International Commerce Olympiad

1. Wages paid for installation of new machinery will be debited to which account?

(a) Wages (b) Machinery

Ans: (b) Machinery

2. Which document is sent to a customer when he returns the goods which was sold to him on credit?

(a) Credit Note (b) Cheque

Ans: (a) Credit Note

3. Which of following is not a part of Double Entry System?

(a) Cash Book (b) Trial Balance

Ans: (d) Bank Reconciliation Statement

4. The credit balance of a personal account is ...............

(a) Cash in hand (b) Amount receivable

Ans: (d) Amount payable

5. Which of the following will be the resulting effect of the transaction “Salary due but not paid”?

(a) Increase in assets and decrease in capital

(b) Increase in assets and increase in liability

(d) Increase in liability and decrease in capital

Ans: (d) Increase in liability and decrease in capital

6. Match the source document in column I with the corresponding transaction in column II.

Column I Column II

(i) Cash Memo A. Credit Sales

(ii) Invoice B. Withdrawing cash from bank

(iii) Pay in slip C. Cash Purchases

(iv) Cheque D. Deposited cash into bank

Choose from the options given below:

(a) (i)-D; (ii)-B; (iii)-A; (iv)-D (b) (i)-B; (ii)-C; (iii)-D (iv)-A

Ans: (c) (i)-C; (iii)-A; (iii)-D; (iv)-B

7. Read the following statements carefully:

(i) Increase in Assets and Expenses are always debited

(ii) Decrease in Liabilities, and Incomes are always credited

(iii) Decrease in Assets and Increase in Liabilities are always credited

(iv) Increase in capital and income is debited.

Chose from the options given below:

(a) (i) and (ii) are correct (b) (ii) and (iv) are correct

Ans: (c) (i) and (iii) are correct

8. Sold goods worth list price of X 8,000 at 10% trade discount and 2% cash discount. 25% received at the time of transaction only. The amount posted to discount account will be:

(a) ₹ 36 on Debit side (b) ₹ 144 on Credit side

Ans: (a) ₹ 36 on Debit side

9. Credit purchases of furniture will be recorded through which voucher?

(a) Debit Voucher (b) Credit Voucher

Ans: (d) Transfer Voucher

10. If Cash is ₹ 7,000; Creditors are ₹ 9,000; Stock is ₹ 5,000; Debtors are worth ₹ 4,000; Unexpired Insurance is ₹ 2,000; Outstanding expenses is ₹ 3,000 then calculate the amount of capital of the business:

(a) ₹ 8,000 (b) ₹ 7,000

Ans: (d) ₹ 6,000

11. Which of the following rules of Debit and Credit is INCORRECT?

(a) Debit the giver, Credit the receiver.

(b) Debit what comes in, credit what goes out.

(d) Debit an increase in assets, Credit a decrease in assets.

Ans: (a) Debit the giver, Credit the receiver.

12. Cash received from Kajal ₹ 36,000 after allowing her discount @10%. Amount debited to discount account will be:

(a) ₹ 3,600 (b) ₹ 4,000

Ans: (b) ₹ 4,000

13. Normally, the following accounts are balanced:

(a) Personal A/c and Nominal A/c (b) Real A/c and Nominal A/c

Ans: (d) Personal A/c and Real A/c

14. Outstanding Rent is which type of account?

(a) Real A/c (b) Personal A/c

Ans: (b) Personal A/c

15. Sale of goods on credit to Ram for ₹ 3,000 will bring about what changes in the accounting equation?

(a) Debtor’s Account will decrease by ₹ 3,000, goods will increase by ₹ 3,000.

(b) Debtor’s Account will increase by ₹ 3,000 while goods will decrease by ₹ 3,000.

(d) Debtor’s Account will increase by ₹ 3,000 while Cash will decrease by ₹ 3,000.

Loss of goods by fire should be credited to:

(a) Sales A/c (b) Loss A/c

Ans: (b) Loss A/c

16. Goods costing ₹ 30,000 supplied to Mohan at a profit of 25% of sales price less Trade discount @ 5% will be credited to Sales A/c with:

(a) ₹ 35,625 (b) ₹ 38,000

Ans: (b) ₹ 38,000

17. Wages paid for installation of new machinery will be debited to which account?

(a) Wages (b) Machinery

Ans: (b) Machinery

18. Which document is sent to a customer when he returns the goods which was sold to him on credit?

(a) Credit Note (b) Cheque

Ans: (a) Credit Note

19. Sale of old news papers will be credited to:

(a) Sales Account (b) News paper Account

Ans: (c) Miscellaneous Receipts Account

20. Jitender purchased goods from Ramesh having list price of ₹ 5,000 on cash basis at 8% trade discount and 5% cash discount. The amount of discount account in his books will be:

(a) ₹ 400 (b) ₹ 250

Ans: (c) ₹ 230

21. Mr. Sajal a debtor for ₹ 10,000, 60% amount was paid by him and remaining became bad debt. 40% of the bad debt were recovered after two years. What will be the journal entry when final payment is received?

(a) Cash A/c Dr. 4,000

To Bad Debt Recovered A/c 4,000

(b) Cash A/c Dr. 1,600

To Bad Debt Recovered A/c 1,600

To Bad Debts A/c 1,600

(d) Cash A/c Dr. 6,000

To Sajal’s A/c 6,000

Ans: (a) Cash A/c Dr. 4,000

To Bad Debt Recovered A/c 4,000

22. L.F. (i.e. Ledger Folio column) in the Journal is filled at the time of:

(a) Journalising (b) Balancing

Ans: (c) Posting

23. Income tax paid by a sole proprietor at the end of accounting year, should be debited to:

(a) Income Tax account (b) Drawing account

Ans: (b) Drawing account

24. Which of the following transaction is posted in the ledger while cash book is maintained with cash and bank columns.

(a) Cash withdrawn from bank for personal use

(b) Cash withdrawn from bank for office use

(d) All of the above

Ans: (a) Cash withdrawn from bank for personal use

25. Vaanya commenced a business on 1st April, 2013 with a capital of ₹ 2,50,000. During the year she took a loan of ₹ 1,00,000 from a bank. At the end of the accounting year, her business assets amounted to ₹ 4,50,000 and creditors amounted to ₹ 40,000. The amount of closing capital and profit earned during the year will be:

(a) Closing Capital ₹ 3,10,000 and Profit ₹ 60,000

(b) Closing Capital ₹ 2,00,000 and Profit ₹ 60,000

(d) Closing Capital ₹ 3,10,000 and Profit ₹ 90,000

Ans: (a) Closing Capital ₹ 3,10,000 and Profit ₹ 60,000

26. Payment of outstanding salary due to an employee ‘Ram’ will be debited to

(a) Salary Account (b) Ram Account

Ans: (c) Outstanding Salary Account

27. Sixty paisa in a rupee now recovered from a customer ‘Kunal’ who was previously declared insolvent will be credited to:

(a) Kunal Account (b) Bad Debts Account

Ans: (a) Kunal Account

28. ‘Debit Balance’ in a personal account means

(a) Amount is receivable from a person

(b) Amount is payable to a person

(d) Goods purchased from a person on credit basis

Ans: (a) Amount is receivable from a person

29. Installment paid for loan ₹ 25,000 (including ₹ 15,000 for interest).

Choose the correct treatment of the above in the accounting equation.

(a) Reduce Asset (cash) by ₹ 25,000 and Reduce liability (Loan) by ₹ 25,000.

(b) Reduce Asset (Cash) by ₹ 15,000 and Reduce liability (Loan) by ₹ 15,000.

(d) Reduce Asset (Cash) by ₹ 25,000 and Reduce liability (Loan) and capital by ₹ 10,000 and ₹ 15,000 respectively.

Ans: (c) Reduce Asset (Cash) by ₹ 25,000 and Reduce liability (Loan) by 15,000 and capital ₹ 10,000.

30. Name the document required when a business firm returns goods to supplier for goods being defective.

(a) Voucher (b) Invoice

Ans: (c) Debit Note

31. Which is the correct entry for payment by draft to Creditor. Bank charges were also incurred for issuance of Draft?

(a) Creditors A/c Dr.

To Bank A/c

(b) Bank A/c Dr.

Bank Charges A/c Dr.

To Creditors A/c

(d) Creditor A/c Dr.

Bank Charges Dr.

To Bank A/c

Ans: (d) Creditor A/c Dr.

Bank Charges Dr.

To Bank A/c

32. What is the correct narration for the given Journal entry?

Assets A/c Dr.

To Purchase A/c

(a) Being Goods used to make an Asset.

(b) Being goods returned to supplier and got Machinery in exchange.

(d) None of the above.

Ans: (a) Being Goods used to make an Asset.

33. Calculate the owner’s equity as on 31st March, 2015: Total assets as on 31st March, 2014 were ₹ 5,00,000; Outside liabilities as on the same date were ₹ 2,00,000.

During the year, bad debts recovered were ₹ 10,000 and depreciation was ₹ 7,000; Additional capital ₹ 70,000.

(a) ₹ 3,76,000 (b) ₹ 3,70,000

Ans: (d) ₹ 3,73,000

34. Paid life insurance premium of a proprietor, it will debit

(a) Proprietor’s account (b) Drawings account

Ans: (b) Drawings account

35. Purchased land for ₹ 2,00,000 and paid 1% brokerage and ₹ 15,000 for registration charges. For this.

(a) Land account will be credited by ₹ 2,15,000

(b) Purchase account will be debited by ₹ 2,17,000

(d) Land account will be debited by ₹ 2,00,000

Ans: (c) Land account will be debited by ₹ 2,17,000

36. Which of the following will be debited if a business purchases goods on credit?

(a) Cash (b) Debtor

Ans: (d) Purchases

37. Nominal accounts are not balanced but are closed at the end of the year by transfer to

(a) Cash flow statement (b) Balance sheet

37. (d) Trading A/c or Profit and Loss A/c

38. Rahul sold ornaments of his wife for ₹ 1,00,000 (Costing ₹ 80,000) for the purpose of buying motor lorry for delivering the goods. How will it affect the Accounting equation?

(a) Increase in one asset and decrease in another asset

(b) Increase in asset and increase in liability

(d) No effect on accounting equation

Ans: (c) Increase in asset and Increase in capital

39. Which of the following item will have only Debit balance?

(a) Interest (b) Drawing

Ans: (b) Drawing

40. Goods worth ₹ 25,000 (sale price ₹ 30,000) were given to employees as Diwali bonus. It will be credited to (i) ............... account with amount of (ii) ...............

(a) (i) Cash (ii) ₹ 25,000 (b) (i) Bonus (i) ₹ 30,000

Ans: (d) (i) Purchase (ii) ₹ 25,000

41. An amount of ₹ 20,000 is appearing on the debit side of creditor account. Which of the following transactions can’t be related with above amount ?

(a) Purchase Returns (b) Cash Paid

Ans: (c) Credit Purchase

42. ₹ 1,00,000 paid to Advocate Gagan Singla for acquiring Patent Rights will be debited to

(a) Gagan Singla Account (b) Patents Account

Ans: (b) Patents Account

43. Carriage of ₹ 5,000 paid on purchase of Office Equipment will be debited to

(a) Office Equipment Account (b) Carriage Inward Account

Ans: (a) Office Equipment Account

44. Goods purchased from Virat of list price ₹ 40,000 at 25% trade discount and 5% Cash Discount. Paid him 40% of dues immediately. Discount will be

(i) .................. in the books with amount of (ii) ..................

(a) (i) Debited (i) ₹ 1,500 (b) (i) Credited (ii) ₹ 1,500

Ans: (d) (i) Credited (ii) ₹ 600

45. A Journal is a (i) .................. record of (ii) ..................

(a) (i). Chronological (ii) all the transactions

(b) (i) Chronological (ii) Financial transactions

(d) (i) Summarised (ii) Financial transactions

Ans: (b) (i) Summarised (ii) Financial transactions

46. Goods costing ₹ 80,000 supplied to Mahesh at a profit of 20% on selling price less 10% Trade discount, will be credited to sales account by which amount?

(a) ₹ 90,000 (b) ₹ 96,000

Ans: (a) ₹ 90,000

47. A sold to B goods of the value of ₹ 54,000 but invoice made for ₹ 45,000. To rectify this which of the following will be sent by A to B ?

(a) Debit Note (b) Credit Note

(c ) New Invoice of ₹ 9000 (d) Cash memo

Ans: (a) Debit Note

48. Amrit who owes ₹ 10,000 became insolvent and only 60% amount received from his estate. Amount of (i) .................. will be posted to (ii) .................. side of Amrit A/c.

(a) (i) ₹ 6,000 (ii) credit side (b) (i) ₹ 10,000 (ii) credit side

Ans: (b) (i) ₹ 10,000 (ii) credit side

49. What will be the closing capital (i) .................. and Asset (ii) .................. from the below given information?

(i) Opening Capital ₹ 60,000 (ii) Profits ₹ 30,000

(iii) Expenses ₹ 20,000 (iv) Creditors ₹ 25,000

Choose the correct option:

(a) (i) ₹ 70,000 (ii) ₹ 95,000 (b) (i) ₹ 50,000 (ii) ₹ 75,000

Ans: (d) (i) ₹ 90,000 (ii) ₹ 65,000

50. A firm had a capital balance of ₹ 1,00,000 at the beginning of the year. At the end of the year, the firm has total assets of ₹ 1,50,000 and total liabilities of ₹ 70,000. If the total drawing during the year were ₹ 30,000, what was the amount of net profit or net loss for the year?

(a) ₹ 10,000 Profit (b) ₹ 20,000 Loss

Ans: (a) ₹ 10,000 Profit

51. What will be the amount of profit in case of following, under cash basis of accounting? Income received in advance ₹ 50,000; Accrued Income ₹ 3,000; Salaries paid ₹ 70,000 (including ₹ 5,000 of previous year) and Total sales (30% credit) ₹ 1,00,000

(a) ₹ 70,000 (b) ₹ 53,000

Ans: (d) ₹ 50,000

52. Pick the odd one out of the following in context of Recording of Business Transactions:

(a) Opening Entry (b) Goods purchased for Cash

Ans: (a) Opening Entry

53. Pick the odd one out in context of effect on Accounting Equation.

(a) Purchased Goods of ₹ 20,000 from Ram on Credit.

(b) Paid ₹ 10,000 as salaries to employees

(d) Goods withdrawn for personal use of ₹ 6,000

Ans: (c) Accepted Bill Payable of ₹ 12,000 in favour of Creditor

54. An amount of ₹ 30,000 is appearing on the credit side of Machinery account. Which of the following options are not possible for this amount?

(a) Depreciation (b) Machinery purchased

Ans: (b) Machinery purchased

55. ₹ 20,000 received from Ramesh as security deposit for renting of property will be credited to ............

(a) Ramesh Account (b) Rent Account

Ans: (d) Security Deposit Account

56. Wages paid of ₹ 25,000 for the construction of cycle shed for employees will be debited to

(a) Salaries Account (b) Wages Account

Ans: (c) Building Account

57. Goods purchased from Akbar at 20% trade discount and 5% Cash Discount. Paid him half the dues immediately and availed Cash Discount of ₹ 2,000. Amount of total purchases, shown in books of Accounts will be (i) .................. and Trade Discount will be (ii) ..................

(a) (i) ₹ 80,000; (ii) ₹ 20,000 (b) (i) ₹ 1,00,000; (ii) ₹ 20,000

Ans: (b) (i) ₹ 1,00,000; (ii) ₹ 20,000

58. Goods purchased of ₹ 25,000 from Rahul and paid carriage of ₹ 2,000. This transaction will be (i) .................. in Purchase Account with amount of (ii) ..................

(a) (i) Credited; (ii) ₹ 25,000 (b) (i) Debited; (ii) ₹ 27,000

Ans: (d) (i) Debited; (ii) ₹ 25,000

59. The source document or voucher used for recording entries in sales book is

(a) Invoice received (b) Invoice sent out

Ans: (a) Invoice received

60. If A = Assets; B = Liabilities and C = Capital, then which of the following is not true:

(a) A – B = C (b) A – C = B

Ans: (c) A + C = B

61. Office Furniture purchased of ₹ 25,000 by making payment through cheque from Owners personal Bank Account will affect the Accounting Equation in which of the following way .............

(a) Increase in Furniture and Increase in Capital

(b) Increase in Furniture and Decrease in Bank Balance

(d) Decrease in Bank and Decrease in Capital

Ans: (a) Increase in Furniture and Increase in Capital.

62. Which of the following is not a part of ledger Account?

(a) Ledger Folio (b) Particulars

Ans: (a) Ledger Folio

63. Which of the following is entered in the Journal Proper?

(a) Purchase of an asset on credit (b) Purchase of an asset for cash

63. (a) Purchase of an asset on credit

64. Vishal purchased from Sanjay 900 meters of cloth @ ₹ 50 per meter at 20% trade discount and 5% cash discount. What is the amount of cash discount if 50% amount is paid immediately ?

(a) ₹ 1,125 (b) ₹ 1,800

Ans: (c) ₹ 900

65. Purchased goods from Neeraj for ₹ 10,000 and sold them to Harish for ₹ 12,000. Harish returned goods amounting to ₹ 3,600 which in turn were returned to Neeraj. With what amount will the entry for purchase return be made?

(a) ₹ 3,600 (b) ₹ 4,200

Ans: (c) ₹ 3,000

66. On inter-state sale of goods, which of the following account is credited

(a) Output CGST A/c (b) Output IGST A/c

Ans: (b) Output IGST A/c

67. Received commission of ₹ 10,000 plus CGST and SGST @ 6% each by cheque, half of the account is an advance. Journal entry will be

(a) Bank A/c Dr. 11,200

To Commission Received A/c 10,000

To Input CGST A/c 600

To Input SGST A/c 600

(b) Bank A/c Dr. 11,200

To Commission Received A/c 10,000

To output CGST A/c 600

To output SGST A/c 600

To Commission Received A/c 5,000

To Commission Received in advance A/c 5,000

To output CGST A/c 600

To output SGST A/c 600

(d) Bank A/c Dr. 11,200

To Commission A/c 4,400

To Commission Received in advance 5,600

To Input CGST 600

To Input SGST 600

Ans: (c) Bank A/c Dr. 11,200

To Commission Received A/c 5,000

To Commission Received in advance A/c 5,000

To output CGST A/c 600

To output SGST A/c 600

68. Accrued income increases the amount of ............ and ............ as per accounting equation.

(a) Creditors, debtors (b) Liability, Asset

Ans: (d) Asset, Capital