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1st Year Principles of Accounting Chapter 10 Test

1st Year · Principles of Accounting · Punjab (PTB)

Name: ____________Roll No: ________Class/Section: ________Date: ________Total marks: 30Time: 40 minutes

Q1. Multiple choice questions (Attempt all · 10 × 1 = 10)

The accounting system in which accounting entries are made on the basis of amount having become due for payment or receipt, is called:
1. Cash system
2. Accrued or mercantile system
3. Outstanding system
4. None of these
Interest on drawings is:
1. An asset
2. A liability
3. An expense
4. A revenue
The debts, the recovery or realization of which is uncertain are known as:
1. Bad debts
2. Doubtful debts
3. Provision for doubtful debts
4. Loan
Business allow cash discount on making prompt payment to its:
1. Creditors
2. Debtors
3. Partners
4. Investors
If the closing stock appears in the balance it is taken only to the:
1. Profit or loss a/c
2. Trading a/c
3. Balance sheet
4. Final a/c
Income tax paid is a:
1. Business expense
2. Revenue for business
3. Liability of business
4. Personal expense
All those expenses which have become due but not paid are called:
1. Accrued revenue
2. Prepaid revenue
3. Outstanding revenue
4. Advance expense
A prepaid expense is:
1. An asset
2. A liability
3. An expense
4. An income
An income which has earned but not received is called:
1. Unearned income
2. Accrued revenue
3. Revenue received in advance
4. None of these
Bad debts are business:
1. Expenses
2. Liabilities
3. Assets
4. Revenue

Q2. Short questions (Attempt any 6 of 8 · 6 × 2 = 12)

What will be the adjusting entry for provision for discount on creditors?
Define the accrual or mercantile system of accounting.
Pass the adjusting entry for prepaid expenses?
Define unearned income.
Calculate the value of stock at the end: sales Rs. 450,000; cash purchases Rs. 100,000; credit purchases Rs. 250,000; carriage in Rs. 12,500; gross profit on sales 20%; opening stock Rs.37,500.
What will be the adjusting entry for provision for doubtful debts?
What do you understand by the term outstanding expenses?
Cost of an asset is Rs 10000. Rate of depreciation is 10% P.A. Calculate depreciation.

Q3. Long questions (Attempt any 2 of 3 · 2 × 4 = 8)

The following trial balance was extracted from the books of Rahim on 31-12-2022:
Adjustmenrs:
(1) Closing stock Rs. 81,000.
(2) Building is to be depreciated at the rate of 5% p.a. and furniture at the rate of 10% p.a.
Prepare trading and profit and loss account and balance sheet.

Particulars	Debit	Particulars	Credit
	Rs.		Rs.
Opening stock	58,000	Capital	100,000
Building	100,000	Sales	421,000
Purchases	286,000	Sundry creditors	120,000
Sundry debtors	139,000	Purchases returns	21,000
Sales returns	36,000
Carriage inward	6,000
Carriage outward	8,000
Salaries	16,000
Furniture	8,000
Cash in hand	5,000
	662,000		662,000

From the following particulars prepare a trading and profit and loss a/c for the year ended on 31^st December 2022 and balance sheet as at that date:
Adjustments:
(1) Closing stock Rs. 17,000.
(2) Depreciation motor vehicle 10%.
(3) Outstanding salary Rs. 300.
(4) Goods drawn by proprietor for personal use Rs. 600.

Particulars	Dr.	Cr.
	Rs.	Rs.
Capital		35,000
Motor vehicle	7,600
Drawings	3,000
Purchases	104,00
Freight	4,300
Carriage in	3,700
Returns	3,200
Sales		134,400
Salaries	6,500
Rent	2,000
Stock (1-1-15)	10,000
B/R and B/P	9,100	11,400
Cash in hand	27,400
	180,800	180,800

From the following particulars prepare the relevant accounts including Balance Sheet for the years, 2020, 2021, 2022:

Further bad debts Rs. 100 are to be written off in 2015. A provision for doubtful debts is to be raised @ 2% of sundry debtors:

Particulars	2020	2021	2022
	Rs.	Rs.	Rs.
Bad debts	400	800	200
Provision for Bad debts on Jan. 1:	2000	---	---
Bad debts recovered:	---	600	---
Sundry Debtors on 31^st December:	70,000	30,000	42,100