Foundation: business and money basics
Take a notebook and pen first. Solve each question yourself, then pick an option. Only your first choice counts in the score, so do not rush.
Part A: MCQ (1 mark each)
Q1. A stationery shop buys 50 pens at ₹12 each and sells 40 of them at ₹15 each. What is the profit?
- ₹0
- ₹120
- ₹150
- ₹600
Profit is earned only on goods sold. Sales = 40 × ₹15 = ₹600; cost of the 40 pens sold = 40 × ₹12 = ₹480; profit = ₹120. The 10 unsold pens (₹120 at cost) are closing stock, not a loss.
Q2. In accounts, which of these is "Purchases" for a mobile phone store?
- A new AC for the showroom
- A computer for billing
- 20 smartphones bought from the distributor for resale
- Furniture for the counter
Purchases means only goods bought for resale. The AC, computer and furniture are bought for use in the business, so they are assets, not purchases.
Q3. Ravi bought goods from Sharma Traders on credit and has not paid yet. In the books of Sharma Traders, Ravi is a:
- Debtor
- Creditor
- Proprietor
- Supplier
Ravi owes money to Sharma Traders, so he is a debtor for them. (In Ravi's own books, Sharma Traders would be a creditor.)
Q4. The owner of a kirana shop pays his home's electricity bill of ₹1,800 from the shop's cash. This is:
- Electricity expense of the shop
- Capital
- Drawings
- A loss of the business
Money taken from the business for the owner's personal or family use is drawings. Only the shop's own electricity bill is a business expense.
Q5. An article costing ₹1,600 is sold for ₹2,000. What is the profit %?
- 20%
- 25%
- 40%
- 400%
Profit = ₹400. Profit % is on cost price: ₹400 ÷ ₹1,600 × 100 = 25%. Taking it on selling price (₹400 ÷ ₹2,000 = 20%) is the common mistake.
Q6. List price of goods is ₹40,000, trade discount is 10% and GST is 12% (intra-state). What is the invoice total?
- ₹40,320
- ₹44,800
- ₹36,000
- ₹40,800
Taxable value = ₹40,000 − ₹4,000 = ₹36,000. GST at 12% on ₹36,000 = ₹4,320 (CGST ₹2,160 + SGST ₹2,160). Total = ₹36,000 + ₹4,320 = ₹40,320. GST is never calculated on the list price.
Q7. Interest on a loan of ₹40,000 at 9% per annum for 4 months is:
- ₹14,400
- ₹3,600
- ₹1,200
- ₹1,440
SI = P × R × T ÷ 100 with T in years: ₹40,000 × 9 ÷ 100 × 4 ÷ 12 = ₹3,600 × 1/3 = ₹1,200.
Q8. In a two-sided account, the Dr side totals ₹27,000 and the Cr side totals ₹19,500. The balancing figure is:
- ₹7,500 written on the Dr side
- ₹7,500 written on the Cr side
- ₹46,500 written on the Cr side
- ₹15,000 written on the Cr side
Balancing figure = bigger total − smaller total = ₹7,500, and it is written on the smaller side (Cr) so that both sides total ₹27,000.
Q9. Assertion–Reason Assertion (A): Trade discount is not recorded in the books of account.
Reason (R): Goods are recorded at the net amount after deducting trade discount.
Reason (R): Goods are recorded at the net amount after deducting trade discount.
- Both Assertion (A) and Reason (R) are true, and R is the correct explanation of A.
- Both Assertion (A) and Reason (R) are true, but R is not the correct explanation of A.
- Assertion (A) is true, but Reason (R) is false.
- Assertion (A) is false, but Reason (R) is true.
Both are true, and R explains A: since only the net price (list price minus trade discount) is entered as purchases or sales, the trade discount never appears as a separate item in the books.
Q10. Assertion–Reason Assertion (A): Goods sold by a seller in Delhi to a buyer in Uttar Pradesh attract CGST and SGST.
Reason (R): IGST is charged on inter-state supply of goods.
Reason (R): IGST is charged on inter-state supply of goods.
- Both Assertion (A) and Reason (R) are true, and R is the correct explanation of A.
- Both Assertion (A) and Reason (R) are true, but R is not the correct explanation of A.
- Assertion (A) is true, but Reason (R) is false.
- Assertion (A) is false, but Reason (R) is true.
A is false: Delhi to Uttar Pradesh is an inter-state supply, so IGST is charged, not CGST + SGST. R is true: IGST applies when the seller and buyer are in different states.