Chapter Exam

Chapter 8: Financial Statements – I (Without Adjustments) — Online MCQ Test

Q: Which of the following is an example of Capital Expenditure?

Answer: B. Purchase of machinery for the business — Capital expenditure refers to expenditure incurred to acquire or improve fixed assets that will benefit the business for multiple years. Purchase of machinery is a capital expenditure as it creates a long-term asset.

Q: Which of the following items appears in the Trading Account?

Answer: B. Opening Stock and Purchases — The Trading Account includes items directly related to the cost of production and sales, such as opening stock, purchases, closing stock, sales, and cost of goods sold.

Q: Opening Stock ₹50,000, Purchases ₹3,00,000, Sales ₹5,00,000, Closing Stock ₹75,000. What is Gross Profit?

Answer: B. ₹2,25,000 — Cost of Goods Sold = Opening Stock + Purchases - Closing Stock = 50,000 + 3,00,000 - 75,000 = 2,75,000. Gross Profit = Sales - COGS = 5,00,000 - 2,75,000 = 2,25,000.

Q: A business purchased land for ₹20,00,000, spent ₹2,00,000 on legal fees and ₹50,000 on surveying. If the land is later valued at ₹25,00,000, what is the capital expenditure?

Answer: C. ₹22,50,000 — All costs necessary to acquire and prepare the asset for use are capitalized: ₹20,00,000 + ₹2,00,000 + ₹50,000 = ₹22,50,000. The revaluation has no effect on actual cost.

ACCOUNTANCY · Grade 11 · CBSE(NCERT)

Practice Chapter 8: Financial Statements – I (Without Adjustments) with a free chapter-wise online MCQ test for CBSE(NCERT) Grade 11 ACCOUNTANCY. This chapter covers: Capital expenditure, Revenue expenditure, Deferred revenue expenditure, Capital receipts, Revenue receipts, Trading Account, Profit and Loss Account, Balance Sheet, Gross Profit, N.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 8: Financial Statements – I (Without Adjustments) — Important Questions & Answers (FAQ)

Frequently asked questions from CBSE(NCERT) Grade 11 ACCOUNTANCY — Chapter 8: Financial Statements – I (Without Adjustments), with answers and explanations. These are sample questions; the exam has its own separate question set.

Which of the following is an example of Capital Expenditure?

A. Salary paid to employees
B. Purchase of machinery for the business ✓
C. Rent paid for office premises
D. Insurance premium on stocks

Answer: B. Purchase of machinery for the business
Capital expenditure refers to expenditure incurred to acquire or improve fixed assets that will benefit the business for multiple years. Purchase of machinery is a capital expenditure as it creates a long-term asset.

What is Revenue Expenditure?

A. Expenditure incurred to purchase fixed assets
B. Expenditure incurred to maintain the earning capacity of the business ✓
C. Expenditure that benefits the business for more than one year
D. Expenditure incurred to expand the business

Answer: B. Expenditure incurred to maintain the earning capacity of the business
Revenue expenditure is incurred to maintain the earning capacity of the business and its benefits are consumed within one accounting year. It includes items like salaries, rent, and utilities.

Which of the following items appears in the Trading Account?

A. Depreciation
B. Opening Stock and Purchases ✓
C. Interest on Capital
D. Office Rent

Answer: B. Opening Stock and Purchases
The Trading Account includes items directly related to the cost of production and sales, such as opening stock, purchases, closing stock, sales, and cost of goods sold.

Opening Stock ₹50,000, Purchases ₹3,00,000, Sales ₹5,00,000, Closing Stock ₹75,000. What is Gross Profit?

A. ₹2,00,000
B. ₹2,25,000 ✓
C. ₹1,50,000
D. ₹2,75,000

Answer: B. ₹2,25,000
Cost of Goods Sold = Opening Stock + Purchases - Closing Stock = 50,000 + 3,00,000 - 75,000 = 2,75,000. Gross Profit = Sales - COGS = 5,00,000 - 2,75,000 = 2,25,000.

A business purchased land for ₹20,00,000, spent ₹2,00,000 on legal fees and ₹50,000 on surveying. If the land is later valued at ₹25,00,000, what is the capital expenditure?

A. ₹20,00,000
B. ₹22,00,000
C. ₹22,50,000 ✓
D. ₹25,00,000

Answer: C. ₹22,50,000
All costs necessary to acquire and prepare the asset for use are capitalized: ₹20,00,000 + ₹2,00,000 + ₹50,000 = ₹22,50,000. The revaluation has no effect on actual cost.