PAPER – 1:
ACCOUNTING
QUESTIONS
True and False
1. State with reasons, whether the following statements are true or false:
(a) Accrual concept implies accounting on cash basis.
(b) The Sales book is kept to record both cash and credit sales.
(c) Bank reconciliation statement is prepared to arrive at the bank
balance.
(d) The provision for bad debts is debited to sundry debtors
account.
(e) Periodic inventory system is a method of ascertaining inventory by
taking an actual physical count.
(f) Discount at the time of retirement of a bill is a gain for the drawee.
(g) The provision for discount on creditors is often not provided in
keeping with the principle of conservatism.
(h) Partners can share profits or losses in their capital ratio, when
there is no agreement.
(i) Both revenue and capital nature transactions are recorded in the
Receipts and Payments Account.
(j) A fixed charge generally covers all the assets of the company
including future one.
Theoretical Framework
2. Explain Cash and Mercantile system of accounting.
, REVISION TEST PAPER
FOUNDATION EXAMINATION
Journal Entries
3. (a) You are required to pass necessary journal entries in the books of
Kewal:
(i) Cheque amounting ` 9,000 from Hari Krishan in full
settlement of his account for ` 10,000.
(ii) Withdrawn for personal use: Goods (Sales Price ` 8,000, Cost
` 6,000), cash ` 1,000
(iii) Goods costing ` 3,000 (Sale price `4,000) distributed as free
samples.
(iv) Received commission ` 10,000, half of which does not relate
of current year and is received in advance.
(v) Purchased second hand machinery from Jawahar industries
for ` 3,00,000 plus CGST and SGST @ 6% each. Paid `
1,00,000 immediately by cheque and balance to be paid after
two months.
Capital or Revenue Expenditure
(b) Classify the following expenditures as capital or revenue
expenditure:
(i) Travelling expenses of the directors for trips abroad for
purchase of capital assets.
(ii) Amount spent to reduce working expenses.
(iii) Amount paid for removal of stock to a new site.
(iv) Cost of repairs on second-hand car purchased to bring it into
working condition.
(v) Amount spent on renewal fee of patent rights.
Cash Book
4. (a) Prepare a Triple Column Cash Book from the following transactions
of M/s Ram Agencies and bring down the balance for the start of
next month:
2 SEPTEMBER 2024 EXAMINATION
, REVISION TEST PAPER
ACCOUNTING
2024 `
March 1 Cash in hand 30,000
1 Cash at bank 1,20,000
2 Paid into bank 10,000
5 Bought furniture and issued cheque 15,000
8 Purchased goods for cash 5,000
12 Received cash from Mohan 9,800
Discount allowed to him 200
14 Cash sales 50,000
16 Paid to Lata by cheque 14,500
Discount received 500
19 Paid into Bank 5,000
23 Withdrawn from Bank for Private 6,000
expenses
24 Received cheque from Gupta 14,300
Allowed him discount 200
26 Deposited Gupta's cheque into
Bank
28 Withdrew cash from Bank for Office 20,000
use
30 Paid rent by cheque 8,000
Rectification of Errors
(b) Pass the Journal entries to rectify the following errors detected
during preparation of the Trial Balance:
(i) Wages paid for construction of office building debited to
wages account ` 20,000.
(ii) A credit sale of goods ` 1,200 to Ramesh has been wrongly
passed through the Purchase Book.
(iii) An amount of ` 2,000 due from Mahesh Chand which had
3 SEPTEMBER 2024 EXAMINATION
, REVISION TEST PAPER
FOUNDATION EXAMINATION
been written off as a bad debit in the previous year was
unexpectedly recovered and has been posted to the personal
account of Mahesh Chand.
(iv) Goods (Cost being ` 15,000 and Sales price being ` 16,000)
distributed as free samples amount prospective customers
were not recorded anywhere.
(v) Goods worth ` 1,500 returned by Ritu have not been
recorded anywhere.
Bank Reconciliation Statement
5. According to the cash-book of Mihir there was balance of ` 4,45,000 in
his bank on 30th June, 2024 On investigation you find that :
(i) Cheques amounting to 60,000 issued to creditors have not been
presented for payment till the date
(ii) Cheques paid into bank amounting to 1,10,500 out of which
cheques amounting to ` 55,000 only collected by bank up to 30th
June 2024
(iii) A dividend of ` 4,000 and rent amounting to 60,000 received by
the bank and entered in the pass-book but not recorded in the
cash book.
(iv) Insurance premium (up to 31st December, 2023) paid by the bank
` 2,700 not entered in the cash book.
(v) The payment side of the cash book had been under cast by ` 500
(vi) Bank charges ` 150 shown in the pass book had not been entered
in the cash book.
(vii) A bill payable of ` 20,000 had been paid by the bank but was not
entered in the cash book and bill receivable for ` 6,000 had been
discounted with the bank at a cost of ` 100 which had also not
been recorded in cash book.
You are required:
(1) To make the appropriate adjustments in the cash book, and
(2) To prepare a statement reconciling it with the bank pass book.
4 SEPTEMBER 2024 EXAMINATION
ACCOUNTING
QUESTIONS
True and False
1. State with reasons, whether the following statements are true or false:
(a) Accrual concept implies accounting on cash basis.
(b) The Sales book is kept to record both cash and credit sales.
(c) Bank reconciliation statement is prepared to arrive at the bank
balance.
(d) The provision for bad debts is debited to sundry debtors
account.
(e) Periodic inventory system is a method of ascertaining inventory by
taking an actual physical count.
(f) Discount at the time of retirement of a bill is a gain for the drawee.
(g) The provision for discount on creditors is often not provided in
keeping with the principle of conservatism.
(h) Partners can share profits or losses in their capital ratio, when
there is no agreement.
(i) Both revenue and capital nature transactions are recorded in the
Receipts and Payments Account.
(j) A fixed charge generally covers all the assets of the company
including future one.
Theoretical Framework
2. Explain Cash and Mercantile system of accounting.
, REVISION TEST PAPER
FOUNDATION EXAMINATION
Journal Entries
3. (a) You are required to pass necessary journal entries in the books of
Kewal:
(i) Cheque amounting ` 9,000 from Hari Krishan in full
settlement of his account for ` 10,000.
(ii) Withdrawn for personal use: Goods (Sales Price ` 8,000, Cost
` 6,000), cash ` 1,000
(iii) Goods costing ` 3,000 (Sale price `4,000) distributed as free
samples.
(iv) Received commission ` 10,000, half of which does not relate
of current year and is received in advance.
(v) Purchased second hand machinery from Jawahar industries
for ` 3,00,000 plus CGST and SGST @ 6% each. Paid `
1,00,000 immediately by cheque and balance to be paid after
two months.
Capital or Revenue Expenditure
(b) Classify the following expenditures as capital or revenue
expenditure:
(i) Travelling expenses of the directors for trips abroad for
purchase of capital assets.
(ii) Amount spent to reduce working expenses.
(iii) Amount paid for removal of stock to a new site.
(iv) Cost of repairs on second-hand car purchased to bring it into
working condition.
(v) Amount spent on renewal fee of patent rights.
Cash Book
4. (a) Prepare a Triple Column Cash Book from the following transactions
of M/s Ram Agencies and bring down the balance for the start of
next month:
2 SEPTEMBER 2024 EXAMINATION
, REVISION TEST PAPER
ACCOUNTING
2024 `
March 1 Cash in hand 30,000
1 Cash at bank 1,20,000
2 Paid into bank 10,000
5 Bought furniture and issued cheque 15,000
8 Purchased goods for cash 5,000
12 Received cash from Mohan 9,800
Discount allowed to him 200
14 Cash sales 50,000
16 Paid to Lata by cheque 14,500
Discount received 500
19 Paid into Bank 5,000
23 Withdrawn from Bank for Private 6,000
expenses
24 Received cheque from Gupta 14,300
Allowed him discount 200
26 Deposited Gupta's cheque into
Bank
28 Withdrew cash from Bank for Office 20,000
use
30 Paid rent by cheque 8,000
Rectification of Errors
(b) Pass the Journal entries to rectify the following errors detected
during preparation of the Trial Balance:
(i) Wages paid for construction of office building debited to
wages account ` 20,000.
(ii) A credit sale of goods ` 1,200 to Ramesh has been wrongly
passed through the Purchase Book.
(iii) An amount of ` 2,000 due from Mahesh Chand which had
3 SEPTEMBER 2024 EXAMINATION
, REVISION TEST PAPER
FOUNDATION EXAMINATION
been written off as a bad debit in the previous year was
unexpectedly recovered and has been posted to the personal
account of Mahesh Chand.
(iv) Goods (Cost being ` 15,000 and Sales price being ` 16,000)
distributed as free samples amount prospective customers
were not recorded anywhere.
(v) Goods worth ` 1,500 returned by Ritu have not been
recorded anywhere.
Bank Reconciliation Statement
5. According to the cash-book of Mihir there was balance of ` 4,45,000 in
his bank on 30th June, 2024 On investigation you find that :
(i) Cheques amounting to 60,000 issued to creditors have not been
presented for payment till the date
(ii) Cheques paid into bank amounting to 1,10,500 out of which
cheques amounting to ` 55,000 only collected by bank up to 30th
June 2024
(iii) A dividend of ` 4,000 and rent amounting to 60,000 received by
the bank and entered in the pass-book but not recorded in the
cash book.
(iv) Insurance premium (up to 31st December, 2023) paid by the bank
` 2,700 not entered in the cash book.
(v) The payment side of the cash book had been under cast by ` 500
(vi) Bank charges ` 150 shown in the pass book had not been entered
in the cash book.
(vii) A bill payable of ` 20,000 had been paid by the bank but was not
entered in the cash book and bill receivable for ` 6,000 had been
discounted with the bank at a cost of ` 100 which had also not
been recorded in cash book.
You are required:
(1) To make the appropriate adjustments in the cash book, and
(2) To prepare a statement reconciling it with the bank pass book.
4 SEPTEMBER 2024 EXAMINATION
