Free Questions › CA › Accounting
Free CA Accounting Practice Questions & Answers
150 exam-style Accounting questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 1
A business has assets of Rs.9,60,000 and liabilities of Rs.3,40,000. The proprietor then introduces further capital of Rs.1,00,000 in cash, and the business pays off Rs.60,000 of its liabilities out of that cash. Closing capital is:
Select an option first.
Correct answer: C — Rs.7,20,000
Explanation: Opening capital = 9,60,000 - 3,40,000 = Rs.6,20,000. Fresh capital of Rs.1,00,000 raises it to Rs.7,20,000. Repaying a liability reduces an asset (cash) and a liability by the SAME Rs.60,000, so capital is untouched. The lesson worth carrying into a written answer: settling a liability never changes owner's equity, it only shortens both sides of the Balance Sheet.
Question 2
A ledger account has total debits of Rs.7,45,000 and total credits of Rs.6,98,000. It has:
Select an option first.
Correct answer: D — A debit balance of Rs.47,000
Explanation: The balance is the DIFFERENCE between the two sides and takes the name of the larger side: 7,45,000 - 6,98,000 = Rs.47,000 debit. The balancing figure is written on the smaller (credit) side as 'By Balance c/d' and reappears on the debit side as 'To Balance b/d' in the next period. Adding the two sides, as distractor B does, is meaningless.
Question 3
The periodic total of the Bills Receivable Book is posted to the:
Select an option first.
Correct answer: A — Debit of the Bills Receivable Account
Explanation: A bill receivable is an asset - a right to receive money - so the total of the book is DEBITED to the Bills Receivable Account. The individual customers whose acceptances were received are credited from the book, their debtor balances being replaced by the bill. The mirror image applies to the Bills Payable Book, whose total is credited.
Question 4
Which of the following is the book of ORIGINAL entry for a credit purchase of goods?
Select an option first.
Correct answer: D — The Purchases Book
Explanation: The transaction is first recorded from the supplier's invoice in the Purchases Book, a book of original or prime entry. Only afterwards is it posted to the ledger - individually to each supplier and in total to the Purchases Account. The Trial Balance is not a book of account at all but a statement extracted from the ledger.
Question 5
Which of the following is a contra entry in a two-column cash book?
Select an option first.
Correct answer: B — Rs.25,000 withdrawn from the bank for office use
Explanation: A contra entry affects BOTH the cash column and the bank column of the same cash book, so it is marked 'C' in the L.F. column and is never posted to the ledger. Cash withdrawn from bank for office use is debited in the cash column and credited in the bank column. Cash sales and payment by cheque each touch only one column plus an outside account, so they are ordinary entries.
Get the full CA question bank — free
Drop your email and we'll send you fresh CA practice questions, fully worked solutions and exam-deadline reminders. No spam — unsubscribe in one click.
Want to save your score and take a full mock exam? Create a free account →
Question 6
Rs.40,000 of cash is deposited into the bank. In a two column cash book this is:
Select an option first.
Correct answer: A — Debited in the bank column and credited in the cash column
Explanation: Money moves from cash to bank, so the bank column (receiving) is debited and the cash column (giving) is credited, both within the same cash book. It is marked 'C' in the L.F. column and is NOT posted to the ledger, since both aspects are already recorded. Withdrawing cash from the bank is the same entry in reverse.
Question 7
A credit balance in the bank column of the cash book indicates:
Select an option first.
Correct answer: D — A bank overdraft
Explanation: A credit balance in the bank column means more has been drawn than deposited - the firm owes the bank, which is an overdraft and a current liability. The cash column, by contrast, can NEVER show a credit balance, since a business cannot pay out cash it does not hold; a credit balance there is proof of an error.
Question 8
Outstanding Salary at the year end is credited to the Outstanding Salary Account because it is:
Select an option first.
Correct answer: B — A representative personal account, the firm's liability to the employees having increased
Explanation: Outstanding Salary REPRESENTS the persons to whom the amount is due, which makes it a representative personal account: credit the giver, and the employees have given service not yet paid for. It is shown as a current liability. The related expense sits in the Salary Account, a nominal account, which is debited - keeping the two apart is what makes the adjustment double-sided.
Question 9
Under the traditional classification, Prepaid Insurance is:
Select an option first.
Correct answer: A — A representative personal account
Explanation: Prepaid Insurance represents the insurer, who owes the firm cover not yet received, so it is a representative personal account and appears as a current asset. The Insurance Account itself is nominal. The same logic classifies outstanding expenses, prepaid expenses, accrued income and income received in advance - all representative personal accounts.
Question 10
The Sales Account was undercast by Rs.5,000 and the Purchases Account was also undercast by Rs.5,000. The consequence is:
Select an option first.
Correct answer: A — The Trial Balance will agree, the two errors having offset each other
Explanation: A short credit of Rs.5,000 in Sales is exactly cancelled by a short debit of Rs.5,000 in Purchases, so the totals still tally - the definition of a compensating error. Rectification is still necessary: the Sales and Purchases figures disclosed in the Trading Account, and every ratio built on them, remain wrong even though profit happens to be unaffected here.
Question 11
A Sales Ledger Control Account is maintained principally to:
Select an option first.
Correct answer: D — Locate errors and provide a total debtors figure independently of the individual accounts
Explanation: The control account is built from TOTALS taken from the subsidiary books, so its balance should equal the sum of the individual debtor balances. A mismatch localises the error to the sales ledger instead of the whole set of books, and the control balance can be used for final accounts before the individual ledger is agreed. It supplements the individual accounts, it does not replace them.
Question 12
A debit note is issued when:
Select an option first.
Correct answer: C — Goods are returned by the firm to a supplier
Explanation: A debit note tells the supplier that his account has been DEBITED (reduced) because goods have gone back to him; it is the source document for the Purchases Return Book. A credit note works the other way - issued to a customer whose account is credited on a sales return, and it feeds the Sales Return Book. Match document to book and the entry follows.
Question 13
A credit sale of Rs.9,500 to Anil was omitted from the books altogether. This is:
Select an option first.
Correct answer: D — An error of complete omission, and the Trial Balance will still agree
Explanation: Because neither the debit nor the credit was recorded, both sides of the Trial Balance are equally understated and the totals still tally. Rectification is the original entry itself: Anil's A/c Dr. Rs.9,500, To Sales A/c Rs.9,500. Note the contrast with PARTIAL omission, where only one aspect is left out - that does disturb the Trial Balance and goes through Suspense.
Question 14
Which of the following is recorded in the Journal Proper?
Select an option first.
Correct answer: A — The purchase of a motor van on credit
Explanation: The Journal Proper takes only what no special book covers: opening and closing entries, adjustment and rectification entries, transfer entries, and credit purchases or sales of ASSETS. Credit purchases of goods go to the Purchases Book, cash sales to the cash book and returns to the Purchases Return Book. Listing the residual categories is itself a standard theory question.
Question 15
A debt of Rs.18,000, written off as bad two years ago, is recovered in full. The credit is to:
Select an option first.
Correct answer: A — Bad Debts Recovered A/c, being an income of the current year
Explanation: The debtor's account was closed when the debt was written off, so there is no balance left to reduce - reviving it would overstate debtors. The receipt is a windfall gain of the CURRENT year, credited to Bad Debts Recovered and transferred to the Profit and Loss Account. This is also why prior-year recoveries are never netted against the current year's bad debts figure in a written answer.
Question 16
The proprietor took goods costing Rs.15,000, having a selling price of Rs.19,000, for personal use. The correct entry is:
Select an option first.
Correct answer: A — Drawings A/c Dr. Rs.15,000; To Purchases A/c Rs.15,000
Explanation: Goods taken by the proprietor leave the business at COST - no sale has occurred and no profit may be recognised on dealing with oneself. Purchases is credited (not Sales) so that the Trading Account is relieved of the cost of goods never available for sale. Recording Rs.19,000 would book an unrealised profit of Rs.4,000, which breaches the realisation concept.
Question 17
Goods costing Rs.24,000 were distributed as free samples to prospective customers. The entry is:
Select an option first.
Correct answer: A — Advertisement A/c Dr. Rs.24,000; To Purchases A/c Rs.24,000
Explanation: The goods have been consumed to promote the business, so the cost is a selling expense: debit Advertisement and credit Purchases at cost. Contrast this with drawings, where the goods go to the OWNER, and with a normal sale, where the goods go to a customer for consideration. Identify the destination of the goods first - it decides the debit every time.
Question 18
Goods costing Rs.80,000 were destroyed by fire. The insurance company admitted a claim of Rs.55,000. The amount ultimately charged to the Profit and Loss Account is:
Select an option first.
Correct answer: C — Rs.25,000
Explanation: Two entries are needed. First, Loss by Fire A/c Dr. Rs.80,000, To Purchases (or Trading) A/c Rs.80,000, removing the cost of goods no longer available for sale. Second, Insurance Claim Receivable A/c Dr. Rs.55,000, To Loss by Fire A/c Rs.55,000. The balance of Rs.25,000 is the uninsured loss taken to the Profit and Loss Account, while Rs.55,000 stands as a current asset until received.
Question 19
In the opening entry passed at the start of a new accounting year, the proprietor's capital is:
Select an option first.
Correct answer: C — Credited, being the excess of assets over liabilities
Explanation: The opening entry brings in every asset by debit and every liability by credit; capital, being what the business owes the proprietor, is the balancing CREDIT and equals assets less liabilities. Writing capital on the debit side would make the entry fail to balance - a quick self-check when the opening entry is worth several marks.
Question 20
Where a separate Provision for Depreciation Account is maintained, the annual entry for depreciation is:
Select an option first.
Correct answer: B — Depreciation A/c Dr.; To Provision for Depreciation A/c
Explanation: Under this method the asset account stays permanently at COST and all accumulated depreciation collects in the provision account, so the Balance Sheet can show cost, accumulated depreciation and net book value separately. The provision is debited only when the asset is sold or discarded, at which point cost and accumulated depreciation are transferred together to an Asset Disposal Account.
Question 21
A supplier's account in the Purchases Ledger normally carries a credit balance. A DEBIT balance in that account most likely indicates:
Select an option first.
Correct answer: A — An advance paid to the supplier, or goods returned after the invoice was paid
Explanation: An abnormal balance is a prompt to investigate, not proof of error. A debit balance on a creditor arises when the firm has paid in advance or returned goods after settling the bill, making the supplier a debtor for that amount. In the Balance Sheet such a balance is shown on the ASSETS side and must not be netted off against other creditors.
Question 22
The agreement of a Trial Balance does NOT prove the absence of:
Select an option first.
Correct answer: C — Errors of principle, compensating errors and errors of complete omission
Explanation: A Trial Balance only proves ARITHMETICAL accuracy - that total debits equal total credits. Errors of principle (wrong class of account), compensating errors (two mistakes cancelling out) and complete omission (no entry at all) leave both sides equally affected, so the totals still agree. The other three options each disturb one side and would be caught.
Question 23
Under the imprest system the petty cashier started the month with Rs.5,000, spent Rs.4,280 during the month and was reimbursed at the month end. The reimbursement is:
Select an option first.
Correct answer: B — Rs.4,280
Explanation: The imprest system restores the float to its fixed level, so the reimbursement always equals the amount actually SPENT - here Rs.4,280, bringing the balance back to Rs.5,000 for the next period. The system's control value lies exactly here: cash in hand plus vouchers must always equal the imprest amount, so a shortage is visible at once.
Question 24
The periodic total of the Sales Return Book is posted to the:
Select an option first.
Correct answer: D — Debit of the Sales Return Account
Explanation: Sales returns reduce revenue, and the reduction is collected as a DEBIT in the Sales Return Account, whose total is deducted from sales in the Trading Account. The individual customers are credited one by one from the book, which is why only the total goes to the Sales Return Account - posting both the total and the individual amounts to the same account would double count.
Question 25
Furniture worth Rs.90,000 was bought on credit from Deco Ltd for use in the office. The entry is:
Select an option first.
Correct answer: B — Furniture A/c Dr. Rs.90,000; To Deco Ltd Rs.90,000
Explanation: The Purchases Account records only goods the business DEALS IN; anything bought for use is an asset. The entry is made in the Journal Proper, not the Purchases Book. Note the presentation point examiners look for: Deco Ltd is a creditor for an asset, so it is disclosed under other current liabilities and not clubbed with trade payables.
Question 26
The total of the Purchases Return Book, Rs.14,000, was posted to the Sales Return Account. The rectifying entry is:
Select an option first.
Correct answer: D — Suspense A/c Dr. Rs.28,000; To Purchases Return A/c Rs.14,000; To Sales Return A/c Rs.14,000
Explanation: Two separate wrongs exist. Purchases Return was never credited (credits short Rs.14,000) and Sales Return was wrongly debited (debits excess Rs.14,000), so the Trial Balance differs by Rs.28,000. Correct both by crediting Purchases Return Rs.14,000 and crediting Sales Return Rs.14,000, with Suspense debited Rs.28,000. Distractor B looks tidy but leaves the Suspense difference untouched.
Question 27
Rs.3,400 received from Sohan was posted to the CREDIT of Mohan's account. The rectifying entry is:
Select an option first.
Correct answer: A — Mohan A/c Dr. Rs.3,400; To Sohan A/c Rs.3,400
Explanation: Cash was debited correctly, and a credit of Rs.3,400 was made - only to Mohan instead of Sohan. Cancel the wrong credit by debiting Mohan, and give the credit to Sohan whose debt has actually been settled. Trial Balance totals were never affected, so this is rectified without a Suspense Account.
Question 28
The Purchases Account was undercast by Rs.2,600. The Suspense Account opened to balance the Trial Balance will show:
Select an option first.
Correct answer: B — A credit balance of Rs.2,600
Explanation: Purchases carries a DEBIT balance, so undercasting it leaves total debits short by Rs.2,600; Suspense is credited with Rs.2,600 to make the Trial Balance agree, giving it a credit balance. Rectification is Purchases A/c Dr. Rs.2,600, To Suspense A/c Rs.2,600. The reliable method is to ask which side the affected account sits on, then which side is now short.
Question 29
Repairs to machinery costing Rs.28,000 were debited to the Machinery Account. Depreciation is charged at 10% per annum on machinery. Before rectification, the profit for the year is:
Select an option first.
Correct answer: A — Overstated by Rs.25,200
Explanation: Two effects run in opposite directions. Profit is overstated by Rs.28,000 because the repairs were never charged, but understated by Rs.2,800 because depreciation was charged on an asset figure inflated by Rs.28,000. Net overstatement = 28,000 - 2,800 = Rs.25,200. Whenever an error of principle touches a depreciable asset, always work through the consequential depreciation - it is where the second mark sits.
Question 30
Discount allowed of Rs.750 was recorded in the cash book but was never posted to the Discount Allowed Account. The rectifying entry is:
Select an option first.
Correct answer: B — Discount Allowed A/c Dr. Rs.750; To Suspense A/c Rs.750
Explanation: Only the debit to Discount Allowed is missing - the customer was already credited from the cash book - so this is a one-sided error and the Trial Balance is short on the debit side by Rs.750. Supply the missing debit and complete the entry through Suspense. The rule is mechanical: a one-sided error is always rectified through Suspense, a two-sided error never is.
More free CA topics
Ten questions in
- The ones you miss are saved as a drill you can repeat
- Your place is kept, on this device and any other
- A streak, if that is the thing that gets you back tomorrow
Every question on this page stays free and open either way.