Tag: elements of accounts

Questions Related to elements of accounts

Which among the following situation will best explain about issuing debit note to a customer:
A) When the amount payable by buyer to seller increases.
B) Return of goods due to bad quality.
C) When the amount payable by buyer to seller decreases.
D) Goods delivered has charged an extra price.  

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

  2. B and C

  3. A and D

  4. B and D

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Correct Option: B
Explanation:

A debit note is a note which is issued when goods purchased are returned by the purchaser to the vendor or in other words when goods are returned by the buyer to the seller. A debit note signifies that the liability of the buyer has been reduced for payment or expense. Whereas a credit note is a note which is issued by the vendor or seller to the purchaser in respect of return of goods. 

When a buyer returns goods to the seller, he sends a _______ as intimation to the seller of the amount and quantity being returned and requesting the return of money. Whereas when a Seller receives goods (returned) from the buyer, he prepares and sends a _______ as intimation to the buyer showing that the money for the related goods is being returned in the form of a 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. Debit note; Credit note

  2. Credit note; Debit note

  3. Cash memo; Credit memo

  4. Debit note; Cash memo

Show answer
Correct Option: A
Explanation:

A debit note is a note which is issued when goods purchased are returned by the purchaser to the vendor or in other words when goods are returned by the buyer to the seller. A debit note signifies that the liability of the buyer has been reduced for payment or expense. Whereas a credit note is a note which is issued by the vendor or seller to the purchaser in respect of return of goods. 

A _______ is a simple official acknowledgment, that the goods or services have been received. It is prepared by the vendor and given to the consumer and is used to show the ownership of the item. 

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. Receipt

  2. Invoice

  3. Cash memo

  4. Sale deed

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Correct Option: A
Explanation:

Receipt is a document that states that a payment against a particular sale of goods or services has been received. It acts as a proof of payment. A receipt contains the details about the person making the payment, amount of the payment made, date of payment, etc.

Which among the following cases a firm issues a credit note to the customer:
A) When the buyer account is overcharged
B) When the buyer returns the goods purchased by him
C) Unit price overcharged or overbilled
D) Product wrongly shipped 

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 C

  2. A and D

  3. B and C

  4. C and D

Show answer
Correct Option: C
Explanation:

Option C (B and C). A credit note is issue when the  customer account is over debited by the buyer. The buyer issues  a credit note and hence the over debit is reduced by issuing a credit note. Over debit may occur when buyer returns the goods or when unit price is overcharged or overbilled. 

The _________ is a document that a seller passes to a buyer at the time of a specific purchase of goods or services. It is the equivalent of an invoice and is only used to record transactions that are paid for using cash, rather than bank transactions.

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. Voucher

  2. Invoice

  3. Cash memo

  4. Credit memo

Show answer
Correct Option: C
Explanation:

Cash Memo. A cash memo is documentary evidence of the payment made. The content of a cash memo and invoice are the same. An invoice is document that is given by the buyer to the purchaser when goods are purchased on credit. 

Accounting software is used to perform the function of ________.

elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

  1. auditing

  2. accounting

  3. taxation

  4. none of the above

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Correct Option: B

What is a detailed process for recovering information or an IT system in the event of a catastrophic disaster such as a fire or flood?

elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

  1. Disaster recovery plan

  2. Hot site

  3. Cold site

  4. Disaster recovery cost curve

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Correct Option: A

Accounting is concerned with recording of ____________ transactions and events.

elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

  1. social

  2. legal

  3. financial

  4. all of the above

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Correct Option: C

When would an auditor typically not perform additional tests of a computer systems controls?

elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

  1. When the assessed level of control risk is at a minimum.

  2. When computer controls appear to be strong and risk is at a minimum.

  3. When controls appear to be weak.

  4. When inherent risk is at a maximum.

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Correct Option: C

When would "auditing around the computer" be appropriate?

elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

  1. When controls over the computer system are strong.

  2. When controls over the computer system are non-existent.

  3. When controls over the computer system are adequate.

  4. It is never appropriate to audit around the computer

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Correct Option: B