Tag: elements of accounts

Questions Related to elements of accounts

Suppose One Dealer has a credit of ' 5/-Lakhs in his Electronic ITC Ledger. That dealer has an interest arrears dues of '6/-Lakhs and Penalty Dues of ' 2/-Lakhs. If so, how much, he has to deposit to settle the above interest and Penalty Dues?

elements of accounts ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. 3/-Lakhs

  2. 6/-Lakhs

  3. 2/-Lakhs

  4. 8/-Lakhs

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Correct Option: D

Ledger is also called  ___________.

elements of accounts ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. Principal Book of Accounts

  2. Cash Books

  3. Subsidiary Books

  4. Petty Cash Book

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Correct Option: A
Explanation:

Journal is called subsidiary books of account. It does not provide the summarized data. 

Hence, all entries need to be posted in ledger account. Ledger is also called as principal book of accounts as it gives the details of each account.

Receivables Management deals with _______________.

elements of accounts ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. Receipts of raw materials

  2. Debtors collection

  3. Creditors management

  4. Inventory management

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Correct Option: B
Explanation:

Receivable management is the process of making decisions relating to investment in trade debtors. Certain investment in receivables is necessary to increase the sales and the profits of the firm.

__________ is a summary of all transactions relating to particular account.

elements of accounts ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. Balance sheet

  2. Trial balance

  3. Ledger

  4. Journal

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Correct Option: C
Explanation:

Ledger is the principal book of accounts. Journal is kept only to facilitate for passing the entries. All entries which are passed in journal are posted in ledger. For every account , a separate ledger is opened. Ledger is a summary of all transactions relating to a particular account.

User of Financial Statements are ____________.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. creditor

  2. employee

  3. owner

  4. all of the above

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Correct Option: D
Explanation:
Users of financial statements are the people who refer the financial statements for various reasons. Creditors, employees and owners are some of the users of financial statements. Creditors use the financial statements to ascertain whether the company to whom they are lending money are capable to repay the same. The employees use the financial statements to understand the business better which will ensure active participation. The owners use the financial statements to understand whether their business is profitable or not. 

 Financial statements contain only_____information.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. monetary

  2. non-monetary

  3. qualitative

  4. all of the above

Show answer
Correct Option: A
Explanation:

The financial statements show only the monetary/quantitative information and ignores the impact of a qualitative information on the financial statements. Qualitative information like efficiency of the management, employer employee relationship, customer satisfaction, loyalty of customers etc. are ignored by the financial statements. However, these are equally important to understand the financial position of an organisation.

Financial statements does not provide _____information.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. monetary

  2. qualitative

  3. both

  4. none

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Correct Option: B
Explanation:

The financial statements show only the monetary/quantitative information and ignores the impact of a qualitative information on the financial statements. Qualitative information like efficiency of the management, employer employee relationship, customer satisfaction, loyalty of customers etc. are ignored by the financial statements. However, these are equally important to understand the financial position of an organisation.

Credit granting institutions take decisions based on the________ performance of the undertakings.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. managarial

  2. financial

  3. social

  4. economical

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Correct Option: B
Explanation:

Credit gaining institutions take decisions based on the financial performance of the undertakings. They refer the financial statements to analyse the performance of the business. Credit gaining institutions need to check whether the company is capable of repaying the credit they are taking or not. 

Profit and loss account discloses the profit/loss for a ___________period.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. over time

  2. specified

  3. not specified

  4. none of the above

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Correct Option: B
Explanation:

Profit and loss account discloses the profit/loss for a specified period. The period can be for a year or for a quarter. The Statement of Profit and loss shows the revenues and expenses of the business earned or incurred during the accounting year. The statement helps in understanding the financial position of the business.

Financial statements show ____information but not __information.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. correct,detailed

  2. aggregate,detailed

  3. detailed,correct

  4. detailed,aggregate

Show answer
Correct Option: B
Explanation:

Financial statements of a company show the aggregate information. By aggregate we mean that all the transactions that have taken place in the business during the whole year. The financial statements do not show detailed information regarding about every transaction only recording of transaction takes place, not all details of the same are disclosed in the statements.