Tag: commercial applications

Questions Related to commercial applications

The double entry system is based on "dual aspect"  concept. 

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

  1. True

  2. False

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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.

A cash receipt may cause ___________.

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

  1. Increase in liability

  2. Decrease in other asset

  3. Reduction in one asset and increase in other asset

  4. All of the above

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Correct Option: D
Explanation:

An amount of money received by a company for goods or services, is called as cash receipts. 

Following are the results of cash receipts:-
Increase in liability, reduction in one asset and increase in other asset, decrease in other asset etc.

Purposes of an accounting system are________________________.

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

  1. Intrepret

  2. Classify the effects of transaction to facilitate the preparation of reports

  3. Summarize and communicate information to decision makers

  4. All of the above

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Correct Option: D
Explanation:

The purpose of an accounting system are interpret, classify the effects of transaction to facilitate the preparation of reports and to summarize and communicate information to decision makers.

No accounting is made for Abnormal Loss in Joint Venture Account.

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

  1. True

  2. False

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Correct Option: A

Cash basis considers the revenue as realised when ____________.

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

  1. Sale is completed

  2. Amount is ultimately collected from sales

  3. Order is received

  4. All of these

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Correct Option: B

The basis of revenue recognition often used in accounting for hire-purchase transaction is _______________.

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

  1. Cash basis

  2. Sales basis

  3. Production basis

  4. None of these

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Correct Option: A

The consignment accounting is made on __________ .

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

  1. Accrual Basis

  2. Realisation Basis

  3. Cash Basis

  4. All of these

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Correct Option: A
Explanation:

The consignment accounting is made on Accrual basis.

As goods are sold in credit and and income to be earned are recorded in accounts.

Adjustment of accrued/outstanding income/expenses is not necessary in ______ system of accounting.

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

  1. Mercantile

  2. Cash

  3. Double Entry

  4. All the three

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Correct Option: B
Explanation:

Cash accounting is an accounting method in which payment receipt are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid. Hence, in this question accounting adjustment is not required for accrual/outstanding expenses/incomes.

The act by members of a trade union, persuading others not to work is called as _________ .

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

  1. Non-cooperation

  2. Picketing

  3. Sit-in-strike

  4. Strike

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Correct Option: D
Explanation:

The act by members of a trade union, persuading others not to work is called as strike. A strike is a type of refusal by the workers to work so that the employers can approve their demands. 

X sends out 100 bags to Y costing Rs 1000 each. 60 bags were sold at 10% above cost price. Sale value will be ______________.

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

  1. Rs 66,000

  2. Rs 65,000

  3. Rs 60,000

  4. Rs 65,500

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Correct Option: A