Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Debenture premium cannot be used to -

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

  1. Write off the discount on issue of shares or debentures

  2. Write off the premium on redemption of shares or debentures

  3. Pay dividends

  4. Write off underwriting commission

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Correct Option: C

Lenders can study the creditworthiness of the business firm with the help of books of accounts.

book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

  1. True

  2. False

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Correct Option: A

Book-keeping enables investors to take a decision whether to invest or not.

book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

  1. True

  2. False

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Correct Option: A
Explanation:

Bookkeeping allows investors to have up-to-date and accessible information. Investors will be able to make better, well informed, decisions which is the ultimate purpose of bookkeeping. Bookkeeping is not only for current investors but for future investors too.

Various departments of government will be able to find out the taxes due from various sources with the help of books of accounts.

book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

  1. True

  2. False

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Correct Option: A
Explanation:

The above statement is true.

Government can access books of accounts of business from various source of the to find out the taxes due.

Book-keeping does not help the owners to find out profit, losses, assets and liabilities.

book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

  1. True

  2. False

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Correct Option: B

For which of the following adjustments would a reversing entry facilitate book-keeping procedures?

book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

  1. Adjustment for depreciation expense

  2. Adjustment to allocate prepaid insurance to the current period

  3. Adjustment made as a result of inventory of supplies

  4. Adjustment for drawings in goods

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Correct Option: B

According to the double entry system of accounting, an account that obtains benefit is __________.

book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

  1. Credit

  2. Debit

  3. Income

  4. Need not to show in accounting records

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Correct Option: A

There are ______ systems of keeping records.

book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

  1. Single Entry System & Double Accounts System

  2. Single Account System & Double Accounts System

  3. Single Entry System & Double Entry System

  4. Single Entry System & Duplicate Accounts System

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Correct Option: C

Which of the following is/are merit of double entry system?

book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

  1. It keeps a complete record of business transactions.

  2. It provides a check on the arithmetical accuracy of accounts.

  3. The detailed profit and loss account can be prepared to show profit earned or loss suffered during any given period.

  4. All of the above

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Correct Option: D

Capital reserves are normally created out of free of distributable profits.

book keeping and accountancy reserve and fund kinds of reserves secret reserve reserves

  1. True

  2. False

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Correct Option: B
Explanation:

Capital reserves are those reserves which are not created out of operating profits. Capital reserves refers to the amounts which are not free for distribution by way of dividend.. In case of companies, following are examples of capital reserves :

  • Profit prior to incorporation.
  • Premium on the issue of shares and debentures.
  • Profit on reissue of forfeited shares.
  • Profit on redemption of debentures.
  • Profit on sale of fixed assets.
  • Profit on revaluation of fixed assets.
  • Profit on a sale of  the whole undertaking or a part of it.