Tag: commercial applications

Questions Related to commercial applications

In lease system, interest is calculated on _________________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Cash down payment

  2. Cash price outstanding

  3. Hire purchase price

  4. None of the above

Show answer
Correct Option: B
Explanation:

If the rate of interest is not given (the cash price and amount of each instalment being given), interest will be calculated on the basis that the interest for each year will be in the ratio of amounts outstanding.

Which one of the following is not an accounting convention?

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Consistency

  2. Full disclosure

  3. Materiality

  4. Secrecy

Show answer
Correct Option: C

Double entry system is used in which type of accounting ___________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Cost

  2. Financial

  3. Management

  4. All of these

Show answer
Correct Option: B
Explanation:

Financial accounting is based on dual concept. On the basis of dual concept, all business transactions are recorded in the books of accounts. This signifies that, every business transaction will affect two accounts while making an accounting entry. Its basically a double entry system of accounting. For every debit, there will be a credit and vice versa.

The accrual cost is the basis for ____________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Management system of accounting

  2. Mercantile system of accounting

  3. Internal system of accounting

  4. External system of accounting

Show answer
Correct Option: B
Explanation:

Accrual Accounting is the base of present accounting. It is also known as the mercantile system of accounting, wherein the transactions are recognised, as and when, they take place. 

Under this method, the revenue is recorded when it is earned, and the expenses are reported when they are incurred.

The system of recording transaction based on dual aspect concept is called ________________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Double account system

  2. Double entry system

  3. Single entry system

  4. None of these

Show answer
Correct Option: B
Explanation:

Dual aspect accounting is a concept which assumes that every business transaction will give two effects, i.e. debit and credit. For every debit there will be a credit, and vice versa. Double entry system of accounting is commonly used by all the organizations. Small concerns who are not well versed with double entry system are following the single entry system, in which they maintained only account of debtors and creditors and bank account. 

The basis for the accounting equation is the principle of _________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Rights

  2. Rules

  3. Procedures

  4. Policies

Show answer
Correct Option: A
Explanation:

Accounting equation is the foundation of double entry system of book-keeping. It displays that all the assets are either financed by borrowing money or paying from the shareholder's equity. The balance sheet being the complex version shows explain the equation very clearly and it shows that total assets is equal to total liability plus shareholder's equity. The basis for this equation is the principle of rights.

Mercantile system is followed by __________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Merchants, trade and industry

  2. Doctors, lawyers, brokers etc.

  3. Industry, trade and agriculturist

  4. Multi-national firms

Show answer
Correct Option: A
Explanation:

Mercantile system is the system which states that revenue and expenditure must be recorded at the time they are recognized or incurred. Mercantile is followed by Merchants, trade and industry as they get arithmetic accurate financial statements and it helps them to take important decisions.

Match the following:

1. Artificial persons accounts a) Firms account, educational institution's accounts, bank account etc.
2. Representative personal accounts b) Prepaid insurance, outstanding wages etc.,
3. Tangible real accounts c) Building, furniture, cash and machinery etc.
4. Intangible real accounts d) trademark, goodwill, patents, etc.
commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. a, b, c, d

  2. b, a, d, c

  3. a, c, d, b

  4. d, b, c, a

Show answer
Correct Option: A
Explanation:

An artificial person consists of any institution, which can be bank, educational institute or a firm.
Representative personal account means, an account which represents a person which can be prepaid insurance, outstanding wages.etc.
Tangible real account is an account, which is related to the assets that can be felt and seen by eyes.
Intangible real account is an account, which cannot be seen and felt.

The system of recording based on dual aspect concept is called _______.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Double account system

  2. Double entry system

  3. Single entry system

  4. All the above

Show answer
Correct Option: B
Explanation:

Dual aspect is the foundation or basic principle of accounting. It provides the very basis for recording business transactions into the book of accounts. This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places. In other words, at least two accounts will be involved in recording a transaction.

The double-entry system also requires that for all transactions, the amounts entered as debits must be equal to the amounts entered as credits.

The governing principle of double entry system is that _________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. for every debit there is an equal and corresponding credit

  2. debit the given credit the receiver

  3. debit what goes out credit what comes in

  4. debit profits and gains credit expenses and losses

Show answer
Correct Option: A
Explanation:

Dual aspect is the foundation or basic principle of accounting. It provides the very basis for recording business transactions into the book of accounts. 

This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places. In other words, at least two accounts will be involved in recording a transaction.

The double-entry system also requires that for all transactions, the amounts entered as debits must be equal to the amounts entered as credits.