Tag: elements of accounts

Questions Related to elements of accounts

Ledger is book for _____________.

elements of accounts ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. Analytical record

  2. Chronological record

  3. Alphabetical record

  4. None of above

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Correct Option: B
Explanation:

A ledger is an accounting book that facilitates the transfer of all journal entries in a chronological sequence to individual accounts. The process of recording journal entries into the ledger is called posting.

Process of recording transaction in ledger is known as ____________.

elements of accounts ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. Balancing

  2. Posting

  3. Journalizing

  4. None of above

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Correct Option: B

A cash memo is prepared and issued by__________.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Buyer

  2. Seller

  3. Customer

  4. Public

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Correct Option: B
Explanation:

A cash memo is prepared by the seller when the goods are sold for cash. The cash memo is similar to an invoice, only difference being invoice is issued for credit sale and cash memo for cash sales.

Which among the following information is contained in a cash memo will contain :
A) Details of goods or services sold
B) Price of items sold
C) Name and address of buyer

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. A and B only

  2. B and C only

  3. A and C only

  4. A, B and C

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Correct Option: D
Explanation:

The cash memo contains the details of the goods and services sold, price of items sold, name and address of the buyer and also the date of purchase. The contents of cash memo and invoice are the same. 

A credit note is issued for cancelling the extra debit or wrong debit.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. True

  2. False

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Correct Option: A
Explanation:

A credit is issued by the shopkeeper to the buyer who returns the goods. It is issued to cancel the excess debit or wrong debit or to increase the credit which earlier given, was less. 

On the basis of the credit note, the seller records the _____________.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Sales return book

  2. Purchase return book

  3. Sales book

  4. All of the above

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Correct Option: A
Explanation:

A credit note is issued by the vendor to the buyer when the goods are returned by the buyer to the vendor. So, with the help of credit notes the vendor/seller can record all the entries of sales return because a credit note would be issued when goods are returned. 

A debit note is issued when _________________.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Less debit was formerly given

  2. Less credit was formerly given

  3. To cancel the wrong debit

  4. All of the above

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Correct Option: A
Explanation:

A debit note is note which is issued when less debit is given. It signifies the debt paying liability of a person. Debit note is issued to give additional debit and to cancel and extra credit.

A credit note is prepared for __________ the account of the counterpart.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Debiting

  2. Crediting

  3. Nulifying

  4. Any of the above

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Correct Option: B
Explanation:

A credit note is prepared for crediting the account of the counter part. A credit note is prepared when less credit is given or extra debit is given. It is issued by the supplier when the goods are returned by the buyer. It gives additional credit or cancels the excess credit by issuing a debit note.

A journal entry cannot be passed in a journal proper with the debit and credit note.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. True

  2. False

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Correct Option: B
Explanation:

False. A debit or credit note is used to rectify the extra short debit or credit is given. They have an advantage of not editing the books of original entry. A journal entries are passed with the help of journal voucher.

Debit and credit note provide an advantage of not editing and changing the original documents. To correct the effect given in original document debit and credit notes are issued accordingly separately.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

True. Debit and credit notes are issued to correct the issues of short debit or short credit given earlier. They give an advantage of not editing the books of original entry and still altering the accounts by either debiting or crediting the accounts so needed respectively.