Accountancy · Sample Paper 3

General instructions

Section A · Objective

1. Question 11 mark

   Which of these is an external user of accounting information?

   1. A.owner-manager
   2. B.employees as managers
   3. C.banks and lenders
   4. D.the accountant
2. Question 21 mark

   Assets that can be converted into cash within a year are

   1. A.fixed assets
   2. B.current assets
   3. C.intangible assets
   4. D.fictitious assets
3. Question 31 mark

   Recording only transactions that can be expressed in money follows the

   1. A.money measurement concept
   2. B.dual aspect concept
   3. C.accrual concept
   4. D.materiality concept
4. Question 41 mark

   Which accounting standard deals with disclosure of accounting policies?

   1. A.AS-1
   2. B.AS-2
   3. C.AS-6
   4. D.AS-10
5. Question 51 mark

   Purchase of machinery for cash increases one asset and

   1. A.increases capital
   2. B.decreases another asset
   3. C.increases liability
   4. D.decreases capital
6. Question 61 mark

   Rent received in advance is a

   1. A.revenue
   2. B.liability
   3. C.asset
   4. D.expense
7. Question 71 mark

   Cash discount allowed to a debtor is

   1. A.debited to Discount Allowed A/c
   2. B.credited to Discount Allowed A/c
   3. C.not recorded
   4. D.recorded only in the sales book
8. Question 81 mark

   The total of the sales book is posted to the

   1. A.debit of Sales A/c
   2. B.credit of Sales A/c
   3. C.debit of Cash A/c
   4. D.credit of Purchases A/c
9. Question 91 mark

   Credit sales of goods are recorded in the

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

    A bank reconciliation statement is prepared by the

    1. A.bank
    2. B.account holder
    3. C.auditor
    4. D.government
11. Question 111 mark

    A cheque deposited and dishonoured, recorded only in the passbook, makes the passbook balance

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

    A trial balance is prepared

    1. A.before the ledger
    2. B.after balancing the ledger accounts
    3. C.after final accounts
    4. D.at the start of the year
13. Question 131 mark

    Purchase of furniture ₹5 000 recorded as ₹500 in the journal is an error of

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

    Depreciation is a

    1. A.cash expense
    2. B.non-cash expense
    3. C.liability
    4. D.revenue
15. Question 151 mark

    Annual depreciation by SLM on a machine costing ₹1 00 000 with scrap ₹10 000 and life 9 years is

    1. A.₹10 000
    2. B.₹11 111
    3. C.₹9 000
    4. D.₹12 000
16. Question 161 mark

    A specific reserve is created for

    1. A.any purpose
    2. B.a specific purpose, like debenture redemption
    3. C.paying taxes only
    4. D.paying salaries
17. Question 171 mark

    Opening stock is shown on the

    1. A.credit side of the trading account
    2. B.debit side of the trading account
    3. C.liability side of the balance sheet
    4. D.credit side of P&L
18. Question 181 mark

    Office rent is shown in the

    1. A.trading account
    2. B.profit and loss account
    3. C.balance sheet
    4. D.capital account
19. Question 191 mark

    Depreciation on machinery is shown in the P&L account and

    1. A.added to machinery in the balance sheet
    2. B.deducted from machinery in the balance sheet
    3. C.added to capital
    4. D.ignored
20. Question 201 mark

    Interest on capital, when given as an adjustment, is

    1. A.deducted from capital
    2. B.added to capital and debited to P&L
    3. C.credited to P&L
    4. D.shown as an asset

Section B · Short answer

1. Question 213 marks

   Explain the meaning of (i) revenue (ii) expense (iii) liability, with an example each.

2. Question 223 marks

   Classify into personal, real and nominal accounts: (i) Machinery (ii) Ram & Co. (iii) Salary (iv) Capital (v) Goodwill (vi) Commission received.

3. OR

   Question 223 marks

   Explain the prudence (conservatism) concept with two examples.

4. Question 233 marks

   Prepare a simple cash book from: May 1 cash in hand ₹15 000; May 5 sold goods for cash ₹8 000; May 10 paid wages ₹2 000; May 20 bought stationery ₹500; May 25 paid rent ₹3 000.

5. Question 243 marks

   Explain three causes of difference between the cash book and passbook that arise because of timing.

6. Question 253 marks

   A machine costing ₹60 000 is depreciated at 20% p.a. on the written down value. Find the book value at the end of the third year.

7. Question 263 marks

   Distinguish between a trading account and a profit and loss account on three bases.

Section C · Long answer I

1. Question 274 marks

   Prepare a bank reconciliation statement on 31 March 2025: bank overdraft as per cash book ₹10 000; cheques issued but not presented ₹4 000; cheques deposited but not cleared ₹6 000; interest on overdraft ₹500 debited only in the passbook.

2. OR

   Question 274 marks

   What is a purchases return book? Record: June 10 returned goods to Mohan ₹2 000; June 18 returned goods to Sohan ₹1 500. Show the posting.

3. Question 284 marks

   Rectify the following before preparing the trial balance: (i) Sales book overcast by ₹500. (ii) Purchase of ₹2 000 from Ravi not posted to his account. (iii) Wages ₹1 000 debited to Salaries A/c. (iv) Discount received ₹300 posted to the debit of Discount A/c.

4. Question 294 marks

   What are the causes of depreciation? Explain any four.

Section D · Long answer II

1. Question 306 marks

   Journalise the following in the books of Amit: (i) Started business with cash ₹2 00 000 and building ₹1 00 000. (ii) Deposited ₹50 000 into the bank. (iii) Bought goods from Rohit for ₹40 000 at 10% trade discount. (iv) Paid Rohit by cheque, receiving ₹600 discount. (v) Sold goods for cash ₹30 000. (vi) Paid salary ₹8 000.

2. Question 316 marks

   On 1 April 2022 a firm bought a machine for ₹50 000 and spent ₹10 000 on installation. Depreciation is 10% p.a. (SLM). On 31 March 2024 the machine was sold for ₹40 000. Prepare the Machinery Account for two years.

3. OR

   Question 316 marks

   What is a provision? Distinguish between a provision and a reserve on five bases.

4. Question 326 marks

   From the following, prepare a Trading Account and find the gross profit ratio for the year ended 31 March 2025:

   Opening stock ₹25 000; Purchases ₹1 20 000; Returns outward ₹5 000; Sales ₹2 00 000; Returns inward ₹10 000; Carriage inwards ₹3 000; Wages ₹12 000; Closing stock ₹30 000.

5. Question 336 marks

   Show how the following adjustments will appear in the final accounts: (i) Closing stock ₹20 000 (ii) Outstanding wages ₹2 000 (iii) Prepaid insurance ₹1 000 (iv) Depreciation on furniture ₹1 500 (v) Interest on capital ₹3 000 (vi) Accrued commission ₹800.

6. OR

   Question 336 marks

   What is a balance sheet? Explain marshalling of assets and liabilities by the order of liquidity and the order of permanence.

7. Question 346 marks

   What is a suspense account? When is it opened? Rectify the following using a suspense account (trial balance short on the debit side by ₹1 200): (i) Purchases book undercast by ₹1 000. (ii) Salary ₹200 not posted to the Salary account.