Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

A scale of typewriter that as been used in the office should be credited to ______________.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. Cash Account.

  2. Sales Account.

  3. Office Equipment Account.

  4. Bank Account.

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Correct Option: C

____________ reduces both total assets as well as owner's equity.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. Credit purchases

  2. Retained earnings

  3. Bank loans

  4. Drawings

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Correct Option: D
Explanation:

A drawing account is an accounting record maintained to track money withdrawn from a business by its owners. For example if proprietor withdraw cash from business then cash in hand account in decreased i.e. total assets decreased and it is recorded in the proprietor capital account as drawing which will reduce owner's equity. 

$A$ purchased a car for Rs. $10,00,000$, making a down payment of Rs. $1,00,000$ and signing a Rs. $9,00,000$ bill payable due in 60 days. As a result of this transaction.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. Total asset increased by Rs. $10,00,000$

  2. Total liabilities increased by Rs. $9,00,000$

  3. Total asset increased by Rs. $9,00,000$

  4. Total asset increased by Rs. $9,00,000$ with corresponding increase in liabilities by Rs. $9,00,000$

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Correct Option: D

Loss of stock by fire would lead to ____________.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. No change in total assets

  2. Total assets to decrease

  3. Total assets to increase

  4. Total assets and owners equity to decrease

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Correct Option: D
Explanation:

Loss of stock by fire will lead to decrease in closing stock on the asset side of balance sheet and decrease in net income of profit and loss account i.e. decrease in owner's equity on the liability side of the balance sheet.

On sale of old furniture, owner's equity would ______________.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. Increase

  2. Decrease

  3. Remain unchanged

  4. May or may not change

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Correct Option: D

_____________ increases both total assets as well as owner's equity.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. Credit purchases

  2. Retained earnings

  3. Bank loans

  4. Drawings

Show answer
Correct Option: B
Explanation:

Profits earned by the business are generally considered as retained earning, if not withdrawn by the owners. If firm generate the profits and retained in the business, cash of the firm increases which is part of the total assets. Parallel to this, all profits which are retained in the business are ultimately part of owners capital, hence it increases.

Accounts which relates to assets tangible or intangible are called ________ .

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. Personal a/c

  2. Real a/c

  3. Nominal a/c

  4. Impersonal a/c

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Correct Option: B
Explanation:

There are mainly three types of accounts: Real, Personal and Nominal accounts. Personal accounts are classified into three subcategories: Artificial, Natural and Representative. All assets of a firm, which are tangible or intangible, fall under the category "Real Accounts". Tangible real accounts are related to things that can b touched and felt physically, e.g., building, machinery, stock, land, etc. Intangible real accounts are related to things that can't be touched and felt physically, e.g., goodwill, patents, trademarks, etc.

Purchase of RBI bonds for cash would lead to ____________.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. No change in total assets

  2. Total assets to decrease

  3. Total assets to increase

  4. Total liabilities to increase

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Correct Option: A
Explanation:

Bonds are considered to be an investment and part of assets, similarly cash is also an asset. If RBI bonds are purchased that will increase the assets against the cash which is going to be reduced. Hence there will be no change in assets. 

Withdrawals by the proprietor would_______.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. Reduce both assets and owner's equity

  2. Reduce assets and increase liabilities

  3. Reduce owner's equity and increase liabiltiy

  4. No change

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Correct Option: A

Payment of a liability results in _________________.

book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

  1. Increase in total assets

  2. Decrease in total assets

  3. No change in total assets

  4. None of these

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Correct Option: B