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Punjab (PTB) · Chapter test · Free

1st Year Principles of Accounting Chapter 2 TestTransactions And Accounting Equation

30 marks · 40 minutes · 21 questions. Covers: CHAP 2: Transactions And Accounting Equation.

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1st Year Principles of Accounting Chapter 2 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)

  1. Purchased goods on credit and for cash will affect:

    1. Cash and goods

    2. Cash and creditors

    3. Cash, creditors  and owner’s equity

    4. Cash, goods and creditors

  2. When there is no question of meeting the value of a transaction, it will be known as:

    1. Cash Transaction

    2. Credit Transaction

    3. Paper Transaction

    4. None of these

  3. Every transaction affects:

    1. One item

    2. Two items

    3. Three items

    4. So many items

  4. Sold goods costing Rs1500 for Rs 1750 will increase the owner’s equity by Rs:

    1. 250

    2. 1500

    3. 1750

    4. 3250

  5. All debts which are payable by a business to its investors and others are known as:

    1. Capital

    2. Equities

    3. Expenses

    4. Liabilities

  6. The accounting equation represents:

    1. Resources in the business are equal to the sources of business

    2. Resources are allocated at cost price

    3. Resources in the business are not equal to the sources of business

    4. Owner’s give money for business

  7. Cash received from debtors, it will be:

    1. Increase in liabilities and decrease in assets

    2. Increase in assets and decrease in revenue

    3. Increase in assets and decrease in assets

    4. None of these

  8. A person who owns money to a business is known as a:

    1. Creditor

    2. Debtor

    3. Investor

    4. Solvent

  9. Expenses paid by a business decrease:

    1. Cash

    2. Capital

    3. Cash & Capital

    4. None of these

  10. All events, which are related to business, are measured in:

    1. Kilograms

    2. Money

    3. Quality

    4. Quantity

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

  1. Liabilities of a business Rs:150,000 which are 0.25 of proprietorship what will be the amount of: a)Assets  b) Capital.

  2. If assets Rs, 80000 and liabilities Rs, 50,000, identify the amount of capital.

  3. Define the term “equity”.

  4. What are the three basic elements of accounting equation?

  5. What do you mean by “Monetary Events” & “Non-Monetary Events”?

  6. If liabilities are Rs, 30000 and assets are Rs, 80000. Find capital.

  7. What is credit transaction?

  8. What will be the amount of liabilities if assets are Rs, 45000 and capital Rs, 20,000.

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

  1. Prepare accounting equation on the basis of the following:

    (a) Mr. Ferooz started business with Goods Rs. 40,000, Building Rs. 100,000 and Cash Rs. 110,000.
    (b) Purchased goods on account for Rs. 30,000.
    (c) Sold goods on account for Rs. 40,000.
    (d) Cash of Rs. 20,000 deposited into bank.
    (e) Paid cash to supplier of goods Rs. 20,000.
    (f) Paid telephone bill Rs. 4,000 by cheque.

  2. Show the effects of the following transactions on the accounting equation of Mr. Qaiser:

    (a) Commenced business with cash Rs. 2,00,000.
    (b) Purchased goods for cash Rs. 40,000.
    (c) Purchased typewriter for cash Rs. 20,000.
    (d) Rent paid in advance Rs. 17,000.
    (e) Commission received in advance Rs. 3000.
    (f) Sold goods for cash Rs. 20,000 costing Rs. 17,000.

  3. Following are the transactions of Wasif & Co. prepare accounting equation for the month of November 2022:

    (i) Started business with cash Rs. 200,000.

    (ii) Bought furniture Rs. 4,000.

    (iii) Bought machinery Rs. 30,000 paying cash Rs. 10,000 and balance is to be paid later on.

    (iv) Purchased merchandise Rs. 15,000.

    (v) Sold merchandise Rs. 8,000 costing Rs. 6,000 to Najam.

    (vi) Paid electricity bill Rs. 4,000.

    (vii) Goods Rs. 2,000 used personally by Wasif.

    (viii) Paid to creditors Rs. 8,000

    (ix) Received from Najam Rs. 8,000.

    (x) Received bank interest Rs. 2,000.