Tag: elements of accounts

Questions Related to elements of accounts

Calculate the creditor's turnover ratio from the following data:
Credit purchase during the year = $Rs. 12,00,000$
(Creditor + bills payables) in the beginning of year = $Rs. 4,00,000$
(Creditor + bills parables) at the end of year = $Rs. 2,00,000$

elements of accounts ratio analysis activity (or turnover) ratios accounting ratio's accounting ratios

  1. 6 times

  2. 4 times

  3. 2 times

  4. 5 times

Show answer
Correct Option: B
Explanation:

Average accounts payable = (Rs. 4,00,000 + Rs. 2,00,000)/2

                                              = Rs. 3,00,000
Credit turnover ratio = Net credit purchases/Average accounts payable
                                   = Rs. 12,00,000/Rs. 3,00,000
                                   = 4 Times

Given information is as follows:
Total assets turnover = $3$ times
Net profit margin = $10\%$
Total assets  = $Rs.2,00,000$
The Net profit is                      .

elements of accounts ratio analysis activity (or turnover) ratios accounting ratio's accounting ratios

  1. $Rs.20,000$

  2. $Rs.30,000$

  3. $Rs.50,000$

  4. $Rs.60,000$

Show answer
Correct Option: D
Explanation:

Total assets turnover ratio = Sales / Total assets

                                 $3$ = Sales / $200000$
Therefore, Sales = $Rs. 600000$
Net profit margin = [Net profit / Sales] x $100$
               $10/100$ = [Net profit / $600000$] x $100$
Therfore Net profit = $Rs. 60000$

Wages paid to Mohan for erecting a machine should be debited to ___________.

elements of accounts journal meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Wages A/c

  2. Machine A/c

  3. Mohans A/c

  4. Cash A/c

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Correct Option: B
Explanation:

'Wages paid' for the 'installation of machinery' should be debited to machinery account. 

Explanation: It is the amount incurred for buying and installing the machine. The 'machinery account' is debited since the machine has to be put to use.

The invoice relating to the acquisition on credit of an Office Equipment for Rs 24,500 from Globe Ltd was entered in the Purchases Journal. To correct this error which of the following needs to be done?

elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. A Journal entry: Debit Office Equipment ale and credit Purchases ale with Rs 24,500

  2. No journal entry is needed

  3. Journal entry: Debit Office Equipment ale and credit Globe Ltd ale with Rs 24,500

  4. Journal entry: Debit Globe Ltd ale and credit Office Equipment ale with Rs 24,500

Show answer
Correct Option: A

Amit commenced business introducing as his capital furniture worth Rs. 21,000, a car valued at Rs. 30,000 and Rs. 48,000 in cash. The journal entry for recording this would require ____________________.

elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Debit in the three asset accounts, including cash and a credit in the Capital Account

  2. No journal entries

  3. Debit in the two asset accounts other than cash and a credit in the Capital Account

  4. Debit in the cash Account and credit in the Capital Account

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Correct Option: C

Transactions which are inter-connected and have taken place simultaneously are recorded by means of a _____________.

elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Adjustment entry

  2. Combined journal entry

  3. Either (A) or (B)

  4. Closing entry

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Correct Option: B

Journal is the book of _______ in which every transaction is recorded before being posted into the ledger. 

elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Primary entry

  2. Secondary entry

  3. Third entry

  4. None of above

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Correct Option: A

________are passed in the general journal for transferring an item entered in one account to another account.

elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Transfer Entries

  2. Adjustment Entries

  3. Closing Entries

  4. Opening Entries

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Correct Option: A

Rs. 15,000 received from Karan has been credited to Ravan. Which of the following rectification entry is correct?

elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Raven A/c Dr. 15,000

    To Karen A/c 15,000

  2. Karan A/c Dr. 15,000

    To Raven A/c 15,000

  3. Ravan A/c Dr. 15,000

    To Suspense A/c 15,000

  4. Suspense A/c Dr. 15,000

    To Karan A/c 15,000

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Correct Option: A

Which one of the following is called backbone of auditing?

elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

  1. Routine checking

  2. Vouching

  3. Internal check

  4. Internal control

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Correct Option: B