Chapter 1 – Introduction to Book- Keeping and Accountancy

Chapter 2 – Meaning and Fundamentals of Double Entry Book-Keeping

Chapter 3 – Journal

Chapter 4 – Ledger

Chapter 5 – Subsidiary Books

Chapter 6 – Bank Reconciliation Statement

Chapter 7 – Depreciation

Chapter 8 – Rectification of Errors

Chapter 9 – Final Accounts of a Proprietary Concern

Chapter 10 – Single Entry System

Introduction to Book- Keeping and Accountancy

Short Questions

1. What is Book-keeping?
Answer: Book-keeping is the process of recording business transactions systematically in the books of accounts.

2. What are goods in accounting?
Answer: Goods are items a trader buys or manufactures for sale to earn profit.

3. What is capital in a business?
Answer: Capital is the amount invested by the owner in the business.

4. What are drawings?
Answer: Drawings are cash or goods withdrawn by the owner for personal use.

5. What is goodwill?
Answer: Goodwill is the reputation of a business valued in monetary terms.

6. What is a debtor?
Answer: A debtor is a person who owes money to the business for goods or services on credit.

7. What is a cash transaction?
Answer: A cash transaction involves immediate payment or receipt of cash.

8. What is a trade discount?
Answer: Trade discount is an allowance given on the catalogue price of goods at the time of sale.

9. What is a solvent person?
Answer: A solvent person has assets equal to or more than their liabilities.

10. What is the accrual basis of accounting?
Answer: Accrual basis records revenue when earned and expenses when incurred, regardless of cash flow.

Long Questions

1. Explain the importance of book-keeping for a business.
Answer: Book-keeping maintains permanent records of transactions, helping track profit, loss, assets, and liabilities. It provides financial information for decision-making, controls business activities, and serves as evidence in legal disputes. It also helps calculate tax liabilities accurately.

2. What is the difference between book-keeping and accountancy?
Answer: Book-keeping involves recording and classifying transactions, forming the primary stage of accounting. Accountancy includes book-keeping, plus summarizing, analyzing, and interpreting financial data. Book-keeping is done by junior staff, while accountancy requires senior staff with analytical skills.

3. Describe the objectives of book-keeping.
Answer: Book-keeping aims to record all financial transactions systematically and accurately. It provides a permanent record for future reference, helps determine profit or loss, and tracks assets and liabilities. It also compares business progress with previous years.

4. What are the qualitative characteristics of accounting information?
Answer: Accounting information must be reliable for accurate judgments, relevant to influence decisions, understandable to users, and comparable across firms or periods. These qualities ensure financial data is useful, clear, and consistent for stakeholders.

5. Explain the cash basis of accounting with an example.
Answer: In cash basis accounting, revenue and expenses are recorded only when cash is received or paid. For example, a doctor records fees when patients pay cash, not when services are provided. This method is simple but less comprehensive.

6. What is the dual aspect concept in accounting?
Answer: The dual aspect concept states that every transaction has two effects, a debit and a credit. For example, if a business buys furniture for cash, cash decreases (credit), and furniture increases (debit). This forms the basis of double-entry book-keeping.

7. What is the importance of accounting standards?
Answer: Accounting standards ensure uniformity, comparability, and reliability in financial statements. They help accountants follow consistent practices, make financial data understandable, and meet legal requirements. This promotes trust and better decision-making for stakeholders.

8. Explain the conservatism concept in accounting with an example.
Answer: The conservatism concept advises recording potential losses but not anticipating profits. For example, if closing stock is valued at ₹25,000 (cost) or ₹35,000 (market), the lower cost of ₹25,000 is recorded to avoid overstating assets.

9. What is the difference between capital and revenue expenditure?
Answer: Capital expenditure is for acquiring or improving fixed assets, like buying machinery, benefiting the business long-term. Revenue expenditure covers daily operating costs, like rent or salaries, with short-term benefits. Capital expenditure is non-recurring, while revenue expenditure is regular.

10. What is the role of International Financial Reporting Standards (IFRS)?
Answer: IFRS, issued by the IASB, standardizes how transactions are reported globally, improving financial reporting consistency. It ensures financial statements are comparable and reliable worldwide. In India, IFRS is adapted as Ind AS for compatibility with local practices.

Chapter 1 – Introduction to Book- Keeping and Accountancy

Chapter 2 – Meaning and Fundamentals of Double Entry Book-Keeping

Chapter 3 – Journal

Chapter 4 – Ledger

Chapter 5 – Subsidiary Books

Chapter 6 – Bank Reconciliation Statement

Chapter 7 – Depreciation

Chapter 8 – Rectification of Errors

Chapter 9 – Final Accounts of a Proprietary Concern

Chapter 10 – Single Entry System

Introduction to Book- Keeping and Accountancy

Introduction

Book-keeping is the process of recording all business transactions systematically. Businesses and organizations carry out activities that involve money or things of monetary value. These transactions are recorded to help make decisions about whether the business is profitable, sustainable, or needs changes. This information is useful not only to owners and managers but also to stakeholders like the government, investors, customers, employees, and researchers.

Evolution of Accounting

• Ancient India: During Chandragupta Maurya’s time, Kautilya’s book Arthashastra mentioned ways to maintain accounting records, later called “Deshi Nama.”
• Early Civilization: Agents managing wealthy people’s properties kept periodic accounts. Debit and credit records existed as early as the 12th century.
• 1494: Luca Pacioli, an Italian merchant, introduced the Double-Entry Book-keeping System, which became the foundation of modern accounting.
• Industrial Revolution (18th-19th Century): Large-scale businesses and Joint Stock Companies emerged, separating ownership from management. This led to the need for detailed financial records to protect owners and investors.
• 20th Century: Management Accounting developed to help managers analyze financial data for decision-making.
• 21st Century: Accounting evolved into Social Responsibility Accounting due to the growth of business activities, making it essential for modern businesses.

1.1 Meaning and Definition of Book-keeping

Book-keeping is the process of recording business transactions in an organized and systematic way. It involves documenting all financial transactions date-wise to get accurate results at the end of the accounting year.
Definitions:

• Richard E. Strahelm: Book-keeping is the art of analyzing, recording, reporting, and interpreting business transactions for effective control.
• J.R. Batliboi: It is the art of recording business dealings in a set of books.
• Nocth Cott: It involves recording the monetary aspects of financial transactions in the books of accounts.
• R.N. Carter: It is the science and art of correctly recording transactions involving money or money’s worth.

Features of Book-keeping:

• Records day-to-day business transactions.
• Only financial transactions are recorded.
• Records are prepared for a specific period and kept for future reference.
• Follows specific rules and regulations.
• Involves scientific and systematic recording.

Objectives of Book-keeping:

• Keep a complete and accurate record of financial transactions systematically.
• Record transactions date-wise and account-wise.
• Serve as a permanent record for evidence when needed.
• Determine the profit or loss of the business for the financial year.
• Track total assets and liabilities.
• Know what the business owes others and what others owe the business.
• Compare the current year’s performance with previous years or other businesses.

1.2 Importance of Book-keeping

Book-keeping is crucial because:

• Record Keeping: It permanently records transactions, as human memory cannot retain all details.
• Financial Information: Provides details about profits, losses, assets, liabilities, investments, and stock.
• Decision Making: Helps businessmen make informed decisions based on financial data.
• Control: Enables executives to monitor and control business activities.
• Evidence: Provides financial records as evidence in legal disputes.
• Tax Liability: Helps calculate taxes like Income Tax, Property Tax, and GST.

Utility of Book-keeping:

• Owner: Tracks profits, losses, assets, and liabilities.
• Management: Assists in planning, decision-making, and controlling business activities.
• Investors: Helps decide whether to invest based on financial health.
• Customers: Assures them about the business’s ability to supply goods.
• Government: Simplifies tax collection.
• Lenders: Helps assess whether the business is financially stable for loans.
• Development: Supports business growth through accurate financial insights.

1.3 Difference between Book-keeping and Accountancy

1.4 Meaning and Definition of Accountancy

Accountancy is the broader field that includes book-keeping. It involves recording, classifying, and reporting business transactions, following established accounting principles.
Definitions:

• Kohler: Accountancy is the entire body of accounting theory and processes.
• Prof. Robert N. Anthony: It is a system for collecting, summarizing, analyzing, and reporting business transactions in monetary terms.

1.5 Basis (Methods) of Accounting

There are three main methods of accounting:

Cash Basis:

• Records only actual cash receipts and payments.
• Revenue is recognized when cash is received, and expenses when cash is paid.
• Example: A doctor records fees only when patients pay in cash.
• Used by professionals (e.g., doctors, lawyers) and not-for-profit organizations.

Accrual (Mercantile) Basis:

• Records revenue when earned and expenses when incurred, regardless of cash flow.
• Example: A business records sales when goods are delivered, even if payment is due later.
• Commonly used in businesses for accurate financial reporting.

Mixed (Hybrid) Basis:

• Combines cash and accrual methods.
• Revenues and assets are recorded on a cash basis, while expenses are on an accrual basis.
• Note: This method is prohibited by law in India.

1.6 Qualitative Characteristics of Accounting Information

Accounting information must have the following qualities:

• Reliability: Information must be accurate and trustworthy for decision-making. For example, current assets may be more reliable than plant and machinery due to less uncertainty.
• Relevance: Information should influence decisions and include only useful data, avoiding irrelevant details.
• Understandability: Information should be clear and easy to understand for users with varying levels of knowledge.
• Comparability: Information should allow comparisons between different businesses or time periods to assess financial strengths and weaknesses.

1.7 Basic Accounting Terminologies

Understanding key terms is essential for accounting:

1.7.1 Transactions

A transaction is an exchange of goods or services between two parties for money or money’s worth.

Monetary Transactions:

• Involve money or money’s worth.
• Recorded in books of accounts.
• Cash Transactions: Immediate cash payment or receipt (e.g., buying goods for ₹15,000 cash).
• Credit Transactions: Payment or receipt is delayed (e.g., selling goods on credit for ₹8,000).

Non-Monetary Transactions:

• Do not involve money (e.g., barter transactions, exchanging goods for goods).
• Not recorded in books of accounts.
• Entry: Recording a transaction in the books of accounts.
• Narration: A brief explanation of the transaction, written below the journal entry (starts with “Being” or “For”).
• Goods: Items a trader deals in for sale (e.g., medicines for a chemist, vegetables for a vendor).

1.7.2 Capital and Drawings

• Capital: The amount invested by the owner in the business. It is a liability as the business owes it to the owner. Formula: Capital = Assets – Liabilities.
• Drawings: Cash or goods withdrawn by the owner for personal use (e.g., paying personal expenses like college fees from business funds).

1.7.3 Debtors and Creditors

• Debtor: A person who owes money to the business for goods or services bought on credit.
• Creditor: A person to whom the business owes money for goods or services received on credit.
• Bad Debts: Amounts owed by debtors that cannot be recovered, treated as a loss.

1.7.4 Expenditure

An expenditure is money spent by the business for benefits received.

• Capital Expenditure: Spent on acquiring or improving fixed assets, providing long-term benefits (e.g., buying machinery).
• Revenue Expenditure: Spent on day-to-day operations, providing short-term benefits (e.g., rent, salaries).
• Deferred Revenue Expenditure: Revenue expenditure with benefits extending beyond one year, written off over time (e.g., heavy advertising costs).

1.7.5 Cash Discount and Trade Discount

• Trade Discount: A reduction on the catalogue price of goods at the time of sale. Not recorded separately in books (e.g., ₹1,000 goods sold at 5% trade discount = ₹950 recorded).
• Cash Discount: A reduction offered to encourage prompt payment within a specified period. Recorded in books as it affects the final amount.

1.7.6 Solvent and Insolvent

• Solvent: A person whose assets are equal to or more than their liabilities, capable of paying all debts (e.g., assets ₹50,00,000, liabilities ₹30,00,000).
• Insolvent: A person whose liabilities exceed their assets, unable to pay debts (e.g., assets ₹20,00,000, liabilities ₹50,00,000).

1.7.7 Accounting Year

The 12-month period for which accounts are maintained, typically April 1 to March 31 in India for tax purposes. At the end, businesses prepare Trading Account, Profit and Loss Account, and Balance Sheet.

1.7.8 Goodwill

Goodwill is the reputation of a business valued in monetary terms. It arises from factors like location, skilled employees, product quality, or customer satisfaction. It is an intangible asset.

1.7.9 Profit or Loss

• Profit: When selling price exceeds cost price (e.g., goods sold for ₹50,000, expenses ₹30,000 = ₹20,000 profit).
• Loss: When cost price exceeds selling price (e.g., goods sold for ₹50,000, expenses ₹60,000 = ₹10,000 loss).
• Income: Revenue from business transactions (e.g., interest, dividends).
• Revenue: Income from normal business activities, like sales of goods or services.

1.7.10 Assets, Liabilities, and Net Worth

• Assets: Items or rights owned by the business with monetary value.
• Fixed Assets: Long-term assets (e.g., land, machinery).
• Current Assets: Short-term, easily convertible to cash (e.g., debtors, cash).
• Fictitious Assets: Imaginary assets with no realizable value (e.g., deferred advertising expenses).
• Liabilities: Amounts owed by the business to others.
• Fixed Liabilities: Long-term debts (e.g., loans, capital).
• Current Liabilities: Short-term debts payable within a year (e.g., creditors).
• Net Worth (Owner’s Equity/Capital): The owner’s investment or the excess of assets over liabilities. Formula: Net Worth = Assets – Liabilities.
• Contingent Liabilities: Potential liabilities that may arise based on future events (e.g., a pending lawsuit). Shown as a footnote in the Balance Sheet.

1.8 Accounting Concepts, Conventions, and Principles

Accounting follows certain concepts to ensure reliable and uniform financial reporting.
Importance of Accounting Concepts:

• Ensures reliable financial statements.
• Maintains uniformity in presentation.
• Provides a generally accepted basis for measurement.
• Delivers proper information to stakeholders.
• Based on valid assumptions.

Key Accounting Concepts:

• Business Entity: The business is separate from its owner. Only business transactions are recorded, not personal ones (e.g., only half the rent is recorded if the building is used partly for business).
• Money Measurement: Only transactions measurable in money are recorded (e.g., 5 computers = ₹1,50,000, not just “5 computers”).
• Cost Concept: Assets are recorded at their acquisition cost, adjusted for depreciation (e.g., furniture bought for ₹3,00,000 is recorded at that cost, not market value).
• Consistency Concept: Accounting policies should remain consistent unless circumstances require change (e.g., using the same depreciation method every year).
• Conservatism: Anticipate no profits but provide for all possible losses (e.g., value stock at cost price ₹25,000, not market price ₹35,000).
• Going Concern: Assumes the business will continue operating in the future, influencing asset valuation and depreciation.
• Realization: Revenue is recorded when earned, not when cash is received (e.g., sales recorded when goods are delivered).
• Accrual: Revenues and expenses are recorded when earned or incurred, not when cash changes hands (e.g., interest earned but not yet received).
• Dual Aspect: Every transaction has two effects (debit and credit). Basis of double-entry book-keeping. Formula: Capital + Liabilities = Assets.
• Disclosure: Financial statements must disclose all material information honestly.
• Materiality: Only significant items affecting decisions are disclosed (e.g., minor expenses may be ignored).
• Matching Concept: Revenues are matched with expenses incurred to earn them during the same period (e.g., adjusting for prepaid expenses).

1.9 Accounting Standards (AS) and IFRS

Accounting Standards (AS) provide guidelines to ensure consistency, comparability, and reliability in financial reporting.
Definition (Kohler): AS are codes of conduct set by professional bodies or laws for accountants.
Need for Accounting Standards:

• Improve understanding of financial statements.
• Ensure uniform accounting practices.
• Enable comparison between businesses.
• Enhance reliability of financial data.
• Meet legal requirements.

International Financial Reporting Standards (IFRS):

• Issued by the International Accounting Standards Board (IASB).
• Globally accepted standards to improve financial reporting.

Accounting Standards in India:

• Issued by the Institute of Chartered Accountants of India (ICAI) through the Accounting Standards Board (ASB), formed on April 21, 1977.
• AS are modified to align with Indian practices, resulting in Ind AS (Indian Accounting Standards), which are converged with IFRS.
• Large companies must follow Ind AS, while smaller businesses can use AS. In the future, all businesses may adopt Ind AS.

Key Accounting Standards (AS):

• AS-1: Disclosure of Accounting Policies – Policies must be disclosed in financial statements.
• AS-2: Valuation of Inventories – Inventories valued at lower of cost or net realizable value.
• AS-3: Cash Flow Statements – Prepared alongside Profit and Loss Account.
• AS-6: Depreciation Accounting – Depreciation allocated systematically over an asset’s life.
• AS-8: Accounting for Research and Development – R&D costs treated as expenses when incurred.
• AS-9: Revenue Recognition – Specifies conditions for recognizing revenue.
• AS-10: Accounting for Fixed Assets – Fixed assets recorded at cost, removed when no longer useful.
• AS-12: Accounting for Government Grants – Grants recognized when conditions are met.
• AS-13: Accounting for Investments – Distinguishes between current and long-term investments.
• AS-22: Accounting for Taxes on Income – Includes current and deferred taxes in profit/loss.

Chapter 1 – Introduction to Book- Keeping and Accountancy

Chapter 2 – Meaning and Fundamentals of Double Entry Book-Keeping

Chapter 3 – Journal

Chapter 4 – Ledger

Chapter 5 – Subsidiary Books

Chapter 6 – Bank Reconciliation Statement

Chapter 7 – Depreciation

Chapter 8 – Rectification of Errors

Chapter 9 – Final Accounts of a Proprietary Concern

Chapter 10 – Single Entry System

Introduction to Book- Keeping and Accountancy

EXERCISE

Q.1 Answer in One Sentence:

1. What is Book-keeping?
Answer: Book-keeping is the process of recording business transactions systematically in the books of accounts.

2. What is meant by Goods?
Answer: Goods are the commodities, merchandise, or articles a trader deals in for the purpose of sale to earn profit.

3. What is Capital?
Answer: Capital is the total amount invested by the owner in the business or the excess of assets over liabilities.

4. What is Drawings?
Answer: Drawings are the cash or goods withdrawn by the owner from the business for personal use.

5. What is Goodwill?
Answer: Goodwill is the reputation of a business valued in monetary terms, arising from its superior earning capacity.

Q.2 Give the word, term, or phrase which can substitute each of the following statements:

1. Recording of business transactions.
Answer: Book-keeping

2. Amount invested in business by the proprietor.
Answer: Capital

3. A person to whom amount is payable.
Answer: Creditor

4. Exchange between two persons.
Answer: Transaction

5. Excess of expenses over income.
Answer: Loss

6. A person whose assets are sufficient enough to meet business obligations.
Answer: Solvent

7. Art and science of recording business transactions.
Answer: Book-keeping

8. Property of any description owned by Proprietor.
Answer: Asset

9. Assets which remain in the business for only for short time and can be converted into cash very easily.
Answer: Current Assets

10. Allowance is given on catalogue price of goods.
Answer: Trade Discount

Q.3 Select the most appropriate alternatives from those given below and rewrite the statements:

1. Surplus of income over expenses is Profit.
a) Profit b) Deficit c) Loss d) Financial Statements

2. In Cash basis of accounting, actual cash receipts and actual cash payments are recorded.
a) Accrual b) Hybrid c) Cash d) Mercantile

3. Amount which is not recoverable from customer is known as Bad Debts.
a) Bad Debts b) Debts c) Debtors d) Doubtful debts

4. Accounts must be honestly prepared and they must disclose all material information is known as Disclosure Concept.
a) Entity Concepts b) Dual Aspect Concept c) Disclosure Concept d) Cost Concept

5. A commodity in which a trader deals is known as Goods.
a) Goods b) Income c) Property d) Expenditure

6. Goodwill means a reputation of a business valued in terms of money.
a) Trademark b) Assets c) Patents d) Goodwill

7. According to AS-3 cash flow statement is prepared and presented for the period for which the profit and loss account is prepared.
a) AS-3 b) AS-10 c) AS-6 d) AS-2

8. The immediate recognition of loss is supported by principle of Conservatism.
a) Conservatism b) Objective c) Matching d) Consistency

9. Brief explanation of an entry is called as Narration.
a) Folio b) Narration c) Posting d) Journalising

10. An act of exchange of things or services between the two parties is termed as Transaction.
a) Ledger b) Transfer c) Transaction d) Business

Q.4 State whether the following statements are true or false with reasons:

1. Book-keeping and accounting are one and the same thing.
False.
Reason: Book-keeping is the primary stage of recording and classifying transactions, while accounting involves recording, classifying, summarizing, analyzing, and interpreting financial data.

2. Conservatism means to follow safe side.
True.
Reason: The conservatism principle advises anticipating no profits but providing for all possible losses, ensuring a cautious approach in accounting.

3. The double entry system is based on “Dual Aspect” concept.
True.
Reason: The dual aspect concept states that every transaction has two effects (debit and credit), which is the basis of the double-entry book-keeping system.

4. Bank overdraft is an asset of the business.
False.
Reason: Bank overdraft is a liability, as it represents an amount owed by the business to the bank.

5. Solvent person is a person whose assets are more than his liabilities.
True.
Reason: A solvent person has assets equal to or greater than liabilities, enabling them to meet their financial obligations.

6. Cash discount does not appear in the books of accounts.
False.
Reason: Cash discount is recorded in the books as it is a concession given for prompt payment and affects the financial records.

7. A transaction is concerned with money or money’s worth.
True.
Reason: Only monetary transactions or those with money’s worth are recorded in the books of accounts.

8. Accounting is the language of business.
True.
Reason: Accounting communicates the financial results of business operations to stakeholders, making it the language of business.

9. In earlier times of civilization, accounting was done by owners.
False.
Reason: In earlier times, accounting was done by agents who managed the properties of wealthy people, not necessarily the owners.

10. Book-keeping is useful to find out all tax liabilities.
True.
Reason: Book-keeping provides accurate financial records, which are essential for calculating tax liabilities like income tax, GST, etc.

Q.5 Do you agree or disagree with the following statements:

1. Accounting is useful only to the owner.
Disagree.
Reason: Accounting is useful not only to the owner but also to stakeholders like management, investors, creditors, government, and customers for decision-making and assessing financial position.

2. Book-keeping is an art, science.
Agree.
Reason: Book-keeping is both an art (systematic recording) and a science (based on rules and principles) of recording financial transactions.

3. Bills Payable is an asset of the business.
Disagree.
Reason: Bills Payable is a liability, as it represents an amount the business owes to others.

4. In Book-keeping and Accountancy only non-monetary transactions are recorded.
Disagree.
Reason: Only monetary transactions are recorded in book-keeping and accountancy, as they can be expressed in terms of money.

5. The Assets which give long term benefit to the business are Fixed Assets.
Agree.
Reason: Fixed assets, like land, building, and machinery, provide long-term benefits to the business.

Q.6 Complete the following sentences:

1. Revenue arising as a result of business transactions is known as Income.
2. Excess of gross profit over operating expenses is Net Profit.
3. An expenditure which is basically revenue in nature but benefit of which is not exhausted within one year is called as Deferred Revenue Expenditure.
4. The amount deducted by the seller from the list price of goods at the time of sale is Trade Discount.
5. A person to whom business owes money for the goods or services is known as Creditor.

Single Entry System

1. Which of the following is deducted from profit as a provision for expected loss?

Interest on Drawings

Interest on Capital

Reserve for Doubtful Debts

Outstanding Income

Question 1 of 20

2. In Single Entry System, which statement is similar to Balance Sheet?

Cash Flow Statement

Trial Balance

Statement of Affairs

Statement of Profit or Loss

Question 2 of 20

3. Which of the following is NOT added while calculating Adjusted Closing Capital?

Drawings

Additional Capital

Interest on Drawings

Outstanding Income

Question 3 of 20

4. In Single Entry System, which of the following is ignored while calculating capital?

Assets

Liabilities

Owner's Salary

Drawings

Question 4 of 20

5. What will be the effect of depreciation on furniture in the Statement of Profit or Loss?

It is added

It is ignored

It is deducted

It is shown as income

Question 5 of 20

6. Which statement helps in determining the financial position of the business?

Trial Balance

Statement of Profit or Loss

Statement of Affairs

Journal

Question 6 of 20

7. Overvaluation of liabilities means:

Liabilities are recorded more than actual

Liabilities are recorded less than actual

Assets are overvalued

Expenses are omitted

Question 7 of 20

8. What is the treatment of interest on loan in the Statement of Profit or Loss?

It is added

It is ignored

It is deducted

It is capitalized

Question 8 of 20

9. Under Single Entry System, how is Trial Balance treated?

It is prepared monthly

It is optional

It cannot be prepared

It is necessary for arithmetical accuracy

Question 9 of 20

10. Which item is considered a gain while preparing the Statement of Profit or Loss?

Undervaluation of Assets

Interest on Capital

Depreciation

Bad Debts

Question 10 of 20

11. Interest on Capital is:

An income to the business

An expense to the business

Not considered in Profit or Loss

Treated as Drawing

Question 11 of 20

12. Interest on Drawings is:

An expense to the business

An income to the business

A liability

Ignored in accounting

Question 12 of 20

13. In the absence of dates, interest on drawings is calculated for:

Full year

3 months

6 months

9 months

Question 13 of 20

14. Bad debts are:

Added to profit

Ignored

Deducted from profit

Added to capital

Question 14 of 20

15. In Single Entry System, assets like Machinery and Furniture are:

Systematically recorded

Sometimes maintained

Not recorded at all

Not systematically recorded

Question 15 of 20

16. What is the effect of Outstanding Income in the Statement of Profit or Loss?

Deducted from profit

Added to profit

Ignored

Shown as liability

Question 16 of 20

17. Which of the following is NOT a component in the Statement of Affairs?

Capital

Sundry Debtors

Drawings

Sundry Creditors

Question 17 of 20

18. Which of the following is added while computing profit in Statement of Profit or Loss?

Bad Debts

Depreciation

Overvaluation of Stock

Overvaluation of Liabilities

Question 18 of 20

19. Which of these increases the profit in Statement of Profit or Loss?

Depreciation on Machinery

Undervaluation of Liabilities

Interest on Drawings

R.D.D.

Question 19 of 20

20. What is the treatment of Income Received in Advance in Profit or Loss Statement?

It is added to profit

It is deducted from profit

It is ignored

It is added to capital

Question 20 of 20

 Loading...

 

Single Entry System

Please go to MCQ Chapter 10 Accountancy Class 11 Maharashtra Board to view this quiz

Single Entry System

Please go to MCQ Chapter 10 Accountancy Class 11 Maharashtra Board to view this quiz

Final Accounts of a Proprietary Concern

Please go to MCQ Chapter 9 Accountancy Class 11 Maharashtra Board to view this quiz