformity is maintained under this, system while recording transactions. The, single entry system is also known as, ‘accounts from incomplete records’., , 5. Basis of Accounting, (i) Cash Basis of Accounting Under the cash, basis of accounting, entries in the books of, accounts are made, when cash is received, or paid and not when the receipts or, payment becomes due., , Revenue is recognised at the time when cash, is received and not at the time of sale or, change of ownership of goods. Expenses are, recorded only at the time of actual payments., The difference between total revenue, (receipts) and expenses (payments) is profit, earned or loss suffered., (ii) Accrual Basis of Accounting Under, accrual basis of accounting, revenue is, recognised when sales take place or, ownership of goods and services changes, whether payment for such sales is received or, not, is not relevant. Accrual basis of, accounting is based on realisation and, matching principle., , 6. Meaning of Accounting Standards, Accounting standards are the written, statements consisting of uniform accounting, rules and guidelines issued by the accounting, body of the country (such as Institute of, Chartered Accountants of India) that are to be, followed in the preparation and presentation, of financial statements., However, the accounting standards cannot, override the provision of applicable laws,, custom, usages and business environment in, the country., 7. Needs/Benefits of Accounting Standards, (i), (ii), (iii), (iv), (v), (vi), , Basis of preparing financial statements, Uniformity in accounting methods, Sense of confidence to various users, Help to auditors, Simplifying accounting information, Render reliability to financial statements, , 8. Limitations of Accounting Standards, (i), (ii), (iii), (iv), , There may be a trend towards rigidity., These are not flexible., Accounting standards cannot override the law., Differences in accounting standards are, bound to be because of differences in the, legal system and traditions from one country, to another., , 9. Applicability in Ind-AS AS are applicable to, all types of organisations engaged in any, industrial and business activity except for, purely charitable organisations. In order to, make economy more dynamic, competitive, and boost confidence in international circuit, it

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CBSE New Pattern ~ Accountancy XI (Term I), , is important that the financial statements must be, prepared in accordance with certain standards., Due to this reason, accounting standards are, being converged with International Financial, Reporting Standards (IFRS)., In India too, Ministry of Corporate Affairs in, collaboration with Institute of Chartered, Accountants of India (ICAI) established Indian, Accounting Standards (Ind-AS)., These are applicable to the certain class of, companies under the Companies (Indian, Accounting Standards) Rules, 2015 as adopted, on 16th February, 2015., 10. Meaning of IFRS International Financial, Reporting Standards (IFRS) are issued by, International Accounting Standard Board (IASB)., IASB replaced International Accounting, Standard Committee (IASC) in 2001. IASC was, formed in 1973 to develop accounting standards, which have global acceptance and make different, accounting statements of different countries, similar and comparable., 11. Benefits of IFRS, (i), (ii), (iii), (iv), , Helpful to global enterprises, Helpful to investors, Helpful to industry, Helpful to accounting professionals, , 12. Meaning and Definition of Goods and, Services Tax (GST) The goods and services tax, is a value-added tax levied on most goods and, services sold for domestic consumption. It is paid, by the consumers. However, it is remitted to the, government by the businesses selling the goods, and services., , 19, Goods and Services Tax (GST) provides, revenue for the government., The term GST has been defined in Article, 366 (12A) to mean ‘‘any tax on supply of, goods or services or both except taxes on, supply of the alcoholic liquor for human, consumption.’’, 13. Characteristics of Goods and Services, Tax, (i) It is a comprehensive indirect tax., (ii) GST has four-tier tax rate structure., (iii) Appropriation of tax revenue between, the centre and states., (iv) Components of GST are Central GST,, State GST and Integrated GST (IGST)., (v) Uniform GST rate on goods and services, across all states., , 14. Objectives of Goods and Services Tax, (i) To eliminate classification dispute, between goods and services., (ii) To bring uniformity in tax rates and, automated compliances., (iii) To ensure availability of input tax credit, across the value chain and avoid, cascading effect., (iv) To ensure simplification of registration,, filing of return, tax administration and, compliance., (v) To harmonise tax base, laws and, administration procedures across the, country., (vi) To minimise tax rate slabs and prevent, unhealthy competition among states., (vii) To ensure free movement of goods across, the country without any additional tax.

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20, , CBSE New Pattern ~ Accountancy XI (Term I), , Objective Questions, Multiple Choice Questions, 1. As per this concept under accounting, concepts/assumptions, business is, assumed to continue for a long period, of time in future and there is no, intention of closing it. Which concept is, highlighted here?, (a), (b), (c), (d), , Consistency concept, Going concern concept, Accrual concept, None of the above, , 2. According to consistency concept,, which of the following statements is, correct?, (i) Accounting principles should be, changed year to year to benefit the, organisation., (ii) Accounting principles or methods, should remain same from year to year., (iii) Business firm can change accounting, methods according to the changed, circumstances of business., (a) Only (ii), (c) Only (i) and (iii), , (b) Only (iii), (d) Only (ii) and (iii), , 3. In accrual concept, revenue is recorded, when ……… ., (a), (b), (c), (d), , cash is received, sales are made, goods are delivered, None of the above, , 4. Going concern concept is indespensable, for the proper working of the business., Which of the following events are based, on the concept of going concern?, (a) Outside parties purchase the debentures, and shares of the enterprise, (b) Prepaid expenses, which have no realisable, value are shown as assets in balance sheet, (c) Classification of current and fixed assets is, made in accounting books, (d) All of the above, , 5. Which of the following methods need, not remain consistent from year to year?, (a) Method of depreciation : Straight line or, Written down value, (b) Method of stock valuation : LIFO, FIFO or, HIFO, (c) Both (a) and (b), (d) None of the above, , 6. Even after the existence of consistency, concept, if the accountant feels that, change in a particular method will lead, to the better disclosure of profits and, the financial position of the business,, the changed method may be adopted., (a) True, (b) False, (c) Partially true, (d) Partially false, , 7. According to business entity principle,, business is treated as a unit separate, and distinct from its ……… ., (a) owners, (c) shareholders, , (b) promoters, (d) All of these, , 8. Principle of separate entity is applicable, to only sole proprietorship business., (a) True, (c) Partially false, , (b) False, (d) Can’t say, , 9. Goods used from stock of the business, for business purposes are treated as the, ……… of business but similar goods, used by proprietor for his personal use, are treated as ……… ., (a), (b), (c), (d), , inventory, expenditure, drawings, expenditure, drawings, inventory, expenditure, drawings, , 10. Accrual concept is based on ……… ., (a), (b), (c), (d), , matching principle, dual aspect principle, cost principle, going concern concept

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21, , CBSE New Pattern ~ Accountancy XI (Term I), , 11. Accounting concepts are basic, , 16. The proforma and contents of balance, , assumptions which are taken for any, business and business are considered to, be following them. From the given, options, identify which of the following, cannot be considered a fundamental, accounting assumption?, , sheet and profit and loss account are, prescribed by Companies Act so that, companies show all the relevant, information while preparing the, financial statements. This is done to, ensure that ……… is followed., , (a) Going concern, (c) Accrual, , (a), (b), (c), (d), , (b) Consistency, (d) Materiality, , 12. According to ……… principle, an, event, even though it may be very, important for the business, will not be, recorded in the books of business, unless its effect can be measured in, terms of money with a fair degree of, accuracy., (a), (b), (c), (d), , in the books of account?, (i) Competitor placing better product in, market., (ii) Strike by labour union., (iii) Labours being pair., (b) (ii) and (iii), (d) All of these, , 14. As per the law, which of the following, is the correct accounting period?, 1st April to 31st December, 1st April to 31st March, 1st January to 31st December, Both (b) and (c), , 15. According to ………, the entire life of, business should be divided into timeintervals for the measurement of the, profits of business., (a), (b), (c), (d), , (a), (b), (c), (d), , Accounting period principle, Financial period principle, Periodicity principle, Time period principle, , value of investments of a firm?, , 13. Which of the following will be recorded, , (a), (b), (c), (d), , 17. Pick the odd one out., , 18. Which of the following is correct about, , materiality, money measurement, full disclosure, dual aspect, , (a) (i) and (ii), (c) Only (iii), , accrual concept, dual aspect principle, principle of full disclosure, principle of materiality, , going concern concept, accounting period principle, consistency concept, principle of prudence, , (a) Market value of investments are not shown, anywhere and only book value is shown in, balance sheet, (b) Both market value and book value is shown, in balance sheet and the higher of the two, is accounted for, (c) Market value of investments is shown in, balance sheet and book value is not shown, anywhere, (d) Market value of investments is shown in, footnote and book value of investment is, reflected in balance sheet, , 19. Due to which principle, contingent, liabilities are shown in the balance sheet?, (a), (b), (c), (d), , Dual aspect principle, Principle of full disclosure, Principle of materiality, Going concern concept, , 20. An item is considered to be material if, there is a reason to believe that, knowledge of it would influence the, decision of an informed investor., (a), (b), (c), (d), , True, False, Partially true, Partially false

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22, , CBSE New Pattern ~ Accountancy XI (Term I), , 21. For a large manufacturing, the costs of, , 27. When there are different alternatives, , small tools used in not relevant whereas, it is very relevant for a small roadside, workshop. This fallacy can be, explained by which principle?, , for recording a transaction, the one, having least favourable immediate, effect on profits or capital should be, adopted., , (a), (b), (c), (d), , (a) True, (c) Partially true, , Principle of conservation, Principle of full disclosure, Principle of materiality, Matching principle, , 22. All anticipated losses and gains should, be recorded in the books of accounts., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , 23. As per principle of conservatism, which, of the following is incorrect?, (a) Provision for doubtful debts is created in, anticipation of actual bad debts, (b) Closing stock is always valued at the, realisable value, (c) Joint life insurance policy is shown at the, surrender value, (d) None of the above, , 24. According to principle of prudence,, (a), (b), (c), (d), , outstanding expenses are accounted for, provision for bad debts is created, depreciation is charged on assets, All of the above, , 25. The junior accountant in a fortune 500, company decided to omit the ‘paisa’ in, certain figures and showed the rounded, off figures in financial statements. The, act was found to be correct by senior, accountant because of, (a), (b), (c), (d), , principle of full disclosure, going concern concept, materiality principle, consistency concept, , 26. Principle of …… is an exception to the, principle of full disclosure, (a), (b), (c), (d), , money measurement, materiality, matching, None of the above, , (b) False, (d) Can’t say, , 28. According to the cost principle, an asset, bought is recorded in books at price, ……… ., (a), (b), (c), (d), , at which it was acquired, which is prevailing in market, higher of (a) and (b), lower of (a) and (b), , 29. Cost/Historical cost principle means, that assets will be continuously shown, at their acquisition cost, even if the, asset is depreciable., (a) True, (c) Partially false, , (b) False, (d) Can’t say, , 30. During periods of inflation, the figure of, net profit disclosed by profit and loss, account will be distorted because of, ……… ., (a), (b), (c), (d), , matching principle, historical cost principle, principle of prudence, dual apsect principle, , 31. Which of the following transactions/, events/entries can be attributed to, matching principle?, (i) Outstanding expenses, though not paid, in cash are shown in profit and loss, account., (ii) When insurance premium is paid, partly for next year also, the part, relating to next year will be shown as, expense only next year and not this, year., (iii) Depreciation is charged as per straight, line method each and every year., (a) Only (i), (c) (i) and (ii), , (b) Only (ii), (d) All of these

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23, , CBSE New Pattern ~ Accountancy XI (Term I), , 32. Recognition of cost in the same period, as associated revenues is called ……… ., (a), (b), (c), (d), , Cost principle, Dual aspect principle, Full disclosure principle, Matching principle, , revenues and income received in, advance must be …… from revenues as, per matching principle., (b) ignored, added, (d) None of these, , 34. ‘Double entry system’ is based on, , which accounting principle concept?, (a), (b), (c), (d), , Going concern concept, Business entity principle, Matching principle, Dual aspect principle, , somebody. This co-existence is, explained by ……… ., accrual concept, dual aspect principle, consistency concept, matching principle, , (b) False, (d) Can’t say, , 38. In ………, unpaid expenses are, recorded in books of accounts., (a), (b), (c), (d), , cash basis of accounting, accrual basis of accounting, Both (a) and (b), Can’t be determined, , accounting is/are recognised by, Companies Act, 2013?, (a), (b), (c), (d), , Cash basis of accounting, Accrual basis of accounting, Both (a) and (b), Can’t be determined, , distinction between revenue and capital, items?, Column II, , A. Quality of, management is not, recorded in books, , (i) Full disclosure, principle, , B. Change in method, of valuation of, stock is shown in, footnotes, , (ii) Consistency, concept, , C. Making provision, (iii) Money, for likely bad debts, measurement, should remain, principle, consistent with, previous years, D. Provision should, be made for, pending law suit, against firm, , (a) True, (c) Partially true, , 40. Which basis of accounting makes a, , 36. Match the columns., Column I, , require the use of estimates and, personal judgements., , 39. Which of the following methods of, , 35. Everything a firm owns, it also owes to, (a), (b), (c), (d), , A B C D, (b) (i) (ii) (iii) (iv), (d) (iii) (i) (ii) (iv), , 37. Cash basis of accounting does not, , 33. Incomes receivables must be …… in, , (a) deducted, added, (c) added, deducted, , Codes, A B C D, (a) (iii) (ii) (i) (iv), (c) (iii) (ii) (iv) (i), , (iv) Principle of, conservation, , (a), (b), (c), (d), , Cash basis of accounting, Accrual basis of accounting, Both (a) and (b), Can’t be determined, , 41. Which of these is/are the objectives of, accounting standards?, (a) Better understanding of financial, statements, (b) Minimise diverse accounting policies and, practices with an aim to eliminate them to, possible extent, (c) Enhance reliability of financial statements, (d) All of the above, , 42. Which AS deals with ‘Financial, Instruments: Disclosures’?, (a) AS-29, (c) AS-31, , (b) AS-30, (d) AS-32

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24, , CBSE New Pattern ~ Accountancy XI (Term I), , 43. AS does not apply to purely charitable, organisations., (a), (b), (c), (d), , True, False, Partially true, Can’t say, , applicable?, , Standards (IFRS) are issued by ……… ., IFRS Committee, International Accounting Standards Board, international Accounting Committee, None of the above, , 45. Accounting Standard-26 deals with, (a), (b), (c), (d), , inventories valuation, plant, property and equipment, consolidated financial statements, intangible assets, , 46. Serial number of AS and Ind-AS, correspond with each other with respect, to title., (a) True, (c) Partially false, , (b) False, (d) Can’t say, , 47. Ind-AS 1 deals with, (a), (b), (c), (d), , statement of cash flows, disclosure of accounting policies, plant, property and equipment, None of the above, , 48. Consolidated financial statement is, dealt under which IFRS?, (a) IFRS - 1, (c) IFRS - 10, , A B C D, (b) (i) (ii) (iii) (iv), (d) (ii) (i) (iv) (iii), , 50. On which of these items, GST is not, , 44. International Financial Reporting, (a), (b), (c), (d), , Codes, A B C D, (a) (i) (ii) (iv) (iii), (c) (ii) (i) (iii) (iv), , (b) IFRS -5, (d) IFRS - 15, , 49. Match the columns., Column I, A. Cash flow statement, , Column II, (i) AS-10, , B. Plant, property and, equipment, , (ii) AS-3, , C. Valuation of, inventories, , (iii) AS-2, , D. Accounting for, investments, , (iv) AS-13, , (a), (b), (c), (d), , Sanitary pads, Medicines, Alcoholic liquor, Books, , 51. ……… is levied in the course of interstate supply of goods and services., (a), (b), (c), (d), , Central GST, State GST, Union Territory GST, Integrated GST, , 52. Identify the GST applicable in case X, Ltd. sells goods from Naisk to a vendor, in Mumbai., (a) Central GST, (c) Both (a) and (b), , (b) State GST, (d) Integrated GST, , 53. Central GST and Union Territory GST, is applicable in such a way that if the, prescribed rate is 18%, …… GST will, be levied by centre and …… GST will, be levided by the union territory., (a), (b), (c), (d), , 10%, 8%, 8%, 10%, 9%, 9%, Can’t be determined, , 54. In how many categories is GST divided?, (a) 2, (c) 3, , (b) 4, (d) 6, , 55. Which of the following is/are objectives, of GST?, (a) To maximise tax rate slabs, (b) To restrict the movement of goods across, the country, (c) To eliminate classification dispute between, goods and services, (d) All of the above

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25, , CBSE New Pattern ~ Accountancy XI (Term I), , Assertion-Reasoning MCQs, Direction (Q. Nos. 56 to 60) There are, two statements marked as Assertion (A), and Reason (R). Read the statements and, choose the appropriate option from the, options given below., (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct, explanation of Assertion (A), (c) Assertion (A) is false, but Reason (R) is true, (d) Assertion (A) is true, but Reason (R) is false, , 56. Assertion (A) NOP Ltd. purchased a, machinery of ` 20,000 which is, supposed to last for 20 years. The, accountant decides to spread the cost of, machinery for next 20 years for, calculation of profit and loss., Reason (R) According to consistency, concept, accounting principles and, methods should remain consistent from, one year to another., , 57. Assertion (A) A claim of a very big, sum pending in a court of law against, the enterprise should be brought to the, notice of the users of financial, statements, otherwise the statements, would be misleading., Reason (R) According to principle of, full disclosure, all significant, information relating to the economic, affairs of the enterprise should be, completely disclosed., , 58. Assertion (A) Capital = Liabilities, , − Assets., Reason (R) According to the dual, aspect principle, every business, transaction is recored as having a dual, aspect, one aspect is debit and the other, aspect is credit., , 59. Assertion (A) Cash basis of accounting, is that accounting which records only, cash transactions, i.e. only those, incomes and expenses are recorded, which have been received and paid in, cash respectively. Thus, cash basis of, accounting violates GAAP., Reason (R) Cash basis of accounting, makes a distinction between capital and, revenue items., , 60. Assertion (A) The goods supplied from, Chennai to Lucknow would fetch, Integrated GST., Reason (R) Integrated GST is levied in, the course of inter-state supply of goods, and services., , Case Based MCQs, Direction Read the following case study, and answer questions 61 to 65 on the, basis of the same., Olly and Robin are two friends graduated, from a top college of the country. After the, college, they decide to build a start up in their, hometown, Bengaluru. They decided to start, a subscription service of fruits in the nearby, cities., For obtaining high-quality fruits, they made, 5-year contracts with farmers in and around, Karnataka. They also decided to purchase, machinery for cleansing and quality check of, the fruits. The business of the company, started booming., Two years down the line, they had built a, strong brand and reputation. To leverage the, same, the company decided to venture into, other states as well with the similar service, line., They first expanded to Tamil Nadu and got, great demand. While accounting, company, usually booked a normal loss to account for

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26, , CBSE New Pattern ~ Accountancy XI (Term I), , spoiled fruits that they might get. Moreover,, they charged depreciation on the machinery, to ensure that expenses are distributed over, the years., With all these good practices, after four more, years of operations, the company attained a, unicorn status., , Direction Read the following case study, and answer questions 66 to 70 on the, basis of the same., Golu Plastic Ltd (GPL) is a leading plastic, articles manufacturing company. It was listed, on Indian stock market in 1999. The founders, and promoters of the company hold the, highest number of shares of the company,, approximately around 55%. All these, founders belong to a single family., Unfortunately, all of them died in a car, accident recently. However, the company, continued to exist and grow., , 61. Which concept is highlighted in the fact, that company made long-term contracts, with the farmers?, (a), (b), (c), (d), , Going concern concept, Accrual concept, Consistency concept, Both (a) and (b), , 62. Which AS will be applicable to evaluate, the reputation and brand value of firm?, (a) AS-20, (c) AS-30, , (b) AS-26, (d) AS-2, , 63. “They first expanded to Tamil Nadu, and got great demand.” Which type of, GST is applicable on this supply to, Tamil Nadu?, (a) Centre GST, (c) Integrated GST, , (b) State GST, (d) Both (a) and (b), , 64. Which principle is highlighted in the, line, “While accounting, company, usually booked a normal loss to account, for spoiled fruits that they might get”?, (a), (b), (c), (d), , Business entity principle, Prudence principle, Materiality principle, Full disclosure principle, , 65. The principle highlighted in the line,, “Moreover, they charged depreciation, on the machinery to ensure that, expenses are distributed over the years”, is matching principle., (a), (b), (c), (d), , True, False, Partially false, Can’t say, , In the year 2004, the company imported, multiple machines for producing low-cost, plastic sheets. The machines were recorded at, the price prevailing in 2004 and have been, subjected to depreciation year on year based, on written down value method., The depreciation is treated as a non-cash, expense while preparing the cash flow, statement. When GST was implemented in, 2017, it benefitted the company by streaming, the processes. A single rate of GST was, charged on the supply of the goods and the, process of filing was very simple., , 66. Which principle is highlighted in the, fact that the company continued even, after death of the founders?, (a), (b), (c), (d), , Business entity principle, Money measurement principle, Duality principle, Historical cost principle, , 67. Which principle is highlighted in the, line, ‘‘The machines were recorded at, the price prevailing in 2004”?, (a), (b), (c), (d), , Full disclosure principle, Conservatism principle, Duality principle, Historical cost principle

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CBSE New Pattern ~ Accountancy XI (Term I), , 27, , 68. Which principle/concept is highlighted, , market by supplying high quality products, and customer-friendly service. The owner of, the firm asked the accountant to enter this fact, but accountant denied and gave the correct, reasons. The owner was contended., , in the line,” … and have been subjected, to depreciation year on year based on, written down value method.”?, (a), (b), (c), (d), , Full disclosure principle, Business entity principle, Consistency concept, Accrual concept, , 69. Which AS is required to be followed to, prepare cash flow statements?, (a) AS-1, (c) AS-3, , (b) AS-2, (d) AS-4, , 70. “A single rate of GST was charged on, the supply of the goods …”. Who levy, GST on this common base?, (a), (b), (c), (d), , Centre government, State government, Union territory government, Both (a) and (b), , Direction Read the following case study, and answer questions 71 to 75 on the, basis of the same., Dukuma is an MSME business in the Alwar, district of Rajasthan. It is 40 years old, business of selling hardware parts to local, traders of the district and some other retailers, of Rajasthan. The company has multiple, SKUs and the inventories are valued by their, accountant., The accountant of the enterprise also happens, to be a good friend of the owner of the, enterprise. Therefore, the fees of the, accountant was not paid in the year when, pandemic set in as the firm was going through, cash-crunch. However, the accountant, entered the amount of his fees as expense, even though cash was not paid. He justified, his act by stating some accounting concepts., The accountant further completed the books, of accounts for the year ended 31st, December, 2020. Over the years, the, company has developed a reputation in, , 71. The supplies of the company would be, subjected to Integrated GST., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , 72. Which AS would have been followed, by accountant to value inventories?, (a) AS-1, (c) AS-3, , (b) AS-2, (d) AS-4, , 73. Which principle/concept of accounting, is highlighted in the line, “Therefore,, the fees of the accountant was not paid, in the year when pandemic set in as the, firm was going through cash-crunch., However, the accountant entered the, amount of his fees as expense even, though cash was not paid”?, (a), (b), (c), (d), , Dual aspect principle, Accrual concept, Consistency concept, Cost principle, , 74. The company follows the calendar year, as accounting year. Which principle is, highlighted in the fact that firm divided, the whole life of firm into small, financial years?, (a), (b), (c), (d), , Dual aspect principle, Materiality principle, Prudence principle, Accounting period principle, , 75. “The owner of the firm asked the, accountant to enter this fact but, accountant denied and gave the correct, reasons.” Which principle was used by, accountant to explain the owner?, (a), (b), (c), (d), , Dual aspect principle, Money measurement principle, Full disclosure principle, Accounting period principle

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28, , CBSE New Pattern ~ Accountancy XI (Term I), , ANSWERS, Multiple Choice Questions, 1. (b), 11. (d), 21. (c), , 2. (d), 12. (b), 22. (b), , 3. (b), 13. (c), 23. (b), , 4. (d), 14. (b), 24. (b), , 5. (d), 15. (b), 25. (c), , 6. (a), 16. (c), 26. (b), , 7. (d), 17. (b), 27. (a), , 8. (b), 18. (d), 28. (a), , 9. (d), 19. (b), 29. (c), , 31. (c), 41. (d), , 32. (d), 42. (d), , 33. (c), 43. (a), , 34. (d), 44. (b), , 35. (b), 45. (d), , 36. (d), 46. (b), , 37. (a), 47. (d), , 38. (b), 48. (c), , 39. (b), 49. (c), , 51. (d), , 52. (c), , 53. (c), , 54. (d), , 55. (c), , 58. (c), , 59. (d), , 60. (a), , 63. (c), 73. (b), , 64. (b), 74. (d), , 65. (a), 75. (b), , 66. (a), , 67. (d), , 68. (c), , 69. (c), , 10. (a), 20. (a), 30. (b), 40. (b), 50. (c), , Assertion-Reasoning MCQs, 56. (b), , 57. (a), , Case Based MCQs, 61. (a), 71. (b), , 62. (b), 72. (b), , 70. (d), , EXPLANATIONS, 3. In this concept, it is immaterial whether cash, is received or not., , 4. All the given events are based on the, premise that there will be same future of the, firm., , 5. Methods of accounting are supposed to be, consistent from year to year., , 7. Business entity is treated as a separate entity, from everyone else., , 8. Principle of separate entity is applicable to, all forms of business organisations i.e sole, proprietorship, partnership or a company., , 9. The treatment of goods is to be done as per, business entity principle., , 11. Materiality is a principle., 13. As per money measurement principle, only, those transactions which can be expressed in, money terms should be recorded., , 17. Three of the options are names of, accounting period principle., , 18. As per principle of full disclosure, market, value of investments should be given by way, of a footnote as it is an important/significant, information relating to the organisation., , 21. As per materiality definition, what is material, for one concern may be immaterial for, another., , 22. As per principle of conservatism or prudence,, all anticipated losses should be recorded in, books of accounts, but all anticipated or, unrealised gains should be ignored., , 23. As per principle of conservatism, closing stock, is valued at cost price or realisable value, whichever is less., , 26. According to principle of materiality, items, having an insignificant effect or being, irrelevant to the user, need not be disclosed, whereas according to principle of full, disclosure, all significant information relating, to the economic affairs of enterprise should, be completely disclosed., , 27. This is in accordance with the principle of, conservatism., , 29. According to this principle, cost of, depreciable assets can be reduced, systematically year to year by charging, depreciation and the assets are shown in, balance sheet at cost less depreciation., , 30. Depreciation based on historical assets will be, charged against revenues at current prices., , 34. According to this principle, every business, transaction is recorded as having a dual, aspect, i.e. every business transaction affects, two accounts, one account is debited and, other is credited.

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29, , CBSE New Pattern ~ Accountancy XI (Term I), , 35. Every transaction affect two sides as per dual, aspect principle. Therefore, if firm owns, anything, it also owes to somebody, either, internal creditors or external creditors., , 40. In accrual basis, capital items are written-off, over a period of time as it assumes that their, benefits will be availed over a period of time., , 43. AS only applies to organisations engaged in, any industrial and business activity., , 46. The number and individual elements/title, differ in Ind-AS and AS., , 47. Ind-AS1 deals with ‘Presentation of financial, statements.’, , 52. Both CGST and SGST are applicable on, intra-state sales of goods (Maharashtra in this, case, as both Nasik and Mumbai are in, Maharashtra)., , 53. Half of the prescribed rate of GST is, charged by centre and other half by the, State/UT in case of intra-state (or UT), supply of goods., , 54. GST is divided into input GST and output, GST. Further, input GST and output GST is, divided into 3 categories each, i.e. Centre, GST, State/UT GST and integrated GST., Therefore, there are 6 categories in total., , 56. The correct reason for assertion would be, going concern concept which assumes that the, business will continue to exist for a long, period in the future., , 58. The correct assertion would be, (Debit Side) Assets = Capital + Liabilities, (Credit Side), i.e. Capital = Assets − Liabilities., , 59. The correct reason for given assertion is that, the cash basis of accounting does not follow, matching principle and accrual concept., , 64. According to prudence principle, company, should not anticipate profits but provide for, all possible losses., , 71. Integrated GST is applicable on inter-state, supplies. Here, supply is intra-state (i.e. within, Rajasthan only).

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30, , CBSE New Pattern ~ Accountancy XI (Term I), , 03, Source Documents and, Accounting Equation, Quick Revision, 1. Source Documents It is a written document, which contains details of the transactions, prepared at the time, it is entered into. It is, also referred to as supporting document. It is, of prime importance, as in the books of, accounts, transactions are recorded on the, basis of an evidence., These evidences being the basis of recording, entry are known as source documents. e.g., bills of purchases, invoices for sales, debit and, credit notes, etc. They are as follows, (i) Cash Memo It is prepared by the seller, for, goods sold against cash. Cash memo acts as, an evidence for both the seller and purchaser, of goods., For the purchaser, for goods purchased, against cash and for the seller, for sales made, for cash. It contains details of goods sold,, quantity, rate, total amount received, date of, transactions, etc., (ii) Invoice or Bill It is prepared by the seller,, for goods sold against credit. It contains, details such as party to whom goods are sold,, quantity of goods sold and the total sale, amount. One prepares an invoice but, receives a bill. These two terms are, interchangeable and mean the same thing., (iii) Pay-in-slip It is used for depositing cash or, cheques into bank. It is a form which is, available from a bank, having a counterfoil,, , which is returned to the depositor with, cashier’s signature, as receipt. The counterfoil, gives details regarding the date and the, amount (in cash or cheque) deposited., (iv) Cheque As per Negotiable Instrument Act,, “A cheque is a bill of exchange drawn on a, specified banker and not expressed to be, payable, otherwise than on demand and it, includes the electronic image of a truncated, cheque and a cheque in electronic form.”, (v) Debit Note A debit note is made out, evidencing that a debit has been made to the, account of the party named in the debit note., It details the reason for the debit. The effect, of a debit note is that the indebtedness to the, supplier is reduced or, if the account is, already settled, goods can be purchased, further without payment., (vi) Credit Note A credit note is made out, evidencing that credit has been granted to a, debtor. The effect of a credit note is that the, amount of the customer’s indebtedness is, reduced or, if it is already settled, to enable, the customer to purchase goods to the value, of credit without further payment., , 2. Vouchers It is a document evidencing a, business transaction. A voucher detailing the, accounts that are debited and credited is, prepared on the basis of source documents, such as cash memo, invoice or bill, receipt,, pay-in-slip, cheque, debit and credit notes, etc.

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CBSE New Pattern ~ Accountancy XI (Term I), , 3. Types of Vouchers Basically, vouchers, may be classified into categories as follows, (i) Supporting Vouchers These are also, known as source vouchers or source, documents. These are the documents, which come into existence when a, transaction is entered into., (ii) Accounting Vouchers Accounting, vouchers are the secondary vouchers., These vouchers are a written document, prepared on the basis of supporting, vouchers for accounting and recording, purposes, prepared by an accountant and, countersigned by an authorised person., These accounting vouchers are prepared for, cash as well as non-cash transactions., Accounting vouchers may be classified into, two categories as follows, Cash Vouchers Vouchers which are, prepared at the time of receipt or payment, of cash are known as cash vouchers. It, includes receipt and payment through, cheques., Cash vouchers further can be of the, following two types, ● Debit Voucher These are prepared to, record the transactions involving cash, payments, i.e. when payment is made., ● Credit Voucher These are prepared, to record the transactions involving, cash receipts, i.e. when cash is received., Non-cash Vouchers or Transfer, Vouchers The vouchers which are, prepared for transactions not involving, cash, i.e. non-cash transactions, are known, as non-cash vouchers or transfer vouchers., (iii) Complex Voucher/Journal Voucher, Transactions with multiple debits and, multiple credits are called complex, transactions and the accounting vouchers, prepared for such transaction is known as, complex voucher/journal voucher., (iv) Compound Voucher Vouchers which, record transactions with multiple, debits/credits and one credit/debit are, called compound vouchers., , 31, Compound vouchers are of two types, Debit Voucher Voucher showing, transactions that contains multiple debits and, one credit is called debit voucher., Credit Voucher Voucher showing transactions, that contains multiple credits but one debit is, called credit voucher., , 4. Preparation of Vouchers There is no set, format of an accounting voucher. The design of, the accounting vouchers depends upon the, nature, requirement and convenience of the, business., To distinguish various vouchers, different colour, papers and different fonts of printing are used., 5. Accounting Equation A mathematical, expression which shows that the assets and, liabilities of a firm are equal is known as, accounting equation., An accounting equation is based on dual aspect, concept which states that every transaction has, two aspects debit and credit, for every debit, there is an equal amount of credit and vice-versa., Accounting equation signifies that the assets of a, business are always equal to the total of its, liabilities and capital (owner’s equity)., Accounting equation may be expressed as, Total Assets = Total Equities, or, Assets = Internal Equity + External Equity, or, Assets (A) = Capital (C) + Liabilities (L), The above equation can also be presented in the, following forms, Capital = Assets – Liabilities, or, Liabilities = Assets – Capital, 6. Effects of Transactions on Accounting, Equation Practical steps involved in developing, an accounting equation, Step 1. Ascertain the variables (i.e. assets, liabilities, or capital) of an equation affected by a, transaction.

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32, , CBSE New Pattern ~ Accountancy XI (Term I), , Step 2. Find out the effect (in terms of increase or, decrease) of a transaction on the variables, of an equation., Step 3. Show the effect on the appropriate side of, an equation and ensure that the total of, right hand side is equal to the total of left, hand side., , Nominal, Accounts, , (i) Rules for debit and credit according to, traditional classification (i.e. Personal, Real, and Nominal), , Real, Accounts, , Rules for, Debit, Debit the, receiver, , Rules for, Credit, Credit the, giver, , Debit what, comes in, , Credit, what goes, out, , Credit all, incomes, and gains, , (ii) Rules for debit and credit according to, modern classification or accounting equation, based classification, , 7. Rules of Debit and Credit, , Types of, Accounts, Personal, Accounts, , Debit all, expenses, and losses, , Types of, Accounts, Assets, Accounts, , Rules for, Debit, Debit the, increase, , Rules for, Credit, Credit the, decrease, , Liabilities, Accounts, , Debit the, decrease, , Credit the, increase, , Capital, Accounts, , Debit the, decrease, , Credit the, increase, , Revenue, Accounts, , Debit the, decrease, , Credit the, increase, , Expenses, Accounts, , Debit the, increase, , Credit the, decrease, , Objective Questions, Multiple Choice Questions, 1. The business documents which serves as, the evidence of the business transactions, are known as, (a), (b), (c), (d), , First hand documents, Bills, Notes, Source documents, , 2. Which of the following details is usually, provided on the source documents?, (a), (b), (c), (d), , Nature of transaction, Date, Parties involved, All of the above, , 3. Which of the following statements about, source document is incorrect?, (i) They are required for audit and tax, assessments., (ii) They do not serve as legal evidence in, case of a dispute., , (iii) These documents are written and, authentic proof of the correctness of the, recorded transaction., (a) (ii) and (iii), (c) Only (iii), , (b) Only (ii), (d) All of these, , 4. Source documents are also referred to as, (a), (b), (c), (d), , first information documents, notes, supporting documents, invoices, , 5. Which written document is prepared by, seller for goods sold against cash which, acts as an evidence for both the seller, and the purchaser of goods?, (a) Cash-in-slip, (c) Cash memo, , (b) Cash bill, (d) Voucher, , 6. Rates of items sold are not mentioned, on cash memo., (a) True, (c) Patially true, , (b) False, (d) Can’t say

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33, , CBSE New Pattern ~ Accountancy XI (Term I), , 7. When a trader sells goods on credit, he, prepares a sale ……… which contains, the name of the party to whom goods, are sold, the rate, quantity and the total, amount of sale., (a) memo, (c) invoice, , (b) bill, (d) Both (b) and (c), , 8. Which of the following statements, about original copy of invoice/bill is, correct?, (a) It is kept with seller for making records in, books of accounts, (b) It is made for cash transactions, (c) It is sent to the purchaser, (d) All of the above, , 9. Which of these information is present, on invoice?, (i) Party to whom goods are sold, (ii) Goods sold, (iii) Total sale amount, (a), (b), (c), (d), , (i) and (ii), (ii) and (iii), (i) and (iii), All of the above, , goods are ……… ., (a), (b), (c), (d), , customer, delivered, supplier, delivered, supplier, returned, customer, returned, , 14. Which source document is sent to, inform about the credit made in, account of buyer alongwith the reasons, mentioned in it?, (a) Credit slip, (c) Credit note, , (b) Credit bill, (d) Credit receipt, , 15. A duplicate copy of the credit note is, retained by …… for record purpose., (a) buyer, (c) customer, , (b) seller, (d) Both (b) and (c), , 16. Which of the following source, documents is used for depositing cash, or cheques into bank?, (a) Counterfoil, (c) Cash slip, , (b) Pay-in-slip, (d) Pay note, , 17. Pay-in-slip is a form which is available, , 10. Which source document is issued by a, trader when he receives cash from the, customer?, (a) Receipt, (c) Cheque, , 13. Debit note is sent to a ……… when the, , (b) Cash memo, (d) Pay-in-slip, , from a bank having a counterfoil which, is returned to the depositor with ……, signature and bank’s stamp as receipt., (a) depositor’s, (c) cashier’s, , (b) bank manager’s, (d) Both (a) and (c), , 18. A cheque is considered as an order in, , trader himself/herself for making, records in books of accounts., , writing drawn upon a bank to pay a, specified sum to the bearer or the, person named in it only if it is dated, and signed by the ……… ., , (a) True, (c) Partially false, , (a) drawee, (c) Both (a) and (b), , 11. Original copy of receipt is kept by, (b) False, (d) Can’t say, , 12. In which situation, a source document, containing the date of transaction, the, name of account debited, the amount, and the reasons for debit is prepared?, (a), (b), (c), (d), , When goods are returned to a supplier, When goods are received from a customer, Both (a) and (b), None of the above, , (b) drawer, (d) bearer, , 19. Each cheque has a counterfoil in which, the same details as entered in the cheque, are filled. The counterfoil remains with, the ……… for future purposes., (a), (b), (c), (d), , bank, cashier, account holder, Both (b) and (c)

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34, , CBSE New Pattern ~ Accountancy XI (Term I), , 20. Match the columns., , 26. ……… vouchers are written documents, , A. Cash purchases, , (i) Invoice, , B. Deposited cash in, bank, , (ii) Debit note, , prepared on the basis of supporting, vouchers for accounting and recording, purpose by an accountant and, countersigned by authorised person., , C. Returned goods, , (iii) Pay-in-slip, , (a) Primary, (c) Source, , D. Credit sales, , (iv) Cash memo, , Column I, , Codes, A B C D, (a) (i) (ii) (iii) (iv), (c) (iv) (iii) (i) (ii), , Column II, , A B C D, (b) (iv) (iii) (ii) (i), (d) (iv) (ii) (iii) (i), , 21. On the basis of source documents,, entries are directly made in Journal., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , 22. Which of the following must be a, characteristic of a standard voucher?, (a) It should be printed on good quality paper, (b) Debit or credit amount should be written in, figures against the amount, (c) Description of transaction should be given, account wise, (d) All of the above, , 23. Which of the following dates is irrelevant, with respect to preparation of vouchers?, (a), (b), (c), (d), , Date of transaction, Date of recording transaction, Both (a) and (b), None of the above, , 24. Which of the following is mentioned on, the vouchers at the top of the paper?, (a), (b), (c), (d), , Name of the person preparing it, Amount of the transaction, Signature of the person preparing it, Name of the firm, , 25. The design of the voucher has no set, format and depends upon the nature,, requirements and convenience of, business., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , (b) Secondary, (d) Both (b) and (c), , 27. Accounting vouchers are prepared for, (a), (b), (c), (d), , cash transactions, non-cash transactions, Both (a) and (b), None of the above, , 28. Cash vouchers are type of accounting, vouchers which are prepared for cash, transactions only. Which of the, following are types of cash vouchers?, (a) Cash receipt vouchers and cash payment, vouchers, (b) Debit vouchers and cheque vouchers, (c) Debit vouchers and credit vouchers, (d) Cheque vouchers and credit vouchers, , 29. The vouchers which are prepared for, transactions not involving cash, i.e., non-cash transaction, are known as, ……… vouchers., (a) Credit, (c) Unilateral, , (b) Token, (d) Transfer, , 30. For which of the following, non-cash, voucher is prepared?, (a), (b), (c), (d), , Credit sale of goods, Credit sale of investments, Credit sale of fixed assets, All of the above, , 31. A mathematical expression, which, shows that the …… and …… of a firm, are equal, is known as accounting, equation., (a) liabilities and capital (b) assets and capital, (c) liabilities and assets (d) None of these, , 32. Accounting equation is also known as, ……… equation., (a) Balance sheet, (c) Fundamental, , (b) Arithmetic finance, (d) Transactional

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35, , CBSE New Pattern ~ Accountancy XI (Term I), , 33. A transaction may affect either both, sides of the equation by the same, amount or only one side of the equation, by both increasing and decreasing it by, equal amount., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , 34. Following are the steps involved in, developing an accounting equation (in, particular order). Arrange the steps in, correct sequence., (i) Find out the effect (in terms of increase, or decrease) of a transaction on assets,, capitals or liabilities., (ii) Show the effect on appropriate side of, an equation and ensure that the total of, right hand side is equal to the total of, left hand side., (iii) Ascertain the variables (i.e. assets,, liabilities or capital ) involved in a, transaction., (a) (i), (ii), (iii), (c) (iii), (i), (ii), , (b) (ii), (iii), (i), (d) (iii), (ii), (i), , 35. If a business transaction results in the, increase of assets, there will also be a, corresponding increase in the amount of, (a) liabilities, (c) both (a) and (b), , (b) capital, (d) All of these, , 36. When cash is withdrawn by proprietor,, what is its impact on accounting, equation?, (a), (b), (c), (d), , Decrease in assets, decrease in liabilities, Decrease in assets, decrease in capital, Increase in assets, increase in liabilities, Increase in assets, increase in capital, , 37. There will be ……… by same amount,, when a land is purchased by paying the, amount from bank account., (a), (b), (c), (d), , Increase in asset, increase in liabilities, Increase in asset, decrease in liabilities, Decrease in asset, decrease in liabilities, Decrease in one asset, increase in another, asset, , 38. For which of the following transactions,, assets and capital will decrease by same, amount?, (a), (b), (c), (d), , Goods sold for cash, Fixed asset purchased on credit, Depreciation provided on fixed assets, Goods sold for cash at a profit, , 39. When goods are returned to supplier,, assets and ….. are …… by same amount., (a), (b), (c), (d), , liabilities, increased, liabilities, decreased, assets, increased, assets, decreased, , 40. Which of the following is the correct, accounting equation for repayment of, loan amount of ` 1,00,000 along with, interest of ` 10,000?, (a) Assets = Liabilities + Capital, (1,10,000) (1,10,000), 0, (b) Assets = Liabilities + Capital, (1,00,000) (1,00,000), 0, (c) Assets = Liabilities + Capital, (1,10,000) (1,00,000) (10,000), (d) Assets = Liabilities + Capital, (1,10,000) (1,00,000) (10,000), , 41. Expenses tend to decrease the capital of, business., (a) True, (c) Partially True, , (b) False, (d) Can’t say, , 42. What will be the effect on accounting, equation for outstanding expenses?, (Options are in format of assets,, liabilities, capital)., (a), (b), (c), (d), , Decrease, Decrease, No change, Decrease, No change, Decrease, No change, Increase, Decrease, Decrease, Increase, Decrease, , 43. For which of the following transactions,, capital account will be increased and, decreased by the same amount?, (a), (b), (c), (d), , Income received in advance, Outstanding expenses paid, Interest on drawings provided, Bad debts on insolvency of a debtor

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36, , CBSE New Pattern ~ Accountancy XI (Term I), , 44. Neeraj Ltd. is engaged in a laptop, trading business the total assets of, business are ` 10,40,000 and outside, liabilities are `1,80,000. What will be, the owner’s equity?, (a), (b), (c), (d), , ` 12,20,000, ` 9,60,000, ` 8,60,000, Can’t be determined, , 45. Rules of debit and credit are same for, both liability and capital., (a), (b), (c), (d), , True, False, Partially true, Can’t say, , 46. Services for which prepaid expenses, were paid are now availed by Sonu, Enterprises. What will be its effect on, accounting equation?, (a), (b), (c), (d), , Increase in asset, increase in liabilities, Increase in asset, increase in capital, Decrease in asset, decrease in liabilities, Decrease in asset, decrease in capital, , 47. As the effect of a transaction, capital of, the company increased by ` 2,000 and, assets also increased by ` 4000. Identify, the transaction., (a), (b), (c), (d), , Goods purchased on credit , ` 2,000, Goods costing ` 10,000 sold for ` 8,000, Commission received worth ` 2,000, Both (b) and (c), , 48. What will be the effect of following, transaction on the accounting equation?, Goods sold on credit to X (costing, ` 10,000) for ` 15,000., (a) Assets, (` 15,000); Liabilities, (` 15,000);, Capital, 0, (b) Assets (` 10,000) ; Liabilities, (` 15,000);, Capital, ` 5000, (c) Assets (` 5,000) ; Liabilities, 0; Capital,, (` 5000), (d) None of the above, , 49. From the following information, calculate, the total assets of the business Capital, = ` 80,000; Creditors = ` 60,000, Revenue, during the period = ` 1,00,000 Expenses, during the period = ` 80,000; Value of, unsold stock = ` 20,000, (a), (b), (c), (d), , ` 80,000, ` 1,60,000, ` 1,80,000, ` 1,40,000, , 50. Match the columns., Column I, , Column II, , A. Purchased, goods for cash, , (i) Assets and, liabilities will, decrease, , B. Capital, brought in, , (ii) Assets and capital, will decrease, , C. Paid rent, , (iii) Assets decrease as, well as increase, , D. Paid to, creditors, , (iv) Assets and capital, will increase, , Codes, A B C, (a) (iii) (iv) (ii), (b) (iv) (iii) (i), (c) (iii) (iv) (i), (d) (iii) (i) (iv), , D, (i), (ii), (ii), (ii), , Assertion–Reasoning MCQs, Direction (Q. Nos. 51 to 54) There are, two statements marked as Assertion (A), and Reason (R). Read the statements and, choose the appropriate option from the, options given below., (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct, explanation of Assertion (A), (c) Assertion (A) is true, but Reason (R) is false, (d) Assertion (A) is false, but Reason (R) is true

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37, , CBSE New Pattern ~ Accountancy XI (Term I), , 51. Assertion (A) Auditors can easily, vouch the vouchers and use them as, documentary evidence in future., Reason (R) A serial number is put on, each voucher and the relative source, documents are attached with the voucher., , 52. Assertion (A) A business transaction, may result in change in either assets,, liabilities or capital of firm and as a, result, the total assets might not equate, with total of liabilities and capital., Reason (R) If a business transaction, results in increase of assets, there will, also be a corresponding increase in, amount of either capital or liabilities by, same amount., , 53. Assertion (A) In accounting equation,, each transaction affects both sides of, the equation, i.e. Assets side and, Liabilities + Capital side., Reason (R) Assets of a business are, purchased either from the funds (capital), supplied by the proprietor or from the, funds provided by external parties., , 54. Assertion (A) If goods worth ` 4,000, are sold for ` 3,500 at credit, then assets, will decrease, liabilities will be, unchanged and capital will decrease., Reason (R) In case, goods are sold on, credit, goods (assets) are decreased and, debtors (assets) are increased. Also if, goods are sold at a loss, the capital is, reduced., , Case Based MCQs, Direction Read the following case study, and answer questions 55 to 59 on the, basis of the same., Joe and Jimmy started a bat manufacturing, company. They set up a factory in Meerut, (UP) on a land purchased for ` 40,00,000., They purchased raw material from a trader in, Jalandhar (Punjab) for ` 5,00,000 at credit., , However, they did not like the quality of, some of the goods that were sent and, therefore decided to return the same., The company were producing premium bats., Even some of the domestic players of Indian, cricket team purchased bats from the, company and endorsed the same as well. This, led to mass orders rolling in frequently., After a year, they also started to get bulk orders, from academies, institutes and corporates. On, one instance, they were given an order by NPS, Public School, one of the largest school chains, in the country for bat worth ` 2,50,000., The company took a week to fulfil and, received half the payment while the other half, was due for 6 months later. The company, successfully delivered the bats to the head, office of NPS Public School in Delhi., , 55. What was the accounting equation for, the transaction of land purchased? (The, options are in the format of Assets =, Liabilities + Capital), (a), (b), (c), (d), , 40,00,000 = 0 + 40,00,000, 40,00,000 + (40,00,000) = 0 + 0, 0 = 40,00,000 + (40,00,000), 40,00,000 = 40,00,000 + 0, , 56. The company must have received, ……… from the seller of raw materials, as a source document., (a) cash memo, (c) credit note, , (b) invoice, (d) receipt, , 57. What is issued by the company along, with the goods returned?, (a) Credit note, (c) Bill, , (b) Debit note, (d) Receipt, , 58. As a result of transaction with NPS, school, the company’s net assets, ………, liabilities ……… and capital, ……… . (ignore profit/loss)., (a), (b), (c), (d), , decreased, decreased, unchanged, increased, increased, unchanged, unchanged, unchanged, unchanged, increased, unchanged, unchanged

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38, , CBSE New Pattern ~ Accountancy XI (Term I), , 59. As a result of transaction of ordering, raw material, the liabilities of company, increased., (a), (b), (c), (d), , True, False, Partially true, Can’t say, , Direction Read the following case study, and answer questions 60 to 64 on the, basis of the same., KLR Ltd. is publicly listed company trading, in EV batteries. The company is known to, have an advanced version of EV battery, which can be used in almost all types of EV, cars. As a result of onset of EV trend in India,, company is getting lot of pre-orders., Recently, one of the largest cab aggregators of, India collaborated with the company to get, batteries. Against this order, company, received an advance of ` 10,00,000. When the, EV batteries were delivered, company, received the rest of the payment of, ` 5,00,000., The company sent a source document for, these goods sold. Consequently, the company, deposited the money received in the bank, account., To produce and fulfil the further orders, the, company decided to purchase a new 3D, moulder. It was worth ` 1,00,000 and, company issued a document in writing drawn, upon a specified banker and payable on, demand., The company also employed an experienced, manager to streamline the operations. As a, result, company continued to prosper and its, stock prices also shot up., , 60. What is the accounting equation for, advance received against order? [Use, format Asset = Liabilities + Capital], (a), (b), (c), (d), , 15,00,000 + (15,00,000) = 0 + 0, 10,00,000 + (10,00,000) = 0 + 0, 10,00,000 = 10,00,000 + 0, None of the above, , 61. Which document is highlighted in the, line, “The company sent a source, document for these goods sold”?, (a) Debit note, (c) Cash memo, , (b) Credit note, (d) Bill, , 62. Which document must be used to, deposit money in the bank?, (a) Cheque, (c) Bill, , (b) Pay-in-slip, (d) Receipt, , 63. Which document is highlighted in the, line, “It was worth `1,00,000 and, company issued a document in writing, drawn upon a specified banker and, payable on demand”?, (a), (b), (c), (d), , Cheque, Pay-in-slip, Credit note, Debit note, , 64. Which of following would be, unchanged as a result of transaction of, purchasing 3D moulder of ` 1,00,000?, (a) Capital, (c) Liabilities, , (b) Assets, (d) All of these, , Direction Read the following case study, and answer questions 65 to 69 on the, basis of the same., Pradhan Opticals is a spectacles shop in, Lucknow. The shop procures the frames from, a local frame manufacturing firm. The shop, arranges the lenses from Delhi as and when, orders come in according to specifications by, the customer.

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39, , CBSE New Pattern ~ Accountancy XI (Term I), , After the pandemic, to boast the business, further, it decided to enter into collaborations, with hospital chains to provide the black, spectacles required after the cataract surgery., It shipped 20,000 units of ` 5 each of such, spectacles to the local hospital. This, transaction was on credit basis. However, the, hospital returned 10,000 units as those units, were found to be defective., After 6 months, the hospital chain went, bankrupt and the shop lost its money as bad, debt. It decided to stop the credit policy, altogether so that it prevents losses in the, future., At the end of the year, the company was left, with ` 1,00,000 worth of goods and no, debtors. The company also had a creditor of, raw materials of ` 20,000 and a creditor of a, small machinery (not written off) ` 10,000., , 65. Which document must have been, prepared by Pradhan Opticals in the, line, “It shipped 20,000 units of ` 5, each of such spectacles to the local, hospital. This transaction was on credit, basis”?, , (a) Cash memo, (c) Debit note, , (b) Invoice, (d) None of these, , 66. What was the affect of the return by the, hospitals on the accounting equation?, [Use format Assets = Liabilities +, Capital], (a), (b), (c), (d), , (50,000) = (50,000) + 0, 50,000 = 50,000 + 0, (50,000) + 50,000 = 0 + 0, None of the above, , 67. Bad debts by the hospital had impact, on the capital and liabilities of the firm., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , 68. What was the capital of the firm at the, end of the year?, (a) ` 1,00,000, (c) ` 80,000, , (b) ` 90,000, (d) ` 70,000, , 69. After the units were returned by the, hospital, the shop prepared a source, document and sent it to the hospital., What could it be?, (a) Debit Note, (c) Credit Note, , (b) Bill, (d) Pay-in-slip, , ANSWERS, Multiple Choice Questions, 1. (d), 11. (b), 21. (b), , 2. (d), 12. (a), 22. (d), , 3. (b), 13. (c), 23. (b), , 4. (c), 14. (c), 24. (d), , 5. (c), 15. (b), 25. (a), , 6. (b), 16. (b), 26. (b), , 7. (d), 17. (c), 27. (c), , 8. (c), 18. (b), 28. (c), , 9. (d), 19. (c), 29. (d), , 31. (c), 41. (a), , 32. (a), 42. (c), , 33. (a), 43. (c), , 34. (c), 44. (c), , 35. (d), 45. (a), , 36. (b), 46. (d), , 37. (d), 47. (c), , 38. (c), 48. (d), , 39. (b), 49. (b), , 59. (a), 69. (c), , 60. (c), , 61. (c), , 62. (b), , 63. (a), , 10. (a), 20. (b), 30. (d), 40. (c), 50. (a), , Assertion-Reasoning MCQs, 51. (a), , 52. (c), , 53. (c), , 54. (a), , 57. (b), 67. (b), , 58. (c), 68. (d), , Case Based MCQs, 55. (b), 65. (b), , 56. (b), 66. (c), , 64. (d)

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40, , CBSE New Pattern ~ Accountancy XI (Term I), , EXPLANATIONS, 3. These documents serve as legal evidence in, case of dispute., , 4. Invoices and notes (debit and credit) are just, one of the types of source/supporting, documents., , 6. Item quantity, rate and total amount is, mentioned on the cash memo., , 11. Original copy of receipt is given to the, customer and its duplicate copy is kept for, making records in the books of accounts., , 21. On the basis of source documents, entries are, firstly made in vouchers and then on the, basis of vouchers, recording is made in the, journal., , 23. Only date of transaction is entered and is, relevant while date of recording transaction is, irrelevant., , 32. Accounting equation depicts the fundamental, relationship among the components of, balance sheet., , 36. As drawings are made by the proprietor, it, will reduce the capital as well as cash (asset)., , 37. Due to this transaction, land (asset) will, increase and cash (asset) will decrease., , 38. Value of fixed asset will reduce due to, depreciation and capital will decrease due to, expenses., , 39. Stock (assets) will reduce due to purchase, return and creditors (liabilities) will also, decrease by the same amount., , 40. Payment of interest (expenses) will reduce the, capital, loan (liabilities) will be reduced as it is, paid and cash (assets) will be reduced because, it is used to pay both loan and interest., , 41. Expenses tend to decrease the profit of a, business. Profit is the part of capital. It is, because of this that expenses reduce the, capital., , 42. Outstanding expenses will be treated as a, liability because these are expenses which are, due to be paid, but are not yet paid., , 43. Interest on drawings is an income for the, firm (so increase in capital) and is an expense, for the proprietor (so decrease in capital)., , 44. As per accounting equation,, Assets = Owners equity + Liabilities, 10,40,000 = Owner’s equity + 1,80,000, ∴Owner’s equity = 10, 40, 000 − 1,80, 000, = ` 8,60,000, , 45. According to business entity concept, capital, is also treated as internal liability., , 46. Since an expense is entered into, capital will, decrease and prepaid expense (asset) will be, reduced., , 47. On assets side, cash is increased by ` 2,000., On capital side, income will increase the, capital by ` 2,000 and liabilities are assumed, to be unchanged since, question does not, mention any information., , 48. The correct equation will be, Assets = Liabilities + Capital, ` 5,000 = 0, + ` 5,000, Q Cash would increase by ` 15,000 and goods, would decrease by ` 10,000 leading to total, assets increasing by ` 5,000., Since, company gets a profit ( ` 15,000, − ` 10,000) by selling goods at more than cost,, thus the profit would increase the capital., , 49. Total Assets = Liabilities + Capital, = Creditors + [ Capital + Profit (Revenue −, Expenses)], = 60, 000 + 0 + [80, 000 + 20, 000, (1, 00, 000 − 80, 000 )], = 60, 000 + 1, 00, 000, [Including stock ` 20,000]., = ` 1,60,000, , 50. Transactions effect, A. Cash decrease, stock increase, B. Cash increase, capital increase, C. Cash decrease, capital decrease (rent is an, expense), D. Cash decrease, creditors decrease., , 51. Serial numbers make it easier for accountant, to vouch the vouchers., , 52. As a result of any transaction, the change in, assets and liabilities/capital will be equal., Therefore, the total of assets will be equal to, total of liabilities and capital.

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41, , CBSE New Pattern ~ Accountancy XI (Term I), , 53. In accounting equation, a transaction may, affect only one side for instance, goods, purchased for cash will simultaneously, increase and decrease the asset side by the, same amount., , 54., , Assets = Liabilities + Capital, ( 4, 000 ) + 3, 500 = 0, + (500), ↓, ↓, ↓, Goods, Debtors, Loss booked, decreased increased by deducting capital, , 55. Cash decreases and land increases by the, same amount. Both are assets which are, affected and either liabilities or capital is not, affected., , 56. Invoice is prepared by the seller for goods, sold against credit., , 57. When a buyer returns goods to the seller, he, sends a debit note to the seller as an, intimation of the amount and quantity being, returned and requesting return of money., , 58. The accounting equation is, (2,50,000)+ 1,25,000 + 1,25,000 = 0 + 0, i.e. Goods decreased + Cash increased +, Debtors increased = Liabilities unchanged +, Capital unchanged, , 59. The accounting equation is, 5,00,000 = 5,00,000 + 0, i.e. Raw material increased = Creditors, increased + Capital unchanged, , 60. As a result of advanced received, cash would, increase and advanced received against, orders (liability as money is received but, goods are not delivered yet) increase by the, same day., , 64. Assets = Liabilities + Capital, (1,00,000) + 1,00,000 = 0 + 0, i.e. Cash decreased and 3D moulder, purchased (asset) thus, net assets remain, unchanged along with liabilities and capital., , 66. Amount of goods returned = 10,000 × 5, = ` 50,000, So, debtors decreased (assets decreased) and, stock of goods is increased (assets increased)., , 67. Bad debts decrease the debtors, therefore, assets are decreased. Liabilities are, unchanged and capital is decreased as bad, debts is a loss/expense for the firm., , 68. Assets = Liabilities + Capital, 1,00,000 = 20,000 + 10,000 + Capital, So, Capital = ` 70,000

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CBSE New Pattern ~ Accountancy XI (Term I), , 42, , 04, Journal and Ledger, Quick Revision, 1. Book of Original Entry (Journal) Journal is the book of original entry or prime entry. Journal is a, book in which transactions are recorded in the order in which they occur, i.e. in chronological, order. The process of recording a transaction in a journal is called journalising. An entry made in, the journal is called a journal entry., 2. Format of a Journal, , JOURNAL, Date, (1), , Particulars, (2), , LF, (3), , Amt (Dr), (4), , Amt (Cr), (5), , 3. Simple and Compound Journal Entries The journal entry is the basic record of a business, transaction. It may be simple or compound., (i) Simple Entry When only two accounts are involved to record a transaction, it is called a simple, journal entry. In this, one account is debited and another account is credited with an equal amount., (ii) Compound Entry When the number of accounts to be debited or credited is more than one, entry, made for recording the transaction is called compound journal entry. In other words, it involves, multiple accounts., , 4. Recording in Journal Entries are recorded in journal on the basis of source documents following, the rules of debit and credit., , A Quick Glance of Some Important Journal Entries, Transactions, , Journal Entry, , Cash brought into the business as capital, , Cash/Bank A/c, To Capital A/c, , Dr, , Cash and other assets brought into business, , Building A/c, Plant and Machinery/Furniture A/c, Cash A/c, To Capital A/c, , Dr, Dr, Dr

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CBSE New Pattern ~ Accountancy XI (Term I), , Transactions, , 43, Journal Entry, , Goods purchased on cash, , Purchases A/c, To Cash/Bank A/c, , Dr, , Goods purchased on credit, , Purchases A/c, To Supplier, , Dr, , Cash sales, , Cash A/c, To Sales A/c, , Dr, , Sales of goods on credit, , Customer, To Sales A/c, , Dr, , Opening a bank account, , Bank A/c, To Cash A/c, , Dr, , Purchase of assets for cash, , Assets A/c, To Cash/Bank A/c, , Dr, , Depreciation charged on assets, , Depreciation A/c, To Asset A/c, , Dr, , Sale or disposal of any old asset at a loss, , Cash/Bank A/c, Loss on Sale of Assets A/c, To Asset A/c, , Dr, Dr, , Sale or disposal of any old asset at a profit, , Cash/Bank A/c, To Asset A/c, To Profit on Sale of Assets A/c, , Dr, , Cash withdrawn for personal use, , Drawings A/c, To Cash A/c, , Dr, , Goods withdrawn for personal use, , Drawings A/c, To Purchases A/c, , Dr, , Goods given as chairty, , Charity A/c, To Purchases A/c, , Dr, , Goods returned by the customer, , Return Inwards A/c, To Customer, , Dr, , Goods returned to the supplier, , Supplier’s A/c, To Return Outwards A/c, , Dr, , Withdrawal of cash from bank, , Cash A/c (Office use), Drawings A/c (Personal use), To Bank A/c, , Dr, Dr, , Collection of cash/cheque from customers, (and discount allowed, if any), , Cash/Bank A/c (Net amount), Discount Allowed A/c (Discount), To Customer, , Dr, Dr

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CBSE New Pattern ~ Accountancy XI (Term I), , 44, Transactions, , Journal Entry, , For payment of cash/cheque to suppliers, (and discount received, if any), , Supplier’s A/c, To Cash/Bank A/c (Net amount), To Discount Received A/c (Discount), , Dr, , For abnormal loss of goods (Fire/Stolen), , Bank A/c, (Insurance claim received), or, Insurance Claim A/c, (Insurance claim admitted), Abnormal Loss A/c (Loss), To Purchases A/c, , Dr, , Bad debts, , Bad Debts A/c, To Customer, , Dr, , Recovery of bad debts, , Cash/Bank A/c, To Bad Debts Recovered A/c, , Dr, , Acceptance received of a bill of exchange, on debtor, , Bills Receivable A/c, To Debtor, , Dr, , Acceptance of a bill of exchange, , Creditor, To Bills Payable A/c, , Dr, , Bank charges/Interest etc charged by bank, , Bank Charges/Interest A/c, To Bank A/c, , Dr, , Paid expenses by cheque, , Expenses A/c, To Bank A/c, , Dr, , Dr, Dr, , 5. Ledger A ledger is the principal book of accounting system which contains all the accounts (assets,, liabilities, revenue and expenses). All the transactions recorded in the books of original entry are, transferred to ledger., Ledger is called the principal book/book of final entry as trial balance is prepared from it and, thereafter financial statements are prepared. It is the ultimate destination of all the transactions., The book which contains a classified and permanent record of all the business transactions is called, a ledger., 6. Format of Ledger, , Name of the Account, , Dr, , Date, , Particulars, , JF, , Amt (`), , Date, , Cr, , Particulars, , JF, , Amt (`)

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CBSE New Pattern ~ Accountancy XI (Term I), , 45, , 7. Posting the Entries The process of transferring the entries from the books of original entry, (journal) to the ledger is referred to as posting. Posting is the grouping of all the transactions, in, respect to a particular account at one place which facilitates meaningful conclusion., 8. Process of Posting from Journal to Ledger Posting of account, debited in a journal entry, Step 1. Locate in the ledger, the account to be debited as entered in the journal., Step 2. Enter the date of transaction in the date column on the debit side., Step 3. In the ‘particulars’ column write the name of the account through which it has been debited in, the journal., Step 4. Enter the page number of the journal in the folio column and in the journal write the page, number of the ledger on which a particular account appears., Step 5. Enter the relevant amount in the amount column on the debit side., Note, , It may be noted, when posting an account, credited in a journal entry or for making the entry on the credit, side of that account to be credited, the same procedure is to be followed., , 9. Opening Entry An opening entry is a journal entry by the means of which the various balances, (i.e. assets, liabilities and capital) appearing in the balance sheet of previous accounting period are, brought forward in the books of current accounting period. While passing an opening entry, all, assets account are debited and all liabilities account are credited., 10. Posting an Opening Entry While passing an opening entry all assets account are debited and all, liabilities account are credited., So, in case of an account which has been debited, it will be written on the debit side as ‘To Balance, b/d’ and in case of an account which has been credited it will be written on the credit side as ‘By, Balance b/d’., 11. Balancing of Accounts Balancing of an account is the process of ascertaining the difference, between the total of debits and total of credits appearing in an account., In other words, balancing of an account suggest totalling the two sides of an account and finding the, difference in total of the two sides and writing on the side whose total is short. The difference of, amount will be recorded as ‘Balance c/d’. It may be a debit balance or a credit balance or a nil, balance depending upon whether the debit or the credit side total is higher or are equal., Balancing of an account is necessary to ascertain the net effect of all the transactions posted to that, account during a given period. Generally, personal and real accounts are balanced and nominal, accounts are closed by transferring it to trading and profit and loss account as they are not, balanced., 12. Procedure for Balancing a Ledger Account The basic procedure for balancing a ledger, accounts is as follows, Step 1. Total both the sides of a ledger account (i.e. the debit amount and credit amount column) and, find out the difference in the totals., Step 2. If the debit side total is more than the credit side total, write the difference on the credit side as, ‘By Balance c/d’. If the credit side total is more than the debit side total, write the difference on, the debit side as ‘To Balance c/d’., Step 3. Make the total of the debit side equal to the credit side and draw a double line after the totals., Step 4. Bring forward the balance on the next date. If debit balance, write on the debit side as ‘To, Balance b/d’. If credit balance, write on the credit side as ‘By balance b/d’.

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CBSE New Pattern ~ Accountancy XI (Term I), , 46, , Objective Questions, Multiple Choice Questions, 1. The book in which the transaction is, recorded for the first time is called, ……… ., (a) Ledger, (c) Trial Balance, , (b) Journal, (d) None of these, , 2. Journal is considered as the book of, original entry., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 3. In a journal, transactions are recorded in, chronological order., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 4. When the number of accounts to be, debited or credited is more than one,, entry made for recording the transaction, is called ……… journal entry., (a) single, (c) normal, , (b) compound, (d) None of these, , 5. Which of the following is/are feature(s), of journal?, (i) It is a daily accounting record., (ii) It records both credit and debit aspects, of a transaction., (iii) No explanation of the transactions is, given., (a) Only (i), (c) (i) and (iii), , (b) (i) and (ii), (d) (i) (ii) (iii), , 7. A journal helps in maintaining the, identity of each transaction by keeping a, complete record of each transaction at, one place on a permanent basis., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 8. Which of the following is/are, advantage(s) of maintaining a journal?, (i) As transactions in journal are entered as, and when they take place, the, possibility of omission of a transaction, in the books of accounts is minimised., (ii) Journal facilitates cross checking of, ledger accounts in case a trial balance, does not agree., (iii) It is bulky., (a) Only (i), (c) (i) and (iii), , (b) (i) and (ii), (d) (i) (ii) (iii), , 9. The page number of the ledger account, where the posting has been made from, the journal, is recorded in the ………., column of the journal., (a) date, (c) credit, , (b) debit, (d) ledger folio, , 10. ……… is a brief explanation of the, transaction with necessary details., (a) Date Column, (c) Narration, , (b) Credit Column, (d) Ledger Folio, , 11. Identify the account to be debited and, , journal?, , credited respectively for the following, transaction., Raag commenced business with cash, ` 1,00,000., , (a) To keep a chronological record of all, transactions., (b) To provide the basis for posting into ledger., (c) To analyse each transaction into debit and, credit aspects by using double entry system, of book keeping., (d) All of the above, , (a) Cash account debited with ` 1,00,000 and, Raag account credited with ` 1,00,000., (b) Cash account debited with ` 1,00,000 and, Capital account credited with ` 1,00,000., (c) Capital account debited with ` 1,00,000 and, Cash account credited with ` 1,00,000., (d) None of the above, , 6. Which of the following is a function of a

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CBSE New Pattern ~ Accountancy XI (Term I), , 12. While passing a journal entry, the, accounts of all losses and expenses are, credited., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 13. When goods are purchased, Goods A/c, is debited., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 14. Purchases Return Account is a nominal, account and is credited while passing a, journal entry., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 15. What will be the journal entry if goods, of ` 20,000 are purchased for cash from, Surbhi?, (a) Goods A/c, To Surbhi A/c, (b) Purchases A/c, To Surbhi A/c, (c) Purchases A/c, To Cash A/c, (d) None of the above, , Dr 20,000, 20,000, , 18. What is the journal entry if goods of, ` 20,000 are sold on, (a) S A/c, To Sales A/c, (b) Cash A/c, To Sales A/c, (c) S A/c, To Goods A/c, (d) None of the above, , credit to S?, Dr 20,000, 20,000, Dr 20,000, 20,000, Dr 20,000, 20,000, , 19. Reem purchased furniture worth, ` 50,000 for cash from M/s XYZ Ltd., , The transaction will be shown in the, journal as, (a) Furniture A/c, To XYZ Ltd A/c, (b) Furniture A/c, To Cash A/c, (c) XYZ Ltd A/c, To Furniture A/c, (d) None of the above, , Dr 50,000, 50,000, Dr 50,000, 50,000, Dr 50,000, 50,000, , 20. Agira purchased furniture worth, ` 50,000 on credit from M/s XYZ Ltd., , Dr 20,000, 20,000, , The transaction will be shown in the, journal as, , 20,000, , (a) Furniture account debited with ` 50,000, and XYZ Ltd account credited with `, 20,000., (b) Furniture account debited with ` 50,000, and Cash account credited with ` 20,000., (c) XYZ Ltd account debited with ` 50,000 and, Furniture account credited with ` 20,000., (d) None of the above, , Dr 20,000, , 16. If goods of ` 20,000 are purchased on, credit from Rati, the, (a) Purchases account is debited with ` 20,000, and Rati account is credited with ` 20,000., (b) Purchases account is debited with ` 20,000, and Cash account is credited with ` 20,000., (c) Rati account is debited with ` 20,000 and, Purchases account is credited with `, 20,000., (d) None of the above, , 17. What is the journal entry if goods of, ` 20,000 are sold for cash to B?, (a) Cash A/c, To B A/c, (b) Cash A/c, To Sales A/c, (c) Cash A/c, To Goods A/c, (d) None of the above, , 47, , Dr 20,000, 20,000, Dr 20,000, 20,000, Dr 20,000, 20,000, , 21. Pass journal entry if Plant and, Machinery amounting to ` 2,30,000, purchased by paying ` 30,000 cash, immediately., (a) Plant and Machinery A/c Dr 2,30,000, To Cash A/c, 30,000, To Creditors A/c, 2,00,000, (b) Cash A/c, Dr 30,000, Creditors A/c, Dr 2,00,000, To Plant and Machinery A/c, 2,30,000, (c) Plant and Machinery A/c Dr 2,30,000, To Cash A/c, 30,000, To Suspense A/c, 2,00,000, (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 48, 22. Pass journal entry if goods costing, ` 50,000 are sold for ` 70,000., (a) Cash A/c, To Sales A/c, (b) Cash A/c, To Sales A/c, (c) Cash A/c, To Goods A/c, (d) None of the above, , Dr 50,000, 50,000, Dr 70,000, 70,000, Dr 70,000, 70,000, , 23. What will be the journal entry if, proprietor withdraws ` 35,000 cash for, personal use?, (a) Proprietor A/c, Dr, To Cash A/c, (b) Cash A/c, Dr, To Drawings A/c, (c) Drawings A/c, Dr, To Cash A/c, (d) Cash A/c, Dr, To Proprietor A/c, , 35,000, 35,000, 35,000, 35,000, 35,000, 35,000, 35,000, 35,000, , 24. If a business pays insurance by cheque, of ` 2,500, which of the following, account will be debited?, (a) Insurance account, (c) Cash account, , (b) Cheque account, (d) Bank account, , 25. What will be the journal entry if salary, of ` 5,500 is outstanding?, (a) Outstanding Salary A/c Dr 5,500, To Salary A/c, 5,500, (b) Salary A/c, Dr 5,500, To Outstanding Salary A/c 5,500, (c) Salary A/c, Dr 5,500, To Cash A/c, 5,500, (d) None of the above, , 26. …………….. is an allowance given by, , the seller of goods out of selling price., (a) Credit, (c) Discount, , (b) Bad debt, (d) None of these, , 27. By what amount will be purchases, account debited with, if Riya buys goods, at the list price of ` 1,00,000 from Mary, less 20% trade discount and 2% cash, discount and paid 50% by cheque?, (a) ` 1,00,000, (c) ` 78,000, , (b) ` 80,000, (d) None of these, , 28. By what amount will be bank account, debited with, if goods are sold to Sid at, the list price of ` 4,00,000 less 20% trade, discount and 2% cash discount and paid, 50% by cheque?, (a) ` 3,20,000, (c) ` 1,56,800, , (b) ` 1,60,000, (d) None of these, , 29. What is the net amount if a trader sells, goods of the list price of ` 20,000 at 10%, trade discount and 2% cash discount?, (a) ` 20,000, (c) ` 17,640, , (b) ` 18,000, (d) None of these, , 30. Rebate is a reduction in the value of, goods sold allowed by the seller., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 31. Rebate is usually allowed for, (a), (b), (c), (d), , inferior quality of goods sold, goods sold being not as per specification, Both (a) and (b), None of the above, , 32. Which of the following journal entry, will be passed by a seller for allowing, rebate on goods sold?, (a) Rebate Allowed A/c, Dr, To Purchaser A/c, (b) Purchaser A/c, Dr, To Rebate Allowed A/c, (c) Seller A/c, Dr, To Rebate Received A/c, (d) Seller A/c, Dr, To Rebate Received A/c, , 33. On 10th June, goods worth ` 30,000, were sold to H by IIA Ltd. On 12th, June, H returned goods worth ` 2,000., On 14th June, H pays ` 27,500 in full, settlement of his account., What journal entry will be passed in the, books of IIA Ltd on 14th June?, (a) Cash A/c, Dr 27,500, To H, 27,500, (b) Cash A/c, Dr 27,500, Discount Allowed A/c Dr, 500, To H, 28,000

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CBSE New Pattern ~ Accountancy XI (Term I), , (c) H A/c, To Cash, (d) None of the above, , Dr 27,500, 27,500, , 34. What is the journal entry passed for, inter-state purchase of goods on which, GST is levied?, (a) Purchases A/c, Input CGST A/c, Input SGST A/c, To Cash, (b) Purchases A/c, Input IGST A/c, To Cash, (c) Purchases A/c, Input SGST A/c, To Cash, (d) None of the above, , Dr, Dr, Dr, Dr, Dr, , CGST and SGST @ 9% each, then, what will be the journal entry passed?, (a) S A/c, Dr 3,000, To Sales A/c, 3,000, (b) S A/c, Dr 3,540, To Sales A/c, 3,000, To Output CGST A/c, 270, To Output SGST A/c, 270, (c) S A/c, Dr 3,540, To Sales A/c, 3,000, To Output GST A/c, 540, (d) None of the above, ` 20,000 plus CGST and SGST @ 9%, , CGST and SGST @ 9% each. What, will be the journal entry for the above, transaction?, Dr 10,000, Dr, 900, Dr, 900, 11,800, Dr 10,000, 10,000, Dr 11,800, 10,000, 900, 900, , 36. What is the journal entry passed for, return of intra-state purchase of goods, on which GST is levied?, (a) Cash A/c, Dr, To Purchases Return A/c, To Input CGST A/c, To Input SGST A/c, (b) Purchases Return A/c Dr, Input IGST A/c, Dr, To Cash, (c) Purchases Return A/c Dr, Input SGST A/c, Dr, To Cash, (d) None of the above, , 37. If goods are sold to S for ` 3,000 plus, , 38. If KYU Ltd sells good to Kia for, , Dr, Dr, , 35. Mir bought goods for ` 10,000 plus, , (a) Purchases A/c, Input CGST A/c, Input SGST A/c, To Cash A/c, (b) Purchases A/c, To Cash A/c, (c) Cash A/c, To Purchases A/c, To Input CGST A/c, To Input SGST A/c, (d) None of the above, , 49, , each and she pays the due amount, immediately and avails cash discount, @ 2%, then what will be the journal, entry passed in the books of KYU Ltd?, (a) Bank A/c, Dr 20,000, To Sales A/c, 20,000, (b) Bank A/c, Dr 23,138, Discount Allowed A/c Dr, 472, To Sales A/c, 20,000, To Output CGST A/c, 1,800, To Output SGST A/c, 1,800, (c) Bank A/c, Dr 23,600, To Sales A/c, 20,000, To Output GST A/c, 3,600, (d) None of the above, , 39. Ram withdrew ` 50,000 from bank for, private use. Which account will be, debited while passing journal entry?, (a) Ram, (c) Drawings, , (b) Cash, (d) None of these, , 40. What will be the correct journal entry, for the following?, Placed in fixed deposit at bank by, transfer from current account ` 2,500., (a) Fixed Deposit A/c, Dr, To Bank A/c, (b) Fixed Deposit A/c, Dr, To Current A/c, (c) Current A/c, Dr, To Fixed Deposit A/c, (d) None of the above, , 2,500, 2,500, 2,500, 2,500, 2,500, 2,500

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CBSE New Pattern ~ Accountancy XI (Term I), , 50, 41. If V’s cheque of ` 20,000 is dishonoured, and returned, how will this be recorded, in journal?, (a) V’s account debited with ` 20,000 and, Cheque account credited with ` 20,000., (b) V’s account debited with ` 20,000 and Bank, account credited with ` 20,000., (c) Bank account debited with ` 20,000 and V’s, account credited with ` 20,000., (d) None of the above., , 42. What will be the correct journal entry, for the following?, Purchased machinery from Sunil for, ` 20,000 and paid him by means of a, bank draft for ` 20,020., (a) Machinery A/c, Dr 20,000, To Bank A/c, 20,000, (b) Machinery A/c, Dr 20,020, To Bank A/c, 20,020, (c) Machinery A/c, Dr 20,000, Draft Commission A/c Dr, 20, To Bank A/c, 20,020, (d) None of the above, , 43. When the goods are sold to a customer, on credit, and if the amount becomes, irrecoverable due to his insolvency or, for some other reason, the amount not, recovered is called ……… ., (a), (b), (c), (d), , Doubtful debts, Provision for doubtful debts, Recoverable debt, Bad debts, , 44. Bad debt account is a nominal account., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 45. What will be the correct journal entry, for the following?, R became bankrupt and was able to pay, only 60% of the amount of, ` 1,00,000 due from him., (a) Cash A/c, To R A/c, (b) Cash A/c, Bad Debts A/c, To R A/c, , Dr 60,000, 60,000, Dr 60,000, Dr 40,000, 1,00,000, , (c) Cash A/c, Bad Debts A/c, To R A/c, (d) None of the above, , Dr 40,000, Dr 60,000, 1,00,000, , 46. If an old amount written-off as bad debt, is recovered, then while passing a, journal entry., (a) Cash account is debited and Bad debts, recovered account is credited., (b) Cash account is debited and Bad debts, account is credited., (c) Cash account is debited and Provision for, doubtful debts account is credited., (d) None of the above, , 47. If goods are withdrawn by proprietor, for personal use, then while passing a, journal entry., (a) Purchases account is debited and Drawings, account is credited., (b) Proprietor account is debited and, Purchases account is credited., (c) Drawings account is debited and Purchases, account is credited., (d) None of the above, , 48. If goods worth ` 25,000 are distributed, as charity, then while passing a journal, entry., (a) Purchases account is debited with ` 25,000, and Charity account is credited with, ` 25,000., (b) Charity account is debited with ` 25,000, and Purchases account is credited with, ` 25,000., (c) Drawings account is debited with ` 25,000, and Purchases account is credited with, ` 25,000., (d) None of the above, , 49. If goods worth ` 30,000 were lost in a, fire, then while passing a journal entry, which of the following account is, debited?, (a), (b), (c), (d), , Loss by fire account, Drawings account, Sales account, Purchases account

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CBSE New Pattern ~ Accountancy XI (Term I), , 50. If K pays sundry expenses for postage, and conveyance of ` 200, then while, passing a journal entry which of the, following account is debited?, (a), (b), (c), (d), , Sundry Expenses account, Postage and Conveyance account, Postage account, Conveyance account, , 51. What will be the amount of goodwill in, opening entry, if the following balances, appear in the books of RR & Sons?, Assets-Cash in Hand ` 430; Cash at, Bank ` 2,675; Sundry Debtors ` 7,495;, Closing Stock ` 9,000; Machinery and, Equipments ` 6,000., Liabilities and Capital-Creditor,, ` 5,600; Capital ` 25,000., (a) ` 5,000, (c) ` 5,600, , (b) ` 10,600, (d) None of these, , 52. Closing stock is valued at cost or net, realisable value whichever is higher., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 53. Which of the following is the correct, adjustment entry for closing stock?, (a) Closing Stock A/c, Dr, To Trading A/c, (b) Closing Stock A/c, Dr, To P&L A/c, (c) Trading A/c, Dr, To Closing Stock A/c, (d) None of the above, , 54. What will be the journal entry if, , depreciation is charged @ 10% per, annum for 1 month on furniture worth, ` 30,000?, (a) Depreciation on Furniture A/c Dr 250, To Furniture A/c, 250, (b) Depreciation on Furniture A/c Dr 3,000, To Furniture A/c, 3,000, (c) Furniture A/c, Dr 250, To Depreciation on Furniture A/c, 250, (d) None of the above, , 51, 55. How is interest on capital treated in, journal?, (a) Interest on capital account is debited and, Bank account is credited., (b) Interest on capital account is debited and, Capital account is credited., (c) Interest on capital account is debited and, Drawings account is credited., (d) None of the above, , 56. How is interest on drawings amounting, to ` 250 treated in journal?, (a) Interest on drawings account is debited and, Drawings account is credited., (b) Bank account is debited and Interest on, drawings account is credited., (c) Drawings account is debited and Interest on, drawings account is credited., (d) None of the above, , 57. What will be the journal entry if salaries, of ` 20,000 are unpaid?, (a) Outstanding Salaries A/c Dr 20,000, To Salaries A/c, 20,000, (b) Salaries A/c, Dr 20,000, To Outstanding Salaries A/c, 20,000, (c) Salaries A/c, Dr 20,000, To Cash A/c, 20,000, (d) None of the above, , 58. What will be the journal entry for, adjustment of advanced commission if, commission of ` 2,500 is received, half, of which is in advance?, (a) Commission A/c, Dr, 2,500, To Comm. Received in Advance A/c 2,500, (b) Commission A/c, Dr, 1,250, To Comm. Received in Advance A/c 1,250, (c) Cash A/c, Dr, 2,500, To Comm. A/c, 2,500, (d) None of the above, , 59. How is income received in advance, treated in journal?, (a) Concerned income account is debited and, Bank account is credited., (b) Income received in advance account is, debited and Concerned income account is, credited.

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CBSE New Pattern ~ Accountancy XI (Term I), , 52, (c) Concerned income account is debited and, Income received in advance account is, credited., (d) None of the above, , 60. How is accrued income of ` 2,500, treated in journal?, (a) Accrued income account is debited and, Bank account is credited., (b) Accrued income account is debited and, Income account is credited., (c) Income account is debited and Accrued, income account is credited., (d) None of the above, , 61. A ……… is the principal book of, accounting system which contains all the, accounts related to assets, liabilities,, revenues and expenses., (a) journal, (c) purchase book, , (b) ledger, (d) sales book, , 62. Ledger is called as book of final entry., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 63. Which of the following points out utility, of a ledger?, (a) To keep a chronological record of all, transactions., (b) The net result of all transactions in respect, of a particular account on a given date can, be ascertained only from the ledger., (c) It is bulky., (d) None of the above, , 64. Which of the following correctly, distinguishes between a ledger and a, journal?, (a) The journal is the book of first entry (original, entry); the ledger is the book of second, entry., (b) The journal is the book for chronological, record; the ledger is the book for analytical, record., (c) The journal, as a book of source entry, gets, greater importance as legal evidence than, the ledger., (d) All of the above, , 65. Transaction is the basis of classification, of data within the journal while account, is the basis of classification of data, within the ledger., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , 66. All ledger accounts can be classified in, which of the following groups?, (a) Incomes and expenses, (b) Permanent accounts and temporary, accounts, (c) Losses and gains, (d) Assets and liabilities, , 67. In a ledger, all permanent accounts are, balanced and carried forward to the, next accounting period., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , 68. The temporary accounts are closed at, the end of the accounting period by, transferring them to the trading and, profit and loss account., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , 69. All temporary accounts appears in the, balance sheet., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 70. ……… is the process of transferring the, entries from the books of original entry, (journal) to the ledger., (a), (b), (c), (d), , Recording, Drafting, Posting, None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 53, , Assertion-Reasoning MCQs, , on credit from Smith. He sold goods to Anil, Direction (Q. Nos. 71 to 74) There are two of ` 44,000. Anil returned goods worth, ` 4,000. He purchased goods of ` 63,000 from, statements marked as Assertion (A) and, Reason (R). Read the statements and choose Karan but returned goods of ` 3,000 on, the appropriate option from the options, finding them defective. He purchased goods, given below, of ` 2,000 for cash. He paid for cartage of, (a) Both Assertion (A) and Reason (R) are true, ` 100 and interest on loan amounting to, and Reason (R) is the correct explanation of, ` 1,000., Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct explanation, of Assertion (A), (c) Assertion (A) is true, but Reason (R) is false, (d) Assertion (A) is false, but Reason (R) is true, , 71. Assertion (A) Journal is a book of, original entry., Reason (R) The transactions are first, recorded in a journal in a chronological, order., , 72. Assertion (A) The amount not recovered, from debtors is debited to bad debts, account., Reason (R) As per the traditional rule of, accounting, losses are debited., , 73. Assertion (A) If goods are lost due to, theft, loss by theft account is debited., Reason (R) As per the rules of, accounting, all gains are credited., , 74. Assertion (A) Income which is earned, but not received is credited to accrued, income account., Reason (R) As per the rules of, accounting, all incomes are credited., , Case Based MCQs, Direction Read the following case study, and answer questions 75 to 79 on the basis, of the same., Rajesh started a business with cash ` 1,00,000, and a building valued at ` 5,00,000. He, purchased goods amounting to ` 2,00,000 out, of which goods of ` 1,80,000 were purchased, , 75. Which is the first book of account that, Rajesh will prepare?, (a) Purchase book, (c) Journal, , (b) Sale book, (d) Ledger, , 76. What is the amount of capital, introduced by Rajesh?, (a) ` 1,00,000, (c) ` 6,00,000, , (b) ` 5,00,000, (d) Zero, , 77. What will be the journal entry passed, for goods purchased from Smith?, (a) Purchases A/c, To Cash A/c, To Smith, (b) Purchases A/c, To Cash A/c, (c) Purchases A/c, To Smith, (d) None of the above, , Dr 2,00,000, 20,000, 1,80,000, Dr 2,00,000, 2,00,000, Dr 2,00,000, 2,00,000, , 78. Which account will be credited when, goods are returned to Karan?, (a), (b), (c), (d), , Karan, Purchases Return, Purchases, None of the above, , 79. For recording the payment of Cartage, of ` 100., (a) Cartage account will be debited and Cash, account will be credited., (b) Cash account will be debited and Cartage, account will be credited., (c) Cartage account will be debited and, Purchases account will be credited., (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 54, , Direction Read the following case study, 83. What is the amount received in bank, and answer questions 80 to 84 on the basis, (via cheque) from Preeti on sale of goods, of the same., to her?, (a) ` 1,00,000, (b) ` 78,400, Dev is the owner of a trading firm with a, (c), `, 80,000, (d) None of these, capital of ` 25,000. During the year 2021, he, bought goods at the list price of ` 1,00,000, 84. What would be the journal entry passed, from Rani less 20% trade discount and 2 %, for bad debts of ` 400 recovered from, cash discount and paid 40% by cheque. He, Jaya?, sold goods to Preeti at the list price of, (a) Cash A/c, Dr 400, ` 2,00,000 less 20% trade discount and 2%, To Bad Debts, 400, cash discount and she paid 50% by cheque., (b) Cash A/c, Dr 400, He also sold goods to Tanu for `40,000, To Bad Debts Recovered, 400, allowing her a trade discount of 5% and cash, (c) Cash A/c, Dr 400, discount of 10 %. She paid 1/4th of the amount, To Jaya, 400, in cash at the time of purchase. He received, (d) None of the above, cash from Jaya for a bad debt written-off last, Direction Read the following case study, year amounting to ` 400., and answer questions 85 to 89 on the basis, 80. Why does Dev give cash discount to his of the same., customers?, Insha is a student of Class 11 Commerce. She is, (a) Because he sells goods to them at a very, studying the subject of accountancy for the first, high price., time. After studying the basics of accounting,, (b) To encourage quick payment., their teacher recently taught them about the, (c) To make some profit even if goods are sold, books of original entry. The teacher also taught, at catalogue price., them posting entries to a ledger. The teacher, (d) None of the above, again reiterated that the books of original entry, 81. How is a trade discount different from, and ledger are fundamental for maintaining, cash discount?, records in any business. After teaching them the, (i) Trade discount is allowed when goods, chapter thoroughly, an objective question test is, are purchased in a specified quantity, being held for the students. You are required to, whereas cash discount is allowed when answer the following questions in the test on, payment is made on or before a, Insha’s behalf., specified date., 85. When an entry is made in journal, (ii) Trade discount is not recorded, (a) assets are listed first., separately in the books of account, (b) accounts to be debited listed first., whereas cash discount is separately, (c) accounts to be credited listed first., recorded in the books of account., (d) accounts may be listed in any order., (a), (b), (c), (d), , Only (i), Only (ii), Both (i) and (ii), Neither (i) nor (ii), , 82. What is the amount paid to Rani by, cheque?, (a), (b), (c), (d), , ` 40,000, ` 32,000, ` 31,360, None of the above, , 86. The ledger folio column of journal is, used to, , (a) record the date on which amount posted to, a ledger account., (b) record the number of ledger account to, which information is posted., (c) record the number of amounts posted to the, ledger account., (d) record the page number of the ledger, account.

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CBSE New Pattern ~ Accountancy XI (Term I), , 87. If a transaction is properly analysed, and recorded, (a) only two accounts will be used to record the, transaction., (b) one account will be used to record transaction., (c) one account balance will increase and, another will decrease., (d) total amount debited will equals total, amount credited., , 88. In a journal, transactions are recorded, in ………… order., (a) chronological, (c) random, , (b) anachronistic, (d) None of these, , 89. Ledger is the book for ……… record., (a) chronological, (c) evidence, , (b) analytical, (d) None of these, , Direction Read the following case study, and answer questions 90 to 94 on the, basis of the same., Shobhit has a trading business in Delhi. All, his transactions occur within the limits of, Delhi. Shobhit bought goods of ` 1,00,000 on, credit. He sold them for ` 1,35,000 in the, same state on credit. He paid for railway, transport, ` 8,000. He bought computer printer for, ` 10,000. He paid postal charges ` 2,000., Assuming CGST @ 5% and SGST @ 5%, you, are required to answer the following, questions., , 90. By what amount will creditors account, be credited for the purchases of, ` 1,00,000?, (a) ` 1,00,000, (c) ` 1,10,000, , (b) ` 1,05,000, (d) None of these, , 91. ‘‘He sold them for ` 1,35,000 in the, , same state on credit.’’ By what amount, will debtors be debited while passing, journal entry?, , (a) ` 1,35,000, (c) ` 1,48,500, , (b) ` 1,41,500, (d) None of these, , 55, 92. What will be the total amount paid on, account of transport charges?, (a), (b), (c), (d), , ` 8,000, ` 8,400, ` 8,800, None of the above, , 93. What journal entry would have been, passed by Shobhit in case he had, resorted to inter-state purchase of goods, on which GST is levied?, (a) Purchases A/c, Input CGST A/c, Input SGST A/c, To Cash, (b) Purchases A/c, Input IGST A/c, To Cash, (c) Purchases A/c, Input SGST A/c, To Cash, (d) None of the above, , Dr, Dr, Dr, Dr, Dr, Dr, Dr, , 94. What is the journal entry passed for, return of intra-state purchase of goods, on which GST is levied assuming that, Shobhit returned the goods?, (a) Creditors A/c, Dr, To Purchases Return A/c, To Input CGST A/c, To Input SGST A/c, (d) Purchases Return A/c Dr, Input IGST A/c, Dr, To Cash, (c) Purchases Return A/c Dr, Input SGST A/c, Dr, To Cash, (d) None of the above, , Direction Read the following case study, and answer questions 95 to 99 on the, basis of the same., Adhiraj started business with cash of, ` 2,00,000 on 1st April. The following, transactions took place in the month of April,, 2021.

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CBSE New Pattern ~ Accountancy XI (Term I), , 56, Date, Apr 2, , Bought goods for cash, , Particulars, , Amt (`), 60,000, , Apr 3, , Opened bank account with cash, , Apr 4, , Sold goods for cash, , 80,000, , Apr 7, , Bought goods from Amrit, Kanpur on credit, , 60,000, , Apr 10, , Solds goods to Aryan, Delhi on credit, , 50,000, , Apr 15, , Purchased machinery costing ` 20,000 from Bhalla Bros, Patiala (Punjab), and payment is made by cheque, , Apr 19, , Paid to Amrit in cash on account, , 40,000, , Apr 23, , Goods returned to Amrit, , 10,000, , Apr 27, , Paid to Amrit by cheque in full settlement, , 15,000, , Apr 29, , Received cash from Aryan, , 20,000, , 1,00,000, , 95. What will be the amount that will be reflected in capital account of Adhiraj?, (a) ` 2,00,000, , (b) ` 3,00,000, , (c) ` 5,00,000, , (d) None of these, , 96. What is the balance carried down of purchases account as on 30th April?, (a) ` 60,000, , (b) ` 1,20,000, , (c) ` 1,00,000, , (d) None of these, , 97. The journal entry to record the sale of goods on credit should include, (a) debit to debtors and credit to capital., (c) debit to sales and credit to debtors., , (b) debit to cash and credit to debtors., (d) debit to debtors and credit to sales., , 98. What is the balance in the bank account of Adhiraj as on 30th April?, (a) ` 1,00,000, , (b) ` 40,000, , (c) ` 40,200, , (d) ` 15,000, , 99. Process of recording in the journal is called ……… ; the process of recording in the, ledger is known as ……… ., (a) Journalising; Posting, (c) Posting; Recording, , (b) Posting; Journalising, (d) Recording; Writing, , ANSWERS, Multiple Choice Questions, 1. (b), 11. (b), 21. (a), , 2. (a), 12. (b), 22. (b), , 3. (a), 13. (b), 23. (c), , 4. (b), 14. (a), 24. (a), , 5. (b), 15. (c), 25. (b), , 6. (d), 16. (a), 26. (c), , 7. (a), 17. (b), 27. (b), , 8. (b), 18. (a), 28. (c), , 9. (d), 19. (b), 29. (c), , 31. (c), 41. (b), , 32. (a), 42. (c), , 33. (b), 43. (d), , 34. (b), 44. (a), , 35. (a), 45. (b), , 36. (a), 46. (a), , 37. (b), 47. (c), , 38. (b), 48. (b), , 39. (c), 49. (a), , 51. (a), 61. (b), , 52. (b), 62. (a), , 53. (a), 63. (b), , 54. (a), 64. (d), , 55. (b), 65. (a), , 56. (c), 66. (b), , 57. (b), 67. (a), , 58. (b), 68. (a), , 59. (c), 69. (b), , 80. (b), 90. (c), , 81. (c), 91. (c), , 82. (c), 92. (c), , 83. (b), 93. (b), , 10. (c), 20. (a), 30. (a), 40. (a), 50. (a), 60. (b), 70. (c), , Assertion-Reasoning MCQs, 71. (a), , 72. (a), , 73. (b), , 74. (d), , Case Based MCQs, 75. (c), 85. (b), , 76. (c), 86. (d), , 77. (a), 87. (d), , 78. (b), 88. (a), , 79. (a), 89. (b), , 95. (a), , 96. (b), , 97. (d), , 98. (c), , 99. (a), , 84. (a), 94. (a)

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CBSE, 57 New Pattern ~ Accountancy XI (Term I), , EXPLANATIONS, 5., 12., 13., 27., , In a journal, a brief explanation of the transaction is given in narration. So statement (iii) is false., While passing a journal entry, the accounts of all losses and expenses are debited., When goods are purchased, Purchases A/c is debited., Gross value of purchases will be 1,00,000 – 20,000 (20% of 1,00,000) = ` 80,000, , 4,00,000, , 28. Gross Value of Sales, ( − ) Trade Discount @ 20%, , (80,000), 3,20,000, , Cash to be Received = 3, 20,000 × 50%, , 1,60,000, , ( − ) Discount Given = 1,60,000 × 2%, , (3,200), , Cash Received, , 1,56,800, , 29. List Price, , = 20,000, = ( 2, 000 ), 18,000, (–) Cash Discount @ 2% on 18,000 = (360), ` 17,640, , (–) Trade Discount @ 10%, , 33. While H purchased goods of ` 30,000, but he had returned goods worth ` 2,000, so he owed, ` 28,000 to IIA Ltd. Since he pays ` 27,500 in settlement of his account, so ` 500 (28,000 – 27,500) is, discount and will be debited accordingly., , 37. CGST = 9% of 3,000 = ` 270;, 38. CGST = 9% of 20,000 = ` 1,800, , SGST = 9% of 3,000 = ` 270., , SGST = 9% of 20,000 = ` 1,800, Discount = 2% of (20,000+ 1,800 + 1,800) = ` 472., , 44. Bad debt is a loss account, so it is a nominal account., 51., Date, , Particulars, , JF, , Amt (Dr), , Cash A/c, , Dr, , 430, , Bank A/c, , Dr, , 2,675, , Sundry Debtors A/c, , Dr, , 7,495, , Closing Stock A/c, , Dr, , 9,000, , Machinery and Equipment A/c, , Dr, , 6,000, , Goodwill A/c, , Dr, , 5,000, , To Creditors, To Capital A/c, (Being the balances brought forward), , 52. Closing stock is valued at cost or net realisable value whichever is lower., 54. Depreciation = 30, 000 ×, , 10, 1, ×, = ` 250., 100 12, , Amt (Cr), , 5,600, 25,000

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CBSE New Pattern ~ Accountancy XI (Term I), , 58, 58. Commission Received in Advance =, , 1, × 2, 500 = `1, 250, 2, , 62. Ledger is called as book of final entry as Trial Balance is prepared from it and thereafter financial, statements are prepared., , 66. All ledger accounts are put into five categories namely, assets, liabilities, capital, revenues/gains and, expense/losses. All these accounts may further be put into two groups, i.e. permanent accounts and, temporary accounts., , 69. All permanent accounts appears in the balance sheet., 73. The correct reason for Assertion is ‘As per the traditional rule of accounting, losses are debited’., 74. The correct statement would be ‘Income which is earned but not received is debited to accrued, income account’., , 76. Capital introduced by Rajesh is Cash + Building = 1,00,000 + 5,00,000 = ` 6,00,000., 78. The following journal entry will be passed, Karan A/c, Dr 3,000, To Purchases Return A/c 3,000, , 79. The following journal entry will be passed, Cartage A/c, To Cash A/c, , Dr, , 100, 100, , 82. Gross Value of Purchases, ( − ) Trade Discount @ 20%, Cash Payment = 80, 000 × 40%, ( − ) Discount received= 32, 000 × 2%, Cash Paid, , 1,00,000, (20, 000), 80, 000, 32, 000, ( 640 ), 31, 360, , 83. Gross Value of Sales, , 2,00,000, ( 40, 000 ), 1,60, 000, Cash to be Received = 1,60, 000 × 50% 80, 000, ( − ) Discount Given = 80, 000 × 2%, (1,600 ), Cash Received, 78, 400, ( − ) Trade Discount @ 20%, , 90. Purchases amount = ` 1,00,000, (+) CGST @ 5%, (+) SGST @ 5%, Creditors, , =`, 5,000, =`, 5, 000, = ` 110, , , 000, , 91. The following journal entry will be passed, Debtors A/c, Dr 1,48,500, To Sales A/c, 1,35,000, To Output CGST A/c, 6,750, To Output SGST A/c, 6,750, , 92. Total transport charges paid = 8,000 + 400 (5% Input CGST) + 400 (5% Input SGST) = ` 8,800

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CBSE New Pattern ~ Accountancy XI (Term I), , 59, , 95., , Capital Account, , Dr, , Date, , Particulars, , JF, , Amt (`), , 2021, Apr 30, , Cr, , Date, , Particulars, , JF, , Amt (`), , 2021, To Balance c/d, , 2,00,000, , Apr 1, , By Cash A/c, , 2,00,000, , 2,00,000, , 2,00,000, May 1, , By Balance b/d, , 2,00,000, , 96., , Purchases Account, , Dr, , Date, , Particulars, , JF, , Amt (`), , 2021, , Date, , Cr, , Particulars, , JF, , Amt (`), , 2021, , Apr 2, , To Cash A/c, , 60,000, , Apr 7, , To Amrit, , 60,000, , May 1, , To Balance b/d, , Apr 30, , By Balance c/d, , 1,20,000, , 1,20,000, , 1,20,000, , 1,20,000, , 98., , Bank Account, , Dr, Date, , Particulars, , JF, , Amt (`), , 2021, Apr 3, , Particulars, , JF, , Amt (`), , 2021, To Cash A/c, , 1,00,000, , 1,00,000, May 1, , Date, , Cr, , To Balance b/d, , 40,200, , Apr 15, , By Machinery A/c, , 40,000, , Apr 15, , By Input IGST A/c, , 4,800, , Apr 27, , By Amrit, , 15,000, , Apr 30, , By Balance c/d, , 40,200, 1,00,000

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60, , CBSE New Pattern ~ Accountancy XI (Term I), , 05, Special Purpose Books, Quick Revision, 1. Cash Book Cash book is a special journal which is used for recording all cash receipts and cash, payments. Cash book is a book of prime entry/original entry in which all cash and bank, transactions are recorded in a chronological order. It has two sides, i.e. debit and credit. Debit side, records all receipts of cash (including cheques). Credit side records all payments of cash (including, cheques)., 2. Single Column Cash Book or Simple Cash Book The single column cash book records all, transactions of the business in a chronological order, i.e. it is a complete record of cash receipts and, cash payments., 3. Format of Single Column Cash Book, , Single Column Cash Book, , Dr, , Date, , Particulars, , Receipts, , JF, , Amt (`), , Date, , Cr, , Particulars, , JF, , Amt (`), , Payments, , 4. Balancing of Single Column Cash Book The cash book is balanced in the same way as an, account in the ledger. On the left side, all cash transactions relating to cash receipts (debits) and on, the right side all transactions relating the cash payments (credits) are entered date wise., The excess of receipts over payments is recorded on the left side by writing ‘By balance c/d’. When, a cash book is maintained, a separate cash account in the ledger is not opened., 5. Ledger Posting from Single Column Cash Book Posting of debit side and credit side of cash, book is carried out as follows, Debit Side The left side or debit side of the cash book shows the receipts of the cash. The accounts, appearing on the debit side of the cash book are credited to their respective ledger accounts by, writing ‘By Cash’ in the particulars column because cash has been received in respect of them., Credit Side The right side or credit side of the cash book shows all the payments made in cash., The accounts appearing on the credit side of the cash book are debited to the ledger accounts by, entering ‘To Cash’ in the particulars column as cash/cheque has been paid in respect of them.

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61, , CBSE New Pattern ~ Accountancy XI (Term I), , 6. Two-column Cash Book Two-column cash book is a cash book which has two columns on each, side. One for cash and one for bank. In other words, it can be said that two-column cash book, represents two accounts, i.e. cash account and bank account. Hence, there is no need to open these, accounts in the ledger., As cash and bank accounts are both asset accounts therefore cash and bank transactions are, recorded in the cash and bank column respectively, following the rule debit the increase in asset, and credit the decrease in asset. All the cash receipts, deposits into the bank and discount allowed, are recorded on debit side and all cash payments, withdrawals from bank are recorded on credit, side., 7. Format of Two-column Cash Book, , Two-column Cash Book, , Dr, , Date, , Particulars, , Receipts, , JF, , Cash, (`), , Bank, Date, (`), , Cr, , Particulars, , JF, , Cash, (`), , Bank, (`), , Payments, , 8. Balancing of Two-column Cash Book Cash columns are balanced in the same manner as in case, of single column cash book. The process for balancing the bank column is also the same., However, it is possible that the bank allows the firm to withdraw more than the balance (the, amount deposited), i.e. overdraft. So, in such a case there can be a deficit balance which is recorded, in the right hand side of two-column cash book by writing ‘To balance c/d’., 9. Ledger Posting of Two-column Cash Book Posting of debit side and credit side of cash book is, carried out as follows, Debit Side The left side or debit side of the cash book shows the receipt of cash. Transactions, written in the cash and bank column on debit side are credited to their respective ledger account, by writing ‘By Cash’ (for cash transactions) and ‘By Bank’ (for bank transactions) in the particulars, column. ‘Amount column’ records the amount of the transaction., Credit Side The right side or credit side of the cash book shows all the payments made in cash., Transactions written in cash and bank column on credit side are debited to their respective ledger, accounts by writing ‘To Cash’ (for cash transactions) and ‘To Bank’ (for bank transactions) in the, ‘Particulars column’. ‘Amount column’ records the amount of transaction., 10. Petty Cash Book Petty cash book is the book which is used for the purpose of recording the, payment of petty cash expenses., Petty cash book is prepared by petty cashier to record petty expenses (of small amounts). This book, is prepared to save valuable time of main (head) cashier from bothering about small and irrelevent, cash expenses. For transferring cash to petty cash account, cash account is credited and petty cash, account is debited.

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62, , CBSE New Pattern ~ Accountancy XI (Term I), , 11. Format of Petty Cash Book The format of petty cash book may be designed according to the, requirements of the business. However, the simplest format is given, , Petty Cash Book, Receipts, , Payments, , Conve Staff, Printing MiscePostage/ yance Welfare/, Cash Total, Cartage, and, llaneous Total, Voucher, Telegram /Trave EntertainDate Particulars Book, ( ` ) Date Particulars, (`), Stationery Items, (`), No., (`), Folio, ment, lling, (`), (`), (`), (`), , 12. Balancing the Petty Cash Book Petty cash book is balanced in the same manner as a simple cash, book. The columns for payments and expenses are totalled and the total equals the total in the ‘total, payment column’. A petty cash book is balanced at the end of the month or a specified period., 13. Ledger Posting of Petty Cash Book Ledger posting is done in the following manner, (i) Entries in the petty cash book are posted into the ledger accounts at the end of the specified period,, i.e. monthly or quarterly or as the case may be., (ii) Petty cash book is not posted directly in the ledger. For posting the petty cash book, a petty cash, account is opened in the ledger., (iii) When petty cash is advanced to the petty cashier, it is recorded by the chief cashier on the credit side, as ‘By Petty Cash A/c’., (iv) At the end of specified period, a journal entry is first prepared on the basis of the petty cash book,, debiting each expense account individually as per the total shown by respective columns and, crediting the petty cash account with the total expenditure incurred during the period. Thereafter,, posting is made to the debit of each expense account by writing ‘To Petty Cash A/c’., , 14. Purchases Book or Purchases Journal Purchase journal records all credit purchases of goods (i.e., goods in which the enterprise deals in). Cash purchases and purchases of goods other than goods in, which the firm deals, are not recorded in purchase journal or book., The source documents for recording entries in the books are invoices or bills received by the firm, from the suppliers of the goods with the amounts net of trade discount/quantity discount. Purchase, book is also known as invoice book/bought book., 15. Format of a Purchases Book, , Purchases Book, Date, , Particulars/Name of the Suppliers (Account to be credited), , Details Total, Invoice, LF, (`), Amt (`), No.

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63, , CBSE New Pattern ~ Accountancy XI (Term I), , 16. Ledger Posting of Purchases Book The individual entries and the total of the purchases book are, posted into the ledger as follows, (i) Individual amounts are daily posted to the credit of supplier’s accounts by writing ‘By Purchases A/c’, in the particulars column., (ii) Periodic total is posted to the debit of purchases account by writing ‘To Sundries as per Purchases, Book’ in the particulars column., , 17. Sales Book or Sales Journal Sales book records all credit sales of merchandise (i.e. the goods in, which the firm deals in). It does not record the cash sales of merchandise or any other asset other, than the merchandise., The source documents for recording entries in the sales journal are sales invoice or bill issued by the, firm to the customers with the net of trade discount/quantity discount. It is also known as day book., 18. Format of a Sales Book, , Sales Book, Date, , Particulars/Name of the Customers (Account to be debited), , Details Total, Invoice, LF, (`), Amt (`), No., , 19. Ledger Posting of the Sales Book The individual entries and the total of the sales book are, posted into the ledger as follows, (i) Individual amounts are daily posted to the debit of customer’s accounts by writing ‘To Sales A/c’ in, the particulars column., (ii) Periodic total is posted to the credit of sales account by writing ‘By Sundries as per Sales Book’ in the, particulars column., , 20. Purchase Return or Return Outwards Book In this book, purchase return of goods are, recorded. It does not record the returns of goods purchased on cash basis nor the returns of, purchases other than the goods in which the firm deals in., The entries are usually made in the purchases return book on the basis of debit notes issued to the, suppliers and credit notes received from the suppliers., 21. Format of a Purchase Return Book, , Purchase Return Book, Date, , Particulars/Name of the Suppliers (Account to be debited), , Details Total, Debit, LF, (`), Amt (`), Note No., , 22. Ledger Posting of a Purchase Return Book The individual entries and the total of the book are, posted into the ledger as follows, (i) Individual amounts are debited to the supplier’s account by writing ‘To Purchase Return A/c’ in the, particulars column., (ii) Periodic total is credited to the purchase return account by writing ‘By Sundries as per Purchase, Return Book’ in the particulars column.

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64, , CBSE New Pattern ~ Accountancy XI (Term I), , 23. Sales Return or Return Inwards Book This journal is used to record return of goods by, customers that had been sold on credit. It does not record the return of goods sold on cash basis, nor the return of any asset other than the goods in which the firm deals in., The source documents for recording entries in the sales return journal are the credit notes issued to, the customers or debit notes issued by the customers., 24. Format of Sales Return Book, , Sales Return Book, Date, , Particulars/Name of the Customers, (Account to be credited), , Credit, LF, Note No., , Details, (`), , Total, Amt (`), , 25. Ledger Posting from Sales Return Book The individual entries and the total of the book are, posted into the ledger as follows, (i) Individual amounts are credited to the customer’s accounts by writing ‘By Sales Returns A/c’ in the, particulars column., (ii) Periodic total is debited to the sales returns account by writing ‘To Sundries as per Sales Return, Book’ in the particular column., , 26. Journal Proper A book maintained to record transactions which do not find place in special, journals, is known as journal proper or journal residual. In other words, journal proper records, transactions which cannot be recorded in any other subsidiary book such as cash book, purchases, book, sales book, purchases return book and sales return book., Following transactions are recorded in journal proper, (i) Opening entries, (ii) Closing entries, (iii) Adjustment entries, (iv) Rectification entries, (v) Transfer entries, (vi) Other Entries In addition to the above mentioned entries, recording of the following transactions is, also done in the journal proper, (a) At the time of dishonour of a cheque, the entry for cancellation for discount received or discount, allowed earlier., (b) Purchase/Sale of items on credit other than goods., (c) Goods withdrawn by the owner for personal use., (d) Goods distributed as samples for sales promotion., (e) Endorsement and dishonour of bills of exchange., (f) Transaction in respect of consignment and joint venture, etc., (g) Loss of goods by fire/theft/spoilage.

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65, , CBSE New Pattern ~ Accountancy XI (Term I), , Objective Questions, Multiple Choice Questions, 1. Which of the following is not a special, purpose book?, (a) Cash Book, (c) Journal, , (b) Sales Return Book, (d) Journal Proper, , 2. Special journals prove economical and, make division of labour possible in, accounting work., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 3. Cash book is considered as both ………, and ……… book., (a) primary, subsidiary, (c) tertiary, principal, , 8. Double column cash book records, (a), (b), (c), (d), , 9. What does credit balance of bank, account in cash book signify?, (a), (b), (c), (d), , Column I, , (b) subsidiary, principal, (d) None of these, , need not maintain, journal proper, purchases (journal) book, sales (journal) book, bank and cash account in the ledger, , 5. Transactions that cannot be recorded in, any special journal are recorded in, journal called the ……… ., (a) Cash book, (c) Ledger, , (b) Journal, (d) Journal proper, , 6. Which of the following about cash book, is not true?, (a) It serves the purpose of both journal as well, as the ledger (cash) account., (b) It is also called the book of original entry., (c) When a cash book is maintained,, transactions of cash are not recorded in the, journal, and no separate account for cash or, bank is required in the ledger., (d) It records both cash and credit transactions., , 7. In cash book, there will only be debit, balance., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , Overdraft, Cash deposited in bank, Cash withdrawn from bank, None of the above, , 10. Match the following., , 4. When a firm maintains a cash book, it, (a), (b), (c), (d), , all transactions, cash and bank transactions, only cash transactions, only credit transactions, , Column II, , A. Single Column, Cash Book, , (i) Small, expenses., , B. Double Column, Cash Book, , (ii) Only cash, account., , C. Petty Cash Book, , (iii) Both cash and, bank account., , Codes, A B C, (a) (i) (iii) (ii), (c) (i) (ii) (iii), , A B C, (b) (ii) (iii) (i), (d) (iii) (i) (ii), , 11. Which of the following will be recorded, in cash book?, (a), (b), (c), (d), , Trade discount of ` 5,000, Bad debts of ` 3,000, Credit purchases of ` 25,000, None of the above, , 12. If Razi paid ` 9,900 in settlement of her, account of ` 10,000, then the discount, allowed of ` 100 will be recorded in, (a) Journal book, (c) Both (a) and (b), , (b) Cash book, (d) None of these, , 13. Salary due for the month of March 2021, , worth ` 20,000 will appear in which side, of cash book?, (a) Receipt, (c) Contra, , (b) Payment, (d) None of these

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66, , CBSE New Pattern ~ Accountancy XI (Term I), , 14. Contra entries refer to, , 19. Petty cash book is a book having record, , (a) entries that are made only on debit side of, cash book., (b) entries that are made only on credit side of, cash book., (c) entries that are made on both sides of cash, book., (d) None of the above, , 15. If a cheque of ` 25,000 is deposited on, the same day, it is received and, eventually the cheque is dishonoured, it, will be recorded as, (a) Debtor A/c, To Bank A/c, (b) Bank A/c, To Debtor A/c, (c) Debtor A/c, To Cash A/c, (d) None of the above, , Dr 25,000, 25,000, Dr 25,000, 25,000, Dr 25,000, 25,000, , 16. Identify contra entry from the following., (a), (b), (c), (d), , Salary paid ` 20,000., Cash received from P ` 10,000., Cash deposited into bank ` 25,000., Cash withdrawn from bank for personal use, ` 5,000., , 17. Cash deposited into bank ` 50,000 will, be recorded as, (a) debit of bank column with ` 50,000 and, credit of cash column with ` 50,000., (b) debit of cash column with ` 50,000 and, credit of bank column with ` 50,000., (c) debit of bank column with ` 50,000 and also, debit of cash column with ` 50,000., (d) debit of cash column with ` 50,000 also, credit of cash column with ` 50,000., , 18. If cheque of ` 3,000 is received from A,, what will be the journal entry?, (a) Cash A/c, To A, (b) Bank A/c, To A, (c) A, To Bank A/c, (d) None of the above, , Dr, , 3,000, 3,000, , Dr, , 3,000, , Dr, , 3,000, , 3,000, 3,000, , of big payments., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 20. Bank column of cash book can have, both debit and credit balance., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 21. Contra entries are not posted into the, ledger., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 22. On 1st April, 2020, the balance of cash, column of cash book stood at ` 50,000., After paying salaries of ` 20,000,, receiving ` 20,000 from debtors and, giving a cheque of ` 5,000 to a creditor, S, balance of cash will be, (a) ` 45,000, (c) ` 70,000, , (b) ` 50,000, (d) ` 85,000, , 23. Under ………………. system, a definite, sum is given to the petty cashier at the, beginning of certain period and the, amount spent is reimbursed from, time-to-time., (a) financial, (c) imprest, , (b) accounting, (d) None of these, , 24. Which of the following method(s) can be, used to prepare a petty cash book?, (a) Ordinary system, (c) Financial system, , (b) Imprest system, (d) Only (a) and (b), , 25. What is the journal entry passed if, cheques received are deposited on, different dates?, (a) Cheques-in-hand A/c Dr, To Debtors, (b) Debtors A/c, Dr, To Cheques-in-hand, (c) Bank A/c, Dr, To Debtors, (d) None of the above

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67, , CBSE New Pattern ~ Accountancy XI (Term I), , 26. Given-Imprest amount = ` 10,000. What, will be the amount of reimbursement, if, following expenses were incurred by the, petty cashier during the month?, Wages = ` 1,900 , Tiffin = ` 1,200, Small, repairs = ` 900, General expenses = ` 450., (a) ` 1,900, (c) ` 4,000, , (b) ` 2,100, (d) ` 4,450, , proprietor pays ` 5,000 as life insurance, premium from business cash?, (b) Bank A/c, (d) Drawings A/c, , 28. Payment of wages for installation of, machinery will be recorded as, (a), (b), (c), (d), , Debit Machinery A/c and credit Cash A/c, Debit Cash A/c and credit Machinery A/c, Debit Wages A/c and credit Cash A/c, None of the above, , 29. Which of the following is/are an advantage, of maintaining petty cash book?, (a), (b), (c), (d), , Saving of time and efforts of chief cashier, Effective control over cash disbursements, Convenient recording, All of the above, , 30. A cheque for ` 10,000 is received from P, on 7th August, 2021 and it is endorsed, to M on 9th August, 2021. What will be, the journal entry passed on 9th August?, (a) Cheques-in-hand A/c, To M’s A/c, (b) M’s A/c, To Cheques-in-hand, (c) Cheques-in-hand A/c, To P’s A/c, (d) Cheques-in-hand A/c, To M’s A/c, , Dr 10,000, 10,000, Dr 10,000, 10,000, Dr 10,000, 10,000, Dr 10,000, 10,000, , 31. When a cash book is maintained, a, separate cash book in the ledger is not, opened., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , ……… ., (a) Sales book, (c) Purchase book, , (b) Cash book, (d) None of these, , 33. Purchase book records all cash, purchases of goods., (a) True, (d) Can’t say, , 27. Which account will be debited if, (a) Cash A/c, (c) Insurance A/c, , 32. Cash purchase of goods is recorded in, , (b) False, (d) Partially true, , 34. Which of the following is/are not, recorded in purchase book?, (i) Cash purchase of goods worth ` 5,000., (ii) Purchase of furniture on credit worth, ` 75,000., (iii) Purchase of stationery of ` 3,000 on, credit., (a) Only (i), (c) (i) and (iii), , (b) (ii) and (iii), (d) (i), (ii) and (iii), , 35. If XYZ Electronics Ltd. purchases 20 TV, @ ` 2,000 per piece and 15 tape recorders, @ ` 12,500 per piece. There was a trade, discount of 20%. What will be the amount, recorded in purchase book?, (a) ` 40,000, (c) ` 2,27,500, , (b) ` 1,87,500, (d) ` 1,82,000, , 36. All credit sales of merchandise are, recorded in the sales journal., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 37. Cash sales are recorded in the …….. ., (a) Sales book, (c) Purchase book, , (b) Cash book, (d) None of these, , 38. Assets sold on credit will be entered in, ……… ., (a) Sales book, (c) Purchase book, , (b) Journal proper, (d) None of these, , 39. The source document for recording, entries in the sales journal are sales, invoice or bill issued by the firm to the, customer., (a) True, (c) Can’t say, , (b) False, (d) Partially true

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68, , CBSE New Pattern ~ Accountancy XI (Term I), , 40. M/s ABC Suppliers sold on credit, (i) Two water purifiers @ ` 2,100 each and, (ii) Five buckets @ ` 130 each to M/s, BCD Traders., , What will be the amount shown in sales, book?, (a) ` 4,200, (c) ` 650, , (b) ` 2,230, (d) ` 4,850, , 41. Sales account always shows, …………….. balance., (a) debit, (c) Either (a) or (b), , (b) credit, (d) Can’t say, , 42. The balance of sales column in sales, book is ` 90,000. If ` 3,000 is recovered, from debtors, what will be the balance, in the sales book?, (a) ` 90,000, (c) ` 87,000, , (b) ` 93,000, (d) None of these, , 43. Purchase return of goods is recorded in, ………….., (a), (b), (c), (d), , Purchase return book, Purchase book, Cash book, None of the above, , 44. A ……………… is a document, evidencing a debit to be raised against a, party for reasons other than sale on, credit., (a) debit note, (c) written note, , (b) credit note, (d) None of these, , 45. A ………………… is prepared, when a, party is to be given a credit for reasons, other than credit purchase., (a) credit note, (c) written note, , (b) debit note, (d) None of these, , 46. A debit note is prepared by, (a) Purchaser, (c) Cashier, , (b) Seller, (d) None of these, , 47. SDF Ltd. returned 2 washing machines, purchased from GHJ Ltd. at the list, price of ` 21,000 per machine less trade, , discount of 20%, CGST and SGST was, paid at 6% each. What will be the, amount to be recorded in purchases, return book?, (a) ` 33,600, (c) ` 37,632, , (b) ` 47,040, (d) ` 18,816, , 48. The periodic total of purchases return, journal is posted to, (a), (b), (c), (d), , Purchase account, Profit and loss account, Purchase returns account, Furniture account, , 49. The ……… book is used to record, return of goods by customers that had, been sold to them on credit., (a) sales return, (c) cash, , (b) sales, (d) None of these, , 50. The periodic total of sales return, journal is posted to, (a), (b), (c), (d), , Sales account, Goods account, Purchases return account, Sales return account, , 51. The sales return book does not record, which of the following?, (a) Return of goods sold on cash basis., (b) Return of goods sold on credit basis., (c) Return of assets other than the goods in, which the firm deals in., (d) Both (a) and (c), , 52. The source document for recording, entries in the sales return book is, generally the ……… ., (a) credit note, (c) trial balance, , (b) debit note, (d) None of these, , 53. What will be the amount reflected in, the sales return book of ZXC Ltd if 2, table fans @ ` 5,000 each are returned, by QWE Ltd.? There was a trade, discount of 15 %. CGST and SGST are, at 6% each., (a) ` 9,520, (c) ` 8,500, , (b) ` 10,000, (d) None of these

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69, , CBSE New Pattern ~ Accountancy XI (Term I), , 54. Which of the following differentiates, between credit note and debit note?, (a) The credit note is prepared by the seller, and the debit note is prepared by the buyer., (b) The credit note is prepared by the buyer, and the debit note is prepared by the seller., (c) The credit note is prepared by the, customer and the debit note is prepared by, the cashier., (d) None of the above, , 59. The accounts of expenses/losses and, gains/revenues are also balanced., (a) True, (c) Can’t say, , 60. Match the following., Column I, A. Debit note, , Column II, (i) Purchase book, , B. Credit note, , (ii) Principle, book/Journal, book, , 55. M/s ABC & Sons sold 40 ink pads, @ ` 8 each, 50 files @ ` 10 each, 20, colours books @ ` 20 each to Global, Stationers and provided 5% trade, discount. GST of 5% is applicable on, stationery product. How this, transaction will be recorded in Global, Stationers account?, (a), (b), (c), (d), , To Sales A/c ` 1,216.95, By Sales A/c ` 1,216.9, By Sales A/c ` 1,220, To Sales A/c ` 1,159, , 56. Which of the following entries are, recorded in journal proper?, (a) Purchase of items on credit other than, goods, (b) Goods withdrawn by the owner for personal, use, (c) Endorsement and dishonour of bills of, exchange, (d) All of the above, , 57. Goods distributed as samples for sales, promotion worth ` 25,000 will be, recorded in, (a) Sales book, (c) Journal proper, , (b) Cash book, (d) None of these, , 58. Balancing of an account means that the, two sides are totalled and the difference, between them is shown on the side,, which is shorter in order to make their, totals equal., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , (b) False, (d) Partially true, , C. Credit sale of asset (iii) Purchaser, D. Cash purchase of, asset, Codes, A B C D, (a) (iii) (iv) (ii) (i), (c) (iii) (ii) (iv) (i), , (iv) Seller, , A B C D, (b) (i) (iv) (ii) (iii), (d) (iii) (i) (ii) (iv), , Assertion-Reasoning MCQs, Direction (Q. Nos. 61 to 64) There are, two statements marked as Assertion (A), and Reason (R). Read the statements and, choose the appropriate option from the, options given below, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct, explanation of Assertion (A), (c) Assertion (A) is true, but Reason (R) is false, (d) Assertion (A) is false, but Reason (R) is true, , 61. Assertion(A) In large businesses,, journal is sub-divided into special, journals., Reason (R) Special journals prove, economical and make division of, labour possible in accounting work., , 62. Assertion (A) All credit purchases of, goods are recorded in the purchases, journal., Reason (R) Cash purchases of goods are, recorded in cash book.

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70, , CBSE New Pattern ~ Accountancy XI (Term I), , 63. Assertion (A) Petty cash book records, repetitive large expenses., Reason (R) Petty cash book is, maintained so that the cash book does, not become bulky due to repetitive, transactions., , 64. Assertion (A) Sales return journal is, used to record return of goods by, customers to them on credit., Reason (R) In case of balancing the, accounts, if the debit side exceeds the, credit side, the difference is written on, the debit side., , Case Based MCQs, Direction Read the following case study, and answer questions 65 to 69 on the, basis of the same., Raj is the accountant at KYA Ltd. He has to, prepare the cash book for the month of, August, 2020. Following detail is available, regarding the transactions for the month, Aug 1, , Cash in hand ` 1,200; overdraft at, bank ` 15,000., , Aug 3, , Further capital introduced ` 20,000 out, of which ` 16,000 deposited in the bank., , Aug 4, , Purchased goods from Vrijesh Traders, amounting to ` 3,000 and they allowed, trade discount ` 200. The amount was, paid by cheque., , Aug 4, , Goods purchased for cash ` 4,000., , Aug 5, , Sold goods to Varun on credit ` 5,000., , Aug 6, , Received cheque from Siddhartha, ` 2,450., Allowed him discount ` 50., , Aug 10, , Cheque received from Siddhartha, deposited into bank., , Aug 11, , Settled the account of Superstar, Printers ` 750 by paying cash ` 680., , Aug 12, , Cash received from Varun ` 4,750 in, full settlement of his account of ` 5,000., , Aug 16, , An amount of ` 1,000 due from Kartik, brothers written-off as bad debts in the, previous year, now recovered., , Aug 17, , Received from Kunal on behalf of, Karan ` 200., , Aug 19, , Received a cheque for ` 800 from, Adarsh, which was endorsed to Parth, on 24th August., , Aug 20, , Sale of old furniture, payment received, in cash for ` 720., , Aug 25, , Cashed a cheque for ` 3,000., , Aug 25, , Drew from bank for household, expenses ` 1,000 and for income tax, ` 500., , Aug 28, , Amit who owed ` 400 became, bankrupt and paid 60 paise in a rupee., , Aug 28, , Received repayment of a loan ` 3,000, and deposited out of it ` 2,500 into the, bank., , Aug 30, , Interest debited by bank ` 375., , Aug 30, , Deposited with the bank the entire, balance after retaining ` 2,000 at office., , 65. Which of the following cash book will, Raj prepare?, (a), (b), (c), (d), , Single Column Cash Book, Double Column Cash Book, Petty Cash Book, All of the above, , 66. How will goods sold on credit to Varun, on 5th August be recorded in the cash, book?, (a) ` 5,000 will be recorded on the debit side of, the cash book., (b) ` 5,000 will be recorded on the credit side, of the cash book., (c) it won’t be recorded in the cash book., (d) None of the above, , 67. How will cheque received from, Siddhartha on 6th August be recorded, in cash book?, (a) ` 2,450 will be recorded on the debit side of, the cash book., (b) ` 2,450 will be recorded on the credit side, of the cash book., (c) It won’t be recorded in the cash book., (d) None of the above

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71, , CBSE New Pattern ~ Accountancy XI (Term I), , 68. How will drawing for household, expenses of ` 1,000 on 25th August, be recorded?, (a) Household expenses will be debited and, cash book will be credited, (b) Drawings account will be debited and cash, book will be credited, (c) Household expenses will be credited and, cash book will be debited, (d) Drawings account will be credited and cash, book will be debited, , 69. Raj marks certain entries as C. What, does that mean?, (a) C stands for contra entries and reflect, transactions which include both cash and, bank., (b) C stands for contra entries and reflect, transactions which are contrary to normal, accounting processes., (c) C stands for contra entries and reflect, transactions which are confusing in nature., (d) None of the above, , Direction Read the following case study, and answer questions 70 to 74 on the, basis of the same., INCA Ltd. a manufacturing company has, now expanded its operations. Its sales are, increasing rapidly and the demand for its, products is also rising. It is expanding, geographically to different states., Initially when the operations were small, its, accountant Mr.Dheeraj maintained only a, journal. But as the business expands and the, number of transactions becomes large, it, become cumbersome to journalise each, transaction. So now a need is felt to prepare, special journals or subsidiary books. So, accordingly, Mr. Dheeraj instructs his, subordinates to prepare various subsidiary, books., , 70. What will be the advantage of, preparing these subsidiary books?, (a) Quick, efficient and accurate recording of, business transactions, (b) Time consuming, , (c) They prove economical and make division, of labour possible in accounting work, (d) Both (a) and (c), , 71. What reason will be a cash book, prepared for?, (a) To record all cash receipts and cash, payments, (b) To record cash purchases of merchandise, (c) To record cash sales, (d) None of the above, , 72. Which of the following about the, purchase book is correct?, (a) It records purchases of all types, (b) It records all credit purchases of the goods,, the enterprise deals in, (c) It records all cash purchases of the goods,, the enterprise deals in, (d) None of the above, , 73. Sales book does not record cash sales of, merchandise., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , 74. If INCA Ltd. purchased furniture of, ` 40,000 on credit, Mr. Dheeraj will, record this transaction in, (a), (b), (c), (d), , purchase book, cash book, journal proper, None of the above, , Direction Read the following case study, and answer questions 75 to 79 on the, basis of the same., Khandelwal & Sons is a manufacturing firm., Following information about it is available, Assets Cash in hand ` 1,00,000; Cash at bank, ` 1,10,000; Debtors (Karun ` 90,000; Geeta, ` 50,000); Stock ` 3,20,000 and Machinery, ` 4,00,000., Liabilities Creditors: Avinash & Co., ` 70,000.

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72, , CBSE New Pattern ~ Accountancy XI (Term I), , The following transactions took place during, the month of January, 2021., Jan 2, , Deposited into bank ` 30,000., , Jan 4, , Purchased from Raghav goods of the list, price of ` 70,000 at 10% trade discount., , Jan 5, , Returned to Raghav goods worth, ` 8,000., , Jan 7, , Issued a cheque to Raghav in full, settlement of their account after deducting, cash discount @ 5%., , 76. What amount is finally paid to Raghav, on 7th January?, (a) ` 62,000, (c) ` 55,000, , (b) ` 63,000, (d) ` 52,250, , 77. What will be the balance in sales, book as on 31st January?, (a) ` 80,000, (c) ` 1,12,000, , (b) ` 32,000, (d) ` 1,08,000, , 78. What will be the balance in sales, , Jan 10 Sold to Dishant goods worth ` 80,000., , return book and purchase return, book respectively on 31st January?, , Jan 12 Received cash ` 60,000 and cheque, ` 8,000 from Dishant. The cheque was, sent to bank on the same day. Discount, allowed ` 1,000., , (a), (b), (c), (d), , Jan 14 Purchased machinery from Ronak & Co., on credit for ` 50,000., Jan 16 Khandelwal withdrew goods for his, personal use ` 20,000., Jan 18 Sold to Anuj goods valued ` 32,000., Jan 19 Issued cheque to Ronak & Co. ` 50,000., Jan 20 Returned by Anuj goods worth ` 4,000., Jan 21 Purchased goods from Gaurav for, ` 80,000. Trade discount 10%., Jan 22 Accepted a bill drawn by Gaurav for, ` 72,000 at 1 month., Jan 27 Received from Anuj ` 20,000. Discount, allowed ` 100., , 79. Which of the following entry, represents contra entry?, (a) Purchases from Raghav on 4th January., (b) Goods sold to Anuj on 18th January., (c) Amount withdrawn from bank on 28th, January., (d) None of the above, , Direction Read the following case study, and answer questions 80 to 84 on the, basis of the same., Karim & Co., a saree dealer has the following, transactions for the month of January., Jan 4, , Jan 27 Goods purchased for cash ` 60,000., , Jan 30 Paid rent ` 5,600., Jan 31 Received commission in cash ` 3,200., , 75. Purchase of goods from Raghav on, 4th January will be recorded on that, date in, (a), (b), (c), (d), , Cash book, Purchase book, Journal proper, None of the above, , Returned to Mohan Mills, Kerala,10, polyester sarees @ ` 1,600 each., ( − ) Trade discount @ 10% (Debit, note no. 101)., , Jan 28 Withdrew from bank ` 40,000., Jan 29 Paid salaries by cheque ` 10,000., , ` 4,000; ` 8,000, ` 8,000; ` 4,000, ` 8,000; ` 16,000, None of the above, , Jan 8, , Srimala Mills, Kota accepted the, returns of goods (which were, purchased for cash) from us, 8 Kota, sarees @ ` 640 each (Debit note no., 102)., , Jan 12 Returned to Sonica Mills, Bombay, 12, silk sarees @ ` 1,040 each., ( − ) Trade discount @ 10% (Debit, note no. 103)., Jan 30 Returned one typewriter (being, defective) @ ` 7,200 to Vishaka & Co.

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73, , CBSE New Pattern ~ Accountancy XI (Term I), , 80. What will the total amount recorded, in the purchase returns book relating, to the returns to Mohan Mills on 4th, January?, (a) ` 16,000, (c) ` 17,600, , (b) ` 14,400, (d) None of these, , 81. In which of the following books, will, the return of Kota Sarees on 8th, January be recorded?, (a), (b), (c), (d), , in purchase returns book as on 31st, January?, (a), (b), (c), (d), , ` 25,632, ` 14,400, ` 11,232, ` 28,480, , 84. Which of the following statements, regarding a debit note is correct?, , Purchase returns book, Journal, Cash book, None of the above, , 82. In which of the following books, will, the return of typewriter on 30th, January be recorded?, (a), (b), (c), (d), , 83. What will be the total amount reflected, , Purchase returns book, Journal proper, Cash book, None of the above, , (a) A debit note is a source document that is, prepared when goods are returned to a, supplier., (b) On finding that goods supplied are not as, per the terms of the order placed, the, defective goods are returned to the, supplier of the goods and a note is prepared, to debit the supplier., (c) When an additional sum is recoverable from, a customer, such a note is prepared to, debit the customer with the additional, dues., (d) All of the above, , ANSWERS, Multiple Choice Questions, 1. (c), 11. (d), , 2. (a), 12. (a), , 3. (b), 13. (d), , 4. (d), 14. (c), , 5. (d), 15. (a), , 6. (d), 16. (c), , 7. (a), 17. (a), , 8. (b), 18. (b), , 9. (a), 19. (b), , 10. (b), 20. (a), , 21. (a), 31. (a), , 22. (b), 32. (b), , 23. (c), 33. (b), , 24. (d), 34. (d), , 25. (a), 35. (d), , 26. (d), 36. (a), , 27. (d), 37. (b), , 28. (a), 38. (b), , 29. (d), 39. (a), , 30. (b), 40. (d), , 41. (b), 51. (d), , 42. (a), 52. (a), , 43. (a), 53. (a), , 44. (a), 54. (a), , 45. (a), 55. (a), , 46. (a), 56. (d), , 47. (a), 57. (c), , 48. (c), 58. (a), , 49. (a), 59. (b), , 50. (d), 60. (a), , 69. (a), 79. (c), , 70. (d), 80. (b), , 71. (a), 81. (c), , 72. (b), 82. (b), , 73. (a), 83. (a), , 74. (c), 84. (d), , Assertion-Reasoning MCQs, 61. (a), , 62. (a), , 63. (d), , 64. (c), , 67. (c), 77. (c), , 68. (b), 78. (a), , Case Based MCQs, 65. (b), 75. (b), , 66. (c), 76. (d)

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74, , CBSE New Pattern ~ Accountancy XI (Term I), , EXPLANATIONS, 5. A book maintained to record transactions,, which do not find place in special journals, is, known as journal proper or journal residual., , 6. Cash book records only cash transactions., 7. In the case of cash book, there will always be, debit balance because cash payments can, never exceed the sum of cash receipts and, cash in hand at the beginning of the period., , 11. All the mentioned transactions are non-cash, transactions and hence will not be recorded in, cash book., , 13. It is a non-cash transaction., 19. Petty cash book is prepared by petty cashier, to record petty expenses (of small accounts)., , 22. Balance of Cash = Opening balance of, ` 50,000 + Receipt of ` 20,000 – Payment of, Salaries of ` 20,000 = ` 50,000, , 26. Amount to be reimbursed = ` (1,900 + 1,200, + 900 + 450) = `4,450, , 47. Amount to be recorded in Purchase Return, Book will be, 2 Washing Machines @ ` 21,000, each, , 42,000, , (–) Trade Discount @ 20%, , (8,400), 33,600, , (+) CGST @ 6%, , 2,016, , SGST @ 6%, , 2,016, 37,632, , 51. Sales return book records only the return of, those goods which were sold on credit. Goods, do not include office equipment, furniture,, building etc., , 53. The amount to be shown in sales return book, is calculated as follows, 2 Table Fans @ ` 5,000 each, , 10,000, , (–) Trade Discount @ 15%, , (1,500), , 33. Purchase book records all credit purchases of, goods., , 34. Purchase book records only credit purchase of, goods. All credit purchases of goods are, recorded in the purchases journal whereas, cash purchases are recorded in the cash book., Other purchases such as purchases of office, equipment, furniture, building, are recoded in, the journal proper if purchased on credit, or, in the cash book if purchased for cash., , 35. Amount recorded in Purchase Book, 20 TV @ ` 2,000, = 40,000, (+) 15 Tape Recorders @ ` 12,500 = 1,87,500, ` 2, 27, 500, (–) Trade Discount @ 20%, , = ( 45, 500 ), ` 1,82, 000, , 40. Amount in sales book = 2 × 2,100 + 5 × 130, = ` 4,850, , 41. Sales account reflects revenue and as per rules, of account, incomes are always credited., , 42. Cash recovered from debtors is recorded in, cash book and has no relation with sales, book., , 8,500, (+) CGST @ 6%, , 510, , SGST @ 6%, , 510, 9,520, , 55. 40 Ink Pads @ ` 8 each, 50 Files @ ` 10 each, 20 Colour Books @ ` 20 each, (–) Trade Discount @ 5%., ( +) Central GST 2.5%, ( + ) State GST 2.5%, Amount recorded in Global, Stationers A/c, , 320.000, 500.000, 400.000, 1,220.000, (61.000), 1159, , .000, 28.975, 28.975, 1, 216.95, , Journal Entry in the Books of, M/s ABC & Sons, Global Stationers A/c Dr 1,216.95, To Sales A/c, 1,216.95, , 56. A book maintained to record transactions,, which do not find place in special journals, is, known as journal proper.

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75, , CBSE New Pattern ~ Accountancy XI (Term I), , 59. The accounts of expenses/losses and gains/revenues are not balanced but are closed by transferring, to trading and profit and loss account., , 61. A small business may be able to record all its transactions in one book only, i.e., the journal. But as, the business expands and the number of transactions becomes large, it may become cumbersome to, journalise each transaction. For quick, efficient and accurate recording of business transactions,, journal is sub-divided into special journals., , 63. Petty cash book records small and repetitive expenses. Reason is true., 64. In case the debit side exceeds the credit side, the difference is written on the credit side, if the credit, side exceeds the debit side, the difference between the two appears on the debit side and is called, debit and credit balance respectively., , 65. Since both cash and bank transactions are involved, so Raj will prepare double column cash book., 66. Credit sales are not recorded in cash book., 67. The following entry will be passed on 6th August, Aug 6, , Cheques in Hand A/c, , Dr, , 2,450, , Discount Allowed A/c, , Dr, , 50, , To Siddhartha’s A/c, , 2,500, , (Being the cheque received from Siddhartha’s and allowed him, discount. Cheque received was not deposited the same day), , 73. Sales book records credit sale of merchandise. Cash sale of merchandise is recorded in cash book., 75. It is a credit purchase, so it will be recorded in purchase book., 76., Amt (`), List Price, ( − ) Trade Discount @ 10%, , 70,000, ( 7, 00 ), , Net Price, ( − ) Goods Returned, , 63,000, ( 8, 000 ), 55, 000, , Cash Discount = 55,000 × 5/100 = ` 2,750, Net Amount Paid = 55,000 − 2,750 = ` 52, 250, , Sales Book, , 77., Date, , Particulars, , Invoice No., , LF Details ( ` ) Total Amt (`), , 2021, Jan 10, , Dishant, , 80,000, , Jan 18, , Anuj, , 32,000, , Jan 31, , Sales A/c, , Cr, , 1,12,000, , Sales Return Book, , 78., Date, , Credit Note No. LF Details ( ` ) Total Amt (`), , Particulars, , 2021, Jan 20, , Anuj, , Jan 31, , Sales Return A/c, , 4,000, Dr, , 4,000

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76, , CBSE New Pattern ~ Accountancy XI (Term I), , Purchases Return Book, Date, , Debit Note No. LF Details ( ` ) Total Amt (`), , Particulars, , 2021, Jan 5, , Raghav, , 8,000, , Jan 31, , Purchases Return A/c, , Cr, , 8,000, , 79. Contra entry involves both bank and cash transaction., 81. Since these were sold on cash basis, their returns will be recorded in cash book., 82. Since this does not relate to the goods the firm deals in, thus its return will be recorded in journal, proper., , Purchase Return Book, , 83., Date, Jan 4, , Debit, LF, Note No., , Particulars, , 16,000, , ( − ) Trade Discount @ 10%, , Jan 31, , (1,600), , Sonica Mills, Bombay, , 14,400, , 103, , 12 Silk Sarees @ ` 1040 each, , 12,480, , ( − ) Trade Discount @ 10%, , (1,248), , To Purchases Returns Account, , Total, Amt ( ` ), , 101, , Mohan Mills, Kerala [80], 10 Polyester Sarees @ ` 1,600 each, , Jan 12, , Details, Amt ( ` ), , Cr, , 11,232, 25,632

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CBSE New Pattern ~ Accountancy XI (Term I), , 77, , 06, Bank Reconciliation, Statement, Quick Revision, 1. Meaning of Bank Reconciliation, Statement Bank reconciliation statement is, prepared mainly to reconcile the difference, between the bank balance as shown by the, cash book and bank balance as shown by bank, pass book., 2. Need and Importance of Bank, Reconciliation Statement, (i) It helps in locating any error that may have, been committed while recording either in the, cash book or in the pass book., (ii) It helps in bringing out the unnecessary delay, in the collection of cheques by the bank., (iii) Embezzlements are avoided by regular, periodic reconciliation., (iv) The customer is assured of the correctness of, the bank balance shown by the pass book, by, preparing a bank reconciliation statement., (v) It helps the management to keep a track of, cheques which have been sent to the bank for, collection., , 3. Reasons of Difference between Cash Book, and Pass Book Balances The differences, between the cash book and the bank pass, book is caused by, (i) Differences Due to Timing on Recording, any Transaction, (a) Cheques issued by the bank but not yet, presented for payment., , (b) Cheques paid/deposited into the bank but, not yet collected., (ii) Transactions Recorded by the Bank, (a) Direct debits made by the bank on behalf, of the customer., (b) Amounts directly deposited in the bank, account by the customer., (c) Interest and dividend collected by the, bank., (d) Direct payments made by the bank on, behalf of the customers., (e) Interest credited by the bank but not, recorded in the cash book., (f) Cheque deposited/bills discounted, dishonoured., (iii) Differences Caused by Errors, (a) Errors committed in recording, transactions by the firm., (b) Errors committed in recording, transactions by the bank., , 4. Preparation of Bank Reconciliation, Statement without Adjusting Cash Book, Balance Under this approach, the balance as, per cash book or the balance as per pass book, is taken as the starting item. The debit balance, or favourable balance as per the cash book, means the balance of deposits held at the, bank. Such a balance will be a credit balance, or favourable balance as per the pass book.

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78, , CBSE New Pattern ~ Accountancy XI (Term I), , On the other hand, the credit balance or unfavourable balance as per the cash book indicates bank, overdraft. Such a balance will be a debit balance or unfavourable balance as per the pass book. An, overdraft is treated as negative figure on a bank reconciliation statement., When the starting point or the first item in the statement is the overdraft (unfavourable) balance, it, is to be shown on the minus side. It is to be noted, all the items in case of overdraft are dealt in the, same manner, as in the case of favourable balances (whether cash/pass book)., Unfavourable balance or overdrafts implies credit balance in cash book or debit balance in pass book., 5. Format of Bank Reconciliation Statement, When the bank balance as per cash book is taken as a starting point, , Bank Reconciliation Statement, as on…, (Here enter the date on which the statement is being prepared), Particulars, Balance as per Cash Book (Favourable, i.e. debit balance), or Overdraft as per Cash Book (Unfavourable, i.e. credit balance), (+) Transactions having the effect of higher balance in pass book, Cheques deposited into the bank but not recorded in cash book, Cheques issued but not yet presented for payment, Interest allowed in pass book only, Bills receivable directly collected by bank, Direct payment by a customer into bank but not recorded in cash book., ‘Cheques issued’ returned on technical grounds, A wrong credit given by bank in pass book, (–) Transactions having the effect of lower balance in pass book, Cheques received and recorded in bank column but not yet sent to bank for, collection, Cheques deposited but not yet collected by bank, Bank charges, interest on overdraft debited in pass book only, Insurance premium paid directly by bank under standing advice, Cheques deposited for collection, returned dishonoured and recorded in pass, book only, Discounted bills dishonoured but not recorded in cash book, A wrong debit given by bank in pass book, Balance as per Pass Book, , Plus (`), …, , …, …, …, …, …, …, …, …, …, …, …, …, …, …, …, …, …, , ●, , ●, ●, , Minus (`), , …, , When balance as per pass book is taken as the starting point, the treatment of all items will be, reversed, i.e. items that are added, will be deducted and items that are deducted,will be added., Either favourable balance or overdraft shall appear., If the total of ‘plus items column’ exceeds the total of ‘minus items column’ the difference between the, two is termed as favourable balance. If the total of ‘minus items column’ exceed the total of ‘plus item, column’, the difference between the two is termed as an overdraft.

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CBSE New Pattern ~ Accountancy XI (Term I), , 79, , Objective Questions, Multiple Choice Questions, 1. ……… is a statement which is prepared, mainly to reconcile the difference, between the bank balance as shown by, the cash book and pass book., (a), (b), (c), (d), , Bank Reconciliation Statement, Bank Statement, Cash Flow Statement, Fund Flow Statement, , 2. Why is a bank reconciliation statement, prepared?, (a) It is generally experienced that when a, comparison is made between the bank, balance as shown in the firm’s cash book, and the bank statement, the two balances, do not tally., (b) To find out the cash balance., (c) To understand short term liabilities., (d) None of the above, , 3. A bank reconciliation statement is, prepared by?, (a) Banker, (b) Account holder in a bank, (c) Creditor, (d) Supplier, , 4. Which of the following points out the, need of bank reconciliation statement?, (a) It helps in locating any error that may have, been committed either in the cash book or, in the pass book., (b) It helps in bringing out the unnecessary, delay in the collection of cheques by the, bank., (c) It helps in avoiding embezzlements or, misappropriation of funds by regular, periodic reconciliation., (d) All of the above, , 5. Pass book is a copy of.............as it, appears in the ledger of the bank., (a), (b), (c), (d), , customer’s account, cash book relating to cash column, firm’s receipts and payments, None of the above, , 6. A bank reconciliation statement can be, prepared with the balance of, (a), (b), (c), (d), , pass book, cash book, Both pass book and cash book, None of the above, , 7. Reconciliation of the cash book and the, bank pass book balances amounts to an, explanation of differences between them., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 8. The differences between the cash book, and the bank pass book is caused by, (i) timing differences in recording of the, transactions., (ii) errors made by the business or by the, bank., (a) Only (i), (c) Both (i) and (ii), , (b) Only (ii), (d) Neither (i) nor (ii), , 9. Which of the following is an example of, difference caused due to time gap in, cash book and pass book?, (a) Cheques issued by the firm to suppliers, worth ` 50,000 not presented by supplier to, the bank for payment immediately., (b) Cheques paid into the bank of ` 75,000 but, not yet collected., (c) Cheque collection charges worth ` 25,000, levied by bank., (d) All of the above, , 10. Which of the following is an example of, difference caused due to errors in cash, book and pass book?, (a) Cheques issued by the firm to suppliers, worth ` 60,000 not presented by supplier to, the bank for payment immediately., (b) Cheques paid into the bank of ` 93,000 but, not yet collected., (c) Wrong totalling as ` 2,50,000 instead of, ` 2,30,000 by the accountant of the firm., (d) Cheque collection charges worth ` 45,000, levied by bank.

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CBSE New Pattern ~ Accountancy XI (Term I), , 80, 11. Cheque amounting to ` 5,000 issued to P, but recorded as ` 500 in the cash book is, an example of difference due to time lag., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 12. Difference caused due to bank charges, of ` 500 debited to firm’s current, account by the bank is an example of, difference caused due to time lag., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 13. Normally, the cash book shows a ………, balance while pass book shows ………, balance., (a), (b), (c), (d), , debit; credit, credit; debit, debit; debit, credit; credit, , (b) False, (d) Partially true, , 15. When money is withdrawn from the, bank, the bank ............. the account of, the customer., (b) debit, (d) No effect, , 16. In the bank statement, cash deposited, by a firm is shown as ……… ., (a) debit, (c) liability, , (b) credit, (d) provision, , 17. Unfavourable bank balance means, (a), (b), (c), (d), , credit balance in pass book, credit balance in cash book, debit balance in cash book, None of the above, , 18. If a cheque is not paid by the bank, it is, known as ……… ., (a) Cancelled, (c) Honoured, , (a) deducted, (c) multiplied, , (b) added, (d) divided, , 20. If bank balance as per cash book is, ` 50,000, cheques issued but not, presented for payment of ` 6,000 and, bank charges of ` 400 were not entered, , in the cash book, then balance as per, pass book will be, (a) ` 50,000, (c) ` 55,600, , (b) ` 56,000, (d) ` 56,400, , ` 54,000 and ` 100 for bank incidental, , means credit balance in the bank, column of the cash book., , (a) credit, (c) Either (a) or (b), , starting point the items which make the, cash book balance smaller than the pass, book must be ……… for the purpose of, reconciliation., , 21. If balance as per the cash book is, , 14. Favourable balance as per the cash book, (a) True, (c) Can’t say, , 19. If the cash book balance is taken as, , (b) Dishonoured, (d) None of these, , charges are debited to Anil & Co. account,, which is not recorded in cash book and, cheques for ` 5,400 is deposited in the bank, but not yet collected by the bank, then, what will be the balance in the pass book?, (a) ` 48,500, (c) ` 59,300, , (b) ` 59,500, (d) None of these, , 22. The debit balance in Naman’s cash book, is ` 40,960. A bill for ` 9,900 discounted, with the bank is entered in the cash, book without recording the discount, charges of ` 900. What will be the, amount in pass book?, (a) ` 40,960, (c) ` 41,860, , (b) ` 40,060, (d) None of these, , 23. Which of the following statements, correctly defines an overdraft?, (a) Overdraft is one where the bank account, becomes positive and the businesses in, effect have borrowed from the bank., (b) Overdraft is one where the bank account, becomes positive and the businesses in, effect have lent to the bank., (c) Overdraft is one where the bank account, becomes negative and the businesses in, effect have borrowed from the bank., (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 24. Overdraft is shown in the cash book as a, ……… balance., (a) debit, (c) Either (a) or (b), , (b) credit, (d) None of these, , 25. In the bank statement, where the, balance is followed by Dr means that, there is an, (a), (b), (c), (d), , overdraft, positive balance, zero balance, None of the above, , 26. An overdraft is treated as positive figure, in a bank reconciliation statement., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 27. On 31st March, 2021, P had an, overdraft of ` 8,000 as shown by his, cash book. Cheques amounting to, ` 2,000 had been paid by him but were, not collected by the bank. He issued, cheques of ` 800 which were not, presented to the bank for payment., What will be the balance as per bank, pass book?, (a), (b), (c), (d), , ` 9,200 favourable balance, ` 9,200 overdraft, ` 6,800 favourable balance, ` 6,800 overdraft, , 28. If cheques are not presented for, payment, the favourable balance as per, cash book will be less than the, favourable balance as per pass book., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , 81, 30. On 31st March, 2021, the bank column, of the cash book of XYZ Ltd. showed a, credit balance of ` 1,18,100. Cheques, received and recorded in the cash book, but not sent to the bank for collection of, ` 12,400. Payment received from a, customer directly by the bank of, ` 27,300 but no entry was made in the, cash book. What will be the balance as, per bank pass book?, (a), (b), (c), (d), , ` 1,03,200 overdraft, ` 1,33,000 overdraft, ` 1,03,200 favourable balance, ` 1,33,000 favourable balance, , 31. Find out the bank balance as per cash, book if overdraft as per pass book is, ` 10,000 and cheques deposited in the, bank but not credited are for ` 4,000., (a), (b), (c), (d), , ` 6,000 favourable balance, ` 6,000 overdraft, ` 14,000 favourable balance, ` 14,000 overdraft, , 32. A cheque of ` 500 received from a debtor, was recorded in the cash book but not, deposited in the bank for collection. How, will it be treated for the purpose of bank, reconciliation statement?, (a) ` 500 will be deducted from the balance as, per pass book., (b) ` 500 will be deducted from the balance as, per cash book., (c) ` 500 will be added to the balance as per, cash book., (d) None of the above, , 33. The bank pass book of M/s IF & Co., , on behalf of the customers worth, ` 25,000 would increase the balance as, per the bank pass book, when compared, to the balance as per the cash book., , showed a credit balance of ` 45,000 on, 31st May, 2021. Cheques issued before, 31st May, 2021, amounting to ` 25,940, had not been presented for encashment., There was also a debit in the pass book, of ` 2,500 in respect of a cheque, dishonoured on 31st May, 2021. What is, the balance as per cash book?, , (a) True, (c) Can’t say, , (a) ` 68,440, (c) ` 21,560, , 29. Direct collections received by the bank, , (b) False, (d) Partially true, , (b) ` 73,440, (d) None of these

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CBSE New Pattern ~ Accountancy XI (Term I), , 82, 34. The bank pass book of KYA Ltd. had an, overdraft of ` 20,000. Interest on, overdraft was ` 2,000. Insurance, premium paid by the bank was ` 200., What is the balance as per cash book?, (a), (b), (c), (d), , ` 22,200 overdraft, ` 22,200 favourable balance, ` 17,800 overdraft, ` 17,800 favourable balance, , 35. Nita’s current account shows an, overdraft of ` 5,000 as per her cash, book. When she receives her bank, statement, she noticed that one of her, debtors had deposited ` 2,500 into her, account and the bank has debited, ` 100 as bank charges. Thus, balance as, per bank statement will be, (a) ` 5,000 favourable, (c) ` 2,600 favourable, , (b) ` 2,600 overdraft, (d) None of these, , 36. When payments are made by the bank as, per the standing instructions of the, customer, the balance in the pass book will, be more as compared to the cash book., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 37. The payment side of the cash book was, under cast by ` 100. How will it be, treated for the purpose of bank, reconciliation statement?, (a) ` 100 will be deducted from the balance as, per pass book., (b) ` 100 will be deducted from the balance as, per cash book., (c) ` 100 will be added to the balance as per, cash book., (d) None of the above, , 38. One outgoing cheque of ` 300 was, recorded twice in the cash book. How, will it be treated for the purpose of bank, reconciliation statement?, (a) ` 600 will be added to the balance as per, cash book., (b) ` 300 will be deducted from the balance as, per cash book., (c) ` 300 will be added to the balance as per, cash book., (d) None of the above, , 39. Cheques issued but not presented for, , payment will reduce the balance as per, the pass book., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 40. How is ‘deposit in transit’ treated in, bank reconciliation?, , (a) It will be added to bank balance., (b) It will be deducted from bank balance., (c) It will be deducted from the cash book, balance., (d) It will be added to cash book balance., , 41. Overdraft as per the pass book will be less, than the overdraft as per cash book, when, there are cheques deposited but not, collected by the banker worth ` 5,000., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 42. The debit balance of the bank account, , as per the cash book should be equal to, the credit balance of the account of the, business in the books of the bank., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 43. A cheque of `500 deposited into bank, , but was not recorded in the cash book., How will it be treated for the purpose of, bank reconciliation statement?, , (a) ` 500 will be deducted from the balance as, per pass book., (b) ` 500 will be deducted from the balance as, per cash book., (c) ` 500 will be added to the balance as per, pass book., (d) None of the above, , 44. Interest collected by bank from, investments amounts to ` 2,000. How, will it be treated for the purpose of bank, reconciliation statement?, (a) ` 2,000 will be deducted from the balance as, per cash book., (b) ` 2,000 will be added to the balance as per, pass book., (c) ` 2,000 will be added to the balance as per, cash book., (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 45. There is a wrong entry on the credit side, of the pass book worth ` 990. How will, it be treated for the purpose of bank, reconciliation statement?, (a) ` 990 will be deducted from the balance as, per cash book., (b) ` 990 will be added to the balance as per, pass book., (c) ` 990 will be added to the balance as per, cash book., (d) None of the above, , 46. Dividend collected by bank from, investments amounts to ` 1,500. How, will it be treated for the purpose of bank, reconciliation statement?, (a) ` 1,500 will be deducted from the balance as, per pass book., (b) ` 1,500 will be added to the balance as per, pass book., (c) ` 1,500 will be deducted from the balance as, per cash book., (d) None of the above, , 47. When the pass book balance is taken as, the starting point, items which make the, pass book balance ……… than the, balance in the cash book must be, deducted for the purpose of, reconciliation., (a), (b), (c), (d), , higher, lower, equal, None of the above, , 48. If the overdraft as per the pass book is, taken as the starting point, the cheques, issued but not presented are to be, ……… in the bank reconciliation, statement., (a) deducted, (c) ignored, , (b) added, (d) None of these, , 49. A wrong entry on debit side of the pass, book will be added to the balance as per, pass book to reconcile the statements., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 83, 50. If the credit balance as per the pass, book is taken as the starting point, then, ` 39,000 directly deposited by the, customer in the bank account is to be, ……… in the bank reconciliation, statement., (a) deducted, (c) ignored, , (b) added, (d) None of these, , 51. If the balance as per the cash book is, taken as the starting point, then a wrong, entry on the debit side of the pass book, for ` 2,000 is to be ……… in the bank, reconciliation statement., (a) deducted, (c) ignored, , (b) added, (d) None of these, , 52. If bank sent back the cheque by marking, it as NSF, it means, (a) fake cheque, (b) not sufficient funds, (c) a cheque cannot be cashed because it’s, illegal, (d) None of the above, , 53. Which of the following would not be a, reason for difference between bank, balance as per cash book and pass book?, (a) Bank charges of ` 200, (b) Cheques deposited but not yet cleared, worth ` 9,900, (c) Credit purchases of ` 30,000, (d) Cheques issued but not yet presented for, payment worth ` 3,000, , 54. A cheque of ` 50,000 is deposited by a, firm but it got dishonoured due to, insufficient balance in firm’s account., What will be the reason for difference in, bank balance in cash book and pass, book?, (a) Cheque entry in pass book but not in cash, book., (b) Cheque entry in cash book but not in pass, book., (c) Cheque entry in both pass book and cash, book., (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 84, 55. An auto debit transaction made by bank, for which approval is given by the, company causes difference in bank, balance in cash book and pass book, because, (a), (b), (c), (d), , Entry in pass book but not in cash book., Entry in cash book but not in pass book., Entry in both pass book and cash book., None of the above, , Assertion-Reasoning MCQs, Direction (Q. Nos. 56-59) There are two, statements marked as Assertion (A) and, Reason (R). Read the statements and, choose the appropriate option from the, options given below, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct explanation, of Assertion (A), (c) Assertion (A) is true, but Reason (R) is false, (d) Assertion (A) is false, but Reason (R) is true, , recording of the transactions or errors, made by the business or by the bank., , 58. Assertion (A) When the cheques are, not presented for payment, favourable, balance as per the cash book is less than, that of the pass book., Reason (R) If an entry of payment has, been recorded in the pass book but not, in the cash book, then the balance of, pass book will be less than of cash book., , 59. Assertion (A) When direct debits are, made by the bank on behalf of the, customer, the balance in the passbook, will be more when compared to the cash, book., Reason (R) If an entry of payment has, been recorded in the passbook but not, in the cash book, then the balance of, passbook will be less than of cash book., , Case Based MCQs, , Direction Read the following case study, and answer questions 60 to 64 on the basis, 56. Assertion (A) A bank reconciliation, of the same., statement is a statement prepared to, Vinni has joined as an intern in Elegance Ltd a, reconcile the bank balance as per cash, book with the balance as per pass book FMCG company. She has joined under the, accounting department. Her supervisor Ms., or bank statement., Mini works as an accountant in Elegance Ltd., Reason (R) The amount of balance, On day 1 of her internship, Vinni is taught, shown in the pass book or the bank, statement must tally with the balance as how to prepare a bank reconciliation, statement. Vinni is completely new to the, shown in the cash book., topic and wasn’t aware about the need and, 57. Assertion (A) It is generally, procedure for preparation of bank, experienced that when a comparison is, reconciliation statement. Later, Ms Mini, made between the bank balance as, explained her the need and procedure for, shown in the firm’s cash book, the two, preparation of bank reconciliation statement, balances do not tally., Reason (R) The differences between the and asked her to prepare the bank, reconciliation statement for Elegance Ltd for, cash book and the bank pass book are, the month of March, 2021., caused by either timing differences in

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CBSE New Pattern ~ Accountancy XI (Term I), , 85, , 60. Using which of the following statements Direction Read the following case study, would Ms Mini have explained the need of and answer questions 65 to 69 on the, basis of the same., bank reconciliation statement to Vinni?, (a) To match the balances as it is generally, On 31st March, 2021, Mr. Dua’s cash book, experienced that when a comparison is made showed a bank balance of ` 3,72,000. It, between the bank balance as shown in the, firm’s cash book and the bank statement, the differed with the balance shown in his pass, book. A closer scrutiny revealed that there, two balances do not tally., were cheques issued to creditors but not yet, (b) To find out the cash balance., (c) To understand liquidity position of the firm., presented to the bank for payment amounted, (d) None of the above, to ` 72,000., , 61. Using which of the following statements, , Dividend of ` 5,000 was received by the bank, but not entered in the cash book. Interest of, ` 1,250 was allowed by the bank. Cheques of, ` 15,400 were deposited into bank for, (a) It helps to assure the customer about the, collection but not collected by bank upto this, correctness of the bank balance shown by the, date. Bank charges amounted to ` 200., would Ms Mini have explained the, importance of bank reconciliation, statement to Vinni?, , pass book., (b) It helps the management to keep a track of, cheques, which have been sent to the bank, for collection., (c) Embezzlements are avoided by regular, periodic reconciliation., (d) All of the above, , A cheque of ` 320 deposited into bank was, dishonoured but no intimation was received., Bank paid house tax of ` 350 on his behalf, but no information was received from the, bank in this connection., , 62. How would have Ms Mini classified the, , 65. Cheques issued to creditors but not yet, , reasons for differences between cash book, and bank book balances?, (a) Timing differences in recording of the, transactions., (b) Errors made by the business or by the bank., (c) Both (a) and (b), (d) Neither (a) nor (b), , 63. What documents of Elegance Ltd does, Vinni require for preparation of bank, reconciliation statement?, (a), (b), (c), (d), , Cash book of Elegance Ltd, Pass book of Elegance Ltd, Both (a) and (b), Neither (a) nor (b), , 64. ‘Debit balance as per pass book and, , credit balance as per cash book is a, favourable balance’. You are required to, answer on Vinni’s behalf whether the, above statement is, (a) True, (c) Can’t say, , (b) False, (d) Partially true, , presented to the bank for payment, amounting to ` 72,000 will be, (a), (b), (c), (d), , added to debit balance of cash book., deducted from debit balance of cash book., ignored., None of the above, , 66. Cheques of ` 15,400 were deposited, into bank for collection but not, collected by bank will be, (a), (b), (c), (d), , added to debit balance of cash book., deducted from debit balance of cash book., ignored., None of the above, , 67. Difference caused due to bank charges, amounting to ` 200, is an example of, (a) timing differences in recording of, transactions., (b) errors made by the business., (c) errors made by the bank., (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 86, 68. Bank paid house tax of ` 350 on his, behalf but no information was received, from the bank will lead to, (a) balance in cash book greater than the, balance of pass book., (b) balance in cash book lesser than the balance, of pass book., (c) balance in pass book greater than the, balance of cash book., (d) None of the above, , 69. What is the balance of pass book on 31st, March, 2021?, (a) ` 4,33,980, (c) ` 3,72,000, , (b) ` 4,50,250, (d) None of these, , Direction Read the following case study, and answer questions 70 to 74 on the basis, of the same., On 31st December, 2021, the cash book of, Mittal Bros showed a credit balance of ` 6,920., There is a stark difference in the balance as, per pass book. A careful scrutiny points out, that there was a debit by bank for ` 200 on, account of interest on overdraft and ` 50 on, account of charges for collecting bills., Cheques drawn but not encashed before 31st, December, 2021 were for ` 4,000. The bank, has collected interest and has credited, ` 600 in pass book. A bill receivable for ` 700, previously discounted with the bank had been, dishonoured and debited in the pass book., Cheques paid into bank but not collected and, credited before 31st December, 2021, amounted to ` 6,000., , 70. Credit balance in cash book reflects, (a) overdraft, (c) nil balance, , (b) favourable balance, (d) None of these, , 71. Credit balance of bank account as per, cash book essentially means, (a) bank account becomes negative and the, businesses in effect have borrowed from, the bank., (b) there is high positive balance in bank, account., (c) business has paid all its bank loans., (d) None of the above, , 72. While preparing the bank reconciliation, statement, bills receivable for ` 700, previously discounted with the bank, now dishonoured, will, (a) increase the credit balance of cash book., (b) decrease the credit balance of cash book., (c) will not affect the credit balance of cash, book., (d) None of the above, , 73. While preparing the bank reconciliation, statement, cheques drawn but not, encashed before 31st December, 2021, for ` 4,000 will be, (a), (b), (c), (d), , added to credit balance of cash book., deducted from credit balance of cash book., ignored., None of the above, , 74. What will be the balance as per pass, book on 31st December, 2021?, (a) ` 6,920, (c) ` 4,570, , (b) ` 9,270, (d) ` 13,870, , Direction Read the following case study, and answer questions 75 to 79 on the basis, of the same., On 31st March, 2021, the bank pass book of, Radha showed a balance of ` 15,000 to her, credit and it differed with the balance reflected, in her cash book. Before that date, she had, issued cheques amounting to ` 8,000 out of, which cheques amounting to ` 3,200 have so, far been presented for payment. A cheque of, ` 2,200 deposited by her into the bank on 26th, March, 2021 is not yet credited in the pass, book. She had also received a cheque of ` 500, which although entered by her in the bank, column of cash book, was omitted to be paid, into the bank. On 30th, March 2021, a cheque, of ` 1,570 received by her was paid into bank, but the same was omitted to be entered in the, cash book. There was a credit of ` 150 for, interest on current account and a debit of ` 25, for bank charges.

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CBSE New Pattern ~ Accountancy XI (Term I), , 75. As per the given case, what could be the, possible reason for difference in balance, of cash book and pass book?, (a) Timing differences in recording of, transactions., (b) Errors made by the business., (c) Both (a) and (b), (d) None of the above, , 87, (a), (b), (c), (d), , Added to balance of pass book, Deducted from balance of pass book, Ignored, None of the above, , 78. ‘‘She had issued cheques amounting to, ` 8,000 out of which cheques amounting, to ` 3,200 have so far been presented for, , 76. On 30th March, 2021, a cheque of, ` 1,570 received by her was paid into, , bank but the same was omitted to be, entered in the cash book is an example of, (a) timing differences in recording of, transactions., (b) errors made by the business., (c) errors made by the bank., (d) None of the above, , payment.’’ What will be the amount, deducted from the balance of pass book, to reconcile it with the balance of cash, book?, (a), (b), (c), (d), , ` 8,000, ` 3,200, ` 4,800, None of the above, , 79. What will be the balance as per cash, book on 31st March, 2021?, , 77. How will a credit of ` 150 for interest on, current account be treated while, preparing the bank reconciliation, statement?, , (a), (b), (c), (d), , ` 11,205, ` 15,000, ` 17,725, None of the above, , ANSWERS, Multiple Choice Questions, 1. (a), 11. (b), , 2. (a), 12. (a), , 3. (b), 13. (a), , 4. (d), 14. (b), , 5. (a), 15. (b), , 6. (c), 16. (b), , 7. (a), 17. (b), , 8. (c), 18. (b), , 9. (d), 19. (b), , 10. (c), 20. (c), , 21. (a), 31. (b), , 22. (b), 32. (b), , 23. (c), 33. (c), , 24. (b), 34. (c), , 25. (a), 35. (b), , 26. (b), 36. (b), , 27. (b), 37. (b), , 28. (a), 38. (c), , 29. (a), 39. (b), , 30. (a), 40. (a), , 41. (b), 51. (a), , 42. (a), 52. (b), , 43. (a), 53. (c), , 44. (c), 54. (b), , 45. (c), 55. (a), , 46. (a), , 47. (a), , 48. (b), , 49. (a), , 50. (a), , 64. (b), 74. (b), , 65. (a), 75. (c), , 66. (b), 76. (b), , 67. (a), 77. (b), , 68. (a), 78. (c), , 69. (a), 79. (a), , Assertion-Reasoning MCQs, 56. (a), , 57. (a), , 58. (b), , 59. (c), , 62. (c), 72. (a), , 63. (c), 73. (a), , Case Based MCQs, 60. (a), 70. (a), , 61. (d), 71. (a)

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CBSE New Pattern ~ Accountancy XI (Term I), , 88, , EXPLANATIONS, 11. It is an example of difference caused due to, error., , 14. Favourable balance as per the cash book, means debit balance in the bank column of, the cash book., , 20. Balance as per pass book, = 50,000 + 6,000 – 400 = ` 55,600., , 21. Balance as per pass book, = 54,000 – 5,400 – 100 = ` 48,500., , 22. Balance as per pass book, = 40,960 – 900 = ` 40,060., , 26. An overdraft is treated as negative figure in a, bank reconciliation statement., , 27. Overdraft as per pass book, = (8,000) + (2,000) + 800 = ` (9,200)., , 30. Overdraft as per pass book, = (1,18,100) + (12,400) + 27,300, = ` (1,03,200)., , 31. Bank balance as per cash book, = (10,000) + 4,000, = ` (6,000) Overdraft., , 32. A cheque of ` 500 received from a debtor was, recorded in the cash book but not deposited, in the bank for collection has increased the, balance as per cash book. So, it should be, deducted to reconcile the statements., , 33. Balance as per cash book, = 45,000 – 25,940 + 2,500 = ` 21,560., , 34. Balance as per cash book, = (20,000) + 2,000 + 200 = ` (17,800)., , 35. Balance as per pass book, = (5,000) + 2,500 – 100, = ` (2,600)., , 36. When payments are made by the bank as per, the standing instructions of the customer, the, balance in the pass book will be less when, compared to the cash book., , 37. The payment side of the cash book under cast, by ` 100 has increased the balance as per, cash book. So, it should be deducted to, reconcile the statements., , 38. One outgoing cheque of ` 300 was recorded, twice in the cash book which has decreased, the balance as per cash book by ` 300 as it, should have been recorded only once., , So, it should be added back once to reconcile, the statements., , 39. Cheques issued but not presented for payment, will reduce the balance as per the cash book., , 40. The amount of deposit in transit increases the, balance of the cash book but it has yet not, increased the balance of pass book. So to, reconcile statements, it will be added to the, bank balance, i.e. pass book balance., , 41. Overdraft as per the pass book will be more, than the overdraft as per cash book as, collection of cheques would reduce the, overdraft., , 43. A cheque of ` 500 deposited into bank but, was not recorded in the cash book increases, the balance as per pass book. So, it should be, deducted to reconcile the statements., , 44. Interest collected by bank from investments, amounting to ` 2,000 increases the balance as, per pass book but the balance of cash book is, less by the same amount. So, it should be, added to cash book to reconcile the, statements., , 45. Wrong entry on the credit side of the pass, book worth ` 990 increases the balance as per, pass book but the balance of cash book is less, by the same amount. So, if the balance of, cash book is taken as the starting point, then, ` 990 should be added to cash book to, reconcile the statements., , 46. Dividend collected by bank from investments, amounting to ` 1,500 increases the balance as, per pass book but the balance of cash book is, less by the same amount. So, it should be, deducted from pass book to reconcile the, statements., , 49. Wrong entry on the debit side of the pass, book decreases the balance as per pass book., So, it should be added to the balance as per, pass book to reconcile the statements., , 50. ` 39,000 directly deposited by the customer in, the bank account increases the balance of the, pass book, so it has to be deducted to, reconcile it with cash book., , 51. A wrong entry on the debit side of the pass, book reduces the balance in the pass book. So, to reconcile the balance with the cash book, it, has to be deducted from the cash book.

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CBSE New Pattern ~ Accountancy XI (Term I), , 89, , 53. All credit purchases of goods are recorded in the purchases journal whereas cash purchases are, recorded in the cash book., , 54. When cheque of ` 50,000 is deposited by the firm, then firm makes an entry into the cash book but, because it got dishonoured, so there is no entry in the pass book., , 55. In case of an auto debit transaction, bank makes an entry in pass book but company will record it, when it compares its cash book with the pass book., , 58. The correct reason for the assertion is that if an entry of payment has been recorded in the cash book, but not in the pass book, then the balance of cash book will be less than that of pass book., , 59. When direct debits are made by the bank on behalf of the customer, the balance in the passbook will, be less when compared to the cash book., , 64. Credit balance as per pass book and debit balance as per cash book is a favourable balance., 68. Payment of house tax by bank will reduce the balance in pass book. So, the balance in cash book will, be greater., , 69., Particulars, Debit/Favourable Balance as per Cash Book, (+), , (–), , Cheques issued but not yet presented for payment, , Plus (`), , Minus (`), —, , 3,72,000, 72,000, , —, , Dividend received by the bank not entered in the cash book, , 5,000, , —, , Interest allowed by the bank not entered in the cash book, , 1,250, , —, , Cheques deposited into bank but not collected by bank upto, this date, , —, , Bank charges not entered in the cash book, , —, , 200, , Cheque deposited into bank but dishonoured, , —, , 320, , Payment of house tax by bank on our behalf not entered in, the cash book, , —, , 350, , Credit/Favourable Balance as per Pass Book, , 15,400, , —, , 4,33,980, , 4,50,250, , 4,50,250, , 74., Particulars, Overdraft/Credit/Unfavourable Balance as per Cash Book, (+) Cheque issued but not presented for payment, Interest collected by bank has not been credited in cash book, (–), , Plus (`), , Minus (`), —, , 6,920, , 4,000, , —, , 600, , —, , Interest and collection charges debited by bank (200 + 50), , —, , 250, , Bill discounted with bank dishonoured, , —, , 700, , Cheque sent to the bank for collection but not collected and credited, by the bank, , —, , 6,000, , Overdraft/Debit/Unfavourable Balance as per Pass Book, , 9,270, , —, , 13,870, , 13,870

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CBSE New Pattern ~ Accountancy XI (Term I), , 90, 79., Particulars, Credit/Favourable Balance as per the Pass Book, (+), , Minus (`), , 15,000, , —, , 2,200, , —, , 500, , —, , 25, , —, , Cheques issued but not presented for payment (8,000 – 3,200) [78], , —, , 4,800, , Cheque received was paid into bank but not entered in the cash book, , —, , 1,570, , Interest credited on current account, , —, , 150, , —, , 11,205, , 17,725, , 17,725, , Cheque deposited but not yet credited, Cheque received but omitted to be deposited into bank, Bank charges, , (–), , Plus (`), , Debit/Favourable Balance as per Cash Book

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07, Depreciation, Provisions, and Reserves, Quick Revision, 1. Meaning of Depreciation Depreciation, means decline in the value of a fixed asset due, to use, passage of time or obsolescence., 2. Features of Depreciation, (i) Depreciation is decline in the book value, of fixed assets., (ii) Depreciation includes loss of value of, assets due to passage of time, usage or, obsolescence., (iii) Depreciation is a continuing process till, the end of the useful life of assets., (iv) Depreciation is an expired cost and hence, must be deducted before calculating, taxable profits., (v) Depreciation is a non-cash expense., (vi) Depreciation is the process of writing-off, the capital expenditure already incurred., 3. Causes of Depreciation Various causes of, depreciation, spelt out as part of the definition, of depreciation in AS 6 are as follows, (i) Physical wear and tear, (ii) Passage or efflux of time, (iii) Expiry of legal rights, (iv) Obsolescence, (v) Abnormal reasons, 4. Need for Depreciation, (i) Matching of cost and revenue, (ii) Consideration of tax, (iii) True and fair financial position, (iv) Compliance with the law, , 5. Factors Affecting the Amount of, Depreciation, (i) Cost of assets, (ii) Estimated Net Residual Value (NRV), (iii) Estimated useful life, 6. Other Terms related to Depreciation, (i) Depletion The term depletion is used in, respect of natural resources or wasting, assets like mines, quarries oil reserves, etc., There occurs an erosion in the value of, these natural resources due to extraction, of these resources which is called as, depletion. The main difference between, depletion and depreciation is, depletion is, concerned with the exhaustion of, economic resources but depreciation, relates to usage of an asset., (ii) Amortisation The term amortisation, refers to writing-off the value of intangible, assets like patents, copyrights, trademarks,, goodwill. etc, which can be utilised only, for a specific time period., 7. Methods of Calculating Depreciation, (i) Straight Line Method Under this, method, a fixed and equal amount in the, form of depreciation, according to a fixed, percentage on the original cost, is, written-off each year over the expected, useful life of the asset., It is also known as original cost method or, fixed installment method. It is the earliest, and widely used methods of providing, depreciation.

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CBSE New Pattern ~ Accountancy XI (Term I), , 92, The depreciation under this method can, be calculated by using the following, formulae, (a) Depreciation, Cost of Assets − Estimated NRV, =, Estimated Useful Life, (b) Depreciation, Rate of Depreciation, 100, If the annual depreciation amount is, given, then we can calculate the rate of, depreciation with the following formula, Rate of Depreciation, Annual Depreciation Amount, =, × 100, Cost of Asset, (ii) Written Down Value Method Under, this method, depreciation is charged over, the book value of the asset. It involves, charging a fixed rate on the written down, value. The amount of depreciation goes on, reducing year after year. As the book, value keeps on reducing by the annual, charge, it is also known as reducing, balance method or diminishing balance, method., The depreciation under this method is, calculated in the following manner, (a) For the first year, Depreciation, Rate of Depreciation, = Cost of Asset ×, 100, (b) For subsequent years, Depreciation, Rate of Depreciation, = Book Value ×, 100, Under the written down value method, the, rate of depreciation is computed by using, the following formula, , S, R = 1 − n  × 100, C, , = Cost of Asset ×, , where, R = Rate of Depreciation, n = Expected Useful Life, S = Scrap Value, C = Cost of an Asset, , 8. (i) Advantages of Straight Line Method, (a) It is a simple method of calculating, depreciation., (b) Assets can be depreciated fully or upto, the scrap value over the life of the asset., (c) Since, the depreciation amount is same, every year hence, there is a same effect, on the profit and loss account every year., (ii) Advantages of Written Down Value, Method, (a) It is an approved method of, depreciation by income tax authorities., (b) Under this method, the value of asset, can never be reduced to zero., (c) As a large portion of cost is written-off, in earlier years, loss due to, obsolescence gets reduced., 9. Difference between Straight Line Method, and Written Down Value Method, Straight Line, Method, , Written Down, Value Method, , Depreciation is, Basis of, calculated on, Charging, Depreciation the original, cost., , Depreciation is, calculated on the, book value., , The amount of, Annual, Depreciation depreciation is, fixed (constant), Charge, for all years., , The amount of, depreciation, declines year, after year., , Recognition, by Income, Tax Law, , It is not, recognised by, Income Tax, Law., , It is recognised, by Income Tax, Law., , Book Value, of the Asset, , It becomes zero It can never be, at the end of its zero., effective life., , Effect of, Depreciation, and Repair, on Profit and, Loss, Account, , Unequal effect, over the life of, the asset, as, depreciation, remains same, over the year, but repair cost, increase in the, later years., , Basis, , Equal effect over, the life of the, asset, as, depreciation cost, is high and, repairs are less in, the initial years, but in the later, years the repair, cost increase and, depreciation cost, decreases.

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CBSE New Pattern ~ Accountancy XI (Term I), , 93, , 10. Accounting Treatment of Depreciation, (i) Charging Depreciation to Asset, Account Under this method,, depreciation is directly charged to the, asset account, i.e. depreciation is deducted, from the depreciable cost of the asset, (credited to the asset account) and charged, (or debited) to profit and loss account., Journal Entries, For Recording Purchase of Asset, Asset A/c, Dr, To Cash/Bank/Vendor A/c, (Being the asset purchased), For Providing Depreciation, Depreciation A/c, Dr, To Asset A/c, (Being the depreciation provided), For Closing Depreciation Account, Profit and Loss A/c, Dr, To Depreciation A/c, (Being the transfer of depreciation, account to profit and loss account), Treatment in Balance Sheet Under this, method, the fixed asset appear at its net, book value/written down value (i.e. cost, less depreciation charged till date) on the, assets side of balance sheet and not at its, original (historical) cost., (ii) Creating Provision for Depreciation, Account/Accumulated Depreciation, Account Under this method, a separate, account named as ‘provision for, depreciation’ or ‘accumulated, depreciation’ account is created and the, annual depreciation is transferred to this, account., Journal Entries, For Recording Purchase of Asset, Asset A/c, Dr, To Bank/Cash/Vendor A/c, For Providing Depreciation, Depreciation A/c, Dr, To Provision for Depreciation A/c, , For Closure of Depreciation Account, Profit and Loss A/c, Dr, To Depreciation A/c, Treatment in Balance Sheet In the, balance sheet, the fixed asset continues to, appear at its original cost on the asset side., The depreciation charged till that date, appears in the provision for depreciation, account, which is shown either on the, ‘liabilities side’ of the balance sheet or by, way of deduction from the original cost of, the asset concerned on the asset side of the, balance sheet., 11. Meaning of Provisions The amount set, aside for the purpose of providing for any, known liability or uncertain loss or expense,, the amount of which cannot be ascertained, with certainity is referred to as provision. e.g., provision for depreciation, provision for, repairs and renewals, etc., 12. Importance of Provisions, (i) To meet anticipated losses and liabilities, (ii) To meet known losses and liabilities, (iii) To present correct financial statements, 13. Accounting Treatment and Disclosure of, Provisions Provision is a charge against the, profits and is created by debiting profit and, loss account. In the balance sheet, the amount, of provision may be shown either, (i) On the assets side, by way of deduction, from the concerned asset., (ii) On the liabilities side along with the, current liabilities., 14. Meaning of Reserves Reserves are referred, to as the amount set aside from profits and, retained in the business to provide for certain, future needs like growth and expansion or to, meet future contingencies. e.g. general, reserve, workmen compensation fund, etc., Reserves are not a charge against profit but, are the appropriations of profit., 15. Type of Reserves, Reserves are generally classified into, (i) Revenue Reserves The reserve created, from revenue profits which arise out of the, normal operating activities of the business

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CBSE New Pattern ~ Accountancy XI (Term I), , 94, , and are otherwise freely available for distribution as dividend are known as revenue reserves., Revenue reserves can be classified into, (a) General Reserve The reserve which is not created for a specific purpose is general reserve., It is also known as free reserve or contingency reserve., (b) Specific Reserve These are the reserves that are created for some specific purpose and can, be utilised only for that purpose., Examples of specific reserve are given below, • Dividend equalisation reserve, • Workmen compensation reserve, • Investment fluctuation fund, • Debenture redemption reserve, (ii) Capital Reserve The reserves which are created out of capital profits and are not available for, distribution as dividend are known as capital reserve. Capital reserves can be used for writing, off capital losses or issue of bonus shares in case of a company. e.g. premium on issue of shares, or debentures, profit on sale of fixed assets etc., (iii) Secret Reserve Secret reserve is any reserve which does not appear in the balance sheet. It, is also called as inner reserve or internal reserve or hidden reserve. Such reserves are a result, of understatement of assets or overstatement of liabilities and corresponding understatement, of capital., With the existence of secret reserves, the financial position of the company is better than it, appears from the balance sheet. Creation of secret reserve is prohibited as per Companies, Act., 16. Importance of Reserves, (i) Reserves strengthen the financial position of an enterprise., (ii) The amount set aside as reserves may be utilised for the purpose of meeting of future, contingency., (iii) Creation of reserves help in the expansion of business operations or for bringing uniformity in, distribution of dividends., (iv) Creation of certain reserves is also required by law, e.g. investment allowance reserve, debenture, redemption reserve, etc., 17. Accounting Treatment and Disclosure of Reserves Reserves are not a charge against profit but, are the appropriation of profits. Hence, reserves are transferred to the profit and loss appropriation, account. Reserves are shown under the head ‘Reserves and Surplus’ on the liabilities side of the, balance sheet., 18. Differences between Provision and Reserves, Basis, , Provision, , Reserves, , Basic Nature, , Provisions are Charge against profit., , Reserves are appropriation of profits., , Meaning, , It is created to meet known liability., , It is created to meet unknown liability., , Effects on, It reduces taxable profits., Taxable Profits, , It has no effect on taxable profit.

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CBSE New Pattern ~ Accountancy XI (Term I), , Basis, , 95, , Provision, , Reserves, , Presentation in It is shown either, Balance Sheet (i) by way of deduction from the item, on the assets side for which it is, created, (ii) in the liabilities side along, with current liabilities., , It is shown on the liabilities side after capital, amount., , Element of, Compulsion, , Creation of provision is necessary. It, must be made even if there are no, profits., , Generally, creation of a reserve is at the discretion of, management. Reserves cannot be created unless, there are profits., , Use for the, Payment of, Dividend, , It can not be used for dividend, distribution., , It can be used for dividend distribution., , Investment,, Outside, the, Business, , Provisions are never invested outside, the business., , Reserves may be invested outside the business.', , Purpose, , It is created for a specific liability., , It is created for strengthening the financial position., , Mode of, Creation, , It is created by debiting the profit and, loss account., , It is created by debiting the profit and loss, appropriation account., , 19. Difference between Revenue and Capital Reserve, Basis, , Revenue Reserve, , Capital Reserve, , Source of, Creation, , It is created out of revenue profits which, arise out of normal operating activities of, the business., , It is created primarily out of capital profits which, do not arise out of the normal operating activities of, the business., , Purpose, , It is created for strengthening the, financial position of the business., , It is created for the purpose laid down in companies, act., , Usage, , A specific revenue reserve can be utilised, only for the earmarked purpose., , It can be utilised for specific purposes as provided in, the law in force e.g. to write-off capital losses or, issue of bonus shares., , Dividend, , It can be used for dividend., , It cannot be used for dividend.

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CBSE New Pattern ~ Accountancy XI (Term I), , 96, , Objective Questions, Multiple Choice Questions, 1. Fixed assets are subject to decline in, value and this decline is technically, referred to as ……………., (a) Obsolescence, (c) Reduction, , (b) Depreciation, (d) None of these, , 2. Depreciation means decline in the, , (iii) It is a continuing process., (a) (i) and (ii), (c) (i) and (iii), , (b) (ii) and (iii), (d) (i), (ii), (iii), , 7. Depreciation is a cash expense., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 8. Depreciation is deducted before, , value of a fixed assets due to, , calculating taxable profits., , (a) usage of asset, (c) obsolescence, , (a) True, (c) Can’t say, , (b) passage of time, (d) All of these, , 3. Depreciation, being a charge against, profit, is debited to income, statement/statement of profit and loss., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 4. ………… issued by The Institute of, Chartered Accountants of India (ICAI), defines depreciation., (a), (b), (c), (d), , Accounting Standard-5, Accounting Standard-4, Accounting Standard-6, Accounting Standard-7, , 5. Expected useful life of an asset means, (i) the period over which a, depreciable asset is expected to be, used by the enterprise., (ii) the number of production of similar, units expected to be obtained from, the use of the asset by the enterprise., (a) Only (i), (c) Both (i) and (ii), , (b) Only (ii), (d) Neither (i) nor (ii), , 6. Which of the following is/are feature(s), of depreciation?, (i) It is decline in the book value of, fixed assets., (ii) It includes loss of value due to, effluxion of time, usage or, obsolescence., , (b) False, (d) Partially true, , 9. The term ……………….. is used in the, context of extraction of natural, resources like mines, quarries, etc.,, that reduces the availability of the, quantity of the material or asset., (a), (b), (c), (d), , depreciation, depletion, amortisation, None of the above, , 10. ………………….. refers to writing-off, the cost of intangible assets like patents,, copyright, trade marks, franchises,, goodwill which have utility for a, specified period of time., (a), (b), (c), (d), , Depreciation, Depletion, Amortisation, None of the above, , 11. Which of the following is/are cause(s), of depreciation?, (i) Wear and tear due to use or passage, of time., (ii) Expiration of legal rights., (iii) Obsolescence., (iv) Abnormal factors., (a), (b), (c), (d), , Only (i), (i) and (iii), (i), (iii) and (iv), (i), (ii), (iii), (iv)

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CBSE New Pattern ~ Accountancy XI (Term I), , 97, , 12. ………………….. implies to an existing, , 19. If adequate maintenance expenditure is, , asset becoming out-of-date on account, of the availability of better type of asset., , incurred, depreciation need not be, charged., , (a), (b), (c), (d), , (a) True, (c) Can’t say, , Obsolescence, Depletion, Amortisation, None of the above, , 20. Which of the following factors affect the, , 13. Obsolescence arises from factors like, (a) technological changes, (b) improvements in production methods, (c) change in market demand for the product, or service output of the asset, (d) All of the above, , 14. Which of the following points out the, need for depreciation?, (i) Matching of costs and revenue, (ii) Consideration of tax, (iii) True and fair financial position, (iv) Compliance with law, (a) Only (i), (c) (i), (iii) and (iv), , (b) (i) and (iii), (d) (i), (ii), (iii), (iv), , 15. Depreciation is also charged on current, assets., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 16. The main difference between depletion, and depreciation is that the former is, concerned with the exhaustion of, economic resources, but the latter, relates to the usage of an asset., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 17. Depreciation provides fund for, replacement., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 18. When market value of an asset is higher, than book value, depreciation is not, charged., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , (b) False, (d) Partially true, , amount of depreciation?, (i) Cost of asset, (ii) Tax rate, (iii) Estimated net residual value, (iv) Depreciable cost, (a) Only (i), (c) (i), (iii) and (iv), , (b) (i) and (iii), (d) (i), (ii), (iii), (iv), , 21. Which of the following gives the correct, formula for calculating the original cost, of an asset for depreciation?, (a) Original cost = Purchase price, (b) Original cost = Purchase price + Freight, (c) Original cost = Purchase price + Freight+, Installation cost, (d) None of the above, , 22. In case of purchase of a second hand, asset, original cost includes initial repair, cost to put the asset in workable, condition., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 23. ………………… is the estimated net, realisable value (or sale value) of the, asset at the end of its useful life., (a) Scrap value, (c) Depreciation, , (b) Original cost, (d) None of these, , 24. Depreciable cost of an asset is equal to, (a), (b), (c), (d), , Cost + Net residual value, Cost - Net residual value, Cost - Depreciation, None of the above, , 25. A machine is purchased for ` 50,000, and is expected to have a useful life of, 10 years. At the end of 10th year, it is, expected to have a sale value of ` 6,000, but expenses related to its disposal are, estimated at ` 1,000.

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CBSE New Pattern ~ Accountancy XI (Term I), , 98, Then its net residual value is, (a) ` 6,000, (c) ` 1,000, , (b) ` 5,000, (d) None of these, , 26. It is the physical life of an asset that, matters for the purpose of depreciation., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 27. Total amount of depreciation charged, over the useful life of the asset must be, equal to the depreciable cost., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 28. ……….. of an asset is the estimated, economic or commercial life of the asset., (a) Useful life, (c) Residual life, , (b) Physical life, (d) None of these, , 29. A machine is purchased for ` 50,000, and is expected to have a useful life of, 10 years. At the end of 10th year it is, expected to have a sale value of ` 6,000, but expenses related to its disposal are, estimated at ` 1,000. Then its, depreciable cost is, (a) ` 45,000, (c) ` 44,000, , (b) ` 50,000, (d) None of these, , 30. Which of the following factors affect the, useful life of an asset?, (i) Legal or contractual limits, (ii) Repair and maintenance policy of, the business organisation, (iii) Technological obsolescence, (iv) The number of shifts for which, asset is to be used, (a) Only (i), (c) (i), (iii) and (iv), , (b) (i) and (iii), (d) (i), (ii), (iii), (iv), , 31. Under ……………….. method, a fixed, and equal amount in the form of, depreciation is charged every year, during the life time of the asset., (a) straight line, (c) annuity, , (b) written down value, (d) insurance policy, , 32. The original cost of the asset is, ` 2,50,000 and freight and installation, charges are ` 25,000. The useful life of, the asset is 10 years and net residual, value is estimated to be ` 50,000. What, is the amount of depreciation to be, charged every year under straight line, method assuming that the asset is, purchased on 1st January, 2021?, (a) ` 22,500, (c) ` 30,000, , (b) ` 25,000, (d) None of these, , 33. Which of the following are advantages, of straight line method of depreciation?, (a) It is very simple, easy to understand and, apply., (b) This method makes it possible to distribute, full depreciable cost over useful life of the, asset., (c) Both (a) and (b), (d) None of the above, , 34. Straight line method is based on the, faulty assumption of same amount of, the utility of an asset in different, accounting years., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 35. Which of the following is\are, limitations of straight line method?, (a) This method reduces the book value of an, asset to zero although the asset may still be, in existence., (b) It is a very simple method., (c) Depreciation charged is same every year, making comparison of profits for different, years easy., (d) All of the above, , 36. Under ……………….. method,, depreciation is charged on the book, value of the asset., (a), (b), (c), (d), , straight line, written down value, annuity, insurance policy

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CBSE New Pattern ~ Accountancy XI (Term I), , 37. In straight line method of depreciation,, , 99, 42. Which of the following does not, , amount of depreciation reduces year, after year., , correctly differentiate between straight, line and written down value method?, , (a) True, (c) Can’t say, , (a) In written down value method, depreciation, is charged on the basis of original cost, whereas in straight line method, the basis, of charging depreciation is net book value., (b) The annual amount of depreciation charged, every year remains fixed or constant under, straight line method whereas in written, down value method, the annual amount of, depreciation is highest in the first year and, subsequently declines., (c) Straight line method is not recognised by, Income tax law while written down value, method is recognised by the income tax, law., (d) None of the above, , (b) False, (d) Partially true, , 38. If the original cost of the asset is, ` 2,00,000 and depreciation is charged, @ 10% p.a. at written down value, then, the amount of depreciation for 1st, 2nd, and 3rd year respectively is, (a), (b), (c), (d), , ` 20,000; ` 18,000; ` 16,200, ` 18,000; ` 16,200; ` 14,500, ` 20,000; ` 20,000; ` 20,000, None of the above, , 39. Which of the following is/are the, advantage(s) of written down value, method?, (a) It results into almost equal burden of, depreciation and repair expenses taken, together every year on profit and loss account, (b) Income Tax Act accept this method for tax, purposes, (c) As a large portion of cost is written-off in, earlier years, loss due to obsolescence gets, reduced, (d) All of the above, , 40. Written down value method is based on, a more realistic assumption that the, benefits from asset go on diminishing, with the passage of time., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 41. Which of the following is/are, limitations of written down value, method?, (i) As depreciation is calculated at, fixed percentage of written down, value, depreciable cost of the asset, cannot be fully written-off., (ii) It is difficult to ascertain a suitable, rate of depreciation., (a) Only (i), (c) Both (i) and (ii), , (b) Only (ii), (d) Neither (i) nor (ii), , 43. Straight line method is suitable for, assets in which, (a) repair charges are low., (b) the possibility of obsolescence is low., (c) scrap value depends upon the time period, involved., (d) All of the above, , 44. Written down value method is suitable, for assets which are affected by, technological changes and require more, repair expenses with passage of time., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 45. XYZ Ltd. purchased a plant for, ` 5,00,000 on 1st April, 2020, and spent, ` 50,000 for its installation. The salvage, value of the plant after its useful life of, 10 years is estimated to be ` 10,000., Pass journal entry for depreciation on, 31st March, 2021., (a) Depreciation A/c, Dr 54,000, To Plant A/c, (b) Plant A/c, Dr 54,000, To Depreciation A/c, (c) Depreciation A/c, Dr 50,000, To Plant A/c, (d) None of the above, , 54,000, 54,000, 50,000

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CBSE New Pattern ~ Accountancy XI (Term I), , 100, 46. M/s Mehra and Sons acquired a machine, , 50. The amount set aside for the purpose of, , for ` 1,80,000 on 1st October, 2020, and, spent ` 20,000 for its installation. The, firm writes-off depreciation at the rate of, 10% on original cost every year. What is, the journal entry for charging, depreciation to profit and loss account on, 31st March, 2021?, , providing any known liability, the, amount of which cannot be ascertained, with reasonable accuracy, is known as, , (a) Profit and Loss A/c Dr 10,000, To Depreciation A/c, (b) Profit and Loss A/c Dr 9,000, To Depreciation A/c, (c) Depreciation A/c, Dr 10,000, To Plant A/c, (d) None of the above, , (b) Provision, (d) None of these, , 51. Which of the following is objective of, provision?, , 10,000, 9,000, 10,000, , 47. What is the journal entry for crediting, depreciation amount to provision for, depreciation account?, (a) Depreciation A/c, To Provision for Depreciation A/c, (b) Provision for Depreciation A/c, To Depreciation A/c, (c) Depreciation A/c, To Asset A/c, (d) None of the above, , (a), (b), (c), (d), , To meet anticipated losses and liabilities, To meet unknown losses and liabilities, To hoard funds, None of the above, , 52. Provision is a charge against profit and, is created by crediting profit and loss, account., (a) True, (c) Can’t say, , Dr, Dr, Dr, , 48. Which of the following is/are feature(s), of accumulated depreciation account, method?, (i) Asset account continues to appear, at its original cost year after year, over its entire life., (ii) Depreciation is accumulated on a, separate account instead of being, adjusted in the asset account at the, end of each accounting period., (a) Only (i), (c) Both (i) and (ii), , (a) Reserve, (c) Contingency fund, , (b) Only (ii), (d) Neither (i) nor (ii), , 49. In the Balance sheet, provision for, depreciation of ` 20,000 is shown on, (a) the liabilities side of the balance sheet., (b) by way of deduction from the original cost, of the asset concerned on the asset side of, the balance sheet., (c) Either (a) or (b), (d) None of the above, , (b) False, (d) Partially true, , 53. In the balance sheet, the amount of, provision may be shown as, (i) by way of deduction from the, concerned asset on the assets side., (ii) on the liabilities side of the balance, sheet along with current liabilities., (a), (b), (c), (d), , Only (i), Only (ii), Either (i) or (ii), Neither (i) nor (ii), , 54. Provisions are created according to the, principle of prudence or conservatism., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 55. …………………. are the appropriations, of profit to strengthen the financial, position of the business., (a), (b), (c), (d), , Reserve, Provision, Contingency fund, None of the above, , 56. Reserve is a charge against profit., (a) True, (c) Can’t say, , (b) False, (d) Partially true

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CBSE New Pattern ~ Accountancy XI (Term I), , 57. Reserves are shown under the head, ‘Reserves and Surpluses’ on the, liabilities side of the balance sheet., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 58. Which of the following correctly, differentiates between provision, and reserves?, (a) A provision is a charge against profit whereas, reserve is an appropriation of profit., (b) Provision is made for a known liability or, expense the amount of which is not certain, whereas reserve is created for strengthening, the financial position of the business., (c) Provision is deducted before calculating, taxable profits whereas a reserve is created, from profit after tax and therefore it has no, effect on taxable profit., (d) All of the above, , 59. Provision can be used for distribution, as dividends., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 60. When the purpose for which reserve is, created is not specified, it is called, ………………… ., (a) General reserve, (c) Revenue reserve, , (b) Specific reserve, (d) Capital reserves, , 61. General reserve is also termed as free, reserve because the management can, freely utilise it for any purpose., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 62. ………………… is the reserve, which is, created for some specific purpose and, can be utilised only for that purpose., (a) General reserve, (c) Revenue reserve, , (b) Specific reserve, (d) Capital reserve, , 63. Identify specific reserves from the, following, (i) Dividend equalisation reserve, (ii) Provision for depreciation, (iii) Workmen compensation fund, , 101, (iv) Investment fluctuation fund, (a) (i) and (iii), (c) (i), (ii) and (iv), , (b) (i) and (ii), (d) (i), (iii) and (iv), , 64. Reserve created for maintaining a, stable rate of dividend is termed as, ……… ., (a), (b), (c), (d), , Dividend equalisation reserve, Provision for depreciation, Workmen compensation fund, Investment fluctuation fund, , 65. …………………….. are created from, revenue/profits which arise out of the, normal operating activities of the, business and are otherwise freely, available for distribution as dividend., (a) General reserve, (c) Revenue reserve, , (b) Specific reserve, (d) Capital reserve, , 66. Capital reserves are created out of, capital profits which do not arise from, the normal operating activities., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 67. Which of the following does not, correctly differentiate between revenue, reserve and capital reserve?, (a) Revenue reserve is created out of revenue, profits where as capital reserve is created, primarily out of capital profit., (b) Revenue reserve is created to strengthen, the financial position, to meet unforeseen, contingencies or for some specific, purposes. Whereas capital reserve is, created for compliance of legal, requirements or accounting practices., (c) Revenue reserve can be utilised only for a, specific purpose whereas capital reserve, can be utilised for any purpose., (d) None of the above, , 68. Reserves can be meant for the purpose of, (a) meeting a future contingency, (b) strengthening the general financial position, of the business, (c) redeeming a long-term liability, (d) All of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 102, 69. Creation of reserve reduces taxable, profits of the business., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 70. …………………… is a reserve which, , does not appear in the balance sheet., (a) General reserve, (c) Secret reserve, , (b) Specific reserve, (d) Capital reserve, , 71. Secret reserve is called such as it is not, known to outside stakeholders., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 72. Making excessive provision for doubtful, debts builds up the secret reserve in the, business., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , Assertion–Reasoning MCQs, Direction (Q. Nos. 73 to 76) There are, two statements marked as Assertion (A), and Reason (R). Read the statements and, choose the appropriate option from the, options given below, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct explanation, of Assertion (A), (c) Assertion (A) is true, but Reason (R) is false, (d) Assertion (A) is false, but Reason (R) is true, , 73. Assertion (A) Depreciation is a charge, against the revenue of the corresponding, period and must be deducted before, arriving at net profit., Reason (R) Depreciation is as much the, cost as any other expense incurred in, the normal course of business., , 74. Assertion (A) Charging depreciation is, important to represent true and fair, financial position., Reason (R) If depreciation on assets is, not provided for, then the assets will be, overvalued., , 75. Assertion (A) Provisions are created, by crediting the profit and loss, account., Reason (R) The amount of provision, for expense and loss is a charge against, the revenue of the current period., , 76. Assertion (A) Reserves reduces the, amount of profits available for, distribution among the owners of the, business., Reason (R) Reserve is a charge against, profit., , Case Based MCQs, Direction Read the following case study, and answer questions 77 to 81 on the, basis of the same., Arya Ltd. has a manufacturing plant in, Delhi. On 1st July, 2021, Arya Ltd purchased, a machine for ` 1,08,000 and spent ` 12,000, on its installation. At the time of purchase, it, was estimated that the effective commercial, life of the machine will be 12 years after, which its salvage value will be ` 12,000., The machinery is such that the possibility of, obsolescence is low and do not require much, repair expenses with passage of time. The, accounts are closed on 31st December every, year., , 77. Why should depreciation be charged, on the manufacturing plant of Arya, Ltd?, (a), (b), (c), (d), , For matching of costs and revenue., To comply with law., To reflect true and fair financial position., All of the above, , 78. Which of the following accounting, standard should be followed by Arya, Ltd. to charge depreciation?, (a), (b), (c), (d), , Accounting Standard-7, Accounting Standard-6, Accounting Standard-8, Accounting Standard-9

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CBSE New Pattern ~ Accountancy XI (Term I), , 79. Which of the following method should, be used by Arya Ltd. to charge, depreciation?, (a), (b), (c), (d), , Written down value method, Straight line method, Insurance policy method, None of the above, , 80. What is the original cost of the asset on, which depreciation is to be charged?, (a) ` 1,08,000, (c) ` 1,20,000, , (b) ` 12,000, (d) None of these, , 81. What is the amount of depreciation, charged in the first year?, (a) ` 9,000, (c) ` 4,500, , (b) ` 10,000, (d) ` 5,000, , Direction Read the following case study, and answer question 82 to 86 on the basis, of the same., M/s XYZ purchased a plant for ` 5,00,000 on, 1st April, 2017, and spent ` 50,000 for its, installation. The salvage value of the plant, after its useful life of 10 years is estimated to, be ` 10,000.The owner of the firm has certain, dilemmas regarding the concept of, depreciation. You are required to advise him, regarding the same by answering the, following questions., , 82. By using which of the following, statements would you explain the, concept of depreciation to the owner?, (a) Depreciation is a measure of the wearing, out, consumption or other loss of value of, depreciable asset arising from use,, effluxion of time or obsolescence through, technology and market-change, (b) Depreciation is a measure of the wearing, out, consumption or other loss of value of, depreciable asset arising from use or, obsolescence, (c) Depreciation is reduction in the value of, assets, (d) None of the above, , 103, 83. Which of the following factors that, affect the amount of depreciation would, you point out to the owner to keep in, mind?, (a), (b), (c), (d), , Historical cost of asset, Estimated net residual value, Depreciable cost, All of the above, , 84. Using which of the following statement, would you explain the importance of, straight line method of depreciation to, owner?, (a) It results into almost equal burden of, depreciation and repair expenses taken, together every year on profit and loss, account, (b) Income Tax Act accept this method for tax, purposes, (c) As a large portion of cost is written-off in, earlier years, loss due to obsolescence gets, reduced, (d) This method makes it possible to distribute, full depreciable cost over useful life of the, asset, , 85. Using which of the following statement, would you explain the importance of, written down value method of, depreciation to owner?, (a) This method is suitable for fixed assets, which last for long and which require, increased repair and maintenance, expenses with passage of time, (b) Income Tax Act accepts this method for tax, purposes, (c) As a large portion of cost is written-off in, earlier years, loss due to obsolescence gets, reduced, (d) All of the above, , 86. What will be the amount of, depreciation charged annually using, straight line method?, (a) ` 50,000, (c) ` 55,000, , (b) ` 54,000, (d) None of these

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CBSE New Pattern ~ Accountancy XI (Term I), , 104, Direction Read the following case study, and answer questions 87 to 91 on the, basis of the same., On 1st April, 2017, X Ltd. purchased a, machinery for ` 12,00,000. On 1st October,, 2019 a part of the machinery purchased on 1st, April, 2017 for ` 80,000 was sold for ` 45,000, and a new machinery at the cost of ` 1,58,000, was purchased and installed on the same date., The company has adopted the method of, providing 10% p.a. depreciation on the, diminishing balance of the machinery., X Ltd. maintains provision for depreciation, and machinery disposal account. You are, required to answer the following questions., , 87. Which of the following points need to, be kept in mind when provision for, depreciation account is maintained?, (a) Asset account continues to appear at its, original cost year after year over its entire, life, (b) Depreciation is accumulated on a separate, account instead of being adjusted in the, asset account at the end of each, accounting period, (c) Both (a) and (b), (d) None of the above, , 88. What is the balance carried in the, machinery account in March, 2018?, (a) ` 12,00,000, (c) ` 9,60,000, , (b) ` 10,80,000, (d) None of these, , 89. What is the accumulated depreciation, on the machinery worth ` 80,000 that, was sold?, (a) ` 8,000, (c) ` 18,440, , (b) ` 7,200, (d) None of these, , 90. What is the gain or loss on the sale of, machinery worth ` 80,000?, (a), (b), (c), (d), , ` 16,560 profit, ` 16,560 loss, ` 35,000 loss, ` 35,000 profit, , 91. Provision for depreciation will be, shown as a current asset by X Ltd. in, the balance sheet., (a) True, (c) Partially true, , (b) False, (d) Can’t say, , Direction Read the following case study, and answer question 92 to 96 on the basis, of the same., WHERE Ltd. is a manufacturing firm and has, a machinery worth ` 50,00,000. As on 1st, April, 2018 the provision for depreciation, stood at ` 50,00,000. WHERE Ltd. charges, depreciation on machinery at 20% p.a. by the, diminishing balance method. A piece of, machinery purchased on 1st April, 2016 for, ` 10,00,000 was sold on 1st October, 2018 for, ` 6,00,000., , 92. Under written down value method, a, fixed and equal amount in the form of, depreciation is charged every year, during the life time of the asset., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 93. Which of the following is the probable, reason for WHERE Ltd’s adoption of, written down value method for, charging depreciation?, (a) The machinery is such that its repair, charges are low, (b) The possibility of obsolescence of, machinery is low, (c) The machinery is such that it is affected by, technological changes and require more, repair expenses with passage of time, (d) None of the above, , 94. What is the total depreciation charged, on the machinery sold?, (a) ` 4,24,000, (c) ` 4,40,000, , (b) ` 3,60,000, (d) None of these, , 95. What is the written down value of the, machinery sold?, (a) ` 5,76,000, (c) ` 6,40,000, , (b) ` 10,00,000, (d) None of these

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CBSE New Pattern ~ Accountancy XI (Term I), , 105, , 96. What is the balance carried down in the, , 99. Using which of the following statements, , machinery account?, (a) ` 50,00,000, (c) ` 44,24,000, , (b) ` 40,00,000, (d) None of these, , Direction Read the following case study, and answer question 97 to 101 on the, basis of the same., Geet has recently started her own cloth, trading business. Her business is doing quite, well and she is deciding to expand it. She, decides to maintain accounts of the firm in, proper form as per various legal, requirements. She is not really versed with, the aspects of accountancy. She is confused, what reserves to maintain and what, provisions to create., You are a Chartered Accountant. Geet, approaches you for advice., , 97. Why should Geet create provisions?, (a) To meet anticipated or known losses and, liabilities, (b) To meet unknown losses and liabilities, (c) To hoard funds, (d) None of the above, , 98. In the balance sheet, the amount of, provision should be shown by Geet as, (i) by way of deduction from the, concerned asset on the assets side., (ii) on the liabilities side of the balance, sheet alongwith current liabilities., (a) Only (i), (c) Either (i) or (ii), , (b) Only (ii), (d) Neither (i) nor (ii), , will you justify to Geet the need to, create reserves?, (a) Reserves help in strengthening the, financial position of an enterprise, (b) Reserves help in meeting future, contingencies, (c) Reserves are important to expand the, business operations and to bring uniformity, in distribution of dividends, (d) All of the above, , 100. Geet wants to create a reserve which, the management can freely utilise for, any purpose. Which reserve should she, create?, (a), (b), (c), (d), , General Reserve, Specific Reserve, Secret Reserve, None of the above, , 101. How will you explain the difference, between revenue reserve and capital, reserve to Geet?, (a) Revenue reserve is created out of revenue, profits whereas capital reserve is created, primarily out of capital profit., (b) Revenue reserve is created to strengthen, the financial position, to meet unforeseen, contingencies or for some specific, purposes. Whereas capital reserve is, created for compliance of legal, requirements or accounting practices., (c) Revenue reserve can be utilised only for a, specific purpose whereas Capital reserve, can be utilised for any purpose., (d) Both (a) and (b)

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CBSE New Pattern ~ Accountancy XI (Term I), , 106, , ANSWERS, Multiple Choice Questions, 1. (b), 11. (d), 21. (c), , 2. (d), 12. (a), 22. (a), , 3. (a), 13. (d), 23. (a), , 4. (c), 14. (d), 24. (b), , 5. (c), 15. (b), 25. (b), , 6. (d), 16. (a), 26. (b), , 7. (b), 17. (a), 27. (a), , 8. (a), 18. (b), 28. (a), , 9. (b), 19. (b), 29. (a), , 10. (c), 20. (c), 30. (d), , 31. (a), 41. (c), , 32. (a), 42. (a), , 33. (c), 43. (d), , 34. (a), 44. (a), , 35. (a), 45. (a), , 36. (b), 46. (a), , 37. (b), 47. (a), , 38. (a), 48. (c), , 39. (d), 49. (c), , 40. (a), 50. (b), , 51. (a), 61. (a), 71. (a), , 52. (b), 62. (b), 72. (a), , 53. (c), 63. (d), , 54. (a), 64. (a), , 55. (a), 65. (c), , 56. (b), 66. (a), , 57. (a), 67. (c), , 58. (d), 68. (d), , 59. (b), 69. (b), , 60. (a), 70. (c), , 81. (c), 91. (b), 101. (d), , 82. (a), 92. (b), , 83. (d), 93. (c), , 84. (d), 94. (a), , 85. (d), 95. (a), , 86. (b), 96. (b), , Assertion-Reasoning MCQs, 73. (a), , 74. (a), , 75. (d), , 76. (c), , 79. (b), 89. (c), 99. (d), , 80. (c), 90. (b), 100. (a), , Case Based MCQs, 77. (c), 87. (c), 97. (a), , 78. (b), 88. (a), 98. (c), , EXPLANATIONS, 7. Depreciation is a non-cash expense. It does, not involve any cash outflow. It is the process, of writing-off the capital expenditure already, incurred., , 8. Depreciation is an expired cost and hence, must be deducted before calculating taxable, profits., , 15. Depreciation is charged on fixed assets., 16. The term depletion is used in the context of, extraction of natural resources like mines,, quarries, etc. that reduces the availability of, the quantity of the material or asset., , 18. Depreciation is not related to market value of, an asset. It is charged on book value., , 19. Depreciation still needs to be charged even if, adequate maintenance expenditure is, incurred., , 25. Its net residual value shall be 6,000–1,000, = ` 5,000., , 26. It is the estimated useful life of an asset that, matters for the purpose of depreciation., Physical life is not important for this purpose, because an asset may still exist physically but, , may not be capable of commercially viable, production., , 27. If total amount of depreciation charged is less, than the depreciable cost then the capital, expenditure is under recovered which, violates the principle of proper matching of, revenue and expense., 29. Depreciable cost = Cost – Net residual value, Net residual value = 6,000 – 1,000 = ` 5,000, Depreciable cost = 50,000 – 5,000 = ` 45,000, 32. Annual Depreciation Amount, Acquisition Cost of Asset, − Estimated Net Residual Value, =, Estimated Life of Asset, 2,75, 000 − 50, 000, =, = ` 22, 500, 10, , 37. In written down value method of deprecia, tion, amount of depreciation reduces year, after year., 10, 38. (i) Depreciation (I year) = 2, 00, 000 ×, 100, = ` 20, 000

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CBSE New Pattern ~ Accountancy XI (Term I), , 107, , Written down value = 2, 00, 000 − 20, 000, = `1,80, 000 (at the end of the I year), 10, (ii) Depreciation (II year) = 1,80, 000 ×, 100, = `18, 000, Written down value = 1,80, 000 − 18, 000, = `1,62, 000 (at the end of the II year), 10, (iii) Depreciation (III year) = 1,62, 000 ×, 100, = `16, 200, , 42. In straight line method, depreciation is charged on the basis of original cost or historical cost., Whereas in written down value method, the basis of charging depreciation is net book value (i.e.,, original cost less depreciation till date) of the asset., , 45. Depreciation amount, =, , 5, 50, 000 − 10, 000, = ` 54, 000 p.a., 10, , 46. Calculation of original cost of the machine, Purchase Cost, 1,80,000, + Installation Cost, 20, 000, Original Cost, 2, 00, 000, Depreciation expense = 10% of 2,00,000 every year = ` 20,000 p.a., During the year 2021, depreciation shall be charged only for 6 months, as acquisition date is 1st, October, 2020, i.e., the asset is used only for 6 months during the year 2020-21., 6, So, depreciation = 20,000 × = ` 10,000, 12, , 52. Provision is a charge against profit and is created by debiting profit and loss account., 54. It is necessary to take into account expected loss while calculating true and fair profit/loss, according, to the principle of prudence or conservatism., , 56. Reserve is not a charge against profit as it is not meant to cover any known liability or expected loss, in future., , 59. Provision cannot be used for distribution as dividends., 67. A specific revenue reserve can be utilised only for the earmarked purpose while a general reserve can, be utilised for any purpose including distribution of dividend whereas a capital reserve can be utilised, for specific purposes as provided in the law in force., , 69. A reserve is created from profit after tax and therefore it has no effect on taxable profit., 75. Provisions are created by debiting the profit and loss account., 76. Reserves are the appropriations of profit to strengthen the financial position of the business., However, retention of profits in the form of reserves reduces the amount of profits available for, distribution among the owners of the business., , 79. Straight line method is suitable for assets in which repair charges are low and the possibility of, obsolescence is also low., , 80. Original cost = Purchase price + Installation cost = 1,08,000 + 12,000 = ` 1,20,000, 81. Computation of annual amount of depreciation =, , (1, 08, 000 + 12, 000 − 12, 000 ), = ` 9, 000, 12

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CBSE New Pattern ~ Accountancy XI (Term I), , 108, , For the first year, machine has been used for half year that’s why half year depreciation has been, charged i.e. ` 4,500., 86. Original cost of plant = 5, 00, 000 + 50, 000 = ` 5, 50, 000, 5, 50, 000 − 10, 000, = ` 54,000, ∴Depreciation, 10, 88. Since provision for depreciation is maintained, so in the machinery account, the historical cost of the, machinery i.e. at `12,00,000., , 89. Calculation of Profit/Loss on Sale of Machinery, , Amt (`), 80,000, ( 8, 000 ), 72,000, ( 7, 200 ), 64,800, , Original cost as on 1st April, 2017, ( − ) Depreciation @ 10% p.a. for 2017-18, Book value as on 1st April, 2018, ( − ) Depreciation @ 10% p.a. for 2018-19, Book value as on 1st April, 2019, , ( − ) Depreciation @ 10% p.a. upto date of sale (64,800 ×10/100 × 6/12) (3,240), Book value as on 1st October, 2019, 61, 560, ∴Depreciation = 8, 000 + 7, 200 + 3, 240 = ` 18, 440, , 90. Gain/Loss on machinery = 61, 560 − 45, 000 = `16, 560 (Loss), 91. Provision for depreciation account is shown either on the ‘liabilities side’ of the balance sheet or by, way of deduction from the original cost of the asset concerned on the asset side of the balance sheet., , 92. Under this method, depreciation is charged on the book value of the asset. Since book value keeps, on reducing by the annual charge of depreciation, it is also known as ‘reducing balance method’., The amount of depreciation reduces year after year., , 94. Total depreciation charged on sold machinery, 2016-17, 2017-18, 2018-1st October, , 2,00,000, 1,60,000, 64,000, 4, 24, 000, , 95. Cost of sold machinery (on 1st April, 2016) 10,00,000, ( − ) Depreciation (2016-17), Diminishing Value on 31st March, 2017, ( − ) Depreciation (2017-18), Diminishing Value on 31st March, 2018, ( − ) Depreciation till 1st October, 2018, , 96., , Machinery Account, , Dr, Date, , Particulars, , Amt (`), , To Balance b/d, , 50,00,000, , 2018, Apr 1, , ( 2, 00, 000 ), 8,00,000, (1,60, 000 ), 6,40,000, (64,000), 5,76, 000, Date, , Cr, Particulars, , Amt (`), , By Machinery Disposal A/c, , 10,00,000, , 2018, Oct 1, 2019, Mar 31, 50,00,000, , By Balance c/d, , 40,00,000, 50,00,000

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CBSE New Pattern ~ Accountancy XI (Term I), , 111, , PRACTICE PAPER 1, Accountancy Class 11th (Term I), Instructions, 1. This paper has 40 questions, carrying 1 mark each., 2. All questions are compulsory., 3. Answer the questions as per the given instructions., M.M. : 40, , Time : 90 Minutes, , Multiple Choice Questions, Direction (Q. Nos. 1-20) All the, questions have four options out of which, only one is correct. Choose the correct, option as your answer., , 1. Use of common unit of measurement, and common format of reporting, promotes., (a) Comparability, (c) Relevance, , (b) Understandability, (d) Reliability, , 2. Neel Ltd. deals in selling and buying, furniture. Here, furniture is, (a), (b), (c), (d), , fixed asset for Neel Ltd., intangible asset for Neel Ltd., goods for Neel Ltd., None of the above, , 3. Which of the following is a limitation of, accounting?, (a), (b), (c), (d), , It is historical in nature, It considers only quantitative information, It may be affected by window dressing, All of the above, , 4. Which accounting concept requires that, efforts should not be wasted in recording, and presenting facts, which are immaterial, in the determination of income?, (a), (b), (c), (d), , Objectivity Concept, Materiality Concept, Conservatism Concept, Consistency Concept, , 5. GST is a ………………… based tax on, consumption of goods and services., (a) consumption, (c) income, , (b) destination, (d) None of these, , 6. Find the total assets of the firm, if the, , capital is ` 1,60,000 and liabilities are, ` 40,000., (a) ` 1,20,000, (b) ` 2,00,000, (d) ` 40,000, (c) ` 1,60,000, , 7. Vouchers prepared for transactions with, multiple debits and multiple credits are, known as ……… ., (a), (b), (c), (d), , Complex voucher, Transaction voucher, Multiple voucher, None of the above, , 8. What will be the effect of the following, transaction on accounting equation., Bought plant and machinery for the, business for ` 1,25,000 and an advance of, ` 10,000 is paid in cash to M/s XYZ Ltd., (a) This transaction increases plant and, machinery (assets) by ` 1,25,000, decreases, cash by ` 10,000 and increases liabilities, (M/s XYZ Ltd. as creditor) by ` 1,15,000, (b) This transaction increases plant and, machinery (assets) by ` 1,25,000, decreases, cash by ` 10,000, (c) This transaction increases plant and, machinery (assets) by ` 1,25,000, decreases, cash by ` 1,25,000, (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 112, 9. Which of the following is/are feature(s), of journal?, (a) It is a daily accounting record, (b) It records both credit and debit aspects of a, transaction, (c) No explanation of the transactions is given, (d) Both (a) and (b), , 10. What will be the journal entry if goods, of ` 50,000 are purchased for cash from, Ian?, (a) Goods A/c, To Ian A/c, (b) Purchases A/c, To Ian A/c, (c) Purchases A/c, To Cash A/c, (d) None of the above, , Dr 50,000, 50,000, Dr 50,000, 50,000, 50,000, , by cheque of ` 5,000, which of the, following account will be debited?, (b) Cheque account, (d) Bank account, , 12. The debit notes issued are used to, prepare which book?, (a) Purchase return book (b) Sales return book, (c) Sales book, (d) Purchase book, , 13. Rent due for the month of March, 2021, worth ` 15,000 will appear in which, side of cash book?, (a) Receipt, (c) Contra, , of ` 1,250 debited to firm’s current, account by the bank is an example of, difference caused due to error., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 17. Cost of a machine is ` 4,20,000 with, salvage value ` 20,000. What is the, depreciation amount for 2nd year as, per written down value method?, Charge depreciation @ 10% p.a., (a) ` 37,800, (b) ` 42,000, (c) ` 46,200, (d) ` 38,800, , 18. Which of the following is/are cause(s), , Dr 50,000, , 11. If a business pays insurance premium, (a) Insurance account, (c) Cash account, , 16. Difference caused due to bank charges, , (b) Payment, (d) None of these, , 14. Overdraft as per cash book is ` 10,000,, cheques deposited but not credited for, ` 2,500. What is balance as per pass, book?, (a) ` 11,000, (b) ` 4,000, (d) ` 16,000, (c) ` 12,500, , 15. The differences between the cash book, and the bank pass book is caused by, (a) timing differences on recording of the, transactions., (b) errors made by the business or by the bank., (c) Both (a) and (b), (d) None of the above, , of depreciation?, (a) Wear and tear due to use or passage of, time, (b) Expiration of legal rights, (c) Abnormal factors, (d) All of the above, , 19. A machine is purchased for ` 75,000, and is expected to have a useful life of, 10 years. At the end of 10th year, it is, expected to have a sale value of ` 7,000, but expenses related to its disposal are, estimated at ` 2,500. Then its, depreciable cost is, (a) ` 75,000, (b) ` 68,000, (c) ` 70,500, (d) None of the above, , 20. Which of the following correctly, differentiates between reserves and, profit?, (i) A provision is a charge against, profit whereas reserve is an, appropriation of profit., (ii) Provision is made for a known, liability or expense, the amount of, which is not certain whereas, reserve is created for strengthening, the financial position of the, business.

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CBSE New Pattern ~ Accountancy XI (Term I), , (iii) Provision is deducted before, calculating taxable profits whereas, a reserve is created from profit after, tax and therefore it has no effect on, taxable profit., (a) Only (i), (c) (i) and (iii), , (b) (i) and (ii), (d) (i),(ii), (iii), , Assertion-Reasoning MCQs, Direction (Q.Nos. 21 to 25) There are, two statements marked as Assertion (A), and Reason (R). Read the statements and, choose the appropriate option from the, options given below, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct, explanation of Assertion (A), (c) Assertion (A) is true, but Reason (R) is false, (d) Assertion (A) is false, but Reason (R) is true, , 21. Assertion (A) Accounting is a source of, information., Reason (R) Accounting is a definite, process of interlinked activities, that, begins with the identification of, transactions and ends with the, preparation of financial statements., , 22. Assertion (A) When a person brings in, some money as capital into his business,, in accounting records, it is treated as, liability of the business to the owner., Reason (R) The concept of business, entity assumes that business does not, has a distinct and separate entity from, its owners., , 23. Assertion (A) When recording each, transaction, the total amount debited must, be equal to the total amount credited., Reason (R) In double entry accounting,, every transaction affects and is, recorded in at least two accounts., , 113, 24. Assertion (A) Income which is earned, but not received is debited to accrued, income account., Reason (R) As per the rules of, accounting, all incomes are debited., , 25. Assertion (A) Petty cash book records, only small cash expenses., Reason (R) In every organisation, a, large number of small payments are, made whose recording in cash book, may make it very bulky., , Case Based MCQs, Direction Read the following case study, and answer questions 26 to 30., Stefan started a business for buying and, selling of stationery with `10,00,000 as an, initial investment, of which he paid ` 2,00,000, for furniture, ` 2,00,000 for building and, ` 4,00,000 for buying stationery items. He, employed a sales person and clerk. At the end, of the month, he paid `10,000 as their, salaries. He sold some stationery for, ` 3,00,000 for cash and some other stationery, for ` 2,00,000 on credit basis to Mr. Sharma., Subsequently, he bought stationery items of, ` 3,00,000 from Diya. In the first week of next, month, there was a fire accident and he lost, ` 60,000 worth of stationery. A part of the, furniture, which cost ` 80,000, was sold for, ` 90,000., , 26. What is the amount of capital with, which Stefan started business?, (a) ` 2,00,000, (b) ` 4,00,000, (c) ` 10,00,000, (d) None of these, , 27. What is the amount of fixed assets he, bought?, (a) ` 2,00,000, (b) ` 4,00,000, (c) ` 10,00,000, (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 114, 28. What is the value of the goods, purchased?, (a) ` 2,00,000, (c) ` 10,00,000, , (b) ` 4,00,000, (d) None of these, , 29. Who is the creditor and state the, amount payable to him?, (a) Mr Sharma; ` 3,00,000, (b) Mr Sharma; ` 2,00,000, (c) Diya; ` 3,00,000, , (c) Purchases A/c, To Sam, (d) None of the above, , Dr 4,00,000, 4,00,000, , 34. Which account will be credited when, goods are returned to Kiara?, (a), (b), (c), (d), , Kiara, Purchases returns, Purchases, None of the above, , 35. For recording the payment of cartage of, , (d) None of the above, , 30. What is the total amount of expenses, and losses incurred?, (a) ` 10,000, (b) ` 60,000, (c) ` 70,000, (d) None of these, , Direction Read the following case study, and answer questions 31 to 35., Adhir started a business with cash ` 2,00,000, and a building valued at ` 10,00,000. He, purchased goods amounting to ` 4,00,000 out, of which goods of ` 3,60,000 were purchased, on credit from Sam. He sold goods to Arav of, ` 88,000. Anil returned goods worth ` 8,000., He purchased goods of ` 1,26,000 from Kiara, but returned goods of ` 6,000 on finding them, defective. He purchased goods of ` 4,000 for, cash. He paid cartage of ` 200 and interest on, loan amounting to ` 2,000., , ` 200, (a) cartage account will be debited and cash, account will be credited., (b) cash account will be debited and cartage, account will be credited., (c) cartage account will be debited and, purchases account will be credited., (d) None of the above, , introduced by Adhir?, (a) ` 2,00,000, (b) ` 10,00,000, (c) ` 12,00,000, (d) Zero, , Direction Read the following case study, and answer questions 36 to 40., On 31st March, 2021, Mr. Sharma’s cash, book showed a bank balance of ` 1,86,000. It, differed with the balance shown in his pass, book. A closer scrutiny revealed that cheques, issued to creditors but not yet presented to, the bank for payment amounted to ` 36,000., Dividend of ` 2,500 was received by the bank, but not entered in the cash book. Interest of, ` 625 was allowed by the bank. Cheques of, ` 7,700 were deposited into bank for, collection but not collected by bank upto this, date. Bank charges amounted to ` 100. A, cheque of ` 160 deposited into bank was, dishonoured but no intimation was received., Bank paid house tax of ` 175 on his behalf but, no information was received from the bank in, this connection., , 33. What will be the journal entry passed, , 36. Cheques issued to creditors but not yet, , 31. Which is the first book of account that, Adhir will prepare?, (a) Purchase book, (c) Journal, , (b) Sale book, (d) Ledger, , 32. What is the amount of capital, , on goods purchased from Sam?, (a) Purchases A/c, To Cash A/c, To Sam, (b) Purchases A/c, To Cash A/c, , Dr 4,00,000, 40,000, 3,60,000, Dr 4,00,000, 4,00,000, , presented to the bank for payment, amounting to ` 36,000 will be, (a), (b), (c), (d), , deducted from debit balance of cash book., ignored., added to debit balance of cash book., None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 37. Cheques of ` 7,700 were deposited into, , 115, 39. Bank paid house tax of ` 175 on his, , bank for collection but not collected by, bank will be, , behalf but no information was received, from the bank, this will lead to, , (a), (b), (c), (d), , (a) balance in cash book will be lesser than the, balance of pass book., (b) balance in pass book will be greater than, the balance of cash book., (c) balance of pass book will be lesser than the, balance in cash book., (d) None of the above, , deducted from debit balance of cash book, added to debit balance of cash book., ignored., None of the above, , 38. Difference caused due to bank charges, amounting to ` 100 is an example of, (a) timing differences on recording of, transactions., (b) errors made by the business., (c) errors made by the bank., (d) None of the above, , 40. What is the balance of pass book on, 31st March, 2021?, (a) ` 2,16,990, (c) ` 1,86,000, , (b) ` 2,25,125, (d) None of these

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PRACTICE CBSE, PAPER, 1, New Pattern ~, , 116, , PRACTICE PAPER 1, , Accountancy XI (Term I), , OMRSHEET, OMRSHEET, , Instructions, , Instructions, Use, black or blue ball point pens and avoid gel pens and fountain, pens, filling, the sheets, Usefor, black, or blue, ball point pens and avoid gel pens and fountain, pens for, the completely., sheets, Darken, thefilling, bubbles, Don't put a tick mark or a cross, Darken, the, bubbles, completely., Don'twill, put not, a tick, cross, mark half-filled or over-filled bubbles, bemark, reador, bya the, software., mark half-filled or over-filled, û will not be read by the software., ü bubbles, Incorrect, ü, , Incorrect, , Incorrect, , û, , Incorrect, , Incorrect, , Incorrect, , Do not write anything on the OMR Sheet, , Correct, Correct, , Do not write anything on the OMR Sheet, , Multiple markings are invalid, , Multiple markings are invalid, , a, , b, , c, , d, , 21, , 21, , a, , b, , c, , d, , 2 2 a, 3 3 a, , b, , c, , d, , 22, , 22, , a, , b, , c, , d, , b, , c, , d, , 23, 23, , a, , b, , c, , d, , 4 4 a, , b, , c, , d, , 24, 24, , a, , b, , c, , d, , 5 5 a, , b, , c, , d, , 25, 25, , a, , b, , c, , d, , 6 6 a, , b, , c, , d, , 26, 26, , a, , b, , c, , d, , 7 7 a, , b, , c, , d, , 27, 27, , a, , b, , c, , d, , 8 8 a, , b, , c, , d, , 28, 28, , a, , b, , c, , d, , d, , 29, 29, , a, , b, , c, , d, , d, , 30, , 30, , a, , b, , c, , d, , 31, , a, , b, , c, , d, , a, , b, , c, , d, , a, , b, , c, , d, , a, , b, , c, , d, , 35, , a, , b, , c, , d, , 1, , 1, , 9 9 a, 10 a, , 10, 11, 12, , 11, 12, 13, , a, a, a, , b, b, b, b, , c, c, c, c, , d, d, , 31, , 32, , 32, , 33, , b, , c, , a, , b, , c, , d, , a, , b, , c, , d, , 36, , a, , b, , c, , d, , 37, , 36, , a, , b, , c, , d, , 17 18 a, , b, , c, , d, , 37, 38, , a, , b, , c, , d, , 18 19 a, , b, , c, , d, , 38, 39, , a, , b, , c, , d, , 19 20 a, , b, , c, , d, , 39, 40, , a, , b, , c, , d, , c, , d, , 13, 14, , 14, 15, , 15, 16, , 20, , 16, 17, , a, , d, , 33, 34, , 34, 35, , a this line, 40 below, bStudentscshould not, d write anything, b, , Students should not write anything below this line, , SIGNATURE OF EXAMINER WITH DATE, , SIGNATURE OF EXAMINER WITH DATE, , MARKS SCORED, , MARKS SCORED

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CBSE New Pattern ~ Accountancy XI (Term I), , 117, , PRACTICE PAPER 2, Accountancy Class 11th (Term I), Instructions, 1. This paper has 40 questions, carrying 1 mark each., 2. All questions are compulsory., 3. Answer the questions as per the given instructions., M.M. : 40, , Time : 90 Minutes, , Multiple Choice Questions, Direction (Q. Nos. 1-20) All the, questions have four options out of which, only one is correct. Choose the correct, option as your answer., , 1. Which of the following is not a business, transaction?, (a) Bought furniture of ` 10,000 for business, (b) Paid for salaries of employees ` 5,000, (c) Paid son’s fees from her personal bank, account ` 20,000, (d) Paid son’s fees from the business ` 2,000, , 2. Which of the following is not an internal, user of accounting information?, (a), (b), (c), (d), , Chief executive officer, Plant managers, Creditors, Line supervisors, , 3. Which of the following is objective of, accounting?, (a) To maintain systematic and complete, record of business transactions in the, books of accounts, (b) To ascertain the financial position of the, business, (c) To provide useful information to various, interested parties, (d) All of the above, , 4. ……… are economic resources of an, enterprise that can be usefully, expressed in monetary terms., (a) Liabilities, (c) Capital, , (b) Assets, (d) None of these, , 5. X, a Chartered Accountant earned, ` 1,20,000 during the financial year, , 2019-20, out of which, he received, ` 1,05,000. He incurred an expenses of, ` 51,000, out of which ` 12,000 are, , outstanding. He also received his fees, relating to previous year ` 13,500 and, also paid ` 6,000 expenses of last year., Find out X’s income for 2019-20, following cash basis of accounting., (a) ` 69,000, (b) ` 73,500, (c) ` 73,000, (d) ` 1,36,000, , 6. If total assets of a business at the end of, the year are ` 20,00,000, capital is, ` 8,00,000 and drawings are ` 60,000,, calculate creditors., (a) ` 28,00,000, (b) ` 12,00,000, (c) ` 11,40,000, (d) ` 18,00,000, , 7. The accounting vouchers for simple, transactions are known as ……… ., (a) Transaction voucher (b) Complex voucher, (c) Journal voucher, (d) None of these

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CBSE New Pattern ~ Accountancy XI (Term I), , 118, 8. What will be the effect of the following, transaction on accounting equation?, Goods purchased from M/s ABC Ltd., for ` 55,000., (a) This transaction increases stock (assets), and increases liabilities (M/s ABC Ltd. as, creditors) by ` 55,000, (b) This transaction increases stock (assets), and decreases cash by ` 55,000, (c) This transaction increases stock (assets), and decreases bank by ` 55,000, (d) None of the above, , 9. ……… is the basis of classification of data, within the journal; ……… is the basis of, classification of data within the ledger., (a), (b), (c), (d), , Account; transaction, Transaction; account, Transaction; ledger folio, None of the account, , 10. If goods of ` 75,000 are purchased on, credit from Insha, the, (a) purchases account will be debited with, ` 75,000 and Insha’s account will be, credited with ` 75,000., (b) purchases account will be debited with, ` 75,000 and cash account will be credited, with ` 75,000., (c) Insha’s account will be debited with, ` 75,000 and purchases account will be, credited with ` 75,000., (d) None of the above, , 11. What will be the journal entry if, plant and machinery of ` 2,50,000, purchased by paying ` 75,000 cash, immediately?, (a) Plant and Machinery A/c Dr 2,50,000, To Cash A/c, 75,000, To Creditors A/c, 1,75,000, (b) Cash A/c, Dr, 75,000, Creditors A/c, Dr 1,75,000, To Plant and Machinery A/c 2,50,000, (c) Plant and Machinery A/c Dr 2,50,000, To Cash A/c, 75,000, To Suspense A/c, 1,75,000, (d) None of the above, , 12. What will be the journal entry if salary, of ` 25,000 is outstanding?, (a) Outstanding Salary A/c Dr 25,000, To Salary A/c, 25,000, (b) Salary A/c, Dr 25,000, To Cash A/c, 25,000, (c) Salary A/c, Dr 25,000, To Outstanding Salary A/c, 25,000, (d) None of the above, , 13. Bad debt is a personal account., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 14. The credit balance as per cash book is, ` 1,500. Cheques for ` 400 were, deposited but were not collected. The, cheques issued but not presented were, ` 100, ` 125, ` 50. Balance as per pass, book will be, (b) ` 2,175, (a) ` 1,625, (d) ` 825, (c) ` 1,375, , 15. Original cost = ` 1,26,000, salvage, value = ` 6,000. From the information, given, calculate depreciation for 2nd, year @ 10% p.a. under written down, value method., (a) ` 10,800, (b) ` 11,340, (d) ` 14,000, (c) ` 11,340, , 16. Which of the following is not a specific, reserve?, (a), (b), (c), (d), , Dividend equalisation reserve, Capital reserve, Debenture redemption reserve, Capital redemption reserve, , 17. Binod owed us ` 10,000. He is declared, as insolvent and 70 paise in a rupee is, received from his estate. Calculate the, amount to be debited in Cash A/c., (a) ` 10,000, (b) ` 7,000, (c) ` 3,000, (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 119, , 18. In which of the following situations is a, , and summarisation and reduces those, data into reports and statements, which, show the financial condition and results, of operations of that enterprise., , contra entry passed?, (a) Deposit of ` 50,000 cash in bank, (b) Withdrawal of ` 20,000 from bank, (c) Cheque previously received of ` 99,000, deposited in bank, (d) All of the above, , 19. Overdraft as per the pass book will be, less than the overdraft as per cash book, when there are cheques issued of, ` 25,000 are not presented for payment., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 20. There is a wrong entry on the credit, side of the pass book worth ` 780. How, will it be treated for the purpose of, bank reconciliation statement?, (a) ` 780 will be deducted from the balance as, per cash book, (b) ` 780 will be added to the balance as per, pass book, (c) ` 780 will be added to the balance as per, cash book, (d) None of the above, , Assertion-Reasoning MCQs, Direction (Q. Nos. 21 to 25) There are, two statements marked as Assertion (A), and Reason (R). Read the statements and, choose the appropriate option from the, options given below, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct, explanation of Assertion (A), (c) Assertion (A) is true, but Reason (R) is false, (d) Assertion (A) is false, but Reason (R) is true, , 21. Assertion (A) Accounting is regarded, as a language of business., Reason (R) Accounting describes and, analyses a mass of data of an enterprise, through measurement, classification, , 22. Assertion (A) Accounting principles, are static in nature., Reason (R) Accounting principles are, constantly influenced by changes in the, legal, social and economic environment, as well as the needs of the users., , 23. Assertion (A) Accounting equation is, also known as balance sheet equation., Reason (R) The balance sheet is a, statement of assets, liabilities and, capital., , 24. Assertion (A) When money is, withdrawn from bank, cash account is, debited while passing journal entry., Reason (R) As per rules of accounting,, decrease in asset is credited., , 25. Assertion (A) When debtor directly, deposits payment in bank, favourable, balance as per the pass book is greater, than that of the cash book., Reason (R) If an entry of receipt has, been recorded in the passbook but not, in the cash book, then the balance of, pass book will be lesser than of cash, book., , Case Based MCQs, Direction Read the following case study, and answer questions 26 to 30., Akshita’s father is the sole proprietor of AKS, Ltd. a firm engaged in the sale of glass items., In the process of preparing financial, statements, the accountant of the firm, Mr., Rao fell ill and had to take leave. Akshita’s, father was urgently in need of the statements, as these had to be submitted to the bank, in, pursuance of a loan of ` 10,00,000 applied for, the expansion of the business of the firm.

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CBSE New Pattern ~ Accountancy XI (Term I), , 120, Akshita, who is studying accounting in her, school, volunteered to complete the work. On, scrutinising the accounts, the banker found, that the value of building bought a few years, back for ` 14 lakh has been shown in the, books at ` 40 lakh, which is its present market, value. Similarly, as compared to the last year,, the method of valuation of stock was changed,, resulting in value of goods to be about 10 per, cent higher. Also, the whole amount of, ` 1,40,000 spent on purchase of personal, computer (expected life 8 years) during the, year had been charged to the profits of the, current year. The banker did not rely on the, financial data provided by Akshita., , 26. The banker did not rely on the financial, data provided by Akshita because, (a) the valuation of building was wrong., (b) valuation of stock was wrong., (c) treatment of purchase of computer was, wrong., (d) All of the above, , 27. “The value of building bought a few, years back for ` 14 lakh has been, shown in the books at ` 40 lakh, which, is its present market value.” What is the, correct accounting concept that should, have been used to record the correct, value of building?, (a), (b), (c), (d), , Historical cost concept, Matching concept, Business entity concept, All of the above, , 28. What is the importance of the above, concept you identified in question above?, (a) It brings in objectivity in recording as the, cost of acquisition is easily verifiable from, the purchase documents., (b) It does not show the true worth of the, business and may lead to hidden profits., (c) It means that for the purposes of, accounting, the business and its owners, are to be treated as two separate entities., (d) None of the above, , 29. “The method of valuation of stock was, changed, resulting in value of goods to, be about 10 per cent higher.” Which of, the following accounting concept has, been violated?, (a), (b), (c), (d), , Revenue recognition concept, Conservatism concept, Materiality concept, Consistency concept, , 30. In charging the whole amount of, ` 1,40,000 spent on purchase of, , personal computer to the profits of the, current year, which of the following, concept has been violated?, (a), (b), (c), (d), , Revenue recognition concept, Conservatism concept, Going concern concept, Consistency concept, , Direction Read the following case study, and answer questions 31 to 35., WERE Ltd. is a trading organisation. The, following transactions take place in the month, of February, On 8th February, it returned goods to Ram, Book Center, Delhi for ` 6,000 at a trade, discount of 10%. On 18th February, returned, goods to Pooja Book Center, Mumbai for, ` 20,000 as goods are not as per sample, trade, discount 5% (Debit note 102). On 25th, February, returned goods to Ramesh Chand, for ` 10,000 (Debit note 103). On the same, day, returned goods (which were purchased, for cash) worth ` 5,000 to SM Chand Center., On 27th February, returned one typewriter, being defective of ` 7,200 to Vim Ltd., , 31. What will be the total amount recorded, in the purchase returns book relating to, the returns to Ram Book Center on 8th, February?, (a) ` 6,000, (b) ` 5,400, (c) ` 6,600, (d) None of the above

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CBSE New Pattern ~ Accountancy XI (Term I), , 32. In which of the following books, will, the return to SM Chand Center on 25th, February recorded?, (a), (b), (c), (d), , Purchase returns book, Journal, Cash book, None of the above, , 33. In which of the following books, will, the return of typewriter on 27th, February recorded?, (a), (b), (c), (d), , Purchase returns book, Journal proper, Cash book, None of the above, , 34. What is the total amount reflected in, purchase returns book as on 28th, February?, (a) ` 34,400, (b) ` 5,400, (c) ` 19,000, (d) ` 10,000, , 35. Which of the following statements, regarding a debit note is correct?, (a) A debit note is a source document that is, prepared when goods are returned to a, supplier, (b) On finding that goods supplied are not as, per the terms of the order placed, the, defective goods are returned to the, supplier of the goods and a note is prepared, to debit the supplier, (c) When an additional sum is recoverable from, a customer, such a note is prepared to, debit the customer with the additional dues, (d) All of the above, , Direction Read the following case study, and answer questions 36 to 40., YEH Ltd. has a manufacturing plant in Delhi., On 1st July, 2021, YEH Ltd. purchased a, machine for ` 2,16,000 and spent ` 48,000 on, its installation. At the time of purchase, it was, estimated that the effective commercial life of, the machine will be 12 years after which its, salvage value will be ` 24,000. The machinery, , 121, is such that the possibility of obsolescence is, low and do not require much repair expenses, with passage of time. The accounts are closed, on 31st December every year., , 36. Which of the following Accounting, Standard should be followed by Arya, Ltd. to charge depreciation?, (a), (b), (c), (d), , Accounting Standard-7, Accounting Standard-6, Accounting Standard-8, Accounting Standard-9, , 37. Which of the following method should, be used by YEH Ltd. to charge, depreciation?, (a), (b), (c), (d), , Written down value method, Straight line method, Insurance policy method, None of the above, , 38. Which of the following statement, explains the importance of method of, depreciation that will be used by YEH, Ltd.?, (a) It results into almost equal burden of, depreciation and repair expenses taken, together every year on profit and loss, account, (b) Income Tax Act accepts this method for tax, purposes, (c) As a large portion of cost is written-off in, earlier years, loss due to obsolescence gets, reduced, (d) This method makes it possible to distribute, full depreciable cost over useful life of the, asset, , 39. What is the original cost of the asset on, which depreciation is to be charged?, (a) ` 2,16,000, (b) ` 24,000, (c) ` 2,40,000, (d) None of these, , 40. What is the amount of depreciation, charged in the first year?, (a) ` 18,000, (b) ` 20,000, (c) ` 9,000, (d) ` 10,000

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PRACTICE CBSE, PAPER, 2, New Pattern ~, , 122, , Accountancy XI (Term I), , OMRSHEET, Instructions, Use black or blue ball point pens and avoid gel pens and fountain, pens for filling the sheets, Darken the bubbles completely. Don't put a tick mark or a cross, mark half-filled or over-filled bubbles will not be read by the software., , ü, , û, , Incorrect, , Incorrect, , Incorrect, , Correct, , Do not write anything on the OMR Sheet, Multiple markings are invalid, 1, , a, , b, , c, , d, , 21, , a, , b, , c, , d, , 2, , a, , b, , c, , d, , 22, , a, , b, , c, , d, , 3, , a, , b, , c, , d, , 23, , a, , b, , c, , d, , 4, , a, , b, , c, , d, , 24, , a, , b, , c, , d, , 5, , a, , b, , c, , d, , 25, , a, , b, , c, , d, , 6, , a, , b, , c, , d, , 26, , a, , b, , c, , d, , 7, , a, , b, , c, , d, , 27, , a, , b, , c, , d, , 8, , a, , b, , c, , d, , 28, , a, , b, , c, , d, , 9, , a, , b, , c, , d, , 29, , a, , b, , c, , d, , 10, , a, , b, , c, , d, , 30, , a, , b, , c, , d, , 11, , a, , b, , c, , d, , 31, , a, , b, , c, , d, , 12, , a, , b, , c, , d, , 32, , a, , b, , c, , d, , 13, , a, , b, , c, , d, , 33, , a, , b, , c, , d, , 14, , a, , b, , c, , d, , 34, , a, , b, , c, , d, , 15, , a, , b, , c, , d, , 35, , a, , b, , c, , d, , 16, , a, , b, , c, , d, , 36, , a, , b, , c, , d, , 17, , a, , b, , c, , d, , 37, , a, , b, , c, , d, , 18, , a, , b, , c, , d, , 38, , a, , b, , c, , d, , 19, , a, , b, , c, , d, , 39, , a, , b, , c, , d, , 20, , a, , b, , c, , d, , 40, , a, , b, , c, , d, , Students should not write anything below this line, , SIGNATURE OF EXAMINER WITH DATE, , MARKS SCORED

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CBSE New Pattern ~ Accountancy XI (Term I), , 123, , PRACTICE PAPER 3, Accountancy Class 11th (Term I), Instructions, 1. This paper has 40 questions, carrying 1 mark each., 2. All questions are compulsory., 3. Answer the questions as per the given instructions., M.M. : 40, , Time : 90 Minutes, , Multiple Choice Questions, Direction (Q. Nos. 1 to 20) All the, questions have four options out of which, only one is correct. Choose the correct, option as your answer., , 1. Which qualitative characteristic of, accounting information is reflected, when accounting information is clearly, presented?, (a) Understandability, (c) Comparability, , (b) Relevance, (d) Reliability, , 2. Ritesh starts business with ` 10,00,000., The amount introduced by him is, known as, (a), (b), (c), (d), , Asset, Capital, Liabilities, None of the above, , 3. ……… is an event involving some, value between two or more entities., (a) Profit, (c) Transaction, , (b) Sale, (d) Capital, , 4. Creditors are persons and/or other, entities who owe to an enterprise an, amount for buying goods and services, on credit., (a), (b), (c), (d), , True, False, Can’t say, Partially true, , 5. Single entry system is not a complete, system of maintaining records of, financial transactions., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 6. Damon started his cloth business on 1st, April, 2020 with a capital of ` 60,000., On 31st March, 2021, his assets were, ` 1,00,000 and liabilities were ` 20,000., What will be his profit during the year?, (a) ` 80,000, (b) ` 20,000, (c) ` 40,000, (d) ` 50,000, , 7. Calculate the amount of external, equities from the following information, On 1st April, 2015, Shyam started a, business with a capital of ` 20,000 and, a loan of ` 10,000 borrowed from a, friend. During 2015-16, he earned a, profit of ` 10,000, introduced an, additional capital of ` 12,000 and had, withdrawn ` 6,000 for his personal use., On 31st March, 2016 the total assets, were ` 10,000., (a) ` 36,000, (b) ` 64,000, (d) ` 72,000, (c) ` 28,000, , 8. All ledger accounts can be classified as, permanent accounts and temporary, accounts., (a) True, (c) Can’t say, , (b) False, (d) Partially true

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CBSE New Pattern ~ Accountancy XI (Term I), , 124, 9. What will be the journal entry for, adjustment of advanced commission, if, commission of ` 600 is received,, one-third of which is in advance?, (a) Commission A/c, Dr, 600, To Com. Received in Advance A/c 600, (b) Com. A/c, Dr, 200, To Com. Received in Advance A/c 200, (c) Cash A/c, Dr, 600, To Com. A/c, 600, (d) None of the above, , 10. If goods worth ` 25,000 were lost in a, fire, then while passing a journal entry, which of the following account is, debited?, (a) Loss by fire account (b) Drawings account, (c) Sales account, (d) Purchases account, , 11. Goods taken away by the proprietor, from business for his personal use will, be recorded in, (a), (b), (c), (d), , purchases book, sale book, purchases return book, journal proper, , in bank of ` 20,000. How will it be, treated for the purpose of bank, reconciliation statement?, (a) ` 20,000 will be deducted from the balance, as per cash book., (b) ` 20,000 will be added to the balance as per, pass book., (c) ` 20,000 will be added to the balance as per, cash book., (d) None of the above, , 15. The bank pass book of Ryan had an, overdraft of ` 30,000. Interest on, overdraft was ` 1,000. Insurance, premium paid by the bank was ` 200., What will be the balance as per cash, book?, (a) ` 31,200 overdraft, (b) ` 31,200 favourable balance, (c) ` 28,800 overdraft, (d) ` 28,800 favourable balance, , 16. A wrong entry on debit side of the pass, , 12. A cheque for ` 21,000 is received from P, on 7th August, 2021 and it is endorsed, to M on 9th August, 2021. What will be, the journal entry to be passed on 9th, August?, (a) Cheques in Hand A/c Dr, To M A/c, (b) M A/c, Dr, To Cheques in Hand, (c) Cheques in Hand A/c Dr, To P, (d) None of the above, , 14. Amount directly deposited by debtors, , 21,000, 21,000, 21,000, 21,000, 21,000, 21,000, , 13. If XYZ Electronics Ltd. purchased 10, TV @ ` 2,000 per piece and 15 tape, recorders @ ` 12,500 per piece and, there was a trade discount of 20%, then, what will be the amount to be recorded, in purchase book?, (a) ` 20,000, (b) ` 1,66,000, (d) ` 1,87,500, (c) ` 2,07,500, , book will be deducted from the balance, as per pass book to reconcile the, statements., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 17. A machinery was purchased on 1st, April, 2019 for ` 5,00,000 and on 1st, October, 2019, a new machine is added, for ` 2,00,000. Calculate the balance of, machine account, if depreciation is, charged at 20% per annum on written, down value method for the year ending, 31st March, 2020., (b) ` 5,60,000, (a) ` 6,00,000, (d) ` 5,80,000, (c) ` 5,60,000, , 18. Purchase price of a machine is, ` 1,50,000. Installation charges, ` 50,000, residual value ` 81,920. The, , annual depreciation under straight line, method is ` 29,520. The useful life of, the machine is, (a) 6 years, (c) 4 years, , (b) 5 years, (d) None of these

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CBSE New Pattern ~ Accountancy XI (Term I), , 19. Which of the following does not, correctly differentiate between revenue, reserve and capital reserve?, (a) Revenue reserve is created out of revenue, profits whereas capital reserve is created, primarily out of capital profit., (b) Revenue reserve is created for compliance, of legal requirements or accounting, practices whereas capital reserve is, created to strengthen the financial, position, to meet unforeseen contingencies, or for some specific purposes., (c) Revenue reserve can be utilised only for a, specific purpose whereas capital reserve, can be utilised for any purpose., (d) Both (b) and (c), , 20. The amount set aside for the purpose of, providing any known liability, the, amount of which cannot be ascertained, with reasonable accuracy is known as, ……… ., (a) Reserve, (c) Contingency fund, , (b) Provision, (d) None of these, , Assertion-Reasoning MCQs, Direction (Q.Nos. 21-25) There are two, statements marked as Assertion (A) and, Reason (R). Read the statements and, choose the appropriate option from the, options given below, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of, Assertion (A), (b) Both Assertion (A) and Reason (R) are true,, but Reason (R) is not the correct, explanation of Assertion (A), (c) Assertion (A) is true, but Reason (R) is false, (d) Assertion (A) is false, but Reason (R) is true, , 21. Assertion (A) Cost accounting helps in, controlling the costs., Reason (R) Cost accounting assists in, analysing the expenditure for, ascertaining the cost of various, products manufactured or services, rendered by the firm., , 125, 22. Assertion (A) Efforts should not be, wasted in recording and presenting, facts, which are immaterial in the, determination of income., Reason (R) The concept of materiality, requires that accounting should focus, on material facts., , 23. Assertion (A) If goods are withdrawn, for personal use by the proprietor,, drawings account is debited., Reason (R) As per the rules of accounting, decrease in capital is debited., , 24. Assertion (A) When direct debit is made, by the bank on behalf of the customer,, favourable balance as per the cash book, is less than that of the pass book., Reason (R) If an entry of payment has, been recorded in the pass book but not in, the cash book, then the balance of pass, book will be less than that of cash book., , 25. Assertion (A) Straight line method of, charging depreciation makes comparison, of profits for different years easy., Reason (R) Under straight line method,, different amount of depreciation is, charged every year to profit and loss, account., , Case Based MCQs, Direction Read the following case study, and answer questions 26 to 30., Shiv is the owner of Shiva enterprises which, produces chemicals. He maintains the books, of accounts himself. On 1st June, 2015, an old, plant was purchased for ` 50 lakh by Shiva, Enterprise. An amount of ` 10,000 was spent, on transporting the plant to the factory site. In, addition, ` 15,000 was spent on repairs for, bringing the plant into running position and, ` 25,000 on its installation. Shiv has recorded, it in the books of accounts at ` 50,00,000., Shiva Enterprises also own a building worth, ` 75 lakh whose market value stands at

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CBSE New Pattern ~ Accountancy XI (Term I), , 126, ` 95 lakh now. Shiv has recorded the building at, , 30. ‘‘Purchased stationery of ` 1,000 during, , the market value. In the year 2021, he changed, the method of valuation of stock and, depreciation for no concrete reason. His, closing stock for year ended March, 2021, stood, at ` 7 lakh at cost price and had a market value, of ` 10 lakh. Shiv recorded it at market value., He had also purchased stationery of ` 1,000, during the year and stock worth ` 200 is left, which he has recorded as a current asset., Shiv’s friend Ritesh, who is a Chartered, Accountant, happens to visit him when he was, finalising the accounts of his enterprise. Ritesh, points out that there are lot of flaws in recording, of transactions by Shiv., , the year and stock worth ` 200 is left, which he has recorded as a current, asset.’’ Which of the following concepts, has been violated in the given lines?, , 26. According to you, which of the, following accounting treatments were, incorrect?, (a) Valuation of plant, (c) Valuation of stock, , (b) Valuation of building, (d) All of these, , 27. ‘‘A building worth ` 75 lakh whose, market value stands at ` 95 lakh now., Shiv has recorded the building at the, market value.’’ What is the correct, accounting concept that should have, been used?, (a), (b), (c), (d), , Historical cost concept, Matching concept, Business entity concept, All of the above, , 28. ‘‘In the year 2021, he changed the, method of valuation of stock and, depreciation for no concrete reason.’’, Which accounting concept has been, violated in the given lines?, (a), (b), (c), (d), , Revenue recognition concept, Conservatism concept, Materiality concept, Consistency concept, , 29. Recording of stock at market price by, Shiv is wrong because, (a), (b), (c), (d), , it violates conservatism concept, it violates materiality concept, it violates consistency concept, it violates full disclosure concept, , (a), (b), (c), (d), , It violates conservatism concept, It violates materiality concept, It violates consistency concept, It violates full disclosure concept, , Direction Read the following case study, and answer questions 31 to 35., Sharan has a trading business in Delhi. All his, transactions occur within the limits of Delhi., Sharan bought goods for ` 2,00,000 on credit., He sold them for ` 2,70,000 in the same state, on credit. He paid for Railway transport, ` 16,000. He bought computer printer for, ` 20,000. He paid postal charges ` 4,000., Assuming CGST @ 5% and SGST @ 5%, you, are required to answer the following questions, , 31. By what amount will creditors account be, credited for the purchases of ` 2,00,000?, (a) ` 2,00,000, (b) ` 2,10,000, (c) ` 2,20,000, (d) None of these, , 32. “He sold them for ` 2,70,000 in the, same state on credit.” By what amount, will debtors be debited while passing, journal entry?, (a) ` 2,70,000, (b) ` 2,83,000, (c) ` 2,97,000, (d) None of these, , 33. GST is a/an ……………….. tax., (a) direct, (c) late fee, , (b) indirect, (d) None of these, , 34. What journal entry would have been, passed by Sharan in case he had, resorted to inter-state purchase of goods, on which GST is levied?, (a) Purchases A/c, Input CGST A/c, Input SGST A/c, To Cash, (b) Purchases A/c, Input IGST A/c, To Cash, , Dr, Dr, Dr, Dr, Dr

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CBSE New Pattern ~ Accountancy XI (Term I), , (c) Purchases Return A/c, Input SGST A/c, To Cash, (d) None of the above, , Dr, Dr, , 35. What is the journal entry passed for, return of intra-state purchase of goods, on which GST is levied assuming that, Sharan returned the goods?, (a) Creditors A/c, Dr, To Purchases Return A/c, To Input CGST A/c, To Input SGST A/c, (b) Purchases Return A/c Dr, Input IGST A/c, Dr, To Cash, (c) Purchases Return A/c Dr, Input SGST A/c, Dr, To Cash, (d) None of the above, , Direction Read the following case study, and answer questions 36 to 40., Sudhir has started a new business recently., The following transactions take place, (i) Started business with cash ` 1,00,000, and goods ` 40,000., (ii) Bought goods on cash ` 30,000 and on, credit for ` 20,000., (iii) Goods costing ` 48,000 sold at a profit, 1, of 33 % to Pranav. Half the payment, 3, received in cash., (iv) Purchased furniture for office use, ` 12,000 and for household use ` 8,000., (v) Received cash from Pranav (customer), ` 22,500 and allowed him a discount, ` 500., (vi) Creditors of ` 5,000 accepted ` 4,000, and allowed a discount of ` 1,000., Keeping in mind the concept of accounting, equation, you are required to answer the, following questions, , 127, 36. Accounting equation signifies that, the assets of a business are always, greater than the total of its liabilities and, capital., (a) True, (c) Can’t say, , (b) False, (d) Partially true, , 37. Which of the following accounts will be, affected by the statement ‘Started, business with cash ` 1,00,000 and goods, ` 40,000’?, (a), (b), (c), (d), , Cash and capital, Cash, stock and capital, Cash, stock, liabilities and capital, Cash and stock, , 38. ‘‘Bought goods on cash ` 30,000 and on, credit for ` 20,000’’. Which account will, be impacted on the assets side of the, equation?, (a), (b), (c), (d), , Cash and capital, Cash, stock and capital, Cash, stock, liabilities and capital, Cash and stock, , 39. How will the purchase of furniture be, recorded?, (a) On assets side cash will be reduced by, ` 20,000 and furniture will increase by, ` 12,000 and on the liabilities and capital, side capital will reduce by ` 8,000, (b) On assets side cash will be reduced by, ` 20,000 and furniture will increase by, ` 20,000 and on the liabilities and capital, side there will be no impact., (c) On assets side cash will be reduced by, ` 20,000 and furniture will increase by, ` 12,000 and on the liabilities and capital, side capital will reduce by ` 20,000., (d) None of the above, , 40. How is the liabilities and capital side, reflected in the final equation?, (a), (b), (c), (d), , Liabilities + Capital = 20,000 + 1,47,500, Liabilities + Capital = 15,000 + 1,48,500, Liabilities + Capital = 15,000 + 1,56,000, None of the above

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PRACTICE CBSE, PAPER, 3, New Pattern ~, , 128, , Accountancy XI (Term I), , OMRSHEET, Instructions, Use black or blue ball point pens and avoid gel pens and fountain, pens for filling the sheets, Darken the bubbles completely. Don't put a tick mark or a cross, mark half-filled or over-filled bubbles will not be read by the software., , ü, , û, , Incorrect, , Incorrect, , Incorrect, , Correct, , Do not write anything on the OMR Sheet, Multiple markings are invalid, 1, , a, , b, , c, , d, , 21, , a, , b, , c, , d, , 2, , a, , b, , c, , d, , 22, , a, , b, , c, , d, , 3, , a, , b, , c, , d, , 23, , a, , b, , c, , d, , 4, , a, , b, , c, , d, , 24, , a, , b, , c, , d, , 5, , a, , b, , c, , d, , 25, , a, , b, , c, , d, , 6, , a, , b, , c, , d, , 26, , a, , b, , c, , d, , 7, , a, , b, , c, , d, , 27, , a, , b, , c, , d, , 8, , a, , b, , c, , d, , 28, , a, , b, , c, , d, , 9, , a, , b, , c, , d, , 29, , a, , b, , c, , d, , 10, , a, , b, , c, , d, , 30, , a, , b, , c, , d, , 11, , a, , b, , c, , d, , 31, , a, , b, , c, , d, , 12, , a, , b, , c, , d, , 32, , a, , b, , c, , d, , 13, , a, , b, , c, , d, , 33, , a, , b, , c, , d, , 14, , a, , b, , c, , d, , 34, , a, , b, , c, , d, , 15, , a, , b, , c, , d, , 35, , a, , b, , c, , d, , 16, , a, , b, , c, , d, , 36, , a, , b, , c, , d, , 17, , a, , b, , c, , d, , 37, , a, , b, , c, , d, , 18, , a, , b, , c, , d, , 38, , a, , b, , c, , d, , 19, , a, , b, , c, , d, , 39, , a, , b, , c, , d, , 20, , a, , b, , c, , d, , 40, , a, , b, , c, , d, , Students should not write anything below this line, , SIGNATURE OF EXAMINER WITH DATE, , MARKS SCORED

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CBSE New Pattern ~ Accountancy XI (Term I), , 129, , ANSWERS, Practice Paper 1, 1. (a), 11. (a), 21. (a), , 2. (c), 12. (a), 22. (c), , 3. (d), 13. (d), 23. (a), , 4. (b), 14. (c), 24. (c), , 5. (b), 15. (c), 25. (a), , 6. (b), 16. (b), 26. (c), , 7. (b), 17. (a), 27. (b), , 8. (a), 18. (a), 28. (b), , 9. (d), 19. (c), 29. (c), , 10. (c), 20. (d), 30. (c), , 31. (c), , 32. (c), , 33. (a), , 34. (b), , 35. (a), , 36. (c), , 37. (a), , 38. (a), , 39. (c), , 40. (a), , Practice Paper 2, 1. (c), 11. (a), 21. (a), , 2. (c), 12. (c), 22. (d), , 3. (d), 13. (b), 23. (a), , 4. (b), 14. (a), 24. (b), , 5. (b), 15. (b), 25. (c), , 6. (b), 16. (b), 26. (d), , 7. (a), 17. (b), 27. (a), , 8. (a), 18. (d), 28. (a), , 9. (b), 19. (a), 29. (d), , 10. (a), 20. (c), 30. (c), , 31. (b), , 32. (c), , 33. (b), , 34. (a), , 35. (d), , 36. (b), , 37. (b), , 38. (d), , 39. (c), , 40. (d), , Practice Paper 3, 1. (a), 11. (d), 21. (b), , 2. (b), 12. (b), 22. (a), , 3. (c), 13. (b), 23. (a), , 4. (b), 14. (c), 24. (d), , 5. (a), 15. (c), 25. (c), , 6. (b), 16. (b), 26. (d), , 7. (b), 17. (d), 27. (a), , 8. (a), 18. (c), 28. (d), , 9. (b), 19. (c), 29. (a), , 10. (a), 20. (b), 30. (b), , 31. (c), , 32. (c), , 33. (b), , 34. (b), , 35. (a), , 36. (b), , 37. (b), , 38. (d), , 39. (a), , 40. (b)