UP PGT Commerce Practice Quiz

Question 1

A sole trader starts business by depositing ₹1,20,000 cash as capital. Ignoring any other transaction, what is the immediate effect on the accounting equation?

Accepted Answer

Assets increase by ₹1,20,000 and owner's equity increases by ₹1,20,000

Question 2

A business buys office furniture for ₹30,000 in cash. Which statement correctly describes the transaction under double-entry accounting?

Accepted Answer

Furniture increases by ₹30,000 and cash decreases by ₹30,000, with no change in total assets

Question 3

Under a periodic inventory system, goods are sold on credit to Arun for ₹25,000. Ignoring the separate closing-inventory adjustment, which entry records the sale?

Accepted Answer

Arun A/c Dr ₹25,000; To Sales A/c ₹25,000

Question 4

A debtor owing ₹10,000 settles the account by paying ₹9,800 in cash; the business allows ₹200 discount. Which compound entry is correct?

Accepted Answer

Cash A/c Dr ₹9,800; Discount Allowed A/c Dr ₹200; To Debtor A/c ₹10,000

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