Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

On receipt of Rs 975 from Shyam on his account for Rs 1000 Shyam's Account should be credited with ____________.

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. Rs 1000

  2. Rs 975

  3. Rs 25

  4. None of these

Show answer
Correct Option: B

What will be the treatment of "accrued income" if appearing in the Trial Balance.

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. It will be shown on the assets side as current assets in the balance sheet

  2. It will be shown on the liabilities side as current liability in the balance sheet

  3. It will be shown on the debit side of trading account as an expense

  4. It will be shown on the credit side of profit and loss account as an income

Show answer
Correct Option: A
Explanation:

Accrued Income is treated as an asset for the company , hence it will be shown in Asset Side in the Balance Sheet. 

In balance sheet, accrued income is shown under which head of assets _______________.

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. Intangible Assets

  2. Current Assets

  3. Fictitious Assets

  4. Tangible Assets

Show answer
Correct Option: B
Explanation:

It may happen that certain items of income such as interest on loan, commission, rent, etc. are earned during the current accounting year but have not been actually received by the end of the same year. Such incomes are known as accrued incomes. The adjusting entry for accrued income is:

Accrued Income A/c Dr.     
      To Concerned Income A/c
The amount of accrued income will be added to the related income in the profit and loss account and the new account of accrued income will appear on the asset side under the head current assets of the balance sheet

 Give effect of the following adjustment entry:
 The accrued rent is Rs. 1,900.  

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. Rent A/c Dr. 1,900

    To Accrued Rent A/c 1,900

  2. Accrued Rent A/c Dr. 1,900

    To Rent A/c 1,900

  3. Accrued Rent A/c Dr. 1,900

    To Asset A/c 1,900

  4. None of the above

Show answer
Correct Option: B
Explanation:

It may happen that certain items of income such as interest on loan, commission, rent, etc. are earned during the accounting year but have not been actually received  by the end of the year. Such incomes are known as accrued income. The adjustment entry for accrued income is:

Accrued Income A/c Dr.
     To Concerned Income A/c
The amount of accrued income will be added to the related income in the profit and loss account and the new account of accrued income will appear on the asset side of the balance sheet.
The effect of adjustment entry for  accrued rent of Rs. 1,900 is:
Accrued Rent A/c  Dr.      1,900     
      To Rent A/c                              1,900

Which of these is not a method of redemption of debentures ?

book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

  1. Purchase in open market

  2. Auction of debentures

  3. Drawing of lots

  4. Payment in lump sum

Show answer
Correct Option: B

Debentures can be redeemable at discount.

book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

Debentures will be redeemed at a discount only when the company is able to buy the debentures in the open market at a price lower than the face value of the debentures.

Debentures can be redeemed _____________.

book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

  1. At par

  2. At premium

  3. At discount

  4. Both (a) and (b)

Show answer
Correct Option: D

When a company issues debenture, it usually mentions the terms on which they will be redeemed on their maturity.

book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

  1. True

  2. False

Show answer
Correct Option: A

Debentures can be issued at par and redeemable at par.

book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

  1. True

  2. False

Show answer
Correct Option: A

Premium on redemption is a/an  ____________ of a company payable in future.

book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

  1. liability

  2. asset

  3. income

  4. expense

Show answer
Correct Option: A