CBSE Sample Papers for Class 11 Accountancy Set 8 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 11 Accountancy with Solutions Set 8 are designed as per the revised syllabus.

CBSE Sample Papers for Class 11 Accountancy Set 8 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 is not an objective of accounting?
(A) Maintaining records
(B) Estimating profit and loss
(C) Providing useful information to various users
(D) Recording all the qualitative factors [1]
Answer:
(D) Recording all the qualitative factors

Explanation: As we, know that accounting does not record the Qualitative factors in the book of accounts like efficiency of labour. So recording all the Qualitative factors is not the objective of accounting.

Question 2.
Ajay wants to start a business in a systematic manner. Which accounting system he should follow?
(A) Single Entry System
(B) Double Entry System
(C) Cash basis
(D) Accrual basis [1]
Answer:
(B) Double Entry System

Explanation: Double entry system is a systematic, metho of accounting. Single entry system is an incomplete method of accounting hence it is not systematic.

Question 3.
What is the slip called which is filled when depositing a cheque or cash in bank account?
(A) Cash voucher
(B) Pay-in-slip
(C) Cash memo
(D) Transfer voucher [1]
Answer:
(B) Pay-in-slip

Question 4.
Give an example of a transaction that will not have the effect of increasing an asset and decreasing another asset. [1]
Answer:
Payment to creditors

Explanation: With this transaction liability and Asset both are decreasing.

Question 5.
An old machinery was sold to Manish for ₹ 56,000. Name the book in which this entry will be recorded?
(A) Sales Book
(B) Cash Book
(C) Journal Proper
(D) None of the above [1]
Answer:
(C) Journal Proper

Question 6.
How many amount columns does a Simple Cash Book have ………….. on each of its sides? [1]
Answer:
One

Question 7.
Give an example of a transaction that will not be recorded in a Two Column Cash Book. [1]
Answer:
Machinery purchased from Ram on credit.

Explanation: Credit transactions are not recorded in cash book.

Question 8.
Which of the following is the cause of difference in the Cash Book and Pass Book balances?
(A) Timing difference
(B) Transactions in one book only
(C) Errors committed
(D) All the above [1]
Answer:
(D) All the above

Question 9.
From the following which transaction is not shown in Cash Book:
(A) Cheque issued but not yet presented in bank
(B) Interest debited by bank
(C) Cheques deposited but not credited
(D) Cheque deposited but dishonoured [1]
Answer:
(B) Interest debited by bank

Question 10.
………………… is a charge to Profit & loss Account. [1]
Answer:
Provision

Question 11.
Mr. Rahul purchased a machinery and paid the amount by issue of cheque. The account that will be debited to record this transaction in prime book of entry will be:
(A) Machinery Account
(B) Bank Account
(C) Cash Account
(D) None of These
Answer:
(A) Machinery Account

Explanation: As per the rule of real account, debit what comes in and credit what goes out. In this transaction, machinery is coming into the business, hence machinery Account will be debited.

Question 12.
Which of the following is a limitation of Trial balance?
(A) Helps in preparation of final accounts
(B) Transactions that are not recorded at all cannot be found out
(C) Helps in locating errors
(D) Ascertains the arithmetical accuracy of books. [1]
Answer:
(B) Transactions that are not recorded at all cannot be found out

Read the following hypothetical Case Study and answer the questions 14 – 17:
On the 1st of May 2018, Shri Enterprises had a cash balance of ₹ 12,400 and a bank balance of ₹ 36,000. Mr. Ganesh, on of the debtors deposited a cheque worth ₹ 10,000 on the 3rd of May and on 5th May Mr. Suresh was paid via cheque of ₹ 7,700 for the full settlement of the account of ₹ 8,000. The cheque received on the 6th worth ₹ 12,000 from Mr. Xavier was deposited on the 7th of May.

On the 8th ₹ 22,000 was received in cash and ₹ 8,000 was deposited in the bank. The cheque given by Mr. Xavier was dishonoured and for which ₹ 20 was paid as the bank charges. On the 20th of May, a bills receivable was discounted worth ₹ 10,000 at 1% through the bank. On the 26th the proprietor withdrew ₹ 10,000 from the bank for which he used ₹ 8,000 for office use.

Question 14.
In which account will the cheque deposited by Mr. Ganesh recorded?
(A) Bank
(B) Cash
(C) Debtors
(D) Both (A) and (C) [1]
Answer:
(D) Both (A) and (C)

Explanation: The following Journal entry should be passed: Bank A/c Dr. To Debtor (Mr. Ganesh) Hence, the two accounts that are being affected with this transaction are Bank A/c and debtors.

Question 15.
………… is the amount of discount given by Mr. Suresh. [1]
Answer:
₹ 300
Eplanation: Amount to be paid to
Mr. suresh = ₹ 8,000
Amount actually paid = ₹ 7,700
Discount given by suresh = 8,000 – 7,700
= ₹ 300

Question 16.
The amount of discount on the bills receivable is ……………….
Answer:
₹ 100

Question 17.
The amount recorded as drawings will be …………….
(A) ₹ 2,000
(B) ₹ 8,000
(C) ₹ 10,000
(D) Nil [1]
Answer:
(D) Nil

Explanation: Total amount withdrawn ₹ 10,000
Amount used for office = ₹ 8,000
Amount of drawing = 10,000 – 8,000
= ₹ 2,000

Read the following hypothetical Trial Balance extracted from the books of M/s Ravilal and Company and answer the questions 18-21: In the books of M/s Ravilal and Company Trial Balance as on 31/3/2018

Question 18.
Which of the following items appears in the wrong side of the trial Balance?
(A) Purchases
(B) Motor Vans
(C) Premises
(D) Capital [1]
Answer:
(C) Premises

Explanation: Premises is an asset for the company and assets have a debit balance but in this case, premises has been shown on the credit side.

Question 19.
The discount received should be on the ………………… side of the Trial Balance. [1]
Answer:
Credit

Explanation: Discount received is an income and incomes have a credit balance. Hence it should be shown on credit side.

Question 20.
The Electricity is recorded in the …………….. side of the Trial Balance as it is an. [1]
Answer:
Debit, Expense

Question 21.
What should be the actual total in the rectified Trial Balance?
(A) ₹ 18,21,000
(B) ₹ 19,21,000
(C) ₹ 19,92,500
(D) ₹ 18,92,500 [1]
Answer:
(A) ₹ 18,21,000

Question 22.
What do you mean by non- cash transfer voucher? [3]
OR
What is the rule to be followed for recording changes in Assets and Liabilities? [3]
Answer:
Non-cash/Transfer Voucher: These are prepared for non-cash transactions like credit sale, credit purchases, for rectifying mistakes. A transaction with one debit and one credit is a simple transaction and the accounting vouchers prepared for such transaction is known as Transaction Voucher. Transactions with, multiple debits and multiple credits are called complex transactions and the accounting voucher prepared for such transaction is known as Complex Voucher/ Journal Voucher. [3]

‘Increase in asset is debited, and decrease in asset is credited’.
Increase in liabilities is credited and decrease in liabilities is debited.

Question 23.
Explain any two of the following accounting Concepts/Principles :

Dual Aspect
Accrual
Conservatism. [4]

Explain in brief any four limitations of financial Accounting. [4]
Answer:
(i) Dual Aspect: According to Dual Aspect principle every business transaction has two aspects, i.e., debit and credit with same amount. e.g., Rent paid ? 1,000. So this transaction has two aspects , one is debit as rent and other is cash which will be credit. Trial Balance is also prepared as per the Dual Aspect principle.

(ii) Accrual: It applies equally to revenue and expenses. As per the assumption, all revenue and cost are recognised when they are earned or incurred, not at the time when settlement is done.

(iii) Conservatism: It is also called Prudence Principle. Conservatism principle says that the business should provide for all possible anticipated losses but not for profits. For example: Creation of Provision for doubtful debts.

Following are the limitations of financial accounting:
(i) Incomplete information: The accountant measures only those events that are financial in nature, i.e., that are capable of being expressed in money. Non monetary items or events, however, significant they may be, are not measured or recorded in accounting. For example, competency of management, competition in the market, industrial relations, etc.

(ii) Inexactness: Accounting data is some-times based on estimations and it may be inaccurate. Therefore, profits and financial position disclosed by such accounts may not be true and exact. For example, stocks are also valued on some assumptions. Actual useful life of an asset cannot be accurately calculated for the purpose of depreciation.

(iii) Personal influence of accountant: Accounting may be influenced by the personal judgement of the accountant. He/She applies a choice between different methods of inventory valuation, depreciation methods, provision for doubtful debts, treatment of capital and revenue items and so on. Thus, due to lack of objectivity, income measured may not be true in certain cases.

(iv) Assets may not be shown at their real value: Fixed assets are shown at written down value, i.e., cost less depreciation. There may be a great difference between book value at which assets are shown and current replacement cost. Certain valueless assets are also sometimes shown in Balance sheet, such as, preliminary expenses.

(v) Effect of price level changes are not considered: Accounting statements are prepared at historical cost. Money as a measurement unit changes, but it is not considered while preparing Profit & Loss Account, thus, the accounting information will not show true financial results.

(vi) Non-monetary transactions are ignored: Financial statements record only monetary transactions. Certain important and valuable assets like Human Resources, do not find a place in a Balance sheet. This is because, there is no yard-stick to measure the value of Human Resources in monetary terms. (Any four)

Question 24.
State three causes of difference in the Cash Book and Pass Book balances. [4]
Answer:
Three causes of difference in the bank balance shown by Cash Book and Pass Book.
These are discussed below:
(i) Transactions shown in Cash Book Only:

Cheques issued but not yet presented in the bank for payment.
Cheques deposited into bank but not yet credited or collected.
Cheques deposited into bank, but dishonoured.

(ii) Transactions shown in Pass Book Only:

Interest allowed or credited by bank.
Interest charged or debited by bank.
Bank charges and commission charged by the bank.
Direct deposit into the bank by a customer.
Payments made by the bank as per customer’s standing instructions.
Payments collected by the bank.
Bills collected by the bank on behalf of the customer.
Dishonour of a bill discounted with the bank.

(iii) Errors: It may be possible that while recording transactions in the Cash Book, the accountant might have committed some errors. Errors may also be committed by the bank in the firm’s account. These errors will also cause difference in bank balance shown by Cash Book and the Pass Book.

Commonly Made Error
This question is wrongly answered by almost all students. They write three reasons for difference instead of three causes.

Answering Tip
Students should learn the three causes of ! difference along with their reasons / examples

Question 25.
Prepare a Cash Book with Cash and Bank Columns: [4]

2014		₹
Jan. 1	Cash in hand Bank Overdraft	5.000 1.000
Jan. 2	Paid Wages	1,500
Jan. 3	Deposited into bank	2,000
Jan. 4	Cash Sales	7,500
Jan. 5	Sold goods for cheque which was deposited in bank on the same day	5,000
Jan. 6	Purchased goods from Hariom on credit.	4,000
Jan. 7	Drew from bank for personal use	1,000
Jan. 8	Paid to Hariom in full settlement	3,500

Answer:
Dr. Cash Book Cr.

Note: There will be no entry for credit transaction on Jan. 6.

Commonly Made Error
Students get confused when goods are sold and cheque is received for the same, some students pass contra I entry for it.

Answering Tip
Contra entry is not required to be passed. It is simple sales which is to be posted in Bank column.

Question 26.
Explain the factors which necessitated systematic accounting? [6]
Answer:
The factors that necessitated systematic accounting are given below:
(i) Only financial transactions are recorded: Those events that are financial in nature are only recorded in the books of accounts. For example, salary of an employee is recorded in the books but his/her educational qualification is not recorded.

(ii) Transactions are recorded in monetary terms: Only those transactions which can be expressed in monetary terms are recorded in the books. For example, if a business has two buildings and four machines, then their monetary values are recorded in the books, i.e. two buildings costing ₹ 2,00,000, four machines costing ₹ 8,00,000. Thus, the total value of assets is ₹ 10,00,000.

(iii) Art of recording: Transactions are recorded in the order of their occurrence (chronological order).

(iv) Classification of transaction: Business transactions of similar nature are classified and posted under their respective accounts. For example, all the transactions relating to machinery will be posted in the Machinery Account.

(v) Summarising of data: All business transactions are summarised in the form of Trial Balance, Trading Account, Profit & Loss Account and Balance Sheet that provides necessary information to various users.

(vi) Analysing and interpreting data: Systematic accounting records enable users to analyse and interpret the accounting data in a proper and appropriate manner. These accounting data and information are presented in form of graphs, statements, charts that leads to easy communication and understandability by various users Moreover, these facilitates in decision-making and future predictions. [1 x 6 = 6]

Question 27.
On 1st April, 2012 Gupta Bros, purchased two machines for ₹ 1,50,000 each. Depreciation at the rate of 10% on original cost of machine was to be provided. On 31st March, 2014, one machine was sold for ₹ 1,10,000. An improved model with a cost of ₹ 1,60,000 was purchased on the same day. You are required to show the Machinery Disposal Account for the year ended 31st March, 2014. [6]
Answer:
In the Books of Gupta Bros.
Dr. Machinery Account . Cr.

Dr. Machinery Disposal Account Cr.

Question 28.
Trial Balance of Annt Ram did not agree. It showed an excess credit of ₹ 16,000. He put the difference to Suspense A/c. Subsequently the following errors were located :

Cash received from Mohit ₹ 4,000 was posted to Mahesh as ₹ 1,000.
Cheque for ₹ 5,800 received from Arnav in full settlement of his account of ₹ 6,000 was dishonoured. No entry was passed in the books on dishonour of the cheque.
₹ 800 received from Khanna, whose account had previously been written off as bad, was credited to his account.
Credit sale to Manav for ₹ 5,000 was recorded through the Purchases Book as ₹ 2,000.
Purchases book was undercast by ₹ 1,000.
Repairs on Machinery ₹ 1,600 were wrongly debited to Machinery A/c as ₹ 1,000.
Goods returned by Nathu ₹ 3,000 were taken into stock. No entry was passed in the books. Rectify the above errors and prepare Suspense A/c [8]

Trial Balance of Kailash did not agree. He put the difference to Suspense A/c. The following errors were discovered:

Goods withdrawn by Kailash for personal use ₹ 500 were not recorded in the books.
Discount allowed to Ramesh ₹ 60 on receiving ₹ 2,040 from him was not recorded in the books.
Discount received from Rohan ₹ 50 on paying ₹ 3,250 to him was not recorded.
₹ 700 received from Khalil, a debtor, whose account had earlier been written off as bad, were credited to his personal A/c.
Cash received from Govil, a debtor, ₹ 5,000 was posted to his account as ₹ 500.
Goods returned to Mahesh ₹ 700 were posted to his account as ₹ 70.
Bill receivable from Narayan ₹ 1,000 was dishonoured and wrongly debited to Allowances as ₹ 10,000.

Give Journal entries to rectify the above errors and prepare Suspense Account to ascertain the amount of difference in Trial Balance. [8]

Answer:
In the Books of Annt Ram Journal Entries

Dr. Suspense Account Cr.

Commonly Made Errors

In point (i) some students confuse in the treatment of the different amount of ₹ 3000.
Students are also confused for the treatment of discount on dishonour of cheque.

Answering Tips

Since error is made while posting and ₹ 3,000 are less debited this difference will be debited to Suspense A/c.
In case of dishonour of cheque, discount allowed is also to be reversed.

In the Books of Kailash
Rectifying Entries

Dr. Suspense Account Cr.

Commonly Made Error:
In point (iii) students pass entry of the payment as well.

Answering Tip:
Properly read and understand what is asked in the question, Here it is mentioned that only discount entries ! are not entered in the books.

Part-B [24 Marks]
Financial Accounting-II

Question 29.
Excess of indirect expenses and non-operating expenses over gross profit and indirect revenues is called …………. [1]
Answer:
Net loss

Question 30.
Reports prepared to present a periodical review of financial performance and the financial position of a business enterprise are called:
(A) Bank Reconciliation Statement
(B) Auditor’s Report
(C) Financial Statements
(D) All the above [1]
Answer:
(C) Financial Statements

Explanation: Financial statements are the statements which are prepared after a specified period of time in order to show the periodic operating performance and financial position of an enterprise.

Question 31.
While preparing the Balance Sheet, the accountant has not arranged the assets and liabilities in a specified order.
He has not done ……………….. of assets and liabilities. [1]
Answer:
Marshalling

Explanation: The three industries: Railways, Atomic Energy and Defence, are reserved for the operation and management by government only. This is due to the need for security and confidentiality to be maintained especially in the operations of the Atomic Energy and Defence sectors of the country.

Question 32.
Which of the following entries are passed to correct the values of accounts shown in the Trial Balance?
(A) Rectification Entries
(B) Adjusting Entries
(C) Both (A) and (B)
(D) None of the above [1]
Answer:
(B) Adjusting Entries

Explanation: Sometime, we find the correct value of many accounts after preparing the trial Balance. In order to correct the values of such accounts, we pass adjusting entries.

Question 33.
Is renewal fee of license a revenue expenditure or a capital expenditure? [1]
Answer:
Revenue expenditure

Question 34.
Drawings given in trial balance will be shown in :
(A) Trading Account
(B) Profit and-Loss Account
(C) Balance sheet
(D) None of These [1]
Answer:
(C) Balance sheet

Explanation: Drawings Account is a personal account and all the personal and real Accounts find place in balance sheet.

Question 35.
Prepaid Expenses are ………………. for the business. [1]
Answer:
Asset

Explanation: Prepaid Expenses are representing for the amount that has been paid in advance. Hence
these are asset for the business.

Question 36.
Give the adjusting entry for depreciation and also its treatment in final accounts. [1]
Answer:
Adjusting Entry:
Depreciation A/c Dr.
To Assets A/c
Adjustment In:
Trading A/c No entry
Profit & Loss A/c: Shown on the debit side Balance
Sheet: Deduct from the concerned asset on the assets side. [1]

Question 37.
Consider the given information:
Opening stock ₹ 30,000
Net sales ₹ 8,20,000
Administration Exp. ₹ 45,000
Loss Due to fire ₹5,000
Net purchases ₹4,90,000
Wages ₹30,000
Selling and Distribution exp. ₹ 48,000
Closing stock ₹ 36,000

What is the value of cost of goods sold?
What is the value of operating Expenses?
What is the value of operating profit? [2]

Answer:
(i) Cost of Goods sold = Opening stock + Net purchase + Direct Exp. – Closing stock
= 30,000+ 4,90,000 + 30,000 – 36,000 = ₹ 5,14,000

(ii) Operating Expenses = Administration exp + selling and Distr. Exp.
= 45,000 + 48,000
= ₹ 93,000
Note: Loss due to fire is not an operating Exp.

(iii) Operating profit = Gross profit – Operating Exp. Gross profit
= Net sales – COGS
= 8,20,000- 5,14,000 (calculated in part (i))
= ₹ 3,06,000
Operating profit = 3,06,000 – 93,000 (Calculated in part (ii))
= ₹ 2,13,000

Question 38.
Show the treatment of following information in the Profit & Loss Account and Balance Sheet as on March 31, 2014:
Extracts from Trial Balance

Particulars	Debit (₹)	Credit (₹)
Capital		50,000
Carriage and Cartage unpaid	–	100
Interest accrued	400	–
Rent received in advance	–	700
Outstanding salaries	–	300
Depreciation	700	–
Interest on Capital	800	–
Interest on Drawings	–	400

From the following information and adjoining adjustments, prepare Profit & Loss Account and Balance Sheet (do not close Profit & Loss Account and Balance Sheet):

Particulars	Debit (₹)	Credit(₹)
Debtors	70,000	–
Bad debts	400	–
Reserve for bad debts	–	1,000

Adjustments: Provide reserve for bad and doubtful debts @ 6%. [8]
Answer:
In the Books of ….
Profit & Loss Account (Extract)
Dr. for the year ended March, 31, 2014 Cr.

Balance Sheet (Extract)
as on March, 31,2014

Commonly Made Error
Students get confused while solving such questions.

Answering Tip
Only extracts of Profit & Loss A/c and Balance sheet are required to be made.

Profit & Loss Account (Extract)

Balance Sheet (Extract)

Note: ‘Bad debts’ is an item of trial balance, so it has been shown at the debit side of Profit & Loss account only.
Provision for bad and doubtful debts is an item of adjustment, so it has been shown at the debit side of Profit
& Loss, account and also, deducted from debtors in the assets side.