Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Accrued interest will be ________ to interest account.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. Debited

  2. Credited

  3. No effect

  4. None

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Correct Option: B
Explanation:

The amount of accrued interest for the recipient of the payment is a debit to the interest receivable (asset) account and a credit to the interest revenue account. The debit is rolled into the balance sheet (as a short-term asset) and the credit into the income statement.

Accrued income is ______ to the expenses in the profit and loss account.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. Added

  2. Deducted

  3. Rounded off

  4. None

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Correct Option: A
Explanation:

The Accrued Income A/c appears on the assets side of the Balance Sheet. While preparing the Trading and Profit and Loss A/c we need to add the amount of accrued income to that particular income.

Accured income is an income which is __________ but not received.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. Spent

  2. Earned

  3. Occurred

  4. None

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Correct Option: B
Explanation:

Accrued revenues are revenues that are earned in one accounting period, but cash is not received until another accounting period.

Calculate Outstanding interest on 10 % govt bonds Rs. 15000.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. 1520

  2. 1500

  3. 2000

  4. 2200

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Correct Option: B
Explanation:

Calculation of Interest on Govt Bonds = 15000 * 10 / 100 

                                                                 = 1500

Accrued income is shown ___________ of balance sheet.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. Asset

  2. Liability

  3. Added to asset

  4. Added to liability

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Correct Option: A
Explanation:

Accrued income is usually listed in the current assets section of the balance sheet in an accrued receivables account.

Subscription received in advance Rs. 500 shall be ______________________.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. Added to subscription and shown under assets

  2. Added to subscription and shown under liabilities

  3. Deducted from subscription and shown under assets

  4. Deducted from subscription and shown under liability

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Correct Option: D

Rent Received Rs 2400 is for 15 months than Rs ________ is pre received income.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. 500

  2. 470

  3. 480

  4. 400

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Correct Option: C
Explanation:

Rent per month = 2400 / 15

                           = 160 Rs
Rent for 12 months = 160 * 12 = Rs 1920
Then, Prepaid expenses is 160 * 3 = Rs 480.

When income is received in advance ___________ account is debited.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. Expense

  2. Profit and loss

  3. Income

  4. None of these.

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Correct Option: C
Explanation:

 When a company receives money in advance of earning it, the accounting entry is a debit to the asset Cash for the amount received and a credit to the liability account such as Customer Advances or Unearned Revenues.

If Incomes received in advance appears in the trial balance, it__________.

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. will be shown in Profit and Loss Account by way of deduction from the income received

  2. will be credited to Profit and Loss Account

  3. will not be shown any where

  4. will be shown on the liabilities side of the balance sheet only

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Correct Option: D

Drawings account of a partner will have _____________. 

book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

  1. debit balance

  2. credit balance

  3. either (a) or (b)

  4. neither (a) nor (b)

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Correct Option: A