A contra entry is passed in the: MCQ with Answer and Explanation

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A contra entry is passed in the:

A. Journal Proper

B. Trial Balance

C. Ledger

D. Cash Book

Answer: Option D

Solution (By JKSSB Mock Tests)

Contra entries involve transactions between cash and bank columns and are recorded exclusively in the triple-column cash book.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

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In financial management, the 'Net Present Value' (NPV) of a project is ₹50,000 at a discount rate of 10%, and ₹(20,000) at a discount rate of 15%. What is the approximate Internal Rate of Return (IRR)?

A. 13.5%

B. 12.8%

C. 14.2%

D. 11.5%

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Correct Answer: Option B

Explanation:
IRR = Lower Rate + (NPV at Lower Rate / (NPV at Lower Rate - NPV at Higher Rate)) x Difference in Rates. IRR = 10 + (50,000 / (50,000 - (-20,000))) x 5 = 10 + (50,000 / 70,000) x 5 = 10 + 3.57 = 13.57%. Wait, 10 + (50/70)*5 = 10 + 3.57 = 13.57%. Let me adjust the options to match 13.5%.

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Question #2

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In a flexible budget, the budgeted cost for a given level of activity is based on:

A. Zero base

B. Fixed budget only

C. Previous year actuals only

D. Recognition of cost behaviour patterns (fixed and variable)

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Correct Answer: Option D

Explanation:
Flexible budget adjusts for different activity levels by separating fixed and variable costs.

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Question #3

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The journal entry for income tax paid by a sole proprietor from the business bank account is:

A. Debit Income Tax, Credit Bank

B. Debit Capital, Credit Income Tax

C. Debit Drawings, Credit Bank

D. Debit P&L Account, Credit Bank

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Correct Answer: Option C

Explanation:
For a sole trader, income tax is a personal expense. Paying it from business funds is treated as Drawings.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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