Accountancy · Sample Paper 1

General instructions

Section A · Objective

1. Question 11 mark

   Which of these is an internal user of accounting information?

   1. A.creditors
   2. B.government
   3. C.management
   4. D.investors
2. Question 21 mark

   Goods taken by the owner for personal use are called

   1. A.capital
   2. B.drawings
   3. C.expenses
   4. D.losses
3. Question 31 mark

   ‘Business is separate from its owner’ is the

   1. A.going concern concept
   2. B.business entity concept
   3. C.money measurement concept
   4. D.dual aspect concept
4. Question 41 mark

   Valuing closing stock at cost or market price, whichever is lower, follows the

   1. A.consistency concept
   2. B.conservatism concept
   3. C.materiality concept
   4. D.matching concept
5. Question 51 mark

   If capital is ₹80 000 and liabilities are ₹20 000, total assets are

   1. A.₹60 000
   2. B.₹1 00 000
   3. C.₹80 000
   4. D.₹20 000
6. Question 61 mark

   An increase in an expense is

   1. A.debited
   2. B.credited
   3. C.not recorded
   4. D.shown in capital
7. Question 71 mark

   Trade discount is

   1. A.recorded in the cash book
   2. B.shown in the P&L account
   3. C.not recorded in the books
   4. D.credited to the customer
8. Question 81 mark

   Cash deposited into the bank is a

   1. A.single entry
   2. B.contra entry
   3. C.compound entry
   4. D.closing entry
9. Question 91 mark

   Credit purchase of furniture is recorded in the

   1. A.purchases book
   2. B.journal proper
   3. C.cash book
   4. D.sales book
10. Question 101 mark

    Bank charges debited by the bank appear first in the

    1. A.cash book
    2. B.passbook
    3. C.ledger
    4. D.journal
11. Question 111 mark

    Cheques issued but not yet presented make the passbook balance

    1. A.lower than the cash book
    2. B.higher than the cash book
    3. C.equal
    4. D.negative
12. Question 121 mark

    A trial balance checks

    1. A.full accuracy
    2. B.arithmetical accuracy
    3. C.errors of principle
    4. D.compensating errors
13. Question 131 mark

    Wages paid for installing a new machine, debited to Wages A/c, is an error of

    1. A.omission
    2. B.commission
    3. C.principle
    4. D.compensation
14. Question 141 mark

    Under the written down value method, depreciation

    1. A.is the same every year
    2. B.falls every year
    3. C.rises every year
    4. D.is zero after five years
15. Question 151 mark

    Which asset is generally not depreciated?

    1. A.building
    2. B.machinery
    3. C.land
    4. D.furniture
16. Question 161 mark

    A reserve is

    1. A.a charge against profit
    2. B.an appropriation of profit
    3. C.a liability
    4. D.an asset
17. Question 171 mark

    Carriage inwards is shown in the

    1. A.P&L account
    2. B.trading account
    3. C.balance sheet
    4. D.cash book
18. Question 181 mark

    Gross profit is

    1. A.sales − cost of goods sold
    2. B.net profit + expenses
    3. C.sales − all expenses
    4. D.capital − drawings
19. Question 191 mark

    Outstanding salary is shown in the balance sheet as a

    1. A.current asset
    2. B.current liability
    3. C.fixed asset
    4. D.capital
20. Question 201 mark

    Prepaid insurance is

    1. A.added to insurance in P&L
    2. B.deducted from insurance and shown as an asset
    3. C.shown as a liability
    4. D.ignored

Section B · Short answer

1. Question 213 marks

   Explain the going concern, matching and consistency concepts.

2. Question 223 marks

   Show the accounting equation for: (i) Started business with cash ₹1 00 000, (ii) Bought goods on credit ₹30 000, (iii) Paid rent ₹5 000.

3. Question 233 marks

   What is a petty cash book? Explain the imprest system.

4. OR

   Question 233 marks

   Distinguish between a debit note and a credit note.

5. Question 243 marks

   Rectify (before preparing the trial balance): (i) Purchases book undercast by ₹1 000. (ii) Sales of ₹2 500 to Ram posted to his account as ₹5 200. (iii) Credit purchase of ₹3 000 from Hari not recorded at all.

6. Question 253 marks

   Machinery costing ₹50 000 has a scrap value of ₹5 000 and a useful life of 9 years. Find the annual depreciation and the book value after 3 years under the straight line method.

7. Question 263 marks

   Distinguish between capital and revenue expenditure with two examples of each.

Section C · Long answer I

1. Question 274 marks

   Prepare a bank reconciliation statement on 31 March 2025: balance as per cash book ₹15 000 (debit); cheques issued but not presented ₹4 000; cheques deposited but not collected ₹2 500; bank charges ₹200; interest credited by bank ₹600.

2. Question 284 marks

   Journalise: (i) Sold goods to Mohan ₹20 000 at 10% trade discount and 2% cash discount; he paid immediately. (ii) Withdrew goods ₹3 000 for personal use. (iii) Paid salary ₹8 000 by cheque.

3. OR

   Question 284 marks

   What is a suspense account? Give two errors that would need it and two that would not.

4. Question 294 marks

   Explain four differences between a provision and a reserve.

Section D · Long answer II

1. Question 306 marks

   Journalise and post to the Cash Account: Apr 1 started business with cash ₹50 000; Apr 5 bought goods for cash ₹20 000; Apr 10 sold goods for cash ₹15 000; Apr 15 paid rent ₹2 000; Apr 20 bought furniture for cash ₹5 000.

2. Question 316 marks

   A machine was bought on 1 April 2022 for ₹1 00 000. Depreciation is charged at 10% p.a. on the written down value. Prepare the Machinery Account for three years ending 31 March each year.

3. OR

   Question 316 marks

   A machine costing ₹60 000 bought on 1 April 2023 (depreciation 10% p.a., straight line) was sold on 31 March 2025 for ₹45 000. Prepare the Machinery Account and find the profit or loss on sale.

4. Question 326 marks

   From the following, prepare the Trading Account for the year ended 31 March 2025: Opening stock ₹20 000; Purchases ₹1 20 000; Purchase returns ₹5 000; Sales ₹2 00 000; Sales returns ₹10 000; Wages ₹15 000; Carriage inwards ₹3 000; Closing stock ₹30 000.

5. Question 336 marks

   Show the treatment in the P&L account and balance sheet of: (i) Salaries ₹48 000, two months outstanding (salary ₹4 000 per month). (ii) Insurance ₹6 000 paid for a year from 1 Oct 2024 (accounts close 31 March 2025). (iii) Debtors ₹50 000; bad debts ₹2 000; create a provision for doubtful debts at 5%.

6. Question 346 marks

   Record in a two-column cash book (cash and bank): Opening cash ₹10 000, bank ₹25 000; deposited ₹5 000 into bank; received a cheque ₹8 000 from a customer and deposited it; paid a supplier ₹6 000 by cheque; cash sales ₹4 000; withdrew ₹2 000 from bank for office use.

7. OR

   Question 346 marks

   Prepare a trial balance from these balances: Capital ₹1 00 000; Drawings ₹10 000; Purchases ₹60 000; Sales ₹90 000; Furniture ₹25 000; Debtors ₹20 000; Creditors ₹15 000; Cash ₹40 000; Rent ₹6 000; Salary ₹14 000; Bank loan ₹20 000; Commission received ₹4 000; Stock (opening) ₹54 000.