# MCQs for Accountancy Class 11 with Answers Chapter 10 Financial Statements – II

Refer to MCQs for Accountancy Class 11 with Answers Chapter 10 Financial Statements – II as per the latest syllabus issued by CBSE. All Multiple choice questions have been provided with solutions and have been prepared based on the expected pattern in upcoming board exams. MCQs Chapter 10 Financial Statements – II have been prepared by our team of best accountancy teachers.

Question. Net Profit before the following adjustments Rs. 1,80,000
Outstanding salary Rs. 10,000
Prepaid Insurance Rs. 13,000
Calculate profit after adjustments
(a) Rs. 1,83,000
(b) Rs.1,77,000
(c) Rs.2,03,000
(d) Rs. 1,87,000

Answer

A

Question. ‘Prepaid Wages’ shown in Trial Balance_________
(a) Assets
(b) Debit of Trading A/c and Assets
(c) Debit of P & L A/c
(d) Debit of Trading A/c

Answer

A

Question. If the manager is entitled to a 5% commission on sales before deducting his commission, he will receive a commission of Rs_______ on a Rs. 8,400 profit.
(a) 400
(b) 420
(c) 442
(d) 440

Answer

B

Question. Outstanding Salary is _ account:
(a) Real Account
(b) Nominal Account
(c) Personal Account
(d) None of these

Answer

C

Question. Trial Balance contains the following information:
15% Bank Loan Interest Paid Rs.40,000
Interest paid Rs. 4,500

(a) Rs.1,500
(b) Rs.4,500
(c) Rs.3,000
(d) Rs.6,000

Answer

D

Question. In the Trial Balance are shown Debtors Rs. 52,400, Bad Debts Rs. 221, Bad Debts Provision Rs.324. For creating a Provision for Doubtful debts @ 10% on debtors, the P & L A/c will be debited by:
(a) 240
(b) 137
(c) 9
(d) 343

Answer

B

Question. A new firm commenced business on 1st January, 2020 and purchased goods costing Rs.90,000 during the year. A sum of Rs.6,000 was spent on freight inward. At the end of the year the cost of goods still unsold was Rs. 15,000 (Realisable Value 12,000). Sales during the year was Rs. 1,20,000. What is the gross profit earned by the firm?  C
(a) Rs.42,000
(b) Rs.30,000
(c) Rs.36,000
(d) Rs.39,000

Answer

C

Question. Rent paid on 1st October, 2020 for one year upto 30th September, 2020 was Rs.2,400. Rent paid on 1st October, 2020 for the year upto 30th September, 2020 was Rs.3,200. Rent shown in the Profit and Loss Account for the year ended on 31st December, 2020, would be :   D
(a) Rs.6,000
(b) Rs.3,200
(c) Rs.3,000
(d) Rs.2,600

Question. If closing stock appears in Trial Balance then it will be appearing in ;
(d) Trading Account
(b) Balance Sheet
(c) Profit & Loss Account
(d) Trading A/c & Balance Sheet

Answer

B

Question. Income tax in case of sole trader is treated as ,
(a) Personal expenses
(b) Debtors expenses
(c) Business expenses
(d) None of the above

Answer

A

Question. Heavy amount spent for the advertisement of new company product is
(a) Revenue Expenditure
(b) Deferred Revenue Expenditure
(c) Capital Expenditure
(d) Either (a) or (c)

Answer

B

Question. A’s Trial Balance provides you the following information:
Bad Debts Rs.3,000
Provision for Bad Debts Rs.5000
It is desired to maintain a provision of Rs.1,500 for doubtful debts, the amount to be recorded in P & L A/c will be:

(a) Rs.4,500 in Dr.
(b) Rs.500 in Dr.
(c) Rs.3,500 in Dr.
(d) Rs.500 in Cr.

Answer

D

Question. Sundry debtors given in the Trial Balance are Rs.20,000. Further bad debts amounted to Rs.1,000 and it is desired to create a provision of 5% on debtors for doubtful debts and 2% for discount. Sundry Debtors will appear in the Balance Sheet at a figure of:
(a) Rs.18,600
(b) Rs.17,689
(c) Rs.17,670
(d) Rs.18,620

Answer

B

Question. Following information is given in Trial Balance
Bad Debt Rs. 3,000
Provision for Bad Debts Rs. 3,500
Debtors Rs.40,000
Additional information :
It is desired to make a provision for doubtful debts @ of 10% on debtors. The amount debited to P&L A/c is
(a) Rs.4,000
(b) Rs.5,000
(c) Rs.6,500
(d) Rs.3,500

Answer

D

Question  Prepaid Insurance existing in the Trial Balance is shown in the Balance Sheet in the assets side because of
(a) Accrual Concept.
(b) Matching Principle.
(c) Materiality Principle.
(d) Cost Principle.

Answer

A

Question Prepaid Expenses, if given in the Trial Balance, is shown in
(a) Trading Account, as deduction from the respective expense.
(b) Profit and Loss Account, as deduction from the respective expense.
(c) Trading and Profit and Loss Account, as deduction from the respective expense and in the Balance Sheet, as an asset.
(d) Balance Sheet.

Answer

D

Question. A trial balance contains Debtors Rs.15,000, Bad Debts Rs.400 and Provision for Doubtful Debts Rs.600. Further bad debts given in adjustments are Rs.400. If a provision at 5% is made on Debtors, P & L A/c will be debited with:
(a) Rs.1950
(b) Rs.800
(c) Rs.1,130
(d) Rs.930

Answer

D

Question. Income earned but not received is shown in:
(a) Liabilities
(b) Foot notes
(c) Assets
(d) None of them

Answer

C

Question. Bills Receivable discounted but not due till the date of final accounts is shown in:
(a) Foot notes
(b) Assets
(c) Liabilities
(d) P&L A/C

Answer

A

Question. Accrued income is :
(a) A Liability
(b) Revenue
(c) An Asset
(d) An Expense

Answer

C

Question In the Trial Balance, Sundry Debtors are shown at Rs. 2,25,000, Bad Debts Rs. 25,000 and Provision for Doubtful Debts Rs. 5,000. 5% Provision for Doubtful Debts is to be maintained and 2% Provision for Discount on debtors is to be made. The amount of Provision for Discount on Debtors would be
(a) Rs. 4,293.
(b) Rs. 4,500.
(c) Rs. 2,925.
(d) Rs. 4,275.

Answer

C

Question  On 1st February, 2020, a loan of Rs. 1,00,000 was given to Parth @ 12% p.a. Interest was received for 3 months from February to April, 2020. In the financial statements for the year ended 31st March, 2020, amount of advance interest should be
(a) Rs. 1,200.
(b) Rs. 1,000.
(c) Rs. 3,600.
(d) Rs. 4,800.

Answer

B

Question A new firm commenced business on 1st April, 2019 and purchased goods costing Rs.90,000 during the year. A sum of Rs.6,000 was spent on freight inward. At the end of the year (on 31st March, 2020) the cost of goods still unsold was Rs.15,000 (Realisable Value Rs.12,000). Sales during the year was Rs.1,20,000. What is the gross profit earned by the firm?
(a) Rs.36,000
(b) Rs.30,000
(c) Rs.42,000
(d) Rs.39,000

Answer

A

Question. Income tax paid by a sole trader is reflected in his financial statements:
(a) On the debit side of the Trading Account
(b) On the debit side of the Profit and Loss Account
(c) As way of deduction from capital in the Balance Sheet
(d) As an asset in the Balance Sheet

Answer

C

Question. Insurance paid 4,000 (including premium of 3,000 per annum paid upto 30th June, 2020). What will be the adjusting closing entry necessary as on 31st March, 2020:

Answer

D

Question Closing Stock is valued at Cost or Net Realisable Value (Market Value), whichever is less because of
(a) Going Concern Concept.
(b) Accrual Concept.
(c) Prudence Concept.
(d) Consistency Concept.

Answer

C

Question Accrued Income, if given in the Trial Balance, is shown in
(a) Trading Account, as addition to the respective income.
(b) Profit and Loss Account, as addition to the respective income.
(c) Profit and Loss Account, as addition to the respective income and in the Balance Sheet, as an asset.
(d) Balance Sheet as an asset.

Answer

D

Question. Closing stock is shown in Financial Statements at:
(a) Cost price
(b) Reliasable Value
(c) Cost price or Reliasable Value whichever is greater
(d) Cost price or Reliasable Value whichever is less

Answer

D

Question. Rent paid on 1st October, 2018 for one year upto 30th September, 2019 was Rs.2400. Rent paid on 1st October, 2019 for the year upto 30th September, 2020 was Rs.3.200. Rent shown in the Profit and Loss Account for the year ended on 31st December, 2019, would be:
(a) Rs. 2,600
(b) Rs. 53,000
(c) Rs. 3,200
(d) Rs. 6,000

Answer

A

Question. Net profit of a firm before charging manager’s commission is Rs.21,000. If the manager is entitled to 5% commission after charging such commission, how much manager will get as commission?
(a) Rs. 1,050
(b) Rs. 1,000
(c) Rs.2,100
(d) Rs.2,000

Answer

B

Question Indirect Expenses are transferred to
(a) Trading Account.
(6) Profit and Loss Account.
(c) Balance Sheet.
(d) Trading Account and Balance Sheet.

Answer

B

Question  On 1st April, 2019 M/s Omega Bros., had a Provision for Doubtful Debts of Rs. 6,500. During 2019-20, Rs. 4,200 proved irrecoverable and it was decided to maintain the Provision for Doubtful Debts @ 5% on debtors which stood at Rs. 1,96,500 before writing off bad debts. Amount of net provision debited to Profit and Loss Account will be
(a) Rs. 9,500.
(b) Rs. 8,200.
(c) Rs. 6,500.
(d) Rs. 7,315.

Answer

d

Question. Which of the following statements is correct:
(a) Luvi Ltd. – P & L A/c as on 31st March, 2020
(b) Luvi Ltd. – P&L A/c for the year ended 31st March, 2020
(c) Luvi Ltd. – P & L A/c for the year ended 31st March
(d) Luvi Ltd. – P&L A/c for the current year (2019-2020)

Answer

B

Question. General Manager gets 10% commission on net profit after charging such commission. Gross Profit Rs.70,000 and general expenses other than manager’s commission are Rs. 12,000. Commission amount will be :
(a) Rs.5,273
(b) Rs.6,073
(c) Rs.5,373
(d) Rs.5,173

Answer

A

Question Salaries and Wages Account is shown in
(a) Trading Account.
(b) Profit and Loss Account.
(c) Balance Sheet.
(d) Trading Account and Balance Sheet.

Answer

B

Question  Closing Stock, if given outside the Trial Balance, is shown in
(a) Trading Account and Balance Sheet.
(b) Profit and Loss Account.
(c) Profit and Loss Account and Balance Sheet.
(d) Balance Sheet.

Answer

A

Question. Accrued income is:
(a) A Liability
(b) An Asset
(c) Revenue
(d) An Expense

Answer

B

Question Wages and Salaries Account is shown in
(a) Trading Account,
(6) Profit and Loss Account.
(c) Balance Sheet.
(d) Trading Account and Balance Sheet.

Answer

A

Question. Business paid to Mr. A Rs.50,000 as salary on 25th March, 2011. Mr. A went to bank to deposit cheque in his account on 3rd April, 2011. What is the entry to be passed in the Balance Sheet on the date of final accounts?
(a) No entry
(b) Bank A/c Dr.
To O/s Salary A/c
(c) Salary A/c Dr.
To O/s Salary A/c
(d) Salary A/c Dr.
To A

Answer

A

Question. If closing stock appears in Trial Balance then it will be appearing in:
(a) Trading Account
(b) Trading A/c & Balance Sheet
(c) Profit & Loss Account
(d) Balance Sheet

Answer

D

Question What is the effect of overvaluing Closing Stock on the Current Year’s Profit?
(a) Decreases the gross profit and net profit.
(b) Increases the gross profit but decreases the net profit.
(c) Decreases the gross profit and increases net profit.
(d) Increases the gross profit and net profit.

Answer

D

Question Closing Stock is valued at
(a) Cost.
(b) Net Realisable Value (Market Value).
(c) Cost or Net Realisable Value (Market Value), whichever is more.
(d) Cost or Net Realisable Value, whichever is less.

Answer

D

Question Goods destroyed by fire costing Rs. 50,000 and insurance company admitted 60% claim. The adjustment will be entered in
(a) Trading Account.
(b) Profit and Loss Account.
(c) Balance Sheet.
(d) Trading Account, Profit and Loss Account and Balance Sheet.

Answer

D

Question. Types of Account shown in Balance Sheet are
(a) Real and Personal
(b) Real and Nominal
(c) Nominal and Personal
(d) Real, Nominal and Personal

Answer

A

Question. Types of Account shown in Balance Sheet are
(d) Nominal and Personal
(b) Real and Nominal
(c) Real and Personal
(d) Real, Nominal and Personal

Answer

C

Question Debts that were earlier written off, if recovered, are transferred to the credit side of
(a) Debtors Account.
(b) Trading Account.
(c) Profit and Loss Account.
(d) Provision for Doubtful Debts Account.

Answer

C

Question Following information is extracted from the Trial Balance of a business:
Sales: Rs. 1,00,000; Purchase: Rs. 60,000; Wages Rs. 21,000.
Closing stock was Rs. 3,000 more than opening stock. One third of the wages was charged to cost of goods sold in the Trading Account. What was the Gross Profit?
(a) Rs. 30,000.
(b) Rs. 33,000.
(c) Rs. 36,000.
(d) Rs. 40,000.

Answer

C

Question Depreciation for current year in the Trial Balance is shown in
(a) Debit side of Profit and Loss Account and it is deducted from that particular asset in the Balance Sheet.
(b) Assets side of Balance Sheet as a deduction from the concerned Asset.
(c) Debit side of Profit and Loss Account.
(d) Debit side of Trading Account.

Answer

C

Question. Following information is given in Trial Balance
Bad Debt Rs. 3,000
Provision for Bad Debts Rs. 3.500
Debtors Rs. 40,000
Additional information:
It is desired to make a provision for doubtful debts @ of 10% on debtors. The amount debited to P&L A/c is

(a) Rs.4,000
(b) Rs.3,500
(c) Rs.6,500
(d) Rs.5,000

Answer

B

Question. A machine was purchased in Bihar. During transit the machine was damaged and the cost of repairs incurred is Rs.20,000. This expense is treated as :
(a) Capital expense
(b) Revenue expense
(c) Deferred Revenue expense
(d) None of these

Answer

A

Question. Income tax paid by a sole trader is reflected in his financial statements :
(a) On the debit side of the Trading Account
(b) On the debit side of the Profit and Loss Account
(c) As an asset in the Balance Sheet
(d) As way of deduction from capital in the Balance Sheet

Answer

D

Question Provision for Doubtful Debts is made on the debts that are
(а) Doubtful of recovery.
(б) Not doubtful of recovery.
(c) Total Debtors.
(d) Total Debtors less Provision for Doubtful Debts.

Answer

A

Question Income Received in advance, if given in the Trial Balance, is shown in
(a) Trading Account, as deduction from the respective income.
(b) Profit and Loss Account, as deduction from the respective income.
(c) Profit and Loss Account, as deduction from the respective income and in the liabilities side of the Balance Sheet.
(d) Balance Sheet in the liabilities side.

Answer

D

Question Income received in advance is deducted from the income because of
(a) Revenue Recognition Concept.
(b) Accrual Concept.
(c) Matching Concept.
(d) Prudence Concept.

Answer

C

Question  Accrued Income, if given outside the Trial Balance, is shown in
(a) Trading Account, as addition to the respective income.
(b) Profit and Loss Account, as addition to the respective income.
(c) Profit and Loss Account, as addition to the respective income and in the assets side of the Balance Sheet.
(d) Balance Sheet in the assets side.

Answer

C

Question. Net Profit before the following adjustments Rs. 1,80,000
Outstanding salary Rs. 10,000
Prepaid Insurance Rs. 13,000
Calculate profit after adjustments

(a) Rs. 1,87,000
(b) Rs. 31,77,000
(c) Rs. 1,83,000
(d) Rs. 2,03,000

Answer

C

Question. Net profit of a firm before charging manager’s commission is Rs.21,000. If the manager is entitled to 5% commission after charging such commission, how much manager will get as commission?
(a) Rs.1,050
(b) Rs.2,100
(c) Rs.1,000
(d) Rs.2,000

Answer

C

Question Gross Profit: Rs. 50,000; Salaries: Rs. 5,800; Rent paid: Rs. 6,000; Provision for Doubtful Debts: Rs. 2,000 (Old); Commission (Credit) Rs. 4,000. Net Profit of the firm will be
(a) Rs. 42,200.
(b) Rs. 40,000.
(c) Rs. 42,000.
(d) Rs. 45,000.

Answer

A

Question Provision for Doubtful Debts, in excess of the required provision, is credited to
(a) Debtors Account.
(b) Trading Account.
(c) Profit and Loss Account.
(d) Capital Account.

Answer

C

Question. Closing stock is shown in Financial Statements at:
(a) Cost price
(b) Realisable Value
(c) Cost price or Realisable Value whichever is less
(d) Cost price or Realisable Value whichever is greater

Answer

C

Question. Which of the following statements is correct:
(a) King’s International — P & L A/c as on 31st March, 2020
(b) King’s International — P & L A/c for the year ended 31st March 2020
(c) King’s International — P & L A/c for the year ended 31st March, 2020
(d) King’s International — P & L A/c for the current year (2019-2020)

Answer

C

Question Balance sheet is prepared to know
(a) financial performance.
(b) financial position.
(c) liabilities position.
(d) assets position.

Answer

B

Question Wages paid for installation of machine is added to the cost of machine because of
(a) Accrual Concept.
(b) Matching Principle.
(c) Materiality Principle.
(d) Cost Principle.

Answer

A

Question General Manager gets 10% commission on net profit after charging such commission. Gross Profit Rs.70,000 and general expenses other than manager’s commission are Rs.12,000. Commission amount will be:
(a) Rs.5,173
(b) Rs.6,073
(c) Rs.5,373
(d) Rs.5,273

Answer

D

Question. Heavy amount spent for the advertisement of new company product is:
(a) Deferred Revenue Expenditure
(b) Revenue Expenditure
(c) Capital Expenditure
(d) Either (A) or (C)

Answer

A

Question. Income tax in case of sole trader is treated as:
(a) Business expenses
(b) Debtors expenses
(c) Personal expenses
(d) None of the above

Answer

C

Question Profit and Loss Account is prepared to know
(a) Gross Profit or Gross Loss.
(6) Net Profit or Net Loss.
(c) Operating Profit or Operating Loss,
(d) Financial Position.

Answer

B

Question  Expenses incurred but not yet paid are accounted because of
(a) Matching Principle.
(B) Dual Aspect Principle.
(c) Accrual Concept.
(d) Materiality Principle.

Answer

C

Question Business paid to Mr. A Rs.50,000 as salary on 25th March, 2020. Mr. A went to bank to deposit cheque in his account on 3rd April, 2020. What is the entry to be passed in the Balance Sheet on the date of final accounts?

Answer

D

Question Adjustments given are recorded once in Trading and Profit and Loss Account and again in Balance Sheet. It is so because of
(a) Matching Principle.
(b) Dual Aspect Principle.
(c) Accrual Concept.
(d) Materiality Principle.

Answer

B

Question A machine was purchased in Bihar. During transit the machine was damaged and the cost of repairs incurred is Rs.20,000. This expense is treated as:
(a) Revenue expense
(b) Capital expense
(c) Deferred Revenue expense
(d) None of these

Answer

B

Question  Trading Account is prepared to know
(a) Gross Profit.
(6) Net Profit.
(c) Balance of Capital.
(d) Financial Position.

Answer

A

Question Balance of Provision for Doubtful Debts (As on 1st April, 2019): Rs. 1,250; Bad Debts during the year were: Rs. 300. Provision for Doubtful Debts is required @ 5% on debtors of Rs. 10,000. Provision for Doubtful Debts credited to Profit and Loss Account will be
(a) Rs. 400.
(b) Rs. 500.
(c) Rs. 600.
(d) Rs. 450.

Answer

D