PCO-01:
PREPARATORY COURSE IN COMMERCE
Time:
2 Hours Maximum Marks: 50
Note:
All questions are compulsory, each of which carries one mark.
1. Which
of the following equations is correct?
(1) Capital =
Assets — Liabilities (2) Capital = Assets + Liabilities
(3) Assets =
Capital x Liabilities (4) Liabilities = Assets + Capital
Ans:
(1) Capital = Assets — Liabilities
2. The
concept of conservatism takes into account:
(1) All
expected incomes and losses
(2) All
expected losses but no expected incomes
(3) All
expected incomes but no losses
(4) No
expected profits and losses
Ans:
(2) All expected losses but no expected incomes
3. Buying and
selling activity is called:
(1) Commerce
(2) Trade (3) Business (4) Industry
Ans: (2)
Trade
4. Book-
Keeping is:
(1)
Identifying, measuring, recording and classifying business transactions
(2) Analysing
the business transactions
(3)
Classifying the business transactions only
(4)
Interpreting the business transactions only
Ans: (1) Identifying, measuring,
recording and classifying business transactions
5. Purchase
book is meant for recording:
(1) All types
of credit purchases
(3) All cash
purchases
(2) All types
of purchases
(4) Credit
purchases of merchandise only
Ans: (4)
Credit purchases of merchandise only
6. Sales of
goods to Anil for cash should be debited to:
(1) Goods A/C
(2) Cash A/C (3) Sales A/C (4) Anil's A/C
Ans: (2)
Cash A/C
7. Which of
the following statements is false?
(1) Process
of journalising is called posting.
(2) Capital
account is a personal account.
(3) Ledger is
the principal book of entry.
(4) Goodwill
account is a real account.
Ans: (3)
Ledger is the principal book of entry.
8. The debit
balance of a nominal account shows:
(1) Gross
profit (2) Net profit
(3) Gains,
incomes etc. (4) Expenses, losses etc.
Ans: (4)
Expenses, losses etc.
9. An example
of representative personal account is:
(1) Wages (2)
Salary
(3) Prepaid
expenses (4) Cash
Ans: (3)
Prepaid expenses
10. Single
entry system of book- keeping is a:
(1) System of
incomplete records
(2) System of
reliable records
(3) System of
providing true financial position
(4) System of
helping in locating errors.
Ans: (1)
System of incomplete records
11. Furniture
purchased should be debited to:
(1) Goods A/C
(2) Premises A/C
(3) Furniture
A/C (4) Equipment A/C
Ans: (3)
Furniture A/C
12. Which of
the following account is a nominal account?
(1) Capital
A/C (2) Ram's A/C
(3) Vehicle
A/C (4) Wages A/C
Ans: (4)
Wages A/C
13. Ledger
folio is the column in:
(1) Cash book
(2) Journal
(3) Sales
book (4) all of the above
Ans: (4)
all of the above
14. The debit
balance of a personal account indicates:
(1) Amount
receivable (2) Amount payable
(3) Cash in
hand (4) Cash at bank
Ans: (1)
Amount receivable
15. Which of
the following errors shall affect the trial balance?
(1) Error of
principle (2) Compensatory errors
(3) Error of
complete omission (4) Error of partial omission
Ans: (4)
Error of partial omission
16. Returns
outwards Book is kept to record:
(1) Credit
purchases of goods
(3) Returns
of goods sold
(2) Credit
sales of goods
(4) Returns
of goods purchased
Ans: (4)
Returns of goods purchased
17. Prepaid
insurance is:
(1) A
liability (2) An asset (3) A gain (4) A loss
Ans: (2)
An asset
18. The
balance of petty cash book is:
(1) An income
(2) A liability (3) an expense (4) an asset
Ans: (4)
an asset
19. Closing
stock is valued at:
(1) Cost
price or market price whichever is less
(2) Cost
price
(3) Market
price
(4) Cost
price or market price whichever is more
Ans: (1) Cost price or market price
whichever is less
20. Profit
and loss account shows:
(1) Accuracy
of Ledger accounts (2) Capital employed in a business
(3) Financial
position of a business (4) Profit earned by a business
Ans: (4)
Profit earned by a business
21. Rent
outstanding account is:
(1) Personal
A/C (2) Real A/C
(3) Nominal
A/C (4) Representative personal A/C
Ans: (4)
Representative personal A/C
22. Which
of the following will not be shown in balance sheet?
(1) Machinery
(2) Contingent liability
(3) Debtors
(4) Closing stock
Ans: (2) Contingent liability
23. Debit
balance of suspense A/C will be shown on:
(1) The
credit side of Trading A/C
(2) The debit
side of Trading A/C
(3) The
liabilities side of Balance sheet
(4) The
Assets side of Balance sheet
Ans: (4) The Assets side of Balance
sheet
24. All
transactions are recorded first in the journal, therefore, it is called book of:
(1) Original
entries (2) Adjustment entries
(3) Closing
entries (4) Transfer entries
Ans: (1)
Original entries
25. Impersonal
accounts mean:
(1) Only Real
accounts
(2) Personal
accounts
(3) Only
Nominal accounts
(4) Real and
Nominal accounts
Ans: (4)
Real and Nominal accounts
26. Trial
Balance includes:
(1) Only Real
accounts
(2) Real,
Personal and Nominal accounts
(3) Only
Personal accounts
(4) Only
Nominal accounts
Ans: (2)
Real, Personal and Nominal accounts
27. Discount
Allowed accounts have:
(1) A debit
balance
(2) A credit
balance
(3) No
balance
(4) Both the
balance i.e. debit balance and credit balance
Ans: (1)
A debit balance
28. Which of
the following will increase by a credit entry?
(1) Bank
overdraft (2) Goodwill
(3) Purchases
(4) Sales returns
Ans: (1)
Bank overdraft
29. The term
book of prime entry is normally used for:
(1) Ledger
(2) Journal
(3) Sales
Book (4) Purchases Book
Ans: (2)
Journal
30. Which of
the following is not entered in the books of accounts?
(1) Cash
discount (2) Commission received
(3) Interest
received (4) Trade discount
Ans: (4)
Trade discount
31.
Preliminary expenses are an example of:
(1) Capital
expenditure (2) Revenue expenditure
(3) Deferred
Revenue expenditure (4) Capital loss
Ans: (3)
Deferred Revenue expenditure
32. Repairs
of office building will be shown in:
(1)
Manufacturing A/C (2) Trading A/C
(3) Profit
and Loss A/C (4) Balance sheet
Ans: (3)
Profit and Loss A/C
33. Which of
the following items are not charged to Profit and Loss account?
(1) Carriage
inwards (2) Carriage outwards
(3) Bad-debts
(4) Depreciation on furniture
Ans: (1) Carriage inwards
34.
Depreciation on machinery is shown in:
(1)
Manufacturing A/C (2) Trading A/C
(3) Profit
and Loss A/C (4) Balance sheet
Ans: (3)
Profit and Loss A/C
35. Cost of
goods sold is:
(1) Cost of
goods produced + Opening stock — Closing stock
(2) Sales +
Closing stock — Opening stock
(3) Sales —
Closing stock + Opening stock
(4) Purchases
— Opening stock + Closing stock
Ans: (1)
Cost of goods produced + Opening stock — Closing stock
36. If
purchases are Rs. 42,300; sales Rs.67, 450; wages Rs.12, 000; opening stock
Rs.10, 550; And closing stock Rs.12, 000; the Gross Profit would be:
(1) Rs.15,
100 (2) Rs.14, 800 (3) Rs.14, 300 (4) Rs.14, 600
Ans: (4)
Rs.14, 600
37.
Additional money brought into business by the proprietor is a
(1) Capital
receipt (2) Revenue receipt
(3) Capital
profit (4) Revenue profit
Ans: (1)
Capital receipt
38. Balance
sheet is a statement containing the assets and liabilities of a firm.
(1) On a
particular date (2) For a particular period
(3) During a
particular period (4) In the form of an accounts
Ans: (1)
On a particular date
39. Payment
by cheque should be debited to:
(1) Cheque
A/C (2) Cash A/C
(3)
Customer's A/C (4) Bank A/C
Ans: (4)
Bank A/C
40. A
promissory note is written by the:
(1) Buyer (2)
Seller
(3) Bank (4)
All of the above
Ans: (1)
Buyer
41. Credit
purchase of furniture will be recorded in:
(1) Cash book
(2) Purchases Journal
(3) Sales
Journal (4) Journal proper
Ans: (4)
Journal proper
42. Cash
discount is given to the customers on:
(1) Bulk
purchases (2) Cash purchases
(3) Payment
before due date (4) Credit purchases
Ans: (3)
Payment before due date
43. The
packing expenses are shown on the:
(1) Debit
side of profit and loss A/C
(2) Debit
side of trading A/C
(3) Debit
side of manufacturing A/C
(4)
Liabilities side of the balance sheet
Ans: (1)
Debit side of profit and loss A/C
44. Which
of the following items is debited to trading account?
(1) Wages
and salaries (2) Salaries and wages
(3) Salaries
(4) Bonus to employees
Ans: (1) Wages and salaries
45. Income
tax payable is:
(1) A
liability (2) A loss
(3) An Asset
(4) an expense
Ans: (1)
A liability
46. Bank
overdraft is a:
(1) Current
Asset (2) Current Liability
(3) Fixed
Asset (4) Fixed Liability
Ans: (2)
Current Liability
47. Interest
on drawings is:
(1) Expenditure
for the business (2) Loss for the business
(3) Gain for
the business (4) Receipt for the business
Ans: (3) Gain for the business
48.
Outstanding expenses given in trial balance will be shown in:
(1) Trading
A/C (2) Profit and Loss A/C
(3)
Manufacturing A/C (4) Balance sheet
Ans: (4)
Balance sheet
49. A balance
sheet shows:
(1) Only
Current Assets
(2) Only
Current Liabilities
(3) Only
Fixed Assets and Fixed Liabilities
(4) All
Assets and All Liabilities
Ans: (4)
All Assets and All Liabilities
50. Balance
of profit and loss account reflects:
(1) Gross
Profit
(3) Net
Profit
(2) Gross
Loss
(4) Net
Profit or Net Loss
Ans: (4)
Net Profit or Net Loss