APPSC Paper I · Assistant Statistical Officer Paper II · Topic 4
4 APPSC Paper I Financial Accounting questions with answers
28 questions from APPSC ASO 2025 Paper II question paper with answers and APPSC ASO Paper II Mock 1 with answers. Try each one, then tap Show answer.
Previous-paper questions are as in the original paper. Medha AI wrote the answers and explanations.
4.1Accounting concepts, conventions & processNotes
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Match the requirement or condition with its related legal/accounting basis under the Companies Act, 2013.
Column A Column B A. Use of accrual and double-entry system 1. Mandatory compliance with notified Accounting Standards B. Filing of financial statements at AGM 2. Section 129 requirement for Board of Directors C. Compliance with format in Schedule III 3. Applicable to companies not governed by special acts D. Accounting standards application 4. Basis of maintaining company books of account Show answerHide answer
Answer A. A-4, B-2, C-3, D-1
Section 128 requires books on accrual and double-entry basis; Section 129 requires the Board to lay financial statements at the AGM; Schedule III formats apply to companies other than those governed by special acts; notified Accounting Standards must be complied with.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q50, final key
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What does the Business Entity Concept primarily emphasize?
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Answer C. Treating business and owner as separate entities
Under the business entity concept the business is treated as distinct from its owner, so only business transactions are recorded and capital is shown as owed to the owner.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q53, final key
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Which of the following is the correct accounting equation?
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Answer C. Assets = Liabilities + Owner’s Equity
Every resource of the business is financed either by outsiders or by the owner, so Assets = Liabilities + Owner's Equity.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q54, final key
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Which accounting concept is considered to meet the three essential criteria of relevance, objectivity, and feasibility?
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Answer B. Cost Concept
Historical cost is preferred as the basis of recording because it is relevant, objective (verifiable from documents) and feasible to apply, which is how textbooks justify the cost concept.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q56, final key
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What do liabilities represent in accounting?
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Answer B. The obligations payable by the business to others
Liabilities are amounts the business owes to outsiders, such as creditors, loans and outstanding expenses.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q57, final key
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In the context of the Companies Act, 2013, what is the key requirement regarding the location of books of accounts?
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Answer C. At the company’s registered office
Section 128 of the Companies Act, 2013 requires books of account to be kept at the registered office (another place in India is allowed only by a Board decision notified to the Registrar).
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q59, final key
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Which of the following statements regarding events and transactions is true?
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Answer B. All transactions are events, but not all events are transactions.
A transaction is an event that involves an exchange measurable in money; many events (for example, placing an order or hiring staff) are not transactions until money value changes hands.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q61, final key
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Which accounting concept refers to the practice of recording transactions using a standard unit of currency, such as the US dollar?
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Answer B. Monetary Measurement Concept
The money measurement concept says only transactions expressible in a common monetary unit are recorded, and they are recorded in that unit.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q62, final key
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Consider the following statements about the matching concept:
1. Expenses of a period are set against the revenues earned in that period to find profit.
2. Under the matching concept, an expense is recorded only in the period in which cash is paid.
Which of the statements given above is/are correct?
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Answer A. 1 only
The matching concept matches the revenues of a period with the expenses incurred to earn them; this needs outstanding and prepaid adjustments, so recording expenses only when paid (cash basis) is contrary to it.
Source: Telugu Akademi / APSCHE B.Com Financial Accounting, Accounting Concepts and Conventions
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Lakshmi started business with cash ₹2,00,000. She borrowed ₹50,000 from a bank, bought furniture for ₹30,000 in cash and bought goods worth ₹40,000 on credit. What are the total assets of the business after these transactions?
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Answer B. ₹2,90,000
Cash = ₹2,00,000 + ₹50,000 − ₹30,000 = ₹2,20,000; furniture ₹30,000; stock ₹40,000. Total = ₹2,90,000.
Source: Medha AI, based on BRAOU/APSCHE degree textbooks (ASO Paper II)
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Ravi started business with cash ₹1,00,000. He bought goods on credit for ₹40,000 and sold goods costing ₹20,000 for ₹28,000 in cash. What are his total assets after these transactions?
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Answer A. ₹1,48,000
Cash = ₹1,00,000 + ₹28,000 = ₹1,28,000; stock = ₹40,000 − ₹20,000 = ₹20,000; total assets = ₹1,48,000. Check: creditors ₹40,000 + capital (₹1,00,000 + profit ₹8,000) = ₹1,48,000.
Source: Standard method; answer and every option computed and checked in Python
4.2Journal, ledger & subsidiary booksNotes
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Which of the following reflects the primary operational benefit of using subsidiary books in a large organisation?
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Answer C. Enables division of work and faster, specialised transaction recording
Splitting the journal into subsidiary books (purchases, sales, cash, returns books) lets different clerks record different kinds of transactions at the same time, so work is divided and recording is faster and specialised.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q51, final key
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What is the primary book of original entry where all transactions are recorded first?
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Answer C. Journal
Transactions are first recorded chronologically in the journal (book of original or prime entry) and then posted to the ledger.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q52, final key
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Match the term with its correct explanation.
Column A Column B A. Journal 1. Grouping similar transactions B. Ledger 2. First book of original entry C. Narration 3. Brief explanation of a transaction D. Classification 4. Used for preparing trial balance Show answerHide answer
Answer A. A-2, B-4, C-3, D-1
The journal is the first book of original entry, ledger balances are used to prepare the trial balance, narration briefly explains each entry, and classification groups similar transactions.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q58, final key
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In the Cash Book, how are cash transactions recorded to reflect the nature of financial movement?
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Answer C. Cash receipts are recorded on the debit side, and cash payments on the credit side.
The cash book is kept like a cash account: receipts (cash coming in) go on the debit side and payments (cash going out) on the credit side.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q60, final key
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Consider the following statements:
1. Trade discount is recorded in the books of account by debiting Discount Allowed A/c.
2. Cash discount allowed to a customer is a loss and is debited to Discount Allowed A/c.
Which of the statements given above is/are correct?
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Answer B. 2 only
Trade discount is a reduction from list price given at the time of sale; the transaction is recorded at the net amount, so no discount account is opened. Cash discount for prompt payment is recorded: allowed is a loss (debit), received is a gain (credit).
Source: Standard B.Com Financial Accounting (Telugu Akademi / T.S. Grewal), Journal (discounts)
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A trader keeps a three-column cash book. Transactions: received ₹4,900 from A in full settlement of ₹5,000; received ₹2,940 from B in full settlement of ₹3,000; paid ₹1,960 to C in full settlement of ₹2,000. What is the total of the discount column on the debit side?
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Answer D. ₹160
The debit-side discount column records discount allowed on receipts: A ₹100 + B ₹60 = ₹160. The ₹40 discount on payment to C is discount received, recorded on the credit side.
Source: Standard method; answer and every option computed and checked in Python
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A business's sales book total for the year is ₹48,000, cash sales are ₹5,000 and the sales returns book total is ₹3,200. What is the figure of net sales shown in the Trading Account?
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Answer A. ₹49,800
Total sales = credit sales 48,000 + cash sales 5,000 = ₹53,000; less sales returns 3,200 gives net sales ₹49,800.
Source: Standard method; answer and every option computed and checked in Python
4.3Bank reconciliation & trial balanceNotes
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Which of the following best explains the dual record system of the bank and customer for the same transaction?
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Answer C. The Cash Book’s debit side corresponds to the Pass Book’s credit side
A deposit is a debit in the customer's cash book (bank column) but a credit in the pass book, because the bank owes that money to the customer; the two records are mirror images.
Source: APPSC Assistant Statistical Officer 2025, Paper II (Notification 12/2024), Q55, final key
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Which of the following pairs of error and its effect on the trial balance is NOT correctly matched?
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Answer B. Complete omission of a credit purchase : Disclosed by the trial balance
An error of complete omission records neither the debit nor the credit, so the trial balance still agrees; it is not disclosed. The other pairs are correct.
Source: Standard B.Com Financial Accounting text (Telugu Akademi / APSCHE), Trial Balance and Rectification of Errors
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On 31 December the cash book shows a bank balance of ₹15,000 (debit). During December, cheques of ₹6,000 were issued, of which only ₹4,500 were presented for payment; cheques of ₹5,000 were deposited, of which only ₹3,200 were credited by the bank by that date. What is the balance as per the pass book?
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Answer B. ₹14,700
Cheques not presented = ₹6,000 − ₹4,500 = ₹1,500 (add); cheques not cleared = ₹5,000 − ₹3,200 = ₹1,800 (deduct). ₹15,000 + ₹1,500 − ₹1,800 = ₹14,700.
Source: Standard method; answer and every option computed and checked in Python
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Which of the following balances appear on the credit side of a trial balance?
1. Sales returns
2. Purchases returns
3. Outstanding expenses
4. Prepaid expenses
5. Provision for doubtful debts
Select the correct answer using the code given below.
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Answer B. 2, 3 and 5 only
Sales returns (reduction of income) and prepaid expenses (asset) are debit balances. Purchases returns, outstanding expenses (liability) and provision for doubtful debts are credit balances.
Source: Standard B.Com Financial Accounting text (Telugu Akademi / APSCHE), Trial Balance and Rectification of Errors
4.4Final accounts, errors & rectificationNotes
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Consider the following statements:
1. Carriage inwards is debited to the trading account.
2. Carriage outwards is debited to the trading account.
Which of the statements given above is/are correct?
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Answer A. 1 only
Carriage inwards adds to the cost of goods and is debited to the trading account; carriage outwards is a selling and distribution expense debited to the P&L account.
Source: Standard B.Com Financial Accounting text (Telugu Akademi / S.N. Maheshwari), Final Accounts with Adjustments
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A firm holds 8% investments of ₹50,000 throughout the year. Interest received during the year was ₹3,000; the rest is accrued. What amount of interest is credited to the profit and loss account?
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Answer D. ₹4,000
Income for the full year is credited: 50,000 × 8% = ₹4,000, of which ₹1,000 accrued interest is also shown as an asset.
Source: Standard method; answer and every option computed and checked in Python
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Match List I (item) with List II (treatment in final accounts):
List I:
A. Carriage inwards
B. Bad debts
C. Goodwill
D. Drawings
List II:
1. Debit side of the profit and loss account
2. Debit side of the trading account
3. Deducted from capital on the liabilities side
4. Assets side of the balance sheet
Select the correct answer using the code given below.
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Answer D. A-2, B-1, C-4, D-3
Direct expenses go to the trading account, losses such as bad debts to the P&L account, intangible assets to the balance sheet, and drawings reduce capital.
Source: Standard B.Com Financial Accounting text (Telugu Akademi / S.N. Maheshwari), Final Accounts with Adjustments
4.5Depreciation, reserves, single entry & non-trading concernsNotes
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From the following, find the subscriptions to be credited to the Income and Expenditure Account of a club for 2025-26: subscriptions received during the year ₹80,000; subscriptions outstanding on 1 April 2025 ₹6,000 and on 31 March 2026 ₹9,000; subscriptions received in advance on 1 April 2025 (for 2025-26) ₹4,000 and on 31 March 2026 (for 2026-27) ₹5,000.
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Answer D. ₹82,000
Income = received − opening outstanding (received now, but income of last year) + closing outstanding + opening advance (received last year, income of this year) − closing advance = 80,000 − 6,000 + 9,000 + 4,000 − 5,000 = ₹82,000.
Source: Standard method; answer and every option computed and checked in Python
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A machine is bought for ₹1,00,000 and ₹10,000 is spent on its installation. Its estimated scrap value is ₹20,000 at the end of its useful life of 6 years. What is the annual depreciation under the straight line method?
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Answer B. ₹15,000
Depreciable amount = cost including installation − scrap value = ₹1,10,000 − ₹20,000 = ₹90,000. Spread equally over 6 years: ₹90,000 / 6 = ₹15,000 a year.
Source: Standard method; answer and every option computed and checked in Python
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The annuity method of depreciation is most suitable for which of the following assets?
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Answer B. Leasehold property acquired on a long lease
The annuity method takes into account interest on the capital invested in the asset; it is used for leases and similar assets with a long, fixed life and heavy initial cost.
Source: Telugu Akademi / APSCHE B.Com Financial Accounting, Depreciation, Provisions and Reserves
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