ACCOUNTANCY -XI

Ch: 19 Adjustments in preparation of Final Accounts

MCQs/ CBQ/ CUET
Level 1:
1.Calculation of Operating profit :-

a. Gross profit –(Office & Administration exp. + Selling & Distribution Exp.)

b. Gross profit – (Office & Administration exp. – Selling & Distribution EXp.)

c. Gross profit – (Factory exp. + Office & Administration exp. + Selling & Distribution Exp)

d. Gross profit –(Office & Administration exp.+ Selling & Distribution Exp+ Direct Exp.)

2. Heavy amount spent by Airtel on Advertisement for brand positioning in the market will fall
under which category

a. Revenue Expenditure b. Capital Expenditure

c. Deferred Revenue Expenditure d. None of these

3. Closing Stock given inside the Trial balance is shown only in……………

a. Balance Sheet b. Trading Account c. Profit & Loss Account d. None of these

4. Which type of expenses is written in Profit & Loss Account?

a. Direct b. Indirect c. Direct & Indirect d. None of these

5. If insurance premium paid Rs. 2000 including prepaid insurance is Rs. 300. The amount of
insurance premium shown in profit & Loss Account will be…

a. Rs. 2300 b. Rs. 2000 c. 1700 d. 300

Level 2:

1. If opening stock is Rs. 30000, closing stock is Rs. 40000, Purchases are Rs. 80000, Direct
Expenses Rs. 30000. What will be the value of Cost of Goods sold?
a.100000 b. 120000 c. 90000 d. 8000
2. If insurance premium paid Rs. 2000 including prepaid insurance is Rs. 300. The amount of
insurance premium shown in profit & Loss Account will be…

a. Rs. 2300 b. Rs. 2000 c. 1700 d. 300

3. The manager is entitled to a commission of 10% on Net Profit after charging such
commission. If Net profit is Rs. 110000, then manager’s commission will be :

a. Rs. 11000 b. Rs. 20000 c. 10000 d. None of these

4. If the wages paid Rs. 4000 and outstanding wages Rs. 500. The amount of wages shown in
Trading account will be:

a. Rs. 4500 b. Rs. 3500 c. 500 d. None of these

5. The Trial balance of a firm shows Debtor Rs. 40000, Bad debts Rs. 200 and Provision for
doubtful debts at Rs. 1400. A 5% provision for doubtful debts is to be created on debtors. The
amount of Debtors to be shown in Assets

a. Rs. 38000 b. Rs. 36400 c. 41200 d. None of these

6. Trial Balance shows the Value of Machinery is Rs. 20000 purchased on 1st January, 2022.
Rate of Depreciation is 10%. What is the amount of machinery to be shown in balance sheet as
on 31st March, 2023?

a. Rs. 19500 b. Rs. 18000 c. 22000 d. None of these

7. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reasons
(R).
Assertion (A) - The income statement and the balance sheet are financial statements that show the
cash flows in and out of the business unit.
Reason (R) - The general purpose of financial statements is to show the financial position and
performance of a business unit.
In the context of the above two statements, which of the following is correct?

a) Both A and R are true, and R is the correct explanation of A

b) Both A and R are true, and R is not the correct explanation of A
c) A is true, but R is false
d) A is false, but R is true

Level 3:

1. From the following balance extracted from the books of Saga td, prepare Trading A/c, Profit & Loss Account
for the year ending December 31, 2023 and Balance Sheet as on that date:-

Debit Balances: Rs. Credit Balances: Rs.

Plant and Machinery 19,720 Abdul Rahman’s Capital 80,000
Manufacturing Wages 34,695 Creditors Account 56,160
 Salaries 15,965 Bank Loan 10,000
Fixture and Fittings 9,480 Purchases Returns 1,140
Carriage Inwards 1,980 Sales 2,46,850
Carriage Outwards 2,150
Land & Building 25,000
Manufacturing Expenses 9,455
Insurance and Taxes 4,175
Wages 30,000
General Expenses 8,142
Factory Fuel and Power 1,276
Sundry Debtors 78,140
Lightining Factory 986
Selling Expenses for
Distribution 2,473
Stock 1st Jan 2016 34,170
Horses and Carts 5,165
Purchases 97,165
Sales Returns 3,170
Discount 928
Bad Debts 1,485
Interest and Bank Charges 475
Cash at Bank 7,810
Cash in hand 145
3,94,150 3,94,150
Adjustments:
i. Closing stock was valued at Rs. 8,000.
ii. Depreciation is to be provided on Land & Building and Plant & Machinery @ 10% p.a. and Horses and
Cart Rs. 1,000
iii. Write off Rs. 1,800 as Bad Debts and create a provision on Debtors @ 5% p.a.
iv. Wages include Rs. 18,000 for erection of cycle shed.
v. Unexpired Insurance, Rs. 300 and Taxes Rs. 190.

2. Following is the Trial Balance of Mr. Ram Lal as on 31st March, 2024:

Particulars Debit (Rs.) Credit (Rs.)

Capital; Account --- 80,000
Drawings Account 6,000
Stock (01.04.2023) 45,000

Purchases 2,60,000
Sales 3,10,000
Furniture 10,000
Sundry Debtors 40,000
Freight and Octroi Duty 4,600
Trade Expenses 500
Salaries 5,500
Rent 2,400
Advertising Expenses 5,000
Insurance Premium 400
Commision 1,300
Discount 200
 Bad Debts 1,600
Provision for Bad Debts 900
Creditors 20,000
Cash in Hand 5,200
Bank 5,800
Goodwill (at cost) 20,000
4,12,000 4,12,0000
Adjustments:

1) Stock on 31st March, 2024 was valued at Rs. 53,000

2) Salaries have been paid only for 11 Months.
3) Unexpired insurance included in the figure of Rs. 400 appearing in the Trail Balance is Rs. 100.
4) Commission earned but not yet received mounting to Rs. 122 is to be recorded in the bank of accounts.
5) Provision for bad debts is to be brought upto 3% of Sundry Debtors.
6) Only 1/4th of the Advertising Expenses are to be written off.
3. The following balances were extracted from the Books of Mr. Din Dayal on 31st December 2023:
Account Debit Credit
Opening Stock 41,000
Rent 9,600
Salary 20,000
Bad Debts 400
Provision for Doubtful Debts 3,000
Travelling Expenses 1,400
Insurance Premium 1,800
Drawings 4,000
Telephone charges 7,300
Printing and Advertising 5,000
Purchases/ Sales 2,20,000 2,80,000
Retur ns 6,000 2,000
Carriage Inward 3,500
Caraige Outward 500
Capital 1,75,000
Loan 20,000
Sales Tax Collected 3,000
Debtors 40,000
Commission 6,000
Rent Received 4,800
Land & Building 1,40,000
Furniture 10,000
Cash 2,900
Creditors 24,000
Investments 5,000
Interest on Investments 600
5,18,400 5,18,400

Prepare Trading and Profit & Loss A/c for the year and a Balance Sheet as on 31st Dec’ 2023 after taking into
account the following:
i. Closing Stock Rs. 75,000
ii. One third of the Commission received is in respect of work to be done next year.
iii. Create provision of 5% for Doubtful Debts.
iv. 50% of Printing and Advertising is to be carried forward to the next year.
v. A fire occurred on 28th Dec’ 2023 and Stock of the value of Rs. 10,000 was destroyed. Insurance
company admitted a claim of 75% .

4. From the following Trial Balance of Rudra Pratap, prepare Trading and Profit & Loss
Account for the year ended 31st March 2024 and a Balance Sheet as at that date:

Dr. Balances ₹ Cr. Balances ₹

Opening Stock 50,000 Capital 20,00,000

Purchases 5,30,000 Sales 12,50,000

General Expenses 45,000 Sundry Creditors 1,36,000

Stationery 6,000 O/s Trade Charges 5,000

Wages 2,15,000 Outstanding Rent 4,000

Trade Charges 25,000 Bank Balance 45,000

Rent 44,000

Charity 5,000

Advertisement
30,000
Expenses

Carriage on Sales 12,000

Bills Receivables 30,000

Sundry Debtors 2,20,000

Cash Discount 16,000

Cash in Hand 22,000

Furniture 1,00,000

Advance for Furniture 40,000

Plant & Machinery 6,00,000

Building 14,50,000

34,40,000 34,40,000

Adjustments:
(i) Stock on 31st March, 2024 was valued at ₹ 60,000.
(ii) A new machine was installed during the year costing ₹ 2,00,000 but it was not recorded in the
books. Wages paid for its installation ₹ 10,000 have been debited toWages Account.
(iii) An advance of ₹ 10,000 given along with purchase order was wrongly recordedin purchases.
(iv) General expenses include ₹ 20,000 paid for Wages.
(v) Wages include a sum of ₹ 50,000 spent on the erection of a Scooter Stand foremployees.
(vi) Advance for Furniture is for furniture at proprietor's residence.
(vii) Depreciate Furniture at 15%, Plant & Machinery at 20% and Building at 10%.
(viii) Carry forward 2/3rd of Advertisement Expenses as unexpired.
(ix) A B/R of ₹ 20,000 was discounted with bank on 15 Jan. 2020, but not yetmatured.
(x) Provide ₹50,000 for Interest on Capital.