CBSE Class 11 Accountancy Accounting Equation Worksheet Set 03

CBSE Class 11 Accountancy Chapter 3 Accounting Equation Multiple Choice Questions

Question. A cheque is considered as an order in writing drawn upon a bank to pay a specified sum to the bearer or the person named in it only if it is dated and signed by the ……… .
(a) drawee
(b) drawer
(c) Both (a) and (b)
(d) bearer
Answer. B

Question. Each cheque has a counterfoil in which the same details as entered in the cheque are filled. The counterfoil remains with the ……… for future purposes.
(a) bank
(b) cashier
(c) account holder
(d) Both (b) and (c)
Answer. C

Question. On the basis of source documents, entries are directly made in Journal.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer. B

Question. Which of the following must be a characteristic of a standard voucher?
(a) It should be printed on good quality paper
(b) Debit or credit amount should be written in figures against the amount
(c) Description of transaction should be given account wise
(d) All of the above
Answer. D

Question. Which of the following dates is irrelevant with respect to preparation of vouchers?
(a) Date of transaction
(b) Date of recording transaction
(c) Both (a) and (b)
(d) None of the above
Answer. B

Question. Which of the following is mentioned on the vouchers at the top of the paper?
(a) Name of the person preparing it
(b) Amount of the transaction
(c) Signature of the person preparing it
(d) Name of the firm
Answer. D

Question. The design of the voucher has no set format and depends upon the nature, requirements and convenience of business.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer. A

Question. ……… vouchers are written documents prepared on the basis of supporting vouchers for accounting and recording purpose by an accountant and countersigned by authorised person.
(a) Primary
(b) Secondary
(c) Source
(d) Both (b) and (c)
Answer. B

Question. Accounting vouchers are prepared for
(a) cash transactions
(b) non-cash transactions
(c) Both (a) and (b)
(d) None of the above
Answer. C

Question. Cash vouchers are type of accounting vouchers which are prepared for cash transactions only. Which of the following are types of cash vouchers?
(a) Cash receipt vouchers and cash payment vouchers
(b) Debit vouchers and cheque vouchers
(c) Debit vouchers and credit vouchers
(d) Cheque vouchers and credit vouchers
Answer. C

Question. The vouchers which are prepared for transactions not involving cash, i.e. non-cash transaction, are known as……… vouchers.
(a) Credit
(b) Token
(c) Unilateral
(d) Transfer
Answer. D

Question. For which of the following, non-cash voucher is prepared?
(a) Credit sale of goods
(b) Credit sale of investments
(c) Credit sale of fixed assets
(d) All of the above
Answer. D

Question. A mathematical expression, which shows that the …… and …… of a firm are equal, is known as accounting equation.
(a) liabilities and capital
(b) assets and capital
(c) liabilities and assets
(d) None of these
Answer. C

Question. Accounting equation is also known as……… equation.
(a) Balance sheet
(b) Arithmetic finance
(c) Fundamental
(d) Transactional
Answer. A

Question. A transaction may affect either both sides of the equation by the same amount or only one side of the equation by both increasing and decreasing it by equal amount.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer. A

Question. Following are the steps involved in developing an accounting equation (in particular order). Arrange the steps in correct sequence.
(i) Find out the effect (in terms of increase or decrease) of a transaction on assets, capitals or liabilities.
(ii) Show the effect on appropriate side of an equation and ensure that the total of right hand side is equal to the total of left hand side.
(iii) Ascertain the variables (i.e. assets, liabilities or capital ) involved in a transaction.
(a) (i), (ii), (iii)
(b) (ii), (iii), (i)
(c) (iii), (i), (ii)
(d) (iii), (ii), (i)
Answer. C

Question. If a business transaction results in the increase of assets, there will also be a corresponding increase in the amount of
(a) liabilities
(b) capital
(c) both (a) and (b)
(d) All of these
Answer. D

Question. When cash is withdrawn by proprietor,what is its impact on accounting equation?
(a) Decrease in assets, decrease in liabilities
(b) Decrease in assets, decrease in capital
(c) Increase in assets, increase in liabilities
(d) Increase in assets, increase in capital
Answer. B

Question. There will be ……… by same amount, when a land is purchased by paying the amount from bank account.
(a) Increase in asset, increase in liabilities
(b) Increase in asset, decrease in liabilities
(c) Decrease in asset, decrease in liabilities
(d) Decrease in one asset, increase in another asset
Answer. D

Question. For which of the following transactions, assets and capital will decrease by same amount?
(a) Goods sold for cash
(b) Fixed asset purchased on credit
(c) Depreciation provided on fixed assets
(d) Goods sold for cash at a profit
Answer. C

Question. When goods are returned to supplier, assets and ….. are …… by same amount.
(a) liabilities, increased
(b) liabilities, decreased
(c) assets, increased
(d) assets, decreased
Answer. B

Question. Which of the following is the correct accounting equation for repayment of loan amount of Rs 1,00,000 along with interest of Rs 10,000?
(a) Assets = Liabilities + Capital
(1,10,000) (1,10,000) 0
(b) Assets = Liabilities + Capital
(1,00,000) (1,00,000) 0
(c) Assets = Liabilities + Capital
(1,10,000) (1,00,000) (10,000)
(d) Assets = Liabilities + Capital
(1,10,000) (1,00,000) (10,000)
Answer. C

Question. Expenses tend to decrease the capital of business.
(a) True
(b) False
(c) Partially True
(d) Can’t say
Answer. A

Question. What will be the effect on accounting equation for outstanding expenses?
(Options are in format of assets, liabilities, capital).
(a) Decrease, Decrease, No change
(b) Decrease, No change, Decrease
(c) No change, Increase, Decrease
(d) Decrease, Increase, Decrease
Answer. C

Question. For which of the following transactions, capital account will be increased and decreased by the same amount?
(a) Income received in advance
(b) Outstanding expenses paid
(c) Interest on drawings provided
(d) Bad debts on insolvency of a debtor
Answer. C

Question. Neeraj Ltd. is engaged in a laptop trading business the total assets of business are Rs 10,40,000 and outside liabilities are Rs1,80,000. What will be the owner’s equity?
(a) Rs12,20,000
(b) Rs9,60,000
(c) Rs8,60,000
(d) Can’t be determined
Answer. C

Question. Rules of debit and credit are same for both liability and capital.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer. A

Question. Services for which prepaid expenses were paid are now availed by Sonu Enterprises. What will be its effect on accounting equation?
(a) Increase in asset, increase in liabilities
(b) Increase in asset, increase in capital
(c) Decrease in asset, decrease in liabilities
(d) Decrease in asset, decrease in capital
Answer. D

Question. As the effect of a transaction, capital of the company increased by Rs 2,000 and assets also increased by Rs 4000. Identify the transaction.
(a) Goods purchased on credit , Rs2,000
(b) Goods costingRs10,000 sold for Rs8,000
(c) Commission received worthRs2,000
(d) Both (b) and (c)
Answer. C

CBSE Class 11 Accountancy Chapter 3 Accounting Equation Case Based MCQs

Direction Read the following case study and answer questions on the basis of the same.

KLR Ltd. is publicly listed company trading in EV batteries. The company is known to have an advanced version of EV battery which can be used in almost all types of EV cars. As a result of onset of EV trend in India, company is getting lot of pre-orders.
Recently, one of the largest cab aggregators of India collaborated with the company to get batteries. Against this order, company received an advance of ` 10,00,000. When the EV batteries were delivered, company received the rest of the payment of ` 5,00,000.
The company sent a source document for these goods sold. Consequently, the company deposited the money received in the bank account.
To produce and fulfil the further orders, the company decided to purchase a new 3D moulder. It was worth ` 1,00,000 and company issued a document in writing drawn upon a specified banker and payable on demand.
The company also employed an experienced manager to streamline the operations. As a result, company continued to prosper and its stock prices also shot up.

Question. What is the accounting equation for advance received against order? [Use format Asset = Liabilities + Capital]
(a) 15,00,000 + (15,00,000) = 0 + 0
(b) 10,00,000 + (10,00,000) = 0 + 0
(c) 10,00,000 = 10,00,000 + 0
(d) None of the above
Answer. C

Question. Which document is highlighted in the line, “The company sent a source document for these goods sold”?
(a) Debit note
(b) Credit note
(c) Cash memo
(d) Bill
Answer. C

Question. Which document must be used to deposit money in the bank?
(a) Cheque
(b) Pay-in-slip
(c) Bill
(d) Receipt
Answer. B

Question. Which document is highlighted in the line, “It was worth `1,00,000 and company issued a document in writing drawn upon a specified banker and payable on demand”?
(a) Cheque
(b) Pay-in-slip
(c) Credit note
(d) Debit note
Answer. A

Question. Which of following would be unchanged as a result of transaction of purchasing 3D moulder of ` 1,00,000?
(a) Capital
(b) Assets
(c) Liabilities
(d) All of these
Answer. D

Direction Read the following case study and answer questions on the basis of the same.

Pradhan Opticals is a spectacles shop in Lucknow. The shop procures the frames from a local frame manufacturing firm. The shop arranges the lenses from Delhi as and when orders come in according to specifications by the customer.
After the pandemic, to boast the business further, it decided to enter into collaborations with hospital chains to provide the black spectacles required after the cataract surgery. It shipped 20,000 units of ` 5 each of such spectacles to the local hospital. This transaction was on credit basis. However, the hospital returned 10,000 units as those units were found to be defective.
After 6 months, the hospital chain went bankrupt and the shop lost its money as bad debt. It decided to stop the credit policy altogether so that it prevents losses in the future.
At the end of the year, the company was left with ` 1,00,000 worth of goods and no debtors. The company also had a creditor of raw materials of ` 20,000 and a creditor of a small machinery (not written off) ` 10,000.

Question. Which document must have been prepared by Pradhan Opticals in the line, “It shipped 20,000 units of ` 5 each of such spectacles to the local hospital. This transaction was on credit basis”?
(a) Cash memo
(b) Invoice
(c) Debit note
(d) None of these
Answer. B

Question. What was the affect of the return by the hospitals on the accounting equation? [Use format Assets = Liabilities + Capital]
(a) (50,000) = (50,000) + 0
(b) 50,000 = 50,000 + 0
(c) (50,000) + 50,000 = 0 + 0
(d) None of the above
Answer. C

Question. Bad debts by the hospital had impact on the capital and liabilities of the firm.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer. B

Question. What was the capital of the firm at the end of the year?
(a) `1,00,000
(b) `90,000
(c) `80,000
(d) `70,000
Answer. D

Question. After the units were returned by the hospital, the shop prepared a source document and sent it to the hospital. What could it be?
(a) Debit Note
(b) Bill
(c) Credit Note
(d) Pay-in-slip
Answer. C

Please click on below link to download CBSE Class 11 Accountancy Accounting Equation Worksheet Set A