Introduction to Business Accounting-IMBA 1 Semester
Question Bank
Q.1 “Accounting is the language of business” explain the statement and give appropriate support to your answer.
Q.2 Define the following accounting terms with suitable examples:
Current Assets, Bad Debts
Liabilities Current, Liabilities Prepaid Expenses
Capital Stock/, Inventory B/P
Cash Profit, B/R
O/S Expenses, Cash Discount Drawings Accrued Income
Depreciation, Journal
Trade Discount, Debtors
Goodwill, Bank Overdraft
Q.3 Though Trial Balance is prepared to check arithmetical accuracy of books of accounts; sometimes it does not reveal the errors. What are those errors, explain each in brief?
Q.4 What are the different types of accounts under Double Entry System? Explain golden rules of accounting with the help of suitable examples.
Q.5 Write shorts on the following:
1. Functions of accounting 2. Separate Entity/Business Entity Concept
3. Objectives of accounting 4. Rules of Debit and Credit
5. Convention of Conservatism 6. Periodic Matching Concept
Q.6 Distinguish between the following:
Fixed and Current Assets 4. Long term and Short term liabilities.
Receivables and Payables 5. Trade Discount and Cash Discount
Cash Account and Cash Book
Q.7 Describe the different types of cashbook.
Q.8 Classify the following under Personal, Real, and Nominal Account:
Drawings A/c, Outstanding Rent A/c, Bank A/c
Sales Return A/c, Furniture A/c, Purchase Account
Machinery A/c, Capital A/c, Cash A/c, O/S Salary A/c,
Q. 9 What is Journal and Journalizing? On what principles does double entry accounting rest?
Q. 12 How are the entries contained in the sub-divisions of the journal of the sole trading concern? Mention some of the examples of such entries.
Q. 13 What do you mean by “Posting and Balancing”? What types of entries are usually to be found in trial balance? Give a few such examples?
Q. 14 What are the benefits of recording transactions in Journal? Describe the sub-division of journal in detail.
Q.15 What do you mean by accounting concepts and conventions. Discuss in Detail.
Q.16 Discuss the Advantage and Limitations of Accounting.
Q.17 Draw a specimen of , Trial Balance, Trading A/c, Profit & Loss A/c and Balance Sheet.
Q.18 Discuss various activities/functions of accounting.
Q.19 What is Accounting Cycle. List up the various parties interested in accounting information. What is the purpose of various parties to collect this information?
Q. 20 What is Journal. Discuss the advantages and its preparation.
Q. 21 How will you locate errors in a Trial Balance.
Q. 22 What is accounting cycle Discuss with the help of suitable examples.
Q. 23 What do you mean by Ledger? Describe subdivision of Ledger and Mechanics of Posting.
Q. 24 What are the different types of Subsidiary Books of Accounting. Discuss the meaning and use of any two in detail.
Q. 25 What are the objectives of making Trial Balance? How would you locate errors?
Practical Questions for Practice
Q. 26 Journalise the following transactions:
Goods worth Rs. 10,000 given as Charity.
Received cash from bad debts written off Rs. 3000
Bought goods from Mohan for cash of Rs. 50,000
Paid Rent to Ram Rs. 12,000
Withdrawn Rs. 10,000 from bank by proprietor for personal use.
Paid Rs. 450 in full settlement of B’s Account for Rs. 500.
Q. 27 Record the following transaction in Journal:
1. Goods sold on Credit to Harish of Rs. 20,000
2. Goods purchased on 10% Trade Discount on list price 30,000
3. Payment Received from Harish Rs. 10,000
4. Goods sold for Cash Rs. 50,000 on Trade Discount 10% and 5 % Cash Discount
5. Harish declared insolvent and 30% of the total amount due from him was recovered.
6. O/S Salary for the present year Rs. 5000.
7. Prepaid Insurance Rs. 3,000
8. Harish Paid an amount of Rs. 2500.
Q.28 Prepare Journal Entries of the Following:
1. Bought goods from Kailash for Rs. 20,000 at a trade discount of 10% and cash discount of 2%. Paid 60% of the amount immediately.
2. Cash deposited into Bank Rs. 10,000
3. Received a cheque from Mohan Rs. 2,000
4. The cheque received from Mohan deposited into Bank.
5. Cash Sales of Rs. 15,000. Out of Which Rs. 10,000 immediately deposited into Bank.
6. Old newspapers sold for Rs. 50. Furniture sold for Rs. 1,000
7. Paid Rent Rs. 800, Trade Expenses Rs. 700 and Traveling Expenses Rs. 300.
8. Goods purchased from sunil Rs. 10,000
9. Paid Rs. 9,500 to Sunil in the full settlement.
10. Purchased good from Brij Mohan Rs. 20,000 list price at 15% discount.
11. Goods return to Brij Mohan of the list price of Rs. 2,000
12. Settled the account of Brij Mohan by paying cash with a discount of Rs. 4%.
13. Purchased goods from Anil Rs. 5,000.
14. Paid to Anil Rs. 1900 and Received discount Rs. 100.
15. Proprietor Withdrew for his personal use cash Rs. 2,000 and goods worth Rs. 3,000.
16. Goods worth Rs. 25,00 were distributed as free samples.
17. Goods of Rs. 2,000 and Cash Rs. 15,00 stolen by an employee.
18. Goods of Rs. 10,000 Destroyed by Fire.
19. Goods sold for cash to a customer Rs. 5,000 and collected 10% Sales Tax on it.
20. Purchase an Iron Safe of Rs. 12,000 for Business.
21. Purchase a Horse for Business Rs. 35,000
24. Paid Cash to Y on Behalf of X. Rs. 4,000
26. Borrowed from Bank Rs. 20,000
27. Provide Interest on Capital of Rs. 2,00,000 @ 8% p.a. from 1st April 2007 to 31st March 2008.
28. Purchase goods of Rs. 60,000 and paid Rs. 2,000 for carriage on these goods.
29. Purchase goods from Raghunath Brothers Rs. 18000 and paid carriage Rs. 1200 on this.
30. Received an order of goods for Rs. 1,25,000 from Sunil.
31. Sunil's Order was executed and cartage Rs. 3,000 was paid in this connection.
33. Goods worth 50,000 supplied to Ghanshyam against the order.
34. Paid interest on loan Rs. 1,000
35. Sold Goods and on Credit to X of Rs. 24,000
36. 1/6 of the goods Return by X.
37. Paid income tax Rs. 5,000 and Sales Tax Rs. 3,000.
38. Salaries Paid Rs. 8,000 and Salaries due Rs. 2,000.
39. Withdrawn goods by owner for personal use-Cost Price Rs. 800 Sales Price Rs. 1000.
40. Paid Rs. 300 for Subscribing Newspapers and Magazines.
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Question Bank
Q.1 “Accounting is the language of business” explain the statement and give appropriate support to your answer.
Q.2 Define the following accounting terms with suitable examples:
Current Assets, Bad Debts
Liabilities Current, Liabilities Prepaid Expenses
Capital Stock/, Inventory B/P
Cash Profit, B/R
O/S Expenses, Cash Discount Drawings Accrued Income
Depreciation, Journal
Trade Discount, Debtors
Goodwill, Bank Overdraft
Q.3 Though Trial Balance is prepared to check arithmetical accuracy of books of accounts; sometimes it does not reveal the errors. What are those errors, explain each in brief?
Q.4 What are the different types of accounts under Double Entry System? Explain golden rules of accounting with the help of suitable examples.
Q.5 Write shorts on the following:
1. Functions of accounting 2. Separate Entity/Business Entity Concept
3. Objectives of accounting 4. Rules of Debit and Credit
5. Convention of Conservatism 6. Periodic Matching Concept
Q.6 Distinguish between the following:
Fixed and Current Assets 4. Long term and Short term liabilities.
Receivables and Payables 5. Trade Discount and Cash Discount
Cash Account and Cash Book
Q.7 Describe the different types of cashbook.
Q.8 Classify the following under Personal, Real, and Nominal Account:
Drawings A/c, Outstanding Rent A/c, Bank A/c
Sales Return A/c, Furniture A/c, Purchase Account
Machinery A/c, Capital A/c, Cash A/c, O/S Salary A/c,
Q. 9 What is Journal and Journalizing? On what principles does double entry accounting rest?
Q. 12 How are the entries contained in the sub-divisions of the journal of the sole trading concern? Mention some of the examples of such entries.
Q. 13 What do you mean by “Posting and Balancing”? What types of entries are usually to be found in trial balance? Give a few such examples?
Q. 14 What are the benefits of recording transactions in Journal? Describe the sub-division of journal in detail.
Q.15 What do you mean by accounting concepts and conventions. Discuss in Detail.
Q.16 Discuss the Advantage and Limitations of Accounting.
Q.17 Draw a specimen of , Trial Balance, Trading A/c, Profit & Loss A/c and Balance Sheet.
Q.18 Discuss various activities/functions of accounting.
Q.19 What is Accounting Cycle. List up the various parties interested in accounting information. What is the purpose of various parties to collect this information?
Q. 20 What is Journal. Discuss the advantages and its preparation.
Q. 21 How will you locate errors in a Trial Balance.
Q. 22 What is accounting cycle Discuss with the help of suitable examples.
Q. 23 What do you mean by Ledger? Describe subdivision of Ledger and Mechanics of Posting.
Q. 24 What are the different types of Subsidiary Books of Accounting. Discuss the meaning and use of any two in detail.
Q. 25 What are the objectives of making Trial Balance? How would you locate errors?
Practical Questions for Practice
Q. 26 Journalise the following transactions:
Goods worth Rs. 10,000 given as Charity.
Received cash from bad debts written off Rs. 3000
Bought goods from Mohan for cash of Rs. 50,000
Paid Rent to Ram Rs. 12,000
Withdrawn Rs. 10,000 from bank by proprietor for personal use.
Paid Rs. 450 in full settlement of B’s Account for Rs. 500.
Q. 27 Record the following transaction in Journal:
1. Goods sold on Credit to Harish of Rs. 20,000
2. Goods purchased on 10% Trade Discount on list price 30,000
3. Payment Received from Harish Rs. 10,000
4. Goods sold for Cash Rs. 50,000 on Trade Discount 10% and 5 % Cash Discount
5. Harish declared insolvent and 30% of the total amount due from him was recovered.
6. O/S Salary for the present year Rs. 5000.
7. Prepaid Insurance Rs. 3,000
8. Harish Paid an amount of Rs. 2500.
Q.28 Prepare Journal Entries of the Following:
1. Bought goods from Kailash for Rs. 20,000 at a trade discount of 10% and cash discount of 2%. Paid 60% of the amount immediately.
2. Cash deposited into Bank Rs. 10,000
3. Received a cheque from Mohan Rs. 2,000
4. The cheque received from Mohan deposited into Bank.
5. Cash Sales of Rs. 15,000. Out of Which Rs. 10,000 immediately deposited into Bank.
6. Old newspapers sold for Rs. 50. Furniture sold for Rs. 1,000
7. Paid Rent Rs. 800, Trade Expenses Rs. 700 and Traveling Expenses Rs. 300.
8. Goods purchased from sunil Rs. 10,000
9. Paid Rs. 9,500 to Sunil in the full settlement.
10. Purchased good from Brij Mohan Rs. 20,000 list price at 15% discount.
11. Goods return to Brij Mohan of the list price of Rs. 2,000
12. Settled the account of Brij Mohan by paying cash with a discount of Rs. 4%.
13. Purchased goods from Anil Rs. 5,000.
14. Paid to Anil Rs. 1900 and Received discount Rs. 100.
15. Proprietor Withdrew for his personal use cash Rs. 2,000 and goods worth Rs. 3,000.
16. Goods worth Rs. 25,00 were distributed as free samples.
17. Goods of Rs. 2,000 and Cash Rs. 15,00 stolen by an employee.
18. Goods of Rs. 10,000 Destroyed by Fire.
19. Goods sold for cash to a customer Rs. 5,000 and collected 10% Sales Tax on it.
20. Purchase an Iron Safe of Rs. 12,000 for Business.
21. Purchase a Horse for Business Rs. 35,000
24. Paid Cash to Y on Behalf of X. Rs. 4,000
26. Borrowed from Bank Rs. 20,000
27. Provide Interest on Capital of Rs. 2,00,000 @ 8% p.a. from 1st April 2007 to 31st March 2008.
28. Purchase goods of Rs. 60,000 and paid Rs. 2,000 for carriage on these goods.
29. Purchase goods from Raghunath Brothers Rs. 18000 and paid carriage Rs. 1200 on this.
30. Received an order of goods for Rs. 1,25,000 from Sunil.
31. Sunil's Order was executed and cartage Rs. 3,000 was paid in this connection.
33. Goods worth 50,000 supplied to Ghanshyam against the order.
34. Paid interest on loan Rs. 1,000
35. Sold Goods and on Credit to X of Rs. 24,000
36. 1/6 of the goods Return by X.
37. Paid income tax Rs. 5,000 and Sales Tax Rs. 3,000.
38. Salaries Paid Rs. 8,000 and Salaries due Rs. 2,000.
39. Withdrawn goods by owner for personal use-Cost Price Rs. 800 Sales Price Rs. 1000.
40. Paid Rs. 300 for Subscribing Newspapers and Magazines.
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