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Grade : 11 G.C.E. (O/L) Practice Test - 2019 60 E I

Business & Accounting Studies Time : 3 Hours
Instructions :
i.Answer for all the questions
ii.In each of the question 1 to 40 pick one of the alternatives 1,2,3,4 which is correct or most appropriate
iii.Mark a cross (x) on the number corresponding to your choice in the answer sheet provided.
Hasintha who works as a security officer in a tourism business came home to see his mother who is sick
with healthy foods in the weekend.
1) Select the answer which shows the correct order of needs to the underlined words.
i. Transportation, Medicine, Food ii. Security, Health, Food
iii. Transportation, Health, Security iv. Security, Foods, Medicine
2) Not a threat to the Tourism industry
i. Increase in the number of tourism related businesses
ii. Lack of language skill for employees
iii. Creating a stubborn situation in the country
iv. Increase in the price of local products
3) Select the answer which shows the correct order for the government and managers to be interested
over the business .
i. Creating job opportunities, job expansion and job satisfaction.
ii. job expansion and job satisfaction, decision making and implementing those decisions.
iii. Increase in national production, job security.
iv. Obtain the due taxes, expansion of business.
4) Gimhani is conducting a business by purchasing fruits from the people in the village and sells those
as fresh fruits or fruit juices. The fruits of this business can be categorized as,
i. Land ii. Labour iii. Capital iv. Entrepreneurship
5) "Muthu" decides to register the name of her flower plants business. She should register her
business under the,
i. Business Names Ordinance of 1918 ii. Companies act No 07 of 2007
iii. Partnership ordinance of 1890 iv. Prevention of Frauds ordinance act
6) Select the correct answer regarding business organizations.
i. All the profits can be solely owned by the owner is a characteristic of sole proprietorship
business.
ii. According to the 1890 partnership ordinance act if the initial capital of the partnership is greater
than Rs 1000,a partnership is required to be conducted under a written agreement.
iii. Acting for the well being of the society is an advantage of Cooperative societies.
iv. Sharing the profits and ownership is an disadvantage of a company.
7)Following are some incidents occurred in the business environment.
A.Ability to obtain the advanced technology. B. Development of infastructure facilities.
C.Building up international relationships. D. Ability to obtain machineries.
Select the answer which includes the favarable effects of global environment.
i.A, B and C ii.A and C iii.A ,C and D iv.A and D

Business & Accounting - Grade 11 Page 01

8) The answer which shows only the characteristics of a current account is,
i. Ability to make payments through cheques, uesing interest
ii. Obtaining a Bank statement, receiving a past book.
iii. Obtaining bank overdraft facilities, bank charges.
iv. Receiving an interest, obtaining bank overdraft facilities.
9). Buddini is conducting a beauty salon and she obtained flowers worth of Rs 25000 for the salon from
Nethmina, a friend in Nuwaraeliya.She makde the payment through a cheque in People's bank. He
deposited this cheque in his current account at Bank of Ceylon.
According to the above incident drawer, payee and drawee of the cheque is:
i. Buddini, Nethmina, People's bank. ii. Nethmina, Buddini, Bank of Ceylon.
iii. Buddini, People's bank, Nethmina. iv. Nethmina, Bank of Ceylon, Buddini.
10) Correct statement regarding electronic money is :
A. Can be substituted for cash and cheques.
B. The tellers of People's bank and Bank of Ceylon are called as "PET " and "SET"
C. A limitation of electronic money is that data is not secured.
D. For credit card transactions a bank account is not needed.
i. A ,B ii. A ,B ,C iii. A ,C iv. A ,C ,D
11) Select the false statement regarding insurance
i. There is no insurable interest over a rented house for a tenant.
ii. A teacher has no insurable interest over her students
iii. A mother has no insurable interest over her child
iv. A mortgagor has no insurable interest over the pawn articles
12) The main advantage of sea transportation is:
i. Ability to transport to any place
ii. Ability to transport large quantities with high weights at low cost.
iii. High speed for long distance
iv. low cost and speedy way
13) Select the statement which includes internal communications methods
i. loudspeaker, news papers, meetings. ii. meetings, notice board, seminar.
iii. Circulars ,radio, letters. iv. meetings, banners, internet.
14) Appointing managers for business constructions and marketing activities come under......................
and finding out whether those houses are constructed with the expected quality comes under ............
i. Organizing, Controlling. ii. Leading, Controlling.
iii. Planning, Organizing . iv. Planning, Controlling.
15) Sewmini who produces sweet items at her home ,sells thoses items to the people who come to the
home with a safe package. Large amount of orders on credit basis are taking and delivaring
to their houses. She has displayed a banner including "sweet items to be sold ". According to the
above case select the answer which includes the underlined items under the proper variable in
marketing mix.
I. Product, Price, Distribution,Promotion. II. Distribution,Promotion, Product, Price.
III. Promotion, Price, Place, Product. IV.Quality, Price, Place, Promotion.
16) Saduni expects to invest Rs 200 000 in a short term investment project which ensures high security
and a highest interest. She should select,
i) purchasing shares. ii) purchasing assets.
iii) purchasing treasury bills. iv) depositing in the savings account.
17) Select the most suitable statement which describes accounting correctly.
i ) Provides all information about the business.
ii ) Every business should maintain accounting records.
iii) Accounting will not affect for resource management.
iv ) Provides necessary information to the interested parties.

Business & Accounting - Grade 11 Page 02

18) Accounting equation of a business transaction is given below
ASSETS = EQUITY + LIABILITIES
-25000 = +75000 - 100000
Select the answer which explains the above effect as a transaction
i. Obtained a bank loan of Rs 100 000 and withdrew Rs 25 000 for personal use
ii. Settlement of liability Rs 25 000 using business cash and Rs 75 000 received from the owner
iii. Obtained a bank loan of Rs 100 000 and invested as capital
iv. Purchased goods Rs 25 000 on credit and withdraw goods Rs 75 000 for the personal use
19) The double entry to record if the amount receivable from Hasitha Rs 50 000 was received after
deducting 5% discount is:
i. Cash a/c Dr Rs 50 000
Debtor's account Cr Rs 50 000
ii .Cash account Dr Rs 50 000
Discount allowed account Cr Rs 2500
Debtor's account Cr Rs 47500
iii. Cash account Dr Rs 47500
Discount allowed Dr Rs 2 500
Debtor's account Cr Rs 50 000
iv. Cash account Dr Rs 47500
Discount received Dr Rs 2500
Debtor's account Cr Rs 50 000
20) Furniture depriciation account of a business is an .............and purchase account is an........ account.
i.Assets, Expense. ii.Expense, Income. iii.Expenses, Equity. iv.Asset, Equity.
21) The account which records the double entry as ''increase in the debit side and decrease in the credit''
side is,
i. Electricity account. ii. Sales account.
iii. Discount allowed account. iv. Machinery depriciation account
22) The following transactions were occurred in a textile business.
A.Sold textile to Vidushi Rs 20 000 on credit basis.
B. Received Rs 15 000 cash from Vidushi.
C.Written off Rs 5000 as bad debts.
Select the source documents relevant to the above transactions
i. Sales journal, cash book, General journal. ii.Invoice, Voucher, Receipt
iii.Sales journal, Cash book, Cash book. iv.Invoice, Receipt, journal voucher
23) The balance of the bank account as at 31.08.2018 was Rs 44000.The bank statement balance was not
tally with the above balance due to the following errors.
A. Unrepresented cheque Rs 5000. B. Bank charges Rs 2000
C. Direct remittance Rs 8000. D. Dishonored issued cheque Rs 9000.
Balance as per adjusted bank account
i. Rs 42000. ii. Rs 50000. iii. Rs 52000 iv. Rs 59000
24) Balance as per the bank statement is,
i.Rs 46000 ii.Rs 48000 iii.Rs 57000 iv .Rs 64000
25) following is a correction entry for an error
Debtors account Dr 18000.
Suspense account Cr.18000
The error relevant for the above is,
i. Recording Rs 42000 sales on credit basis in the debtor's account as Rs 24000
ii. A sales invoices of Rs 18 000 has been not recorded in the books
iii. Cash received from a debtor, Rs 18000 has not been recorded in the debtor's account
iv. Recording a credit sale of Rs 24000 in the debtor's account as Rs 42000

Business & Accounting - Grade 11 Page 03

 26) The trial balance prepared by the business shows the debit balance of Rs 690 000 and the credit
balance of Rs 960 000.The balance to be transferred to the suspense account is ,
i. Suspense account (Dr) Rs 690 000 ii. Suspense account (Cr) Rs 960 000
iii. Suspense account (Dr) Rs 270 000 iv. Suspense account (Cr) Rs 270 000
27) The petty cash imprest of Rasanga Business is Rs 5000.As at 01.08.2019 the ammount of Petty cash
in hand was Rs 600.Business decides to increase the imprest to Rs 6000 from the month of August
st
Select the value of reimbursement as at 01 of August
i .Rs 6000 ii.Rs 5400 iii.Rs 5000 iv.Rs 4400
28) Select the answer which includes only the transactions transferred to the general journal.
A - Owner withdraw goods worth Rs 5000.
B - Purchase of stationaries Rs 5000 has recorded in the electricity account.
C - Purchase Rs 500 000 worth of Motor vehicle on credit basis.
D - Balance of building was Rs 10000.
i .A ,C ii. A ,B ,C iii. A ,B ,C ,D IV.A ,C D
29) The number of members of Tharu Dilena sports club in year 2018 was 250. The monthly subscription
st
fee for one member is Rs 100 .There were subscriptions to be received as at 01 January 2018 from
10 members .30 members has not paid the subscription fee for the year 2018. The total membership
fee received during the year was ,
i.Rs 23000 ii.Rs 26000 iii.Rs 276 000 iv. Rs 300 000
30) The correct statement regarding the account keeping in societies is,
i. An objective of Income and Expenditure account is regulating financial management .
ii. Income statement is prepared on cash basis.
iii. Income and Expenditure account records the income and expenditure for the relevant period .
iv. Income statement shows the net profit or loss.
*Answer questions No.31 and 32 using following information
The following transactions are related to the Bhagya and Nawodha Textile business for the year 2018
Direct raw material Rs 800 000.
Electricity and other expenses Rs 500 000.
Direct other expenses Rs 200 000.
5000 units of textiles were produced during the year 2018.An employee is paide Rs 100 for each
textile. Business sells goods by keeping 25% profit on cost.
2

31) The production cost of a textile is,

i.Rs 200 ii.Rs 300 iii.Rs 400 iv.Rs 500
32) The expected profit of the business is,
i.Rs 250 000 ii.Rs 375 000 iii.Rs 500 000 iv.Rs 625 000
33) Following adjustments should be done in Sachini Nimara's business for the year ended 31.12.2018
*The monthly rent of building is Rs 15000 and business has paid Rs 135 000
*Business has obtain Rs 400 000 bank loan as at 01.01.2018 which is entitled to a 15%
interest. Rs 50 000 cash has been paid as interest during the year.
Select the correct answer according to the above details.
i. Building rent expense for the year is Rs 135 000 and the accrued interest is Rs 10 000.
ii. Accrued building rent Rs 45 000 and the loan interest in the profit or loss Statement should be
Rs 50 000.
iii. Building rent in the profit or loss statement should be Rs 180 000 and interest payable Rs 10 000
is a current liability
iv. The building rent in the profit or loss statement is Rs 135 000 and Rs 50 000 is stated as loan
interest.

Business & Accounting - Grade 11 Page 04

34) Following are the details related to a machinery purchased by the business. The accounting period
ends on 2018.12.31
2018.07.01 Purchase price of machinery Rs 800 000
Fixing price Rs 200 000
Scrap value Rs 40 000
Useful life 5 year years
The depreciation of machinery for the year 2018.12.31 is ,
i.Rs 200 000 ii.Rs 192 000 iii.Rs 160 000 iv.Rs 96 000

² Answer the questions no.35 to 40 by using following information

The balances extracted from the books of Kasuni Madushani's business as at 2018.12.31
are given below
Motor vehicle. Rs 600 000
Stock as at 01.01.2018 Rs 40 000
Sales. Rs 480 000
Purchases Rs 280 000
Salaries. Rs 36 000
Debtors. Rs 75 000
Creditors. Rs 90 000
Interest paid Rs 18 000
Carriage inwards Rs 16 000
Provision - Motor vehicle depreciation Rs.120 000
Bank charges Rs. 4000
10% Bank loan Rs. 200 000
Capital Rs. 300 000
Donation Rs 12 000
Drawings Rs.10 000
Additional information:
i. Closing stock as at 31.12.2018 is Rs.76 000
ii.Motor vehicle should be depreciated at 10%
35) Cost of sales of the business is,
i. Rs.220 000 ii. Rs.260 000 iii. Rs.320 000 iv. Rs.336 000
36)The total of financial and other expenses in the profit or loss statement is,
i. Rs.22 000 ii. Rs.24 000 iii. Rs.34 000 iv. Rs.36 000
37) Equity as at 2018.12.31 is,
i. Rs.378 000 ii. Rs 386 000 iii. Rs.388 000 iv. Rs.450 000
38) The carring value of the motor vehicle as at 31.12.2018
i. Rs.600 000 ii. Rs.480 000 iii. Rs.420 000 iv. Rs.360 000
39)The total of current liabilities as at 31.12.2018
i. Rs.90 000 ii. Rs.92 000 iii. Rs 290 000 iv. Rs.292 000
40) A distribution expense and an Administration expense of this business respectively are,
i. Interest paid, Wages. ii. Advertising, Bank charges.
iii. Motor vehicle depriciation, Carriage inwards. iv. Motor vehicle deprecation, Wages.

* * * * *

Business & Accounting - Grade 11 Page 05

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Grade : 11 G.C.E. (O/L) Practice Test - 2019 60 E II

Business & Accounting Studies - II
Instructions : First question is compulsory.
Answer five questions by selecting two questions from part I and two questions
from part II including the first question.

1)Anwser the question no.i to x using the following case

Nethsarani who has completed a one year diploma course in Art obtained an experience from a short term
Bathik workshop conducted by Divisional secretariat office. She obtained a loan of Rs.800 000 from
National Savings Bank under the "Industrial Sri Lanka "project at a low interest rate and commenced a
business named"Sarani Bathik" on.01.03.2019.She makes shirts, soron,sarees and Bathik designs.
She is expecting to purchase a small lorry to distribute these products to different places and 5 employees are
working presently. Two agents were joined to sell the clothes to the forigeners.
Following are the transactions occurred in her business in the month of March
Purchase of material and other Rs. 240 000 (material of Rs 140 000 has been only used)
Purchase of equipment Rs. 200 000
Building rent (3 months) Rs. 60 000
Wages Rs. 125 000
Electricity Rs. 15 000 (31.03 has not been paid)
Distribution cost Rs. 75 000
Cash sales Rs. 230 000
Credit sales Rs. 155 000

i. a. What is the basic human need fulfills by Sarani Bathik?

b.
Name two advantages of registering this business
ii. a.Name the business organization that National Savings Bank belongs
b.
Name the production factors of Sarani Bathik with examples from the case.
iii. a.
Name an incident from the case related to the Planning process of Management
b. Name two auxiliary services of this business
iv. a.Name a strength and a threat that can be occurred to this business
b.
State an incident related to the marketing mix from the above case
st
v. Find the Cash in hand balance by preparing cash account as at 31 March
vi. a.Name two Source documents to be prepared by this business
b.
State the double entry to record obtaining the bank loan
vii. What is the deprecation amount if the business depreciate its equipments 12% annually
b.
State the double entry to record the equipment depreciation
viii. Calculate the profit or loss of the business for the month of March
xi. a.State a current asset and a current liability of the business with values
b.
Nethsarani decided to open a current account. State the double entry if she deposited
Rs 25 000 in the bank account.
x. a. Write the accounting equation as at 2019.03.19
b. Calculate the equity as at 2019.03.19

Business & Accounting - Grade 11 Page 06

 Part I Business & Accounting Studies
Answer for two questions only
2) i. a. Name two common objectives of a business
b. Write two differences between goods and services
ii. State whether the following statements are true or false
A. Human wants are limited and needs are unlimited
B. Selling vegetables by the farmer who grows vegetables by himself is a direct production
C. Owner is the person who takes decisions and implements them in a business
D. Conducting the activities of a company according to the companies act is related with the legal
environmental factor
iii. Chathurika who lives near the university, sells sweet potatoes, manioc, maize for the students and
other people with the help of her mother.
A. Write two internal environmental forces included in the above case
B. Write the interested parties for the above business and state the reason for them to be interest
over the business.
iv. Nipun who is expecting to start a business after completing a motor vehicle repairing course.
State 2 advantages of starting a private limited company than a sole proprietorship
( 2x4=8 marks)
03) i. Gayathri purchased vegetables from Latha for their consumption and Latha purchased those
vegetables from Jayani.
A. Name the consumer and the retailer of the above case
B. Draw a flow chart to show the methods that Jayani can use to sell her vegetables
ii. State whether the following statements are true or false
A. Having a lower selling price is a characteristic of retail trade
B. Selling goods via mobile vehicles can be known as Mobile small scale stores.
C. The conditions related to the fixed deposits can be changed according to the desire of the bank
D. Writing only the Name of the bank without having two parallel lines can be considered as
special crossing
iii. a. Recently businessmen are practicing to use cheques for their transactions. But some times
bank will reject (dishonor) payment for cheques. Write two reasons for dishonoring a cheque
by the bank.
b. Write two insurance principles affecting to life insurance.
iv. a. Sewmini goes to school everyday by train. Write an advantage and a disadvantage of
railway transportation
b. Name the Government institution in Sri Lanka relating to the Railway transportation.
( 2x4=8 marks)
4) Mr.Wijeyakoon and Mr.Samarakoon are in same age. The pension obtained by them
were invested in two investment methods. Mr.Wijeyakoon received a dividend income and
Mr.Smarakoon received an interest income.
i. A. Name the investment method selected by Mr.Wijeyakoon?
B. Name the investment method selected by Mr.Samarakoon?
ii. State whether the following statements are true or false
A. Clarity is an element of communication process
B. Achieving the business objectives successfully as expected is efficiency
C. Target market is the market portion that the business can satisfy profitably and attractively
D. Marketing concept is related with fulfilling human needs and wants by providing
goods and services.
iii. Following are some tasks of a business which produces nutritional foods ,
A. Appointing managers for food production and provide necessary resources
B. Deciding the foods to be prepared
C. Taking actions to avoid the faults of production process
D. Provide necessary instructions to the employees by the production managers
State the managerial functions of the above business respectively
iv. a. Name two factors that should consider when selecting a investment method
b. What is the main. objective of Sri Lanka Exchange and Security Commission?
( 2x4=8 marks)

Business & Accounting - Grade 11 Page 07

 Part II
Answer for two questions only
5) i. a. Name two factors that affect to change the ownership of the business
b. Name two characteristics of a liability ( 2 marks)
ii. Classify the following components of a textile industry as Assets, Liability, Equity, Income
and Expenditure
A. Electricity B. Motor vehicle C. Capital D. Debtor
E. Bank overdraft F. Commission received ( 2 marks)
iii. Following shows the impact to accounting equation of Samadara business occurred during the
month of January 2019. Explain the transactions
Assets Equity Liablities
Date Motor Vehicle Stocks Debotrs Cash Capital Creditors
Balance 800 000 150 000 220 000 130 000 1020 000 280 000
01.05 -60 000 + 100 000 -40 000
01.02 -40 000 -40 000
01.16 -20 000 -20 000
01.23 -25 000 +5000 -30 000

No drawings occurred during the period

iv. Following credit sales transactions occurred in the Nadun's.business for.March month 2019
2019.03.11-Sold to Lasantha (invoice number 22) Rs. 60 000
2019.03.21-Sold to Hasintha (invoice number 23) Rs. 44 000
2019.03.26-Sold to Nimantha (invoice number 24) Rs. 72 000
2019.03.30-Sold a office table to Gayani Rs.12 000. ( 4 marks)
*Business allows a 5% trade discount for each sale
Required:
i. Prepare sales journal of Nadun's business for the month of March
ii. Record the transactions in the ledger accounts ( 4 marks)
6) i. a. Define what is a Bank Overdraft?
b.Name two instances where the bank statement balance is higher than bank account balance

ii. Following are the information related to a bricks manufacturing business for the month of June
2019.
Purchase of raw materials. Rs 180 000
Factory electricity. Rs 6 000
Machinery depriciation. Rs 5 000
Production salaries. Rs 44 000
Building rent. Rs 25 000
* Business sells the products by keeping 20% profit
Required:
A. Calculate prime cost of the business B.Total sales income of the business ( 2 marks)
iii. Following shows the bank account prepared by the Chethiya business for the
August month 2019 Bank account
Date Description Amount Date Description Amount
19.8.1 B/B/F 54 000 19.8.8 Sugandi (72) 28 000
08.06 Cash 12 000 8..14 Varuni (73) 14 000
08.09 Cheque (113) 17 000 8.21 Hansi (74) 9 000
08.17 Cheque (176) 31 000 8.31 B/C/D 63 000
114000 114000
Business & Accounting - Grade 11
Page 08
 Bank Statement for the Month of August 2019
Date Description Dr Cr Balance
19.8.1 B/B/F 54 000
19.08.06 Cash 12000 66 000
19.08.10 Cheque (72) 28000 38 000
19.08.12 Cheque (113) 17000 55 000
19.08.15 Direct remittance 24000 79000
19.08.19 Cheque (73) 9000 70 000
Required: 19.08.29 Bank Charges 2000 68 000
A. Adjusted bank account
B. Bank reconciliation statement ( 4 marks)
iv. The trial balance prepared by Sandeepani's business as at 31.12.2018 shows Rs. 1000 difference
in the debit side .Following errors were revealed later
1.Credit purchase Rs 21500 has been recorded in the creditors account as Rs 12500
2.Discount received Rs 4000 has been recorded the discount allowed account
3.Total of the Sales journal Rs 16000 has been overstated
Required:
A. Write the journal entries to rectify the above errors
B. Prepare the Suspense account ( 4 marks)
07) i. a. Name the components included in Statement of financial position
b. Name two concepts used when preparing the statement of profit or loss ( 2 marks)
ii. The income and expenditure account prepared by the president of
"Jayasikurui"Sports club for the month of May 2019 is given bellow .
Income and Expenditure account
2019.05.01 B/B/F 37 000 Sports equipment purchases 20 000
Membership fee 58 000 Electricity charges. 4 000
Accrued membership fee 12 000 Accrued building rent. 12 000
Flag sales income . 15 000
Sports equipment depreciation. 4 000
B/C/D 52000
107 000 107 000
Prepare the above income and expenditure account correctly. ( 2 marks)
iii. The trial balance of Sunil's business as at 31.12.2018 is given below.
Description Dr Cr
Capital 200 000
Opening Stock (2018.01.01.) 36 000
Purchase 180 000
Debtors 158 000
Bank Loan 12% 300 000
Salaries 45 000
Sales Commission 18 000
Cash 252 000
Loan Interest 30 000
Electricity 24 000
Machinery 400 000
Machinery Depriciation 160 000
Creditors 18 000
Additional information: Rent received 5 000
1.The cost of stock as at 31.12.2018 Rs. 36 000 Sales 450 000
2. Bad debts should be write off Rs. 3000 1 143 000 1 143 000
3. Machinery should be depreciated 10% on straight line method
4.Rent income receivable is Rs. 5 000
² Required: Statement of profit or loss for the year ended 31.12.2018
² Statement of Financial Position as at 31.12.2018 ( 8 marks)
Business & Accounting - Grade 11 Page 09