ACCOUNTING PAPER

 

Section A — MCQs

  1. What is the accounting equation?
    A) Assets = Capital – Liabilities
    B) Assets = Liabilities + Capital
    C) Capital = Assets – Liabilities
    D) Liabilities = Assets + Capital

  2. Which account is a nominal account?
    A) Machinery account
    B) Capital account
    C) Rent expense account
    D) Capital introduced account

  3. When a person purchases goods in cash, which account is debited in the journal?
    A) Cash account
    B) Purchases account
    C) Capital account
    D) Sales account

  4. What is the purpose of a Bank Reconciliation Statement?
    A) To merge cash-book and bank-book only
    B) To identify differences between cash-book and bank statement
    C) To find errors only in bank statement
    D) To find errors only in cash-book

  5. If the depreciation method is “Straight Line”, how is depreciation calculated?
    A) Original cost of the asset
    B) Equal amount each year
    C) Different amount each year (reducing balance)
    D) Asset’s scrap value

  6. A bill of exchange that is accepted again is called?
    A) Accommodation bill
    B) Renewal bill
    C) Promissory note
    D) Demand draft

  7. What is the purpose of preparing a trial balance?
    A) To find debtors and creditors
    B) To check whether debits equal credits
    C) To prepare final accounts and adjustments
    D) To summarize only nominal accounts

  8. Which is an example of capital expenditure?
    A) Machine repair
    B) Wages paid
    C) Purchase of new machinery
    D) Salaries paid

  9. If a cheque is not presented to the bank, it is called?
    A) Un‑credited cheque
    B) Un‑presented cheque
    C) Dishonoured cheque
    D) Overdue cheque

  10. When is a suspense account used?
    A) When the trial balance is already balanced
    B) When trial balance is not balanced and error is not located
    C) Only in final accounts
    D) Only for cash transactions

Section B — Short Answer Questions

Answer any 8 questions (8 × 2 = 16 marks)

  1. Define bookkeeping.

  2. Who are debtors?

  3. What is cash discount?

  4. Difference between Journal and Ledger (give 2 points).

  5. Give one example of a nominal account.

  6. Write the accounting equation and define each term.

  7. What is a contra entry? Explain briefly.

  8. Basic difference between capital and revenue expenditure.

  9. What is a Trading Account?

  10. Define fixed assets.

Section C — Short/Medium Answer Questions

Group 1 — Answer any 3 questions (3 × 5 = 15 marks)

a) What is a Bank Reconciliation Statement? Explain its importance.
b) Define Bills of Exchange. Explain Renewal and Accommodation bills.
c) Difference between Cash-book and Bank-book.
d) Journal entry: Purchased furniture on credit worth 50,000 and paid 10,000 cash.

Group 2 — Answer any 2 questions (2 × 10 = 20 marks)

a) A business purchases goods cash 80,000 on 1‑Dec‑2025 and partly sells credit 40,000 and partly cash 30,000 on 5‑Dec‑2025. Prepare Journal, Ledger postings, and short Trial Balance.

b) Prepare a simple Trading & Profit & Loss Account and Balance Sheet. Data:

  • Opening capital: 200,000

  • Purchases: 150,000

  • Sales: 220,000

  • Direct expenses: 30,000

  • Closing stock: 20,000

  • Drawings: 10,000

  • Find closing capital.

c) Bank statement and cash-book differences:

  • Un‑presented cheques: 15,000

  • Bank charged: 2,000

  • Deposit in transit: 5,000

  • Cash-book balance: 50,000
    Prepare Bank Reconciliation Statement and find adjusted bank balance.

Exam Preparation Tips

  • Practice Journal → Ledger → Trial Balance → Final Accounts cycle fully.

  • Revise definitions and theory: nominal vs real accounts, capital vs revenue, depreciation, bills of exchange, bank reconciliation.

  • Focus on Debit/Credit rules, accounting equation, and capital/revenue expenditure for MCQs.

  • Solve past papers for timing and confidence.

  • Chapters with highest probability of appearing: Journal, Ledger, Trial Balance, Final Accounts, Accounting Equation.

  • Medium probability: Bank Reconciliation, Bills of Exchange, Adjustments/Errors.

  • Low probability: Complex scenarios, Comparative analysis questions.

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