XI Accountancy – Previous Years Objective Questions and Answers

Chapter 1 – Introduction to Accounting

1. The Proprietor of a furniture shop took a dining table from his shop for his homely use. In which
account this transaction is recorded?

a) Drawings b) Income c) Sales d) Expenses

2. Note books purchased by a stationery shop comes under _________
a) Assets b) Income c) Purchases d) Liabilities
3. Identify the intangible asset from the following:
a) Building b) Cash in hand c) Copyright d) Stock in trade
4. Find the odd one and state the reason.
a) Bills payable b) Bills receivable c) Creditors d) Bank overdraft
5. Pick out the wrong pair:
a) Land, Building b) Cash, Stock c) Debtors, Machinery d) Copyright, Patent
6. Select the correct order:
a) Identifying, Recording, Summarising, Classifying.
b) Recording, Summarasing, Classifying, Identifying.
c) Identifying, Recording, Classifying, Summarising.
d) Identifying, Classifying, Recording, Summarising.
7. A person who entitled to get money from the business is termed as _____
a) Debtor b) Creditor c) Borrower d) None of these
8. Classify the following into internal users and external users of accounting.
a) Tax Authorities, b) Chief Executive, c) Financial Officer,
d) Trade Associations, e) Vice President, f) Creditors
9. Suresh advanced three months’ salary to an employee of his firm. This advance salary is ____
a) Revenue expense b) Capital expense c) Current asset d) Current Liability
10. ______ reduces the capital in a business.
a) Purchase of Assets b) Purchase of goods c) Drawings d) Incomes

Answers:
1 – a, 2 – c, 3 – c, 4 – b (others are liabilities), 5 – c (Debtors is Current Asset and Machinery is
Fixed Asset), 6 – c, 7 – b, 8: (Internal users: b, c, e, External users: a, d, f), 9 – c, 10 - c
Chapter 2 – Theory Base of Accounting

1. "Profits should not be recorded until realised, but provision should be given for all possible
losses" Identify the accounting principle related to this statement.
a) Consistency concept b) Duality concept c) Conservatism concept d) Cost concept
2. Match the following:

A B
a) Assets = Capital + Liabilities 1) Verifiable documents
b) Cost concept 2) Accounting policies and procedures are not changed
c) Consistency concept 3) Dual aspect concept
d) Objectivity concept 4) Purchase price

3. Accounting equation is based on __________

a) Consistency Concept b) Dual Aspect Concept
c) Money Measurement Concept d) Conservatism Concept
4. All business transactions are recorded by referring to the supporting vouchers. This is based on
________ concept of accounting.
a) Objectivity Concept b) Accounting Period Concept
c) Cost Concept d) Accounting Entity Concept
5. Match the following:

A B
a) A company follows the same method of depreciation for last 5 years 1) Accounting period
b) A firm ascertained profit or loss at the end of each year 2) Matching concept
c) A firm records purchase of assets at cost price only 3) Consistency concept
d) All prepaid expenses are deducted from the total expenses paid 4) Cost concept

6. While preparing final accounts, outstanding wages is added to the wages account. Identify the
accounting concept related to this.
7. Qualitative aspects of business transactions are not recorded because of _________
a) Business Entity Concept b) Matching Concept
c) Consistency Concept d) Money Measurement Concept
8. A building was constructed by a firm for Rs.25 Lakhs and it’s present market value is Rs. 1
Crore. Which amount is recorded in the books of accounts?

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9. From the following events identify which one is a business transactions.
a) Ordered a machinery worth Rs. 10000 b) A new manager is appointed
c) Sold goods on credit d) Swathi purchased a land for the construction of her house
10. Expand IFRS.
11. What are the components of GST?
12. Match the following:

A B
a) Accounting information should be free from bias 1) Conservatism concept
b) Every transaction has two aspects 2) Objectivity concept
c) Closing stock is valued at cost or market price whichever is less 3) Dual aspect concept

13. Under which accounting concept, quality of manpower is not recorded in the books of
accounts?
a) Business entity b) Money measurement c) Going concern d) Accounting period
14. Identify the accounting concepts mentioned in the following statements:
a) Businessman is the creditor of the business to the extent of his capital.
b) Life of business is broken into shorter time intervals.
c) Revenue is recognized at the point of sale.

15. A trader provides accounting information to its users, whenever it is required. Specify the
qualitative characteristics of accounting mentioned here.
a) Understandability b) Relevance c) Comparability d) Reliability
16. Which accounting concept specifies the practice of crediting closing stock to the trading
account?
a) Cost concept b) Revenue realization c) Going concern d) Matching concept
17. Recognition of expenses with associated revenue is called ___ concept.
a) Revenue recognition b) Cost c) Matching d) Materiality
Answers:
1 – c, 2: (a – 3, b – 4, c – 2, d – 1), 3 – b, 4 – a, 5: (a – 3, b – 1, c – 4, d – 2), 6 – Matching
Concept, 7 – d, 8 – 25 Lakhs, 9 – c 10 – International Financial Reporting Standards, 11 –
CGST, SGST and IGST, 12: (a – 2, b – 3, c – 1), 13 – b, 14: (a – Accounting Entity / Business
Entity, b – Accounting Period Concept, c – Revenue Realisation Concept), 15 – b, 16 – d, 17 –
c
Chapter 3 – Recording of Transactions I
1. A document which provides evidence of the transactions is known as _______

a) Debit b) Credit c) Source document d) Stock

2. Fill in the blank:
_____________ A/c Dr
To Thomas & Co. A/c
(Purchased machinery from Thomas & Co.)
3. Goods or cash withdrawn by the proprietor is debited to __________ account.
a) Cash b) Cash or goods c) Drawings d) Purchase
4. Goods or cash withdrawn by the proprietor is credited to __________ account.
a) Cash b) Cash or goods c) Drawings d) Purchase
5. Complete the following as per hint given:

Transaction Effect on Business

1) Increase in asset
a) Purchased goods for cash
2) Decrease in asset
1. ________
b) Bought furniture on credit
2. ________
1. ________
c) Bank load repaid 2. ________

6. A furniture merchant used2chairs for his office use. Here credits to ________ account.
a) Furniture A/c b)Purchase A/c c) Drawings A/c d) Asset A/c
7. The capital of a trader wouldchange as a result of ____________
a) Credit purchase of rawmaterials b) Wages paid in cash
c) Credit purchase of fixedassets d) Creditor being paid his account by cheque
8. Complete the following as perhint given:

Transaction Effect on Business

1) Increase in asset
a) Purchased machinery for cash
2) Decrease in asset
1. ________
b) Sold goods on credit
2. ________
1. ________
c) Cash paid to creditor 2. ________
Answers:
1 – c, 2 – Machinery, 3 – c, 4 – d, 5(b): 1 – Increase in asset, 2 – Increase in liability, (c): 1 –
Decrease in liability, 2 – Decrease in asset, 6 – b, 7 – b, 8 (b): 1 – Decrease in asset, 2 – Increase
in asset, (c): 1 – Decrease in asset, 2 – Decrease in Liability,

Chapter 4 – Recording of Transactions II

1. When a firm maintains a cash book, it need not maintain _________

a) Journal Proper b) Purchases (journal) book
c) Sales (journal) book d) Bank and cash account in the ledger
2. Ramesh, a dealer of Television, sold an old furniture to Rafeeque for Rs. 3000 on credit. Identify
the day book to record this transaction.
a) Purchase day book b) Journal proper c) Sales day book d) Cash book
3. Which one of the following is NOT a contra transaction in Two Column Cash Book?
a) Cash deposited into bank b) Cash withdrawn from bank for domestic purpose
c) Opened a new account with bank d ) Cash withdrawn from bank for office use
4. Debit note is the basis for recording in __________
a) Cash Book b) Sales Book c) Purchase Book d) Purchase Return Book
5. _____ is the situation when cash withdrawn from the bank exceeds the amount of deposit.
a) Cash at Bank b) Cash in Hand c) Bank Overdraft d) None of these
6. Debit balance of cash book indicate _______
a) Favourable balance b) Unfavourable balance c) No balance d) None of these
7. Machinery purchased from Sheeba Industries on credit is recorded in ________
a) Purchase book b) Purchase ledger c) Journal proper d) Cash book
8. Find the odd one:
a) Direct payment by bank on behalf of the account holder
b) Bank charges debited by bank
c) Interest allowed by bank
d) Dishonour of a bill discounted with the bank

Answers:
1– d, 2 – b, 3 – b, 4 – d, 5 – c, 6 – a, 7 – c, 8 – c (others reduce bank balance),
Chapter 5 – Bank Reconciliation Statement

1. Bank Reconciliation Statement is prepared by _______

a) Bank b) Depositor c) Creditor d) Debtor
2. Which among the following is the statement of account of the customer maintained by the bank?
a) Pass Book b) Cash Book c) Either A or B d) None of these
3. A bank reconciliation statement is prepared with _______ balance.
a) Pass Book b) Cash Book c) Both A & B d) None of these
4. Pass book is a copy of ______
a) Copy of customer Account b) Bank column of cash book
c) Cash column of cash book d) Copy of receipts and payments
5. Unfavourable bank balance indicates __________
a) Credit balance in pass book b) Credit balance in cash book
c) Debit balance in cash book d) None of these
6. Bank reconciliation statement is mainly prepared for __________

a) Reconcile the cash balance of the cash book b) Reconcile the difference between
the pass book balance and cash book balance c) Both A & B d) None of these

7. Cheque issued but not presented for payment will ______ the balance as per cash book.
a) Reduce b) Increase c) No change
Answers:
1– b, 2 – a, 3 – c, 4 – a, 5 – b, 6 – b, 7 – a,

Chapter 6 – Trial Balance and Rectification of Errors

1. Which among the following is used to check the arithmetical accuracy of accounts?
a) Trial Balance b) Journal c) Ledger d) Balance Sheet
2. _________ is the common base for preparing trial balance.
a) Ledger accounts b) Journal, c) Balance sheet d) None of these
3. Agreement of trial balance is affected by _______
(a) One sided errors only (b) Two sided errors only (c) Both (a) and (b) (d) None of the above.
4. Which of the following is not an error of principle:
a) Purchase of furniture debited to purchases account.
b) Repairs on the overhauling of second hand machinery purchased debited to repairs account.
c) Cash received from Manoj posted to Saroj.
d) Sale of old car credited to sales account.
5. Which of the following is not an error of commission?
(a) Overcasting of sales book.
(b) Credit sales to Ramesh Rs. 5,000 credited to his account.
(c) Wrong balancing of machinery account.
(d) Cash sales not recorded in cash book.
6. If the trial balance agrees, it implies __________
a) There may be two sided errors in the book.
b) There may be one sided error in the books.
c) There may be both two sided and one sided errors in the books.
7. If suspense account does not balance off even after rectification of errors it implies _______
(a) There are some one sided errors only in the books yet to be located.
(b) There are no more errors yet to be located.
(c) There are some two sided errors only yet to be located.
(d) There may be both one sided errors and two sided errors yet to be located.

8. Trial balance is a ___________

(a) An account. (b) A statement. (c) A subsidiary book. (d) A principal book.
9. A Trial balance is prepared __________
(a) After preparation financial statement.
(b) After recording transactions in subsidiary books.
(c) After posting to ledger is complete.
(d) After posting to ledger is complete and accounts have been balanced,
10. Rent paid Rs. 4500 was posted to rent account as Rs. 5400 which is the error occurred here?
a) Error of Principle b) Error of Commission c) Compensating Error d) Error of Omission

Answers:
1– a, 2 – a, 3 – a, 4 – c, 5 – d, 6 – a, 7 – a, 8 – b, 9 – d, 10 – b
Chapter 7 – Depreciation, Provisions and Reserves

1. ________ reserve is not shown in the Balance Sheet

a) Secret b) General c) Revenue d) Capital
2. The term used for writing-off the cost of intangible assets is called _______
a) Amorisation b) Depletion c) Depreciation d) Appreciation
3. A business purchased a patent for Rs. 5,00,000 for manufacturing their products. They decided
to write off Patent Rs. 50,000 every year from patent. This is an example of _______
a) Depreciation b) Amortisation c) Depletion d) Obsolescence.
4. Mining is an example of _____ asset.
a) Current Asset b) Intangible Asset c) Wasting Asset d) Fictitious Asset
5. Annual amount of depreciation charged under straight line method is _________
a) Variable b) Fixed c) Both a & b d) None of these
6. Depreciation is a ________
a) Cash Expense b) Non-cash expense c) None of these
7. Depreciation is charged on __________
a) Fixed Assets b) Liabilities c) Capital d) None of these

8. The main cause of ____________ is wear and tear caused by its usage.
9. Decrease in the value of asset is called ____________

Answers:
1– a, 2 – a, 3 – b, 4 – c, 5 – b, 6 – b, 7 – a, 8 – Depreciation, 9 - Depreciation

Chapter 8 – Bills of Exchange

1. A bill of exchange is ________

a) A conditional order b) An unconditional order
c) A conditional undertaking d) An unconditional undertaking
2. James sold goods for Rs. 10000 to Rajeev and a promissory note was prepared for a period of 2
months and endorsed to Raheem. Who is the drawer of the promissory note?
a) James b) Rajeev c) Raheem d) None of these
3. Ammu sold good to Manu for Rs. 12000. A bill is drawn and accepted. Who is the drawer of
this bill?

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4. Amal drew a bill on Sudheesh for 3 months validity, which is discounted with the banker. Who is
the payee in this case?
a) Amal b) Sudheesh c) Banker d) Drawer
5. A bill is ‘noted’ when it is _________
a) Discounted b) Honoured c) Dishonoured d) Endorsed
6. The act of transferring the bill from one person to another is called _________
a) Endorsement, b) Discounting c) Retiring d) Dishonour
7. Match the following:
A B
a) Payment of bill before maturity 1) Renewal of bill
b) Encashment of bill from bank before maturity 2) Retiring of bill
c) Extending the maturity period by cancelling an old bill 3) Discounting of bill
d) Non-payment of bill on maturity 4) Dishonour of bill
8. A bill of exchange is prepared by __________
a) Debtor b) Creditor c) Both of them d) None of them
9. The term rebate is associated with _________
a) Renewal of Bill b) Retiring of Bill c) Dishonour of Bill d) Endorsement of Bill

Answers:
1– b, 2 – b, 3 – Ammu, 4 – c, 5 – c, 6 – a, 7: (a – 2, b – 3, c – 1, d – 4), 8 – b, 9 – b,

Chapter 8 – Financial Statements I

1. Purchase of fixed asset is an example for _____

a) Revenue Payments b) Revenue Receipts
c) Capital Receipts d) Capital Payments
2. Which statement shows the financial position of a business on a specific date?
3. The amount earned by a business concern through sale of its products or providing services to
customers is called __________
a) Expenses b) Capital c) Revenue d) Interest
4. Arrange the following assets in the order of liquidity.
a) Furniture b) Bank c) Cash d) Debtors

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5. The financial information provided by an accounting system is need by _____
a) Owners b) Creditors c) Management d) All of these
6. Find the wrong pair:
a) Salary - Revenue expenditure
b) Furniture - Capital expenditure
c) Bank loan - Revenue receipt
d) Sale of machinery - Capital receipt
7. While marshaling the balance sheet in the order of liquidity which of the following assets comes
last?
a) Debtors b) Cash c) Furniture d) Bank
Answers:
1– d, 2 – Balance Sheet, 3 – c, 4 – Cash, Bank, Debtors, Furniture, 5 – d, 6 – c, 7 – c,

Chapter 9 – Financial Statements II

1. Which of the following is correct in case of prepaid insurance, while preparing the final
accounts?
a) Credited to Profit and loss account b) Shown on liabilities side
c) Debited to profit and loss account d) Added to capital account
2. Commission accrued is a _________
a) Direct expense b) Direct income c) Indirect expense d) Current asset
3. If the rent of one month is still to be paid, the adjustment entry will be:
(a) Debit outstanding rent account and Credit rent account
(b) Debit profit and loss account and Credit rent account
(c) Debit rent account and Credit profit and loss account
(d) Debit rent account and Credit outstanding rent account.
4. If the insurance premium paid is Rs. 1,000 and pre-paid insurance Rs. 300. The amount of
insurance premium shown in profit and loss account will be:
(a) 1,300 (b) 1,000 (c) 300 (d) 700.
5. Which among the following is shown as a deduction from Debtors?
a) Depreciation b) Manager’s Commission c) Provision for bad debt d) None of these
6. Further bad debt is _________
a) Deducted from bad debt b) Deducted from Debtors c) Added to debtors
7. Closing stock is __________
a) Shown on the Liability side of Balance Sheet

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 b) Shown on the Asset side of Balance Sheet
c) Shown on the debit side of Trading Account
8. Outstanding expenses are shown on the ______________
a) Asset side of Balance Sheet b) Liability side of Balance Sheet c) Credit side of P&L A/c
Answers:
1– a, 2 – d, 3 – d, 4 – d, 5 – c, 6 – b, 7 – b, 8 – b

Chapter 11 – Accounts from Incomplete Records

1. ________ account is prepared by a trader, who does not maintain the double entry system of
accounting, to find out the value of credit purchase.
a) Total creditors b) Total debtors c) Bills receivable d) Bills payable
2. Opening statement of affairs is prepared to find out __________
3. Incomplete record mechanism of book keeping is ______
(a) Scientific (b) Unscientific (c) Systematic (d) None of these
4. Opening capital is ascertained by preparing __________
(a) Total debtors account (b) Total creditors account
(c) Cash account (d) Opening statement of affairs
5. Credit sales can be ascertained as the balancing figure in the ___________ account.
6. Incomplete records are generally used by ___________

Answers:
1 – a, 2 – Opening capital or Capital at the beginning, 3 – b, 4 – d, 5 – Total Debtors, 6 – Small
Traders

Chapter 12 – Application of Computers in Accounting

1. Find the odd one out.
a) Keyboard b) Mouse c) MICR (Magnetic Ink Character Recognition) d) Printer
2. Which one of the following is NOT an element of Computer System?
a) IQ b) Hardware c) Software d) People
3. AIS stands for ______
4. The user oriented programmes designed and developed for performing certain specific tasks are
called as _________
5. The people who write programmes to implement the data processing system design are called
________

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