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PCO1 / PCO01 Preparatory Course in Commerce June 2013
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Test Papers / Previous Question Papers of IGNOU PCO1 / PCO01 Preparatory Course in Commerce PCO1 / PCO01 Preparatory Course in Commerce June 2013


BACHELOR'S PREPARATORY PROGRAMME (B.P.P.)

Term-End Examination

PC0-01 : PREPARATORY COURSE IN COMMERCE

Time : 2 hours
Maximum Marks : 50

Note : Attempt all questions. Each question carries one mark.

June 2013

1. The basic function of financial accounting is to :

(1) record all business transactions
(2) assist the management in decision making
(3) find out gross profit
(4) all of the above

2. Goods sold for cash to Ramesh will be credited to :

(1) Ramesh A/C (2) Cash A/C
(3) Sales A/C (4) Capital A/C

3. Which note is sent to customer when he returns the goods :

(1) Credit note (2) Debit note
(3) Promissory note (4) Cheque

4. A person who draws a bill of exchange is known as :

(1) Payee (2) Endorser (3) Drawer (4) Drawee

5. Office equipments purchased on credit will be recorded in :

(1) Purchase book (2) Cash book (3) Sales book (4) Journal proper

6. Amount brought in by the proprietor into the business should be credited to :

(1) Capital A/C (2) Cash A/C (3) Drawings A/C (4) Bank A/C

7. Purchases made on credit not recorded would affect :

(1) Cash A/C only (2) Purchases A/C and Supplier's A/C
(3) Purchases A/C only (4) Supplier A/C only

8. Sales returns book is meant for recording :

(1) All sales (2) Cash sales (3) Sales returns (4) Credit sales

9. Debit balance of cash book is :

(1) an asset (2) an income (3) an expense (4) a liability

10. The system of recording transactions based on dual aspect concept is called :

(1) double account system (2) double entry system
(3) single entry system (4) imprest system

11. Which branch of accounting is concerned with the measurement and control of costs ?

(1) Financial Accounting (2) Management Accounting
(3) Corporate Accounting (4) Cost Accounting

12. Which type of discount is not shown in the books of account ?

(1) Trade discount (2) Cash discount
(3) Discount on bills receivable (4) Rebate

13. Which of the following is a nominal account ?

(1) Loan A/C (2) Drawings A/C
(3) Outstanding salary A/C (4) Bad debts A/C

14. Accrued interest is which type of account ?

(1) Real A/C (2) Nominal A/C (3) Personal A/C (4) Suspense A/C

15. Posting is done in the :

(1) Journal (2) Ledger (3) Balance Sheet (4) Trial Balance

16. Which of the following account shows a credit balance ?

(1) Debtors A/C (2) Salaries A/C (3) Creditors A/C (4) Buildings A/C

17. Which of the following error is not disclosed by a Trial Balance ?

(1) Error of omission of posting in one account
(2) Error of commission
(3) Error of principle
(4) Error of posting on the wrong side

18. Credit balance of pass book shows :

(1) an income (2) an asset (3) an expenditure (4) a liability

19. Sales returns journal is also called :

(1) Return outwards journal (2) Journal proper
(3) Day book (4) Invoice book

20. Trading Account is prepared to find out :

(1) Net profit (2) Cost of production
(3) Gross profit (4) Cost of sales.

21. Wages and salaries are shown in :
(1) Trading A/C (2) Profit and Loss A/C
(3) Balance Sheet (4) Profit and Loss Appropriation account

22. Which of the following item is charged to profit and loss A/C ?

(1) Wages (2) Stock
(3) Sales (4) Depreciation on furniture

23. All the indirect expenses are shown in :

(1) Trading A/C (2) Profit and Loss A/C
(3) Manufacturing A/C (4) Profit and Loss Appropriation A/C

24. A statement showing assets and liabilities at the end of an accounting year is called :

(1) Trial balance (2) Ledger (3) Balance sheet (4) Journal proper

25. Interest on drawings is shown on the :

(1) Credit side of trading A/C
(2) Debit side of trading A/C
(3) Credit side of profit and loss A/C
(4) Debit side of profit and loss A/C

26. If the totals of debit and credit sides of trial balance do not tally, the difference is put against :

(1) Suspense Account (2) Trading Account
(3) Profit and Loss A/C (4) Capital Account

27. Goodwill is a :

(1) tangible asset (2) wasting asset (3) fixed asset (4) intangible asset

28. Creditors of a firm is :

(1 ) an asset for the firm (2) a liability for the firm
(3) an expense for the firm (4) a revenue for the firm

29. Excess of income over expenditure is :

(1) Profit (2) Loss (3) Capital gain (4) Capital

30. Which of the following accounts normally show a debit balance ?

(1) Discount allowed A/C (2) Sales A/C
(3) Capital A/C (4) Purchase returns A/C

31. Single entry system of book-keeping is a system of :

(1) incomplete records
(2) reliable records
(3) providing true financial position
(4) helping in locating errors

32. Which of the following equation is correct ?

(1) Capital — Assets = liabilities (2) Capital + Assets = liabilities
(3) Capital + Liabilities = Assets (4) Capital x Liabilities = Assets

33. When an asset is recorded at its price actually paid, it is related to :

(1) Materiality concept (2) Conservatism concept
(3) Cost concept (4) Matching concept

34. Ledger folio is the column included in :

(1) Journal (2) Sales Book (3) Cash Book (4) All of the above

35. Mr. Ram bought an Almirah for Rs. 6,000 and paid cartage of Rs. 600. Furniture A/c will be debited with :

(1) Rs. 6,000 (2) Rs. 600 (3) Rs. 6,600 (4) Rs. 5,400

36. Debit balance of a personal account indicates :

(1) Cash in hand (2) Amount receivable
(3) Arndunt payable (4) Cash at bank

37. Which of the following is called a book of prime entry ?

(1) Journal (2) Ledger
(3) Sales Book (4) Journal and Ledger

38. Which of the following accounts will increase by credit entry ?

(1) Goodwill A/C (2) Purchase A/C
(3) Sales returns A/C (4) Sales A/C

39. For salary paid to Raman, which account will be debited ?

(1) Raman account (2) Salary account (3) Capital account (4) Cash account

40. If customers are allowed discount, it will be treated as :

(1) Loss (2) Income (3) Asset (4) Liability

41. Which of the following statement is false ?

(1) Ram's account is a personal account
(2) Loan account is a personal account
(3) Capital account is a personal account
(4) Rent account is a personal account

42. Petty cash book is used for recording.

(1) Purchases of current assets
(2) Purchases of fixed assets
(3) Payment of long term liabilities
(4) Small expenses like, postage, stationery etc

43. Trial balance is prepared for ensuring the accuracy of :

(1) Cash Book (2) Balance Sheet (3) Ledger (4) Journal Proper

44. Preliminary expenses are an example of :

(1) Capital expenditure (2) Revenue expenditure
(3) Capital loss (4) Deferred revenue expenditure

45. Expenditure on renovation of Building will be shown in :

(1) Manufacturing A/C (2) Profit and Loss A/C
(3) Trading A/C (4) None of the above

46. Depreciation primarily arises from :

(1) Physical wear and tear
(2) Fall in the value of money
(3) Fall in the market value of an asset
(4) Fall in prices

47. Sales are equal to :

(1) Cost of goods sold — gross profit
(2) Cost of goods sold + gross profit
(3) Opening stock + purchases — closing stock
(4) Gross profit + opening stock

48. Closing stock is valued at :

(1) Cost price
(2) Market price
(3) Cost price or market price whichever is less
(4) Cost price or market price whichever is higher

49. A business has liabilities of Rs. 20,000 and owner's equity is Rs. 30,000. Its assets would be .

(1) Rs. 10,000 (2) Rs. 50,000
(3) Rs. 20,000 (4) Rs. 30,000

50. Additional capital introduced is :

(1) Capital receipt (2) Revenue receipt
(3) Capital loss (4) Revenue loss

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