Important MCQ questions for Class 11 Accountancy Chapter 4-Recording of Transaction-2
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MCQ Questions for Chapter 4-Recording of Transaction-2 class 11 Accountancy (Questions set-1)
Accounting - MCQ on Recoding Of Transactions -II
Class XI
Q.1 The system, by which transactions of a class are first recorded in the book and on the basis of which ledger accounts are prepared is known as the
a. Accounting system.
b. Double Entry system of accounting.
c. Practical System of Accounting.
d. Voucher system.
Answer:
(c) Practical System of Accounting
Explanation- The system by which transactions of a class are first recorded in the book, specially meant for it, and on the basis of which ledger accounts are then prepared, is known as the ‘Practical System of Accounting.’
Q.2 The books of original or prime entry are also called
a. subsidiary books.
b. principal book.
c. trial balance.
d. balance sheet.
Answer:
(a) Subsidiary books.
Explanation- The books of original or prime entry are also called Subsidiary books since ledger accounts are prepared on their basis and without this further process of ledger posting, a Trial balance cannot be taken out.
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 The other name of ‘Practical System of Accounting’ is
a. Hindi System.
b. Spanish System.
c. Sanskrit System.
d. English System.
Answer:
(d) English System
Explanation- The other name of ‘Practical System of Accounting’ is ‘English System.’
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 Ledger is a
a. subsidiary book.
b. principal book.
c. trial balance.
d. balance sheet.
Answer:
(a) Subsidiary book.
Explanation- Posting is done from the journal to the ledger that is why it is a subsidiary book.
Q.8 To record receipts and payments of cash, we maintain -
a. cash book.
b. sales book.
c. purchases book.
d. journal.
Answer:
(a) Cash book
Explanation- Cash book is prepared to record receipts and payments of cash and bank transactions.
Q.9 To record credit purchases of goods, we prepare
a. cash book.
b. purchases return book.
c. purchases book.
d. bills payable book.
Answer:
(c) Purchases book
Explanation- Purchases book is prepared to record credit purchases of goods dealt in or of the materials and stores required in the factory.
Q.10 To record the returns made by customers we maintain
a. cash book.
b. bills payable book.
c. purchases return book.
d. sales return book.
Answer:
(d) Sales Return book
Explanation- To record the returns made by customers, sales return book is prepared by firm.
Q.11 Cash book is a special
a. journal.
b. ledger.
c. trial balance.
d. balance sheet.
Answer:
(a) Journal
Explanation- Cash Book is a special Journal. It is so because transactions are directly recorded in it.
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. It is an easy medium to transfer money.
Q.13 To record the issue of promissory notes, we maintain
a. journal.
b. bills payables book.
c. sales book.
d. cash book.
Answer:
(b) Bills Payable book
Explanation- Bills Payable Book is prepared to record the issue of promissory notes or hundis to other parties.
Q.14 To record the credit sales of goods, we prepare
a. sales book.
b. purchases book.
c. cash book.
d. bills payable book.
Answer:
(a) Sales book
Explanation- Sales book is prepared to record the credit sale of goods dealt in by the firm.
Q.15 Cash book is of
a. two types.
b. four types.
c. eight types.
d. three types.
Answer:
(d) Three types
Explanation- The main cash book may be of three types:
(1) Simple cash book
(2) Two-column cash book, and
(3) Three-column cash book
Q.16 Cash book is a part of the
a. journal.
b. ledger.
c. trial balance.
d. balance sheet.
Answer:
(b) Ledger
Explanation- Cash book is a part of the ledger also. Hence, it has also to be treated as the principal book. The cash book is, thus, both a subsidiary book and a principal book.
Q.17 The cash book which appears like an ordinary account, with one account column on each side is known as
a. two-column cash book.
b. three-column cash book.
c. simple cash book.
d. four-column cash book.
Answer:
(c) Simple cash book
Explanation- Such a cash book appears like an ordinary account with one account column on each side. Thus, it is called simple cash book. It has cash column only.
Q.18 The other name of simple cash book is
a. single-column cash book.
b. two-column cash book.
c. three-column cash book.
d. four-column cash book.
Answer:
(a) Single-column cash book
Explanation- Simple cash book is also known as Single-column cash book.
Q.19 The left-hand side of simple cash book records
a. prepaid.
b. payments.
c. receipts.
d. outstanding.
Answer:
(c) Receipts
Explanation- The left-hand side of simple cash book records receipts of cash. Simple cash book contains cash column only.
Q.20 The right-hand side of simple cash book records
a. receipts in advance.
b. outstanding.
c. receipts.
d. payments.
Answer:
(d) Payments
Explanation- The left-hand side records receipts of cash and the right-hand side the payments. Hence, it is also called a ‘single column cash book’.
Q.21 Name the primary book of accounts in which transactions are originally recorded in a chronological order.
a. cash book.
b. journal.
c. sales book.
d. purchases book.
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 The page number in the ledger where the relevant account will be found is known as
a.L.F.
b. J.F.
c. Particulars.
d. Date.
Answer:
(a) L.F.
Explanation- L.F.- the page number in the ledger where the relevant account will be found is written.
Q.23 When discount allowed and discount received accounts are added along with the columns of cash receipts and cash payments it comes under the
a. double-column cash book.
b. single-column cash book.
c. four-column cash book.
d. three-column cash book.
Answer:
(a) Double-column cash book
Explanation- If alongwith the columns for amounts to record cash receipts and cash payments, another column is added on each side to record the cash discount allowed or the cash discount received, it will be a double-column cash book.
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 maintained is
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, the entire amount due from him is not realised. The unrealised amount is a loss to business, the 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 known as
a. bad debts.
b. cash withdrawn.
c. debtors.
d. bad debts recovered.
Answer:
(d) Bad Debts recovered
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 known as Bad Debts Recovered.The entry of bad debts recovered is:
Cash/Bank A/c Dr.
To Bad Debts Recovered A/c
MCQ Questions for Chapter 4-Recording of Transaction-2 class 11 Accountancy (Questions set-2)
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 more 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 Discount is 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 expense, 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.
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 following account is credited
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 expenses is the part of
a. Long-term liability.
b. Current assets.
c. Current Liability.
d. Fixed assets.
Answer:
(b) Current assets
Explanation- Prepaid expenses is the part of current assets which can be converted into cash within a period of one year.
Q.43 Good destroyed by fire or accident are recorded under the following account-
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. It is given on a purchase of higher quantity.
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.
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.
Q.51 Fall in the value of assets is known as
a. outstanding expenses.
b. prepaid expenses.
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 diminition 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 of business.
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
a. loss to the business.
b. gain to the business.
c. prepaid expense.
d. sundry expense.
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, hence, the order in which they occur enters the record permanently.
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 information regarding business.
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- 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 and public deposits.
c. debtors and stock.
d. short-term loans and creditors.
Answer:
(b) Long-term loans and public deposits
Explanation- Long-term loans and public deposits are the examples of fixed liabilities which cannot be paid off within a period of one year.
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 total of both the sides of account equal and to write the difference in the side whose total is short is known as
a. totalling of accounts.
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 on the credit side.
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 journal entry to individual accounts 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 Transactions which are recorded in three-column cash book which relates to both cash and bank is to be called as
a. compound entry.
b. contra entry.
c. journal entry.
d. cash entry.
Answer:
(b) Contra entry
Explanation- Some transactions are recorded in three-column cash book which relates to both cash and bank i.e. balance of one will decrease and other will increase due to such transactions. Such transactions are entered on both the sides of cash book. Such entries are known as Contra entries.