Accountancy · Sample Paper 2

General instructions

Section A · Objective

1. Question 11 mark

   The final step of the accounting process is

   1. A.recording
   2. B.classifying
   3. C.summarising
   4. D.communicating
2. Question 21 mark

   Amount owed by a business to its suppliers for goods bought on credit is shown as

   1. A.debtors
   2. B.creditors
   3. C.capital
   4. D.drawings
3. Question 31 mark

   Recording an asset at the price paid for it follows the

   1. A.dual aspect concept
   2. B.historical cost concept
   3. C.matching concept
   4. D.realisation concept
4. Question 41 mark

   Revenue is recognised when goods are sold and the buyer becomes liable to pay. This is the

   1. A.accrual concept
   2. B.revenue recognition (realisation) concept
   3. C.money measurement concept
   4. D.consistency concept
5. Question 51 mark

   If total assets are ₹1 50 000 and capital is ₹1 00 000, liabilities are

   1. A.₹2 50 000
   2. B.₹50 000
   3. C.₹1 00 000
   4. D.₹1 50 000
6. Question 61 mark

   A source document prepared when goods are sold on credit is a

   1. A.cash memo
   2. B.sales invoice (bill)
   3. C.receipt
   4. D.debit note
7. Question 71 mark

   Under the modern approach, a decrease in a liability is

   1. A.debited
   2. B.credited
   3. C.ignored
   4. D.added to capital
8. Question 81 mark

   Goods returned by a customer are recorded in the

   1. A.purchases return book
   2. B.sales return book
   3. C.sales book
   4. D.cash book
9. Question 91 mark

   The balance of the petty cash book is

   1. A.a liability
   2. B.an asset
   3. C.an expense
   4. D.an income
10. Question 101 mark

    Interest credited by the bank appears first in the

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

    Cheques deposited but not yet credited by the bank make the cash book (debit) balance

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

    Which error is NOT disclosed by the trial balance?

    1. A.wrong totalling of sales book
    2. B.posting to the wrong side
    3. C.error of complete omission
    4. D.wrong balancing of an account
13. Question 131 mark

    Credit sale to Ram ₹5 000 posted to Shyam's account is an error of

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

    Under the straight line method, depreciation is charged on

    1. A.written down value
    2. B.original cost
    3. C.market value
    4. D.scrap value
15. Question 151 mark

    Provision for doubtful debts is created on

    1. A.creditors
    2. B.debtors
    3. C.stock
    4. D.cash
16. Question 161 mark

    A secret reserve is created by

    1. A.overstating assets
    2. B.understating assets
    3. C.showing extra profit
    4. D.issuing shares
17. Question 171 mark

    Wages paid for manufacturing are shown in the

    1. A.profit and loss account
    2. B.trading account
    3. C.balance sheet
    4. D.capital account
18. Question 181 mark

    Net profit is transferred to the

    1. A.trading account
    2. B.capital account
    3. C.drawings account
    4. D.cash account
19. Question 191 mark

    Accrued interest on investments is shown as a

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

    Closing stock given in adjustments is shown in the

    1. A.trading account only
    2. B.balance sheet only
    3. C.trading account and balance sheet
    4. D.profit and loss account

Section B · Short answer

1. Question 213 marks

   State any three qualitative characteristics of accounting information.

2. Question 223 marks

   Prepare the accounting equation for: (i) Started business with cash ₹2 00 000 and furniture ₹50 000; (ii) Purchased goods for cash ₹40 000; (iii) Sold goods costing ₹20 000 for ₹25 000 on credit.

3. OR

   Question 223 marks

   State the rules of debit and credit for (i) assets (ii) liabilities (iii) expenses under the modern approach, with one example each.

4. Question 233 marks

   Record the following in the purchases book of M/s Sharma Traders: May 3 bought from Arora & Co. 20 shirts @ ₹500, trade discount 10%; May 18 bought from Gupta Bros. 10 trousers @ ₹800.

5. Question 243 marks

   Give any three reasons why the balance shown by the cash book may differ from the balance shown by the passbook.

6. Question 253 marks

   A machine was bought for ₹80 000 on 1 April 2023. Depreciation is charged at 10% p.a. on the written down value. Find the depreciation for the first three years.

7. Question 263 marks

   Explain the need for adjustments while preparing final accounts, with two examples.

Section C · Long answer I

1. Question 274 marks

   From the following, prepare a bank reconciliation statement on 31 March 2025: balance as per passbook ₹20 000 (credit); cheques issued ₹6 000 but not presented; cheques deposited ₹4 000 but not credited; bank charges ₹200 debited only in the passbook; interest ₹500 credited only in the passbook.

2. OR

   Question 274 marks

   Explain any four advantages of preparing a bank reconciliation statement.

3. Question 284 marks

   Rectify the following errors (after preparing the trial balance, using a suspense account where needed): (i) Sales book overcast by ₹2 000. (ii) Purchase of machinery ₹15 000 debited to Purchases A/c. (iii) ₹3 000 received from Ravi credited to Rahul. (iv) Discount allowed ₹400 not posted to Discount A/c.

4. Question 294 marks

   Explain the accrual basis and cash basis of accounting. Give two differences.

Section D · Long answer II

1. Question 306 marks

   Journalise the following in the books of Neha: (i) Started business with cash ₹1 00 000. (ii) Bought goods from Kiran ₹30 000 on credit. (iii) Paid rent ₹5 000. (iv) Sold goods to Aman ₹40 000 on credit. (v) Received ₹39 000 from Aman in full settlement. (vi) Withdrew goods ₹2 000 for personal use.

2. Question 316 marks

   On 1 April 2022, a firm bought a machine for ₹1 20 000. On 1 October 2023, it bought another machine for ₹60 000. Depreciation is charged at 10% p.a. by the straight line method; accounts close on 31 March. Prepare the Machinery Account for the years 2022–23 and 2023–24.

3. OR

   Question 316 marks

   Distinguish between the straight line method and the written down value method on six bases.

4. Question 326 marks

   From the following, prepare a Trading and Profit and Loss Account for the year ended 31 March 2025:

   Opening stock ₹15 000; Purchases ₹85 000; Sales ₹1 50 000; Purchases return ₹5 000; Sales return ₹10 000; Wages ₹8 000; Carriage inwards ₹2 000; Salaries ₹12 000; Rent ₹6 000; Advertisement ₹4 000; Interest received ₹1 500. Closing stock ₹20 000.

5. Question 336 marks

   Show how the following will appear in the Profit and Loss Account and Balance Sheet:

   Debtors ₹62 000; Bad debts ₹2 000 (already written off). Additional bad debts ₹2 000 to be written off; create a provision for doubtful debts @ 5% on debtors. Old provision for doubtful debts ₹1 500.

6. OR

   Question 336 marks

   Explain the treatment of (i) outstanding expenses (ii) prepaid expenses (iii) accrued income in the final accounts, with an example and journal entry for each.

7. Question 346 marks

   What is a trial balance? State its objectives. Give four types of errors not disclosed by a trial balance.