Important MCQ questions for Class 11 Accountancy Chapter 3-Recording of Transactions-1
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MCQ Questions for Chapter 3-Recording of Transactions-1 class 11 Accountancy (Questions set-1)
Accounting - MCQ on Recoding Of Transactions - I
Class XI
Q.1 A document which provides evidence of the transactions is called
a. Journal.
b. Ledger.
c. Voucher.
d. Trial Balance.
Answer:
(c) Voucher
Explanation- Business transactions are usually evidenced by appropriate documents such as Cash memo, Invoice, Sales bill, Pay-in-slip, Cheque, Salary slip, etc. A document which provides evidence of the transactions is called the Source Document or a Voucher.
Q.2 A transaction with one debit and one credit is a simple transaction and the accounting vouchers prepared for such transaction is known as
a. transaction Voucher.
b. compound voucher.
c. journal.
d. ledger.
Answer:
(a) Transaction Voucher.
Explanation- A transaction with one debit and one credit is a simple transaction and the accounting vouchers prepared for such transaction is known as Transaction Voucher.
Q.3 Voucher which records a transaction that entails multiple debits/credits is called
a. transaction voucher.
b. compound voucher.
c. journal.
d. ledger.
Answer:
(b) Compound voucher
Explanation- Voucher which records a transaction that entails multiple debits/credits and one credit/debit is called compound voucher. Compound voucher may be: (a) Debit Voucher or (b) Credit Voucher.
Q.4 Transactions with multiple debits and multiple credits are called
a. credit transaction.
b. single transaction.
c. debit transactions.
d. complex transactions.
Answer:
(d) Complex transactions
Explanation- Transactions with multiple debits and multiple credits are called complex
transactions.
Q.5 Accounting voucher prepared for complex transaction is known as
a. Journal voucher.
b. Debit voucher.
c. Credit voucher.
d. Complex Journal.
Answer:
(a) Journal voucher
Explanation- The accounting voucher prepared for complex transaction is known as Complex Voucher/ Journal Voucher.
Q.6 The statement of assets, liabilities and capital is known as
a. journal.
b. voucher.
c. ledger.
d. balance sheet.
Answer:
(d) Balance sheet
Explanation- The balance sheet is a statement of assets, liabilities and capital.
Q.7 When the goods are purchased or sold for cash, the firm receives
a. credit memos.
b. cash memos.
c. debit memos.
d. complex journal.
Answer:
(b) Cash memos
Explanation- When the goods are purchased or sold for cash, the firm receives or gives cash memos which provide details regarding the cash transactions.
Q.8 When the business transactions relating to purchase or sale of goods are made on credit, the document prepared is
a. invoice.
b. cash memos.
c. credit memos.
d. ledger.
Answer:
(a) Invoice
Explanation- This source documents results from credit transactions. When the business transactions relating to purchase or sale of goods are made on credit, this source of document is prepared.
Q.9 The document which is prepared to record the details of credit sale is known as
a. purchase invoice.
b. cheque.
c. sales invoice.
d. receipt.
Answer:
(c) Sales invoice
Explanation- A sale invoice is prepared to record the details of credit sale.
Q.10 When a firm receives cash from the customer, it issues
a. cheque.
b. pay-in-slip.
c. invoice .
d. receipt.
Answer:
(d) Receipt
Explanation- When a firm receives cash from the customer, it issues a receipt as a proof for receiving the cash.
Q.11 The form available from a bank for depositing money in a bank account is
known as
a. pay-in-slip.
b. receipt.
c. invoice.
d. cheque.
Answer:
(a) Pay-in-slip
Explanation- This source relates to the bank transactions. Pay-in-slip is a form available from a bank for depositing money in a bank account. It has a counterfoil which is returned to the depositor with signature of the cashier, as receipt.
Q.12 A document which is in writing drawn upon a specified banker and payable on demand is known as
a. debit and credit notes.
b. pay-in-slip.
c. cheque.
d. invoice.
Answer:
(c) Cheque
Explanation- A cheque is a document which is in writing drawn upon a specified banker and payable on demand. The bank supplies the cheque forms.
Q.13 In a cheque, the name of the party to whom payment is to be made is written after the words
a. Rupees.
b. Pay To.
c. A/c No..
d. Bearer.
Answer:
(b) Pay To
Explanation- The name of the party to whom payment is to be made is written after the words ‘‘Pay To’’. Then the amount has to be written- both in words and figures.
Q.14 The document evidencing a debit to be raised against a party is known as
a. debit note.
b. credit note.
c. bank note.
d. party note.
Answer:
(a) Debit note
Explanation- The term ‘Debit Note’ is reserved for document evidencing a debit to be raised against a party for other reasons, for example, when goods are returned to a supplier or when an additional amount is recoverable from a customer.
Q.15 Issue of cash-memo on sale against cash, issue of credit memo on credit sale are the examples of
a. accounting voucher.
b. cash voucher.
c. non-cash voucher.
d. source voucher.
Answer:
(d) Source voucher
Explanation- Source vouchers are the documents which come into existence when a transaction occurs. Examples of this are issue of cash-memo on sale against cash, issue of credit memo on credit sale, issue of rent receipt on receipt of rent and so on.
Q.16 Cash received against sale of goods, sale of investments come under
a. debit vouchers.
b. credit vouchers.
c. source vouchers.
d. non-cash vouchers.
Answer:
(b) credit vouchers
Explanation- Credit vouchers are prepared when cash is received. Cash may be received against sale of goods, sale of investments, receipts from debtors and withdraw from bank etc.
Q.17 A brief description of the transaction given under voucher is known as
a. net amount of transaction.
b. supporting voucher number.
c. narration.
d. source document.
Answer:
(c) narration
Explanation- Narration is a brief description of the transaction.
Q.18 When payment is made against credit purchase of goods it comes under
a. debit vouchers.
b. credit vouchers.
c. source vouchers.
d. non-cash vouchers.
Answer:
(a) Debit vouchers
Explanation- Debit vouchers are prepared when payments is made. Payment may be made against expenses, purchase of goods, payment to creditors, deposits into bank and drawings etc.
Q.19 Vouchers prepared for transactions not involving cash are known as
a. debit vouchers.
b. transaction vouchers.
c. non-cash vouchers.
d. cash vouchers.
Answer:
(c) Non-cash vouchers
Explanation-Non-cash vouchers refer to vouchers for transactions not involving cash. Examples of these are Invoice or Bills, Debit and Credit Notes etc.
Q.20 The analysis of source document establishes that Stationery Account be debited following the rule
a. Debit the receiver, Credit the giver.
b. Debit what comes in, Credit what goes out.
c. Credit what comes in, Debit what goes out.
d. Debit all expenses and losses, Credit all incomes and profits.
Answer:
(d) Debit all expenses and losses, Credit all incomes and profits
Explanation- The analysis of source document (Cash Memo) establishes the Stationery Account be debited following the rule ‘ Debit all expenses and losses, Credit all incomes and profit.
MCQ Questions for Chapter 3-Recording of Transactions-1 class 11 Accountancy (Questions set-2)
Q.21 The primary book of accounts in which transactions are originally recorded in a chronological order is called
a. voucher.
b. journal.
c. cash voucher.
d. non-cash voucher.
Answer:
(b) Journal
Explanation- Journal is that primary book of accounts in which transactions are originally recorded in a chronological (day-to-day) order. It is called the book of original entry.
Q.22 An entry made in the Journal is called
a. Journal Entry.
b. Cash Entry.
c. Non-Cash Entry.
d. Debit Entry.
Answer:
(a) Journal Entry
Explanation- An entry made in the Journal is called a ‘Journal Entry’. To record transactions in it is to journalise it.
Q.23 L.F. in Journal means
a. Ledger Folio.
b. Ledge Folio.
c. Ledger Fall.
d. Ledger Fix.
Answer:
(a) Ledger Folio
Explanation- Ledger Folio includes the number of pages in the ledger on which the account is written up are entered.
Q.24 Journal Entries are of
a. three types.
b. twelve types.
c. six types.
d. two types.
Answer:
(d) Two types
Explanation- Entries in the Journal may be divided into two groups:
1. Simple Entry
2. Compound Entry
Q.25 The entry in which only two accounts are entered is called
a. compound entry.
b. simple entry.
c. contra entry.
d. complex entry.
Answer:
(b) Simple entry
Explanation- A Simple Entry is one in which only two accounts are affected, viz., one account to be debited and another to be credited with an equal amount.
Q.26 If the amount due from debtor is not realised, it is known as
a. bad debts.
b. debtor.
c. overdraft.
d. creditor.
Answer:
(a) Bad debts
Explanation- When a debtor becomes bankrupt, i.e. unable to pay one’s debts same is called Bad Debts.
Q.27 Whenever a journal entry involves more than two accounts, it is called
a. Simple entry.
b. Complex entry.
c. Compound entry.
d. Contra entry.
Answer:
(c) Compound entry
Explanation- In a compound entry, there may be two or more accounts to be debited and only one to be credited or vice versa.
Q.28 In Journal, the account to be debited is written with the word
a. Cr.
b. Dr.
c. Creditor.
d. Debtor.
Answer:
(b) Dr.
Explanation- In Journal, the account to be debited is written with the word ‘‘Dr.’’ written towards the end of the column.
Q.29 In Journal, the name of the account to be credited is written preceded by word
a. To.
b. By.
c. Dr.
d. Cr.
Answer:
(a) To
Explanation- The name of the account to be credited is written preceded by word ‘‘To.’’ For example-
Ajay Dr.
To Cash A/c
Q.30 Sometime insolvent debtor whose account had been earlier written off as ‘Bad Debts’ pays some amount. This amount so received is credited to
a. bad debts a/c
b. cash a/c
c. debtors a/c
d. bad debts recovered a/c
Answer:
(d) Bad Debts recovered a/c
Explanation- Sometime insolvent debtor whose account had been earlier written off as ‘Bad Debts’ pays some amount.The amount so received is a gain to the business and is credited Bad Debts Recovered a/c.The entry of bad debts recovered is:
Cash/Bank A/c Dr.
To Bad Debts Recovered A/c
Q.31 Recovery of bad debts written off last year is
a. loss.
b. bad debts.
c. interest credited.
d. gain.
Answer:
(d) Gain
Explanation- Recovery of bad debts written off last year is gain to the business; therefore, it is credited to Bad Debts Recovered Account.
Q.32 A reduction in amount whether to encourage purchases or prompt payment is called
a. commission.
b. interest.
c. discount.
d. drawings.
Answer:
(c) Discount
Explanation- A reduction in amount whether to encourage more purchases or prompt payment is called discount.
Q.33 Discounts are of
a. three types.
b. two types.
c. four types.
d. seven types.
Answer:
(b) Two types
Explanation- Discount may be classified into:
(i) Trade discount
(ii) Cash discount
Q.34 When goods are given as Charity, the following account is credited
a. Purchases A/c.
b. Charity A/c.
c. Cash A/c.
d. Sales A/c.
Answer:
(a) Purchases A/c
Explanation- Amount of purchases is reduced with the value of goods given away as charity. The following entry is passed:
Charity A/c Dr.
To Purchases A/c
Q.35 The allowance made to a customer if he purchases goods above a certain quantity or an amount is known as
a. cash discount.
b. trade discount.
c. credit discount.
d. retail discount.
Answer:
(b) Trade discount
Explanation- Trade discount is an allowance made to a customer if he purchases goods above a certain quantity or an amount. The discount so allowed is reduced from the sale value and the sale or purchase is recorded in the books at the net value.
Q.36 The allowance to encourage prompt payment of amount due is known as
a. trade discount.
b. retail discount.
c. credit discount.
d. cash discount.
Answer:
(d) Cash discount
Explanation- Cash discount is an allowance to encourage prompt payment of amount due. Cash discount, received or allowed is recorded separately in the books.
Q.37 Distribution of goods as free sample is a part of
a. production expense.
b. sales expense.
c. advertisement expense.
d. purchases expense.
Answer:
(c) Advertisement expense
Explanation- To increase sales sometimes goods are distributed as free samples. It is a part of advertisement expenses hence; it is debited to advertisement account and deducted from purchases.
Q.38 When the owner withdraws any money or goods from the business for his personal use then it is known as
a. overdraft.
b. prepaid expenses.
c. capital.
d. drawings.
Answer:
(d) Drawings
Explanation- It is treated as decrease in purchase and not increase in sales as no profit is earned on such goods.
Repeated question in chapter 2
Q.39 The account which is not recorded in the ledger accounts
a. cash discount.
b. trade discount.
c. credit discount.
d. retail discount
Answer:
(b) Trade discount
Explanation- Trading account is not recorded in the ledger accounts.
Q.40 When goods are withdrawn by proprietor for personal use, the account to be credited is
a. cash A/c.
b. sales A/c.
c. purchases A/c.
d. bank A/c.
Answer:
(c) Purchases A/c
Explanation- When the goods are withdrawn by proprietor for personal use. Following journal entry is passed-
Drawings A/c ......Dr.
To Purchases A/c
Q.41 The discount which is not deducted from the invoice is known as
a. trade discount.
b. retail discount.
c. credit discount.
d. cash discount.
Answer:
(d) Cash discount
Explanation- Cash discount is not deducted from the invoice.
Q.42 Prepaid expense is the part of
a. Long-term liability.
b. Current assets.
c. Current Liability.
d. Fixed assets.
Answer:
(b) Current assets
Explanation- Prepaid expenses are the expenses paid in advance.
Q.43 Good destroyed by fire or accident are debited to
a. drawings A/c.
b. loss by fire accident A/c.
c. profit & loss A/c.
d. cash A/c.
Answer:
(b) Loss by fire accident A/c
Explanation- Goods destroyed by fire or accident etc. is recorded by debiting the loss to the account titled ‘Loss by Fire Accident Account.’ It is an Expense Account. A loss by Fire Account is debited because loss represents an increase in expense and Purchase Account is credited because it will decrease the purchase.
Q.44 The discount which is deducted from invoice is known as
a. cash discount.
b. credit discount.
c. retail discount.
d. trade discount.
Answer:
(d) Trade discount
Explanation- The amount of the trade discount is deducted from the invoice.
Repeated question
Q.45 At the time of sale, the following tax is collected from the customers
a. income tax.
b. advance tax.
c. sales tax.
d. property tax.
Answer:
(c) Sales tax
Explanation- At the time of sale, sales tax is also collected from the customers. Sales tax so collected must be deposited in government account on the due date. Sales tax collected is a liability and therefore, should be credited in a separate account.
Q.46 For recoding miscellaneous expenditure, the following account is maintained-
a. Prepaid Expenses A/c.
b. Outstanding Expenses A/c.
c. Sundry Expenses A/c.
d. Depreciation A/c.
Answer:
(c) Sundry Expenses A/c
Explanation- Businessman often has to pay petty expenses, such as for refreshment, postage, conveyance etc. It is not desirable to record such expenses in a separate account of each expenses. These expenses are generally debited in one account, i.e., Sundry Expenses Account.
Q.47 Formula for calculating liability is
a. Assets + Liabilities.
b. Assets - Liabilities.
c. Assets + Capital.
d. Assets - Capital.
Answer:
(d) Assets - Capital
Explanation- Liabilities are debts, they are amounts owed to creditors. Thus, the claims who are not owners are called ‘‘Liabilities.’’
Q.48 Expenses that relate to current year but have not been paid till the year end are known as
a. prepaid expenses.
b. sundry expenses.
c. undue expenses.
d. outstanding expenses.
Answer:
(d) Outstanding expenses
Explanation- For example, Wages for the year ending 31st March, 2002 are Rs. 8,000. Out of this wages Rs.1000 for the month of March, 2002 have been paid in April 2002. Since, Rs.1000 as on 31st March, 2002 is yet to be paid it should be recorded in the books by passing the following journal entry:
Wages A/c ......Dr. 1,000
To Outstanding Wages A/c 1,000
Q.49 Formula for calculating capital is
a. Assets + Liabilities.
b. Assets - Liabilities.
c. Assets - Capital.
d. Assets + Capital.
Answer
(b) Assets - Liabilities
Explanation- Capital is also known as Owner’s Equity, proprietorship and net worth. Owner’s Equity means owner’s claim against the assets of the business. It will always be equal to assets less liabilities.
Repeated question
Q.50 Payment of insurance, rent of shop in advance are the examples of
a. outstanding expenses.
b. sundry expenses.
c. prepaid expenses.
d. postpaid expenses.
Answer:
(c) Prepaid expenses
Explanation- Normally payment of certain expenses like Insurance, Rent of Shop etc, are paid in advance. Such expenses are termed as advance or prepaid expenses.
MCQ Questions for Chapter 3-Recording of Transactions-1 class 11 Accountancy (Questions set-3)
Q.51 Fall in the value of assets is known as
a. outstanding expenses.
b. asset.
c. sundry expenses.
d. depreciation.
Answer:
(d) Depreciation
Explanation- Due to continuous use of fixed assets, value of these assets keeps on decreasing every year. This diminution is called the depreciation.
Q.52 Interest on capital is
a. loss.
b. profit.
c. prepaid expense.
d. sundry expense.
Answer:
(a) Loss
Explanation- Interest on capital is loss for business. Therefore, interest account is debited and capital account is credited by the amount.
Q.53 Trading loss is
a. outstanding expenses.
b. prepaid expenses .
c. depreciation.
d. sundry expenses.
Answer:
(c) Depreciation
Explanation- Depreciation is a fall in the value of assets and this is a trading loss.
Q.54 In case, interest is charged on drawings, it is
a. loss to the business.
b. gain to the business.
c. prepaid expense.
d. added to capital.
Answer:
(b) Gain to the business
Explanation- In case, interest is charged on drawings, it is a gain for the business. For this, drawings account will be debited interest on drawings account will be credited.
Q.55 The possibility of error is reduced by
a. ledger.
b. trial balance.
c. balance sheet.
d. journal.
Answer:
(d) Journal
Explanation- The possibility of errors is reduced in Journal as the amounts to be debited and credited are written side by side and the two can be compared to see that they are equal.
Q.56 Chronological record of all transactions is prepared under
a. journal.
b. trial balance.
c. ledger.
d. balance sheet.
Answer:
(a) Journal
Explanation- Transactions are entered in the journal in the chronological order i.e. the order in which they occur.
Q.57 The book which contains accounts is known as the
a. journal.
b. ledger.
c. trial balance.
d. balance sheet.
Answer:
(b) Ledger
Explanation- Ledger is the most important book of account. It is the principal book of account which contains all the ledger accounts.
Q.58 The value of properties and stock is shown by
a. nominal account.
b. personal account.
c. real account.
d. stock account.
Answer:
(c) Real Account
Explanation- The real accounts show the values of properties and also the value of stock.
Q.59 Examples of assets other than fixed assets are
a. machinery and plant.
b. creditors and short-term loans.
c. long term loans and public deposits.
d. stock and prepaid expenses .
Answer:
(d) Stock and prepaid expenses
Explanation- Assets other than fixed assets are current assets.Current assets are those assets which can be converted into cash within a period of one year.
Q.60 Sources of income is reflected by
a. personal account.
b. real account .
c. balance sheet.
d. nominal account.
Answer:
(d) Nominal account
Explanation- Nominal accounts reflect the sources of income and also the amount spent on various items.
Q.61 Examples of liabilities other than current liabilities are
a. machinery and furniture.
b. long-term loans.
c. debtors and stock.
d. short-term loans and creditors.
Answer:
(b) Long-term loans
Explanation- Long-term loans are the examples of fixed liabilities which are repaid after long period of time.
Q.62 The left hand side of ledger is known as
a. debit side.
b. credit side.
c. cash side.
d. bank side.
Answer:
(a) Debit side
Explanation- The left-hand side of ledger is known as the debit side.
Q.63 The process of making both the side of an account equal is known as
a. equalizer.
b. balancing of accounts.
c. cash accounting.
d. capital accounting.
Answer:
(b) Balancing of account.
Explanation- For example, if total of credit side is more than the debit side of any account the difference of amount will be recorded as Balance c/d on debit side and vice versa.
Q.64 After posting the accounts in the Ledger, a statement is prepared to show separately the debit and credit balances. Such a statement is known as the
a. Journal.
b. Voucher.
c. Balance Sheet.
d. Trial Balance.
Answer:
(d) Trial Balance
Explanation- It is prepared by listing each and every account and entering in separate columns the totals of the debit and credit sides.
Q.65 ‘‘To ascertain arithmetical accuracy of ledger accounts’’ is the objective of
a. Journal.
b. Ledger.
c. Trial Balance.
d. Balance Sheet.
Answer:
(c) Trial balance
Explanation- The Trial Balance enables one to establish whether the posting and other accounting processes have been carried out without committing arithmetical errors.
Q.66 Commonly used method for preparing Trial Balance is
a. the balance method.
b. the totals method.
c. the subtraction method.
d. the evaluation method.
Answer:
(a) The balance method
Explanation- In this method, only the debit or credit balances are entered separately in two columns.
Q.67 The other name of Total Method is called as
a. Net Trial Balance
b. Gross Trial Balance.
c. Total Balance
d. Balance Method.
Answer:
(b) Gross Trial Balance
Explanation- In this, the total of each side is entered respectively.
Q.68 ‘ To help in preparation of final accounts’ is the objective of
a. Journal.
b. Ledger.
c. Balance Sheet.
d. Trial Balance.
Answer:
(d) Trial Balance
Explanation- Financial statements are normally prepared on the basis of the Trial balance.
Q.69 Liabilities plus Capital is equal to
a. Liabilities.
b. Drawings.
c. Assets.
d. Capital.
Answer:
(c) Assets
Explanation- The equation says that the assets of a business are always equal to the claims of owners and the outsiders.
Q.70 Net Trial Balance is the other name of
a. Totals Method.
b. Net Trial Method.
c. Balance Method.
d. Gross Trial Method.
Answer:
(c) Balance Method
Explanation- The other name of Net Trial Balance is Balance Method. This is commonly used method of preparing Trial Balance.
Q.71 The systems of recording transactions in the books of accounts are generally classified into
a. two types.
b. three types.
c. five types.
d. six types.
Answer:
(a) Two types
Explanation- The systems of recording transactions in the books of accounts are generally classified into two types, viz. Double Entry system and Single Entry system.
Q.72 The process of transferring journal entry to individual accounts is called
a. transfer.
b. credit.
c. posting.
d. debit.
Answer:
(c) Posting
Explanation- The process of transferring each entry from journal to ledger is called Posting.
Q.73 The item which records the page number of the original book of entry on which relevant transaction is recorded is known as
a. amount.
b. journal folio.
c. ledger folio.
d. date.
Answer:
(b) Journal Folio
Explanation- It records the page number of the original book of entry on which relevant transaction is recorded. This column is filled up at the time of posting.
Q.74 Balance b/d is known as
a. balance carried down.
b. balance bring down.
c. balance carry down.
d. balance brought down.
Answer:
(d) Balance brought down
Explanation- Assets will show a debit balance. Such accounts will be opened and the relevant amounts written on the debit side as ‘‘To Balance brought down.’’
Q.75 Balance c/d is known as
a. balance carried down.
b. balance bring down.
c. balance carry down.
d. balance brought down.
Answer:
(a) Balance carried down
Explanation- It is used for closing the ledger balance.