SPECIAL PURPOSE BOOKS

Multiple Choice Questions

1. Which of the following is not a special purpose book?
(a) Cash Book (b) Sales Return Book
(c) Journal (d) Journal Proper
2. Special journals prove economical and make division of labour possible in
accounting work.
(a) True (b) False
(c) Can’t say (d) Partially true
3. Cash book is considered as both ……… and ……… book.
(a) primary, subsidiary (b) subsidiary, principal
(c) tertiary, principal (d) None of these
4. When a firm maintains a cash book, it need not maintain
(a) journal proper
(b) purchases (journal) book
(c) sales (journal) book
(d) bank and cash account in the ledger
5. Transactions that cannot be recorded in any special journal are recorded in
journal called the ……… .
(a) Cash book (b) Journal
(c) Ledger (d) Journal proper
6. Which of the following about cash book is not true?
(a) It serves the purpose of both journal as well as the ledger (cash)
account.
(b) It is also called the book of original entry.
(c) When a cash book is maintained, transactions of cash are not recorded
in the journal, and no separate account for cash or bank is required in the
ledger.
(d) It records both cash and credit transactions.
7. In cash book, there will only be debit balance.
(a) True
(b) False
(c) Can’t say
(d) Partially true
8. Double column cash book records
(a) all transactions
(b) cash and bank transactions
(c) only cash transactions
(d) only credit transactions
9. What does credit balance of bank account in cash book signify?
(a) Overdraft
(b) Cash deposited in bank
(c) Cash withdrawn from bank
(d) None of the above
10. Match the following.

(a) (i) (iii) (ii) (b) (ii) (iii) (i)

(c) (i) (ii) (iii) (d) (iii) (i) (ii)
11. Which of the following will be recorded in cash book?
 (a) Trade discount of ₹ 5,000
(b) Bad debts of ₹ 3,000
(c) Credit purchases of ₹ 25,000
(d) None of the above
12. If Razi paid ₹ 9,900 in settlement of her account of ₹ 10,000, then the
discount allowed of ₹ 100 will be recorded in
(a) Journal book (b) Cash book
(c) Both (a) and (b) (d) None of these
13. Salary due for the month of March 2021 worth ₹ 20,000 will appear in
which side of cash book?
(a) Receipt (b) Payment
(c) Contra (d) None of these
14. Contra entries refer to
(a) entries that are made only on debit side of cash book.
(b) entries that are made only on credit side of cash book.
(c) entries that are made on both sides of cash book.
(d) None of the above
15. If a cheque of ₹ 25,000 is deposited on the same day, it is received and
eventually the cheque is dishonoured, it will be recorded as
(a) Debtor A/c Dr 25,000
To Bank A/c 25,000
(b) Bank A/c Dr 25,000
To Debtor A/c 25,000
(c) Debtor A/c Dr 25,000
To Cash A/c 25,000
(d) None of the above
16. Identify contra entry from the following.
(a) Salary paid ₹ 20,000.
 (b) Cash received from P ₹ 10,000.
(c) Cash deposited into bank ₹ 25,000.
(d) Cash withdrawn from bank for personal use ₹ 5,000.
17. Cash deposited into bank ₹ 50,000 will be recorded as
(a) debit of bank column with ₹ 50,000 and credit of cash column with ₹
50,000.
(b) debit of cash column with ₹ 50,000 and credit of bank column with ₹
50,000.
(c) debit of bank column with ₹ 50,000 and also debit of cash column
with ₹ 50,000.
(d) debit of cash column with ₹ 50,000 also credit of cash column with ₹
50,000.
18. If cheque of ₹ 3,000 is received from A, what will be the journal entry?
(a) Cash A/c Dr 3,000
To A 3,000
(b) Bank A/c Dr 3,000
To A 3,000
(c) A Dr 3,000
To Bank A/c 3,000
(d) None of the above
19. Petty cash book is a book having record of big payments.
(a) True (b) False
(c) Can’t say (d) Partially true
20. Bank column of cash book can have both debit and credit balance.
(a) True (b) False
(c) Can’t say (d) Partially true
21. Contra entries are not posted into the ledger.
(a) True (b) False
(c) Can’t say (d) Partially true
22. On 1st April, 2020, the balance of cash column of cash book stood at ₹
50,000. After paying salaries of ₹ 20,000, receiving ₹ 20,000 from debtors and
giving a cheque of ₹ 5,000 to a creditor’s, balance of cash will be
(a) ₹ 45,000 (b) ₹ 50,000
(c) ₹ 70,000 (d) ₹ 85,000
23. Under ………………. system, a definite sum is given to the petty cashier at
the beginning of certain period and the amount spent is reimbursed from time-
to-time.
(a) financial (b) accounting
(c) imprest (d) None of these
24. Which of the following method(s) can be used to prepare a petty cash book?
(a) Ordinary system (b) Imprest system
(c) Financial system (d) Only (a) and (b)
25. What is the journal entry passed if cheques received are deposited on
different dates?
(a) Cheques-in-hand A/c Dr
To Debtors
(b) Debtors A/c Dr
To Cheques-in-hand
(c) Bank A/c Dr
To Debtors
(d) None of the above
26. Given-Imprest amount = ₹ 10,000. What will be the amount of
reimbursement, if following expenses were incurred by the petty cashier during
the month?
Wages = ₹ 1,900 , Tiffin = ₹ 1,200,
Small repairs = ₹ 900, General expenses = ₹ 450.
(a) ₹ 1,900 (b) ₹ 2,100
(c) ₹ 4,000 (d) ₹ 4,450
27. Which account will be debited if proprietor pays ₹ 5,000 as life insurance
premium from business cash?
(a) Cash A/c (b) Bank A/c
(c) Insurance A/c (d) Drawings A/c
28. Payment of wages for installation of machinery will be recorded as
(a) Debit Machinery A/c and credit Cash A/c
(b) Debit Cash A/c and credit Machinery A/c
(c) Debit Wages A/c and credit Cash A/c
(d) None of the above
29. Which of the following is/are an advantage of maintaining petty cash book?
(a) Saving of time and efforts of chief cashier
(b) Effective control over cash disbursements
(c) Convenient recording
(d) All of the above
30. A cheque for ₹ 10,000 is received from P on 7th August, 2021 and it is
endorsed to M on 9th August, 2021. What will be the journal entry passed on
9th August?
(a) Cheques-in-hand A/c Dr 10,000
To M’s A/c 10,000
(b) M’s A/c Dr 10,000
To Cheques-in-hand 10,000
(c) Cheques-in-hand A/c Dr 10,000
To P’s A/c 10,000
(d) Cheques-in-hand A/c Dr 10,000
To M’s A/c 10,000
31. When a cash book is maintained, a separate cash book in the ledger is not
opened.
(a) True
(b) False
 (c) Can’t say
(d) Partially true
32. Cash purchase of goods is recorded in……… .
(a) Sales book (b) Cash book
(c) Purchase book (d) None of these
33. Purchase book records all cash purchases of goods.
(a) True (b) False
(d) Can’t say (d) Partially true
34. Which of the following is/are not recorded in purchase book?
(i) Cash purchase of goods worth ₹ 5,000.
(ii) Purchase of furniture on credit worth ₹ 75,000.
(iii) Purchase of stationery of ₹ 3,000 on credit.
(a) Only (i) (b) (ii) and (iii)
(c) (i) and (iii) (d) (i), (ii) and (iii)
35. If XYZ Electronics Ltd. purchases 20 TV @ ₹ 2,000 per piece and 15 tape
recorders @ ₹ 12,500 per piece. There was a trade discount of 20%. What will
be the amount recorded in purchase book?
(a) ₹ 40,000 (b) ₹ 1,87,500
(c) ₹ 2,27,500 (d) ₹ 1,82,000
36. All credit sales of merchandise are recorded in the sales journal.
(a) True (b) False
(c) Can’t say (d) Partially true
37. Cash sales are recorded in the …….. .
(a) Sales book (b) Cash book
(c) Purchase book (d) None of these
38. Assets sold on credit will be entered in ……… .
(a) Sales book (b) Journal proper
(c) Purchase book (d) None of these
39. The source document for recording entries in the sales journal are sales
invoice or bill issued by the firm to the customer.
(a) True (b) False
(c) Can’t say (d) Partially true
40. M/s ABC Suppliers sold on credit
(i) Two water purifiers @ ₹ 2,100 each and
(ii) Five buckets @ ₹ 130 each to M/s BCD Traders.
What will be the amount shown in sales book?
(a) ₹ 4,200 (b) ₹ 2,230
(c) ₹ 650 (d) ₹ 4,850
41. Sales account always shows…………….. balance.
(a) debit (b) credit
(c) Either (a) or (b) (d) Can’t say
42. The balance of sales column in sales book is ₹ 90,000. If ₹ 3,000 is
recovered
from debtors, what will be the balance in the sales book?
(a) ₹ 90,000 (b) ₹ 93,000
(c) ₹ 87,000 (d) None of these
43. Purchase return of goods is recorded in …………..
(a) Purchase return book
(b) Purchase book
(c) Cash book
(d) None of the above
44. A ……………… is a document evidencing a debit to be raised against a
party for reasons other than sale on credit.
(a) debit note (b) credit note
(c) written note (d) None of these
45. A ………………… is prepared, when a party is to be given a credit for
reasons other than credit purchase.
 (a) credit note (b) debit note
(c) written note (d) None of these
46. A debit note is prepared by
(a) Purchaser (b) Seller
(c) Cashier (d) None of these
47. SDF Ltd. returned 2 washing machines purchased from GHJ Ltd. at the list
price of ₹ 21,000 per machine less trade discount of 20%, CGST and SGST was
paid at 6% each. What will be the amount to be recorded in purchases return
book?
(a) ₹ 33,600 (b) ₹ 47,040
(c) ₹ 37,632 (d) ₹ 18,816
48. The periodic total of purchases return journal is posted to
(a) Purchase account
(b) Profit and loss account
(c) Purchase returns account
(d) Furniture account
49. The ……… book is used to record return of goods by customers that had
been sold to them on credit.
(a) sales return (b) sales
(c) cash (d) None of these
50. The periodic total of sales return journal is posted to
(a) Sales account
(b) Goods account
(c) Purchases return account
(d) Sales return account
51. The sales return book does not record which of the following?
(a) Return of goods sold on cash basis.
(b) Return of goods sold on credit basis.
(c) Return of assets other than the goods in which the firm deals in.
 (d) Both (a) and (c)
52. The source document for recording entries in the sales return book is
generally the ……… .
(a) credit note (b) debit note
(c) trial balance (d) None of these
53. What will be the amount reflected in the sales return book of ZXC Ltd if 2
table fans @ ₹ 5,000 each are returned by QWE Ltd.? There was a trade
discount of 15 %. CGST and SGST are at 6% each.
(a) ₹ 9,520 (b) ₹ 10,000
(c) ₹ 8,500 (d) None of these
54. Which of the following differentiates between credit note and debit note?
(a) The credit note is prepared by the seller and the debit note is prepared
by the buyer.
(b) The credit note is prepared by the buyerand the debit note is prepared
by the seller.
(c) The credit note is prepared by the customer and the debit note is
prepared by the cashier.
(d) None of the above
55. M/s ABC & Sons sold 40 ink pads @ ₹ 8 each, 50 files @ ₹ 10 each, 20
colours books @ ₹ 20 each to Global Stationers and provided 5% trade
discount. GST of 5% is applicable on stationery product. How this transaction
will be recorded in Global Stationers account?
(a) To Sales A/c ₹ 1,216.95
(b) By Sales A/c ₹ 1,216.9
(c) By Sales A/c ₹ 1,220
(d) To Sales A/c ₹ 1,159
56. Which of the following entries are recorded in journal proper?
(a) Purchase of items on credit other than goods
(b) Goods withdrawn by the owner for personal use
(c) Endorsement and dishonour of bills of exchange
 (d) All of the above
57. Goods distributed as samples for sales promotion worth ₹ 25,000 will be
recorded in
(a) Sales book (b) Cash book
(c) Journal proper (d) None of these
58. Balancing of an account means that the two sides are totalled and the
difference between them is shown on the side, which is shorter in order to make
their totals equal.
(a) True
(b) False
(c) Can’t say
(d) Partially true
59. The accounts of expenses/losses andgains/revenues are also balanced.
(a) True (b) False
(c) Can’t say (d) Partially true
60. Match the following.

(a) (iii) (iv) (ii) (i) (b) (i) (iv) (ii) (iii)
(c) (iii) (ii) (iv) (i) (d) (iii) (i) (ii) (iv)
Assertion-Reasoning MCQs
Direction (Q. Nos. 61 to 64) There are two statements marked as Assertion (A)
and Reason (R). Read the statements and choose the appropriate option from the
options given below
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct
explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
61. Assertion(A) In large businesses, journal is sub-divided into special
journals.
Reason (R) Special journals prove economical and make division of labour
possible in accounting work.
62. Assertion (A) All credit purchases of goods are recorded in the purchases
journal.
Reason (R) Cash purchases of goods are recorded in cash book.
63. Assertion (A) Petty cash book records repetitive large expenses.
Reason (R) Petty cash book is maintained so that the cash book does not
become bulky due to repetitive transactions.
64. Assertion (A) Sales return journal is used to record return of goods by
customers to them on credit.
Reason (R) In case of balancing the accounts, if the debit side exceeds the
credit side, the difference is written on the debit side.
Case Based MCQs
Direction Read the following case study and answer questions 65 to 69 on the
basis of the same.
Raj is the accountant at KYA Ltd. He has to prepare the cash book for the
month of August, 2020. Following detail is available regarding the transactions
for the month
Aug 1 Cash in hand ₹ 1,200; overdraft at bank ₹ 15,000.
Aug 3 Further capital introduced ₹ 20,000 out of which ₹ 16,000
deposited in the bank.
Aug 4 Purchased goods from Vrijesh Traders amounting to ₹ 3,000 and
they allowed trade discount ₹ 200. The amount was paid by cheque.
Aug 4 Goods purchased for cash ₹ 4,000.
Aug 5 Sold goods to Varun on credit ₹ 5,000.
Aug 6 Received cheque from Siddhartha ₹ 2,450.
Allowed him discount ₹ 50.
Aug 10 Cheque received from Siddhartha deposited into bank.
Aug 11 Settled the account of Superstar Printers ₹ 750 by paying cash ₹
680.
Aug 12 Cash received from Varun ₹ 4,750 in full settlement of his
account of ₹ 5,000.
Aug 16 An amount of ₹ 1,000 due from Kartik brothers written-off as
bad debts in the previous year, now recovered.
Aug 17 Received from Kunal on behalf of Karan ₹ 200.
Aug 19 Received a cheque for ₹ 800 from
Adarsh, which was endorsed to Parth on 24th August.
Aug 20 Sale of old furniture, payment received in cash for ₹ 720.
Aug 25 Cashed a cheque for ₹ 3,000.
Aug 25 Drew from bank for household expenses ₹ 1,000 and for income
tax ₹ 500.
Aug 28 Amit who owed ₹ 400 became bankrupt and paid 60 paise in a
rupee.
Aug 28 Received repayment of a loan ₹ 3,000 and deposited out of it ₹
2,500 into the bank.
Aug 30 Interest debited by bank ₹ 375.
Aug 30 Deposited with the bank the entire balance after retaining ₹ 2,000
at office.
65. Which of the following cash book will Raj prepare?
(a) Single Column Cash Book
(b) Double Column Cash Book
(c) Petty Cash Book
(d) All of the above
66. How will goods sold on credit to Varun on 5th August be recorded in the
cash
book?
(a) ₹ 5,000 will be recorded on the debit side of the cash book.
(b) ₹ 5,000 will be recorded on the credit side of the cash book.
(c) it won’t be recorded in the cash book.
(d) None of the above
67. How will cheque received from Siddhartha on 6th August be recorded in
cash book?
(a) ₹ 2,450 will be recorded on the debit side of the cash book.
(b) ₹ 2,450 will be recorded on the credit side of the cash book.
(c) It won’t be recorded in the cash book.
(d) None of the above
68. How will drawing for household expenses of ₹ 1,000 on 25th August be
recorded?
(a) Household expenses will be debited and cash book will be credited
(b) Drawings account will be debited and cash book will be credited
(c) Household expenses will be credited and cash book will be debited
(d) Drawings account will be credited and cash book will be debited
69. Raj marks certain entries as C. What does that mean?
(a) C stands for contra entries and reflect transactions which include both
cash and bank.
(b) C stands for contra entries and reflect transactions which are contrary
to normal accounting processes.
 (c) C stands for contra entries and reflect transactions which are
confusing in nature.
(d) None of the above
Direction Read the following case study and answer questions 70 to 74 on the
basis of the same.
INCA Ltd. a manufacturing company has now expanded its operations.
Its sales are increasing rapidly and the demand for its products is also rising. It
is expanding geographically to different states. Initially when the operations
were small, its accountant Mr.Dheeraj maintained only a journal. But as the
business expands and the number of transactions becomes large, it become
cumbersome to journalise each transaction. So now a need is felt to prepare
special journals or subsidiary books. So accordingly, Mr. Dheeraj instructs his
subordinates to prepare various subsidiary books.
70. What will be the advantage of preparing these subsidiary books?
(a) Quick, efficient and accurate recording of business transactions
(b) Time consuming
(c) They prove economical and make division of labour possible in
accounting work
(d) Both (a) and (c)
71. What reason will be a cash book prepared for?
(a) To record all cash receipts and cash payments
(b) To record cash purchases of merchandise
(c) To record cash sales
(d) None of the above
72. Which of the following about the purchase book is correct?
(a) It records purchases of all types
(b) It records all credit purchases of the goods, the enterprise deals in
(c) It records all cash purchases of the goods, the enterprise deals in
(d) None of the above
73. Sales book does not record cash sales of merchandise.
 (a) True
(b) False
(c) Can’t say
(d) Partially true
74. If INCA Ltd. purchased furniture of ₹ 40,000 on credit, Mr. Dheeraj will
record this transaction in
(a) purchase book
(b) cash book
(c) journal proper
(d) None of the above
Direction Read the following case study and answer questions 75 to 79 on the
basis of the same.
Khandelwal & Sons is a manufacturing firm. Following information about it is
available
Assets : Cash in hand ₹ 1,00,000; Cash at bank ₹ 1,10,000; Debtors (Karun ₹
90,000; Geeta ₹ 50,000); Stock ₹ 3,20,000 and Machinery ₹ 4,00,000.
Liabilities: Creditors: Avinash & Co. ₹ 70,000.
The following transactions took place during the month of January, 2021.
Jan 2 Deposited into bank ₹ 30,000.
Jan 4 Purchased from Raghav goods of the list price of ₹ 70,000 at 10%
trade discount.
Jan 5 Returned to Raghav goods worth ₹ 8,000.
Jan 7 Issued a cheque to Raghav in full settlement of their account after
deducting cash discount @ 5%.
Jan 10 Sold to Dishant goods worth ₹ 80,000.
Jan 12 Received cash ₹ 60,000 and cheque ₹ 8,000 from Dishant. The
cheque was
sent to bank on the same day. Discount allowed ₹ 1,000.
Jan 14 Purchased machinery from Ronak & Co. on credit for ₹ 50,000.
Jan 16 Khandelwal withdrew goods for his personal use ₹ 20,000.
 Jan 18 Sold to Anuj goods valued ₹ 32,000.
Jan 19 Issued cheque to Ronak & Co. ₹ 50,000.
Jan 20 Returned by Anuj goods worth ₹ 4,000.
Jan 21 Purchased goods from Gaurav for ₹ 80,000. Trade discount 10%.
Jan 22 Accepted a bill drawn by Gaurav for ₹ 72,000 at 1 month.
Jan 27 Received from Anuj ₹ 20,000. Discount allowed ₹ 100.
Jan 27 Goods purchased for cash ₹ 60,000.
Jan 28 Withdrew from bank ₹ 40,000.
Jan 29 Paid salaries by cheque ₹ 10,000.
Jan 30 Paid rent ₹ 5,600.
Jan 31 Received commission in cash ₹ 3,200.
75. Purchase of goods from Raghav on 4th January will be recorded on that date
in
(a) Cash book
(b) Purchase book
(c) Journal proper
(d) None of the above
76. What amount is finally paid to Raghav on 7th January?
(a) ₹ 62,000 (b) ₹ 63,000
(c) ₹ 55,000 (d) ₹ 52,250
77. What will be the balance in sales book as on 31st January?
(a) ₹ 80,000 (b) ₹ 32,000
(c) ₹ 1,12,000 (d) ₹ 1,08,000
78. What will be the balance in sales return book and purchase return book
respectively on 31st January?
(a) ₹ 4,000; ₹ 8,000
(b) ₹ 8,000; ₹ 4,000
(c) ₹ 8,000; ₹ 16,000
 (d) None of the above
79. Which of the following entry represents contra entry?
(a) Purchases from Raghav on 4th January.
(b) Goods sold to Anuj on 18th January.
(c) Amount withdrawn from bank on 28th January.
(d) None of the above
Direction Read the following case study and answer questions 80 to 84 on the
basis of the same.
Karim & Co., a saree dealer has the following transactions for the month of
January. Jan 4 Returned to Mohan Mills, Kerala,10 polyester sarees @ ₹ 1,600
each.
(− ) Trade discount @ 10% (Debit note no. 101).
Jan 8 Srimala Mills, Kota accepted the returns of goods (which were purchased
for cash) from us, 8 Kota sarees @ ₹ 640 each (Debit note no. 102). Jan 12
Returned to Sonica Mills, Bombay, 12 silk sarees @ ₹ 1,040 each.(−) Trade
discount @ 10% (Debit note no. 103).
Jan 30 Returned one typewriter (being defective) @ ₹ 7,200 to Vishaka & Co.
80. What will the total amount recorded in the purchase returns book relating to
the returns to Mohan Mills on 4th January?
(a) ₹ 16,000 (b) ₹ 14,400
(c) ₹ 17,600 (d) None of these
81. In which of the following books, will the return of Kota Sarees on 8 th
January be recorded?
(a) Purchase returns book
(b) Journal
(c) Cash book
(d) None of the above
82. In which of the following books, will the return of typewriter on 30 th
January be recorded?
(a) Purchase returns book
 (b) Journal proper
(c) Cash book
(d) None of the above
83. What will be the total amount reflected in purchase returns book as on 31 st
January?
(a) ₹ 25,632
(b) ₹ 14,400
(c) ₹ 11,232
(d) ₹ 28,480
84. Which of the following statements regarding a debit note is correct?
(a) A debit note is a source document that is prepared when goods are
returned to a supplier.
(b) On finding that goods supplied are not as per the terms of the order
placed, the defective goods are returned to the supplier of the goods and a
note is prepared to debit the supplier.
(c) When an additional sum is recoverable from a customer, such a note is
prepared to debit the customer with the additional dues.
(d) All of the above