CBSE Sample Papers for Class 11 Accountancy Set 7 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 11 Accountancy with Solutions Set 7 are designed as per the revised syllabus.

CBSE Sample Papers for Class 11 Accountancy Set 7 with Solutions

Time : 3 Hr.
Max. Marks : 80

General Instructions:

This question paper contains two parts, A and B.
All questions in both the parts are compulsory.
All parts of the questions should be attempted at one place.

Part-A (56 Marks)
Financial Accounting-I

Question 1.
Which of the following can be converted into cash within a very short period of time?
(A) Fixed Assets
(B) Current Assets
(C) Liquid Assets
(D) Intangible Assets [1]
Answer:
(C) Liquid Assets

Explanation: As per the order of liquidity. Liquid assets are considered as the assets, which can be converted into, cash in least time as compared to * other Assets like marketable deposited in bank, etc.

Question 2.
Value of closing stock is of cost price market price. [1]
Answer:
lower, or

Question 3.
What are the documents called which provide evidence of the transactions?
(A) Source documents
(B) Voucher
(C) Both (A) and (B)
(D) None of the above [1]
Answer:
(A) Source documents

Explanation: Source documents are the documents on the basis of which transactions are recorded in the book of accounts. In other words, these are documents which provide evidence for a transaction.

Question 4.
Give an example of an account that does not indicate a credit balance.
Answer:
Sales Returns

Question 5.
For which of the following transactions, Journal Proper will not be used?
(A) Purchased fixed asset for cash
(B) Purchased fixed asset on credit
(C) Sold goods of ₹ 50,000 to Ram
(D) All of these [1]
Answer:
(A) Purchased fixed asset for cash

Explanation: Purchase asset for cash is an item of cash book as cash is involved in the transaction.

Question 6.
What does the left side of cash book show?
(A) Incomes and gains
(B) Receipt of cash
(C) both (a) and (b)
(D) None of the above [1]
Answer:
(B) Receipt of cash

Question 7.
………………. means a detail of bank account as shown by the bank records.
(A) Pass Book
(B) Cash Book
(C) Cheque Book
(D) Bank Reconciliation Statement [1]
Answer:
(A) Pass Book

Question 8.
Depreciation method is not changed by a firm since last 5 years is an example of …………… [1]
(A) Revenue recognition
(B) Consistency Assumption
(C) Industry practice
(D) Materiality [1]
Answer:
(C) Industry practice

Question 9.
……………… is created out of profit but not for any specific purpose. [1]
Answer:
General Reserve

Question 10.
A proprietor purchased furniture of ? 20,000 by cheque. The account that should be credited is:
(A) Drawings Account
(B) Furniture Account
(C) Bank Account
(D) Cash Account [1]
Answer:
(C) Bank Account

Explanation: Two accounts are being affected with this transaction. One is furniture and other is bank Account. Both of these are real accounts. So apply the golden rule of real account- debit what comes in and credit what goes out.

Question 11.
Under ………………. method, a fixed amount of the original cost of the asset is charged as depreciation every year.
Answer:
Straight line.

Question 12.
Purchases of ₹ 9,000 from Ram recorded as ₹ 900 is an example of error of ……………..
Answer:
Errors of commission

Question 13.
One-sided errors are the errors which affect:
(A) One account
(B) Two accounts
(C) More than two accounts
(D) both (B) and (C) [1]
Answer:
(A) One account

Read the following hypothetical Case Study and answer the given questions 14 to 17:
The business which follows the convention of prudence keeps provisions and reserves so that they can keep the liquidity of the firm and help it in the time of crisis. But, what are exactly Reserves and Provisions. When we talk about provisions, they mean setting aside a part of the profits for meeting a known future liability, the amount of which is not accurately known at the time of finalization of financial statements.

It is made for meeting known future liability. The amount of the liability cannot be determined accurately. It is charge against profit reducing the profit. Provisions serve a lot of purposes. It helps in ascertaining the true net profit of the entity. The true financial position can be determined adequately.

It helps in providing funds for the liabilities that may occur in future. It helps in the proper allocation of expenses that are incurred over the time.

Reserves, on the other hand, means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise and not for meeting any liability, contingency or any commitment of the business. They are retained or undistributed net profit. It is voluntarily done to strengthen the financial position of the firm. It can be used for investing in outside securities.

Like provisions, reserves are also very important for the business enterprises. It helps in meeting any unforeseen expenses. It strengthens the financial position of the firm. It helps in equal distribution of profit. It helps in providing funds to meet liability.

Question 14.
……………….. means setting aside a part of the profits for meeting a known future liability. [1]
Answer:
Provision

Question 15.
Which of the following is not a characteristic of Provisions?
(A) It is made for meeting known future liability.
(B) The amount of the liability cannot be determined accurately.
(C) It is charge against profit reducing the profit.
(D) They are retained or undistributed net profit.
Answer:
(D) They are retained or undistributed net profit.

Question 16.
………………… means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise. [1]
Answer:
Reserve

Question 17.
Which of the following is not an importance of Reserve?
(A) It helps in meeting any unforeseen expenses.
(B) It strengthens the financial position of the firm.
(C) It helps in equal distribution of profit.
(D) It helps in providing funds for the liabilities that may occur in future. [1]
Answer:
(D) It helps in providing funds for the liabilities that may occur in future.

Read the following hypothetical Case Study and answer the given questions 18 to 21:
An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹ 270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered:

Salary for the month of March was posted twice ₹ 155.
Interest on investment collected by the bankers, were posted directly in concerned accounts through the
pass book, but no entry was made in the bank column of the cash book ₹ 75.
Rent of ₹ 350 received from Ashok credited both to Rent Account and Ashok Account.
A purchase of a chair from Karnal Furniture Mart for ₹ 65 has been entered in purchases book as ₹ 56.
Old Machinery sold to the proprietor Keshav for ₹ 400 was entered in Sales Book as sale to Kishore.
Cash Purchases from Ajay ₹ 189 were recorded in Cash Book as well as in Purchases Book and posted
from both. Closing Stock has been undervalued by ₹ 300.
The Profit & Loss Account disclosed a net profit of ₹ 15,000 for the year ended 31st March 2016.

Question 18.
What will be the rectification entry of the salary for the month of march posted twice? [1]

Answer:
Option (A) is correct Explanation:

Question 19.
…………….. account will be debited for the rent received wrongly credited to Ashoks Account. [1]
Answer:
Ashok’s

Question 20.
……………….. and …………. accounts will be credited for rectifying the entry where a purchase of a chair from Carnal Furniture Mart for 65 has been entered in purchases book as ₹ 56. [1]
Answer:
Profit and Loss Adjustment Account, Suspense Account

Question 21.
What will be the journal entry for the balance of Profit and Loss Adjustment Account?

Answer:
Option (B) is correct
Explanation:

Question 22.
State whether the following accounts will indicate a debit or credit balance.

Drawing
Advance Rent Received
Bad Debts
Sales Returns
Furniture
Bank Overdraft [3]

Journalise the following transactions in the books of Saurabh:

Paid ₹ 12,000 for rent.
Received ₹ 15,000 from insurance company against a claim of ₹ 20,000 for loss by fire.
Paid for installation of machinery ₹ 17,000. [3]

Answer:

Drawing – Debit
Advance Rent Received – Credit
Bad Debts – Debit
Sales Return – Debit
Furniture – Debit
Bank Overdraft – Credit

OR
In the Books of Saurabh Journal Entries

Commonly Made Errors
Students pass the following entry:
Cash A/c Dr. ₹ 15,000
To Loss by Fire A/c ₹ 15,000
Students wrongly debit “wages A/c”.

Answering Tips

Understand who is the giver.
Loss of 5,000 is to be debited to P & L A/c.
Amount paid for installation of machinery are added to the amount of machinery.

Question 23.
Explain the convention of consistency. Give examples. [4]
Answer:
According to this principle, financial statements should be prepared on the same basis as that of the preceding period. This provides comparability to accounting data of the same enterprise over the periods or data of different enterprises of the same period or both.

Whatever may be the accounting policies; these are to be followed consistently. Whenever there is any change in policy, the results of the enterprise and financial position may be affected. Therefore, nature and effect of such change and the justification of the change must be informed to the users of accounting information by way of foot-notes. Following are the examples of such changes:

Change in the method of valuation of stock.
Change in the method of providing depreciation.
Change in the basis of making provision for bad and doubtful debts.

Question 24.
From the following information, prepare BRS as on 31st July, 2011:

Balance as per Cash Book is ₹ 25,000 as on 31st July, 2011.
Cheques for ₹ 15,000 were deposited into the Bank in the month of July but only cheques for ₹ 11,000 were credited by the bank till 31st July, 2011.
Cheques issued for ₹ 13,000 in July, out of which a cheque for ₹ 9,200 was presented for payment on 3rd August.
Bank charged ₹ 50 as Bank charges and credited interest of ₹ 370. [4]

Answer:
Bank Reconciliation Statement As on 31st July, 2011

Commonly Made Error
Students get confused between the treatment of bank charges and interest credited by bank to be dorieinBRS.

Answering Tip
Students should practice a lot and should carefully read which opening balance is given in question and then make the treatment for different items.

Question 25.
In the following Sales Book, determine the missing information:
Sales Book

Answer:
Sales Book

Question 26.
Who are the users of accounting information? Why do they need accounting information? [6]
Answer:
Following are the groups of people interested in accounting information:
(i) Owners: Owners are the persons who invest capital in the business and share the risks. Owners need accounting information to know the profitability and financial strength of the business to make proper decisions.

(ii) Management: Management is answerable to the owners. The responsibility of the management is to operate the business efficiently. Management needs accounting information for decision-making.

(iii) Employees: Employees need accounting information to claim increase in wages, bonus and other benefits.

(iv) Investors: Investors are the persons who want to invest their money in the business. They need accounting information to know the safety of their investments and future prospects of the business.

(v) Creditors: Creditors are the persons who have advanced some money or goods to the business. They need accounting information to know the capacity of the business to repay their claims in time.

(vi) Govemment Government needs accounting ax information to collect the various taxes like sales tax, income tax, excise duty, etc.

(vii) Research scholars: Research scholars need accounting information to study the financial operations of a particular firm or company for their research.

(viii) Consumers: Consumers need accounting information to create public opinion against those business firms who exploit the consumers.

(ix) Banks and Lenders: If banks have lent money to any firm they would like to know whether the money given is safe-guarded and to ensure timely loan repayments. (Any six)

Commonly Made Error
Students generally write the same uses of accounting of more than one user of accounting.

Answering Tips

Iearn the various users of accounting information.
Carefully understand how accounting information is useful to each of its users.

Question 27.
A machine was purchased on 1st Jan, 2014 for ₹ 19,400 and ₹ 600 were spent on its installation. On 1st July, 2014, in the same year, additional machinery costing ₹ 10,000 was purchased. On 1st July, 2016, the machine purchased on January 2014, having become useless was sold for ₹ 8,000 and on the same date, a new machine was purchased at a cost of ₹ 15,000. Depreciation is provided annually on 31st December @ 10% per annum on original cost. Prepare Machinery Account from 1st Jan, 2014 to 31st Dec, 2016. [6]
Answer:
In the Books of …
Dr. Machinery Account Cr.

Question 28.

How will you rectify the errors, which come into notice after preparing the Trial Balance?
What is a Suspense Account? Give one example with entries of Suspense Account. [8]

Pass entries to rectify the following errors:

Purchased goods from Ravi ₹ 500 were passed through Sales Book.
Only ₹ 20 were recorded in Purchase Book instead of ₹ 200.
A repair to Plant amounting to ₹ 1,000 has been charged to Plant and Machinery A/c.
A purchase of goods of ₹ 2,000 has been wrongly debited to Furniture A/c. [8]

Answer:
(i) Suspense Account: Sometimes, errors come into notice after preparing the Trial Balance. When Trial Balance is prepared and accountant is unable to find errors affecting the agreement of the Trial Balance, he puts the difference in trial balance in a newly opened account, which is called Suspense Account.

Suspense Account is opened only when there is a difference in the Trial Balance, by placing the difference in this account. If the debit side of trial balance is more than the credit side, then difference is put on the credit side of suspense account. If the credit side of trial balance is more than the debit side then the difference

is put on the debit side of suspense account. After opening this account, one sided errors are rectified by passing journal entry through suspense account. Posting of these entries is made in the suspense account. When all the errors leading to disagreement of the trial balance are located, the suspense account is automatically closed.

(ii) Suspense Account may be defined as a temporary account to which the difference in trial balance has been put till the errors are located and rectified. For example: A payment received from an unidentified party is recorded as:
Bank A/c Dr.
To Suspense A/c

While preparing Trial Balance, if an accountant is unable to detect the difference in the totals of the Trial Balance, he can put the difference in suspense account. If the debit side is short, the suspense account shall be debited by the amount of difference.

If the credit side is short, then the difference shall be credited to the suspense account. Thus, with the help of the suspense account the trial balance will get balanced. As soon as the errors are detected, these are rectified by passing Journal Entries. When all the errors leading to difference in the trial balance are located and rectified, the suspense account shall be closed automatically.

OR
Rectifying Entries

Part-B [24 Marks]
Financial Accounting-II

Question 29.
Which of the following is the use of financial statements for the creditors of the company?
(A) Ascertain the firm’s ability to repay its debt in a short period of time
(B) Ascertain future prospects of the firm
(C) Ascertain performance of the firm in terms of profit and financial position
(D) All of the above [1]
Answer:
(A) Ascertain the firm’s ability to repay its debt in a short period of time

Explanation: Creditors are those persons who give loan to the firm. So they are know the firm’s ability to repay its debt period of time.

Question 30.
………………… is an example of non-operating income. [1]
Answer:
Interest on investments (or any other)

Question 31.
A statement depicting the exact financial position of a business on a particular date is called …………….. [1]
Answer:
Balance Sheet

Question 32.
Which of the following expenses means the expenses which have become due during the accounting year but have not been paid:
(A) Capital Expenditure
(B) Revenue Expenditure
(C) Outstanding expenses
(D) Deferred Revenue expenses [1]
Answer:
(C) Outstanding expenses

Explanation: Outstanding expenses are those expenses that have been incurred but not been paid in the current while these pertain to the current year.

Question 33.
Commission of ₹ 1,000 is received in advance. The accountant is not able to pass an adjustment entry for this advance commission received. Help him in identifying which of the following entries will be the adjusting entry for this advance commission:
(A) Debit Commission Account and credit Commission Received in Advance Account
(B) Debit Cash Account and credit Commission Received in Advance Account
(C) Debit Commission Account and credit Cash Account
(D) Debit Commission Received in Advance Account and credit Commission Account [1]
Answer:
(A) Debit Commission Account and credit Commission Received in Advance Account

Question 34.
Mr. Aaditya found gross profit of his firm of ₹ 2,00,000 for the year 2021. Identify the component of final account being talked about. [1]
Answer:
Trading Account.

Explanation: Gross profit or gross loss is computed by preparing trading Account

Question 35.
Depreciation if given in trial Balance will be shown in : [1]
(A) Profit & Loss A/c
(B) Trading A/c
(C) Balance sheet
(D) None of These
Answer:
(A) Profit & Loss A/c

Explanation: Depreciation of given in trial balance means it has been recorded in the book of accounts. As it is an indirect Expense, will be shown in profit and loss A/c.

Question 36.
How will you treat provision for discount on debtors ? [3]
Answer:
Provision for discount on debtors is treated in final accounts as follows:
(i) It is shown on the debit side oF Profit & Loss A/c.

(ii) It is deducted from debtors on the assets side of Balance Sheet. When provision for discount account is maintained, the discount allowed account is closed by transferring its balance to provision for discount on debtors accounts.

Question 37.
Fatima was operating her firm. On 31st March, 2021, she prepared final accounts of the firm. One day her friend kajal visited her, she showed her accounts to kajal. Kajal observed some mistakes in her final accounts. Two of them were as follows:
(a) She had shown closing stock only in trading account. While it had not been computed before the preparation of trial balance.
(b) Depreciation had not been recorded in the book of accounts but she had shown depreciation only to trading Account.

Now answer the following Questions:

Give any two features of final accounts.
What should be the correct treatment for mistake (a) given in case.
What should be the correct treatment for mistake (b) given in case. [6]

Answer:
(i)

Financial statements are based upon the past figures. Hence they are historical in nature.
Financial statements help in comparison of current year’s profit with that of the previous year’s profit.

(ii) As closing stock has not been computed before the preparation of trial Balance means it is an adjustment. So it should be shown at two places as per the adjustment entry It should be shown in the credit side of trading account as well as in the assets side of the balance sheet.

(iii) Depredation is also an item of the adjustment. Hence as it is to be shown in the debit side of profit and Loss account and should be shown by subtracting from the concerned asset in the balance sheet.

Question 38.
Following is the Trial Balance extracted from the books of Aashima Mehra on 31st March, 2016 :

Adjustments:

Salaries ₹ 800 and Taxes ₹ 550 are outstanding.
Depreciation on Building @ 5%, Furniture and Fittings @ 10% and Motor Vehicle @ 20% is to be charged.
₹ 450 is due for interest on bank overdraft.
One-third of the commission received is in respect of work to be done in the next year.
Stock in hand on 31st March, 2016 was ₹ 11,000.
Write off ₹ 300 as further Bad debts and make a provision of 5% on sundry Debtors.

Prepare Trading and Profit & Loss Account for the year ending 31st March, 2016 and Balance Sheet as at that date. [8]

Following are balance from the trial balance of Mukesh Traders on 31st March, 2016:

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2016 and Balance Sheet as at that date after taking into account the following adjustments:

Closing Stock was valued at ₹ 20,000.
Insurance prepaid was ₹ 1,000.
Write off ₹ 2,000 as Bad debt.
Depreciation to be provided on Land and Building @ 5% p.a and on Plant and Machinery @ 10% p.a.
Create Provision for doubtful debts @ 5% on debtors.
Wages include ₹ 4,800 for installation of a new machinery.

Answer:
Trading Account
Dr. for the year ended March 31, 2016 Cr.