Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

Credit creation power of the commercial banks gets limited by which of the following?

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. Banking habits of the people

  2. Cash Reserve Ratio

  3. Credit policy of the central bank

  4. All of the above

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Correct Option: D

Which of the following statements best explains the relationship between journal and ledger?

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. First recording in journal and then positing to ledger completes the double entry of the transaction

  2. The journal is the book of original entry, where as the ledger is the book of second entry

  3. The journal is the book for analytical record and ledger is the book for chronological record

  4. The process of recording, in the journal is called journalising, the process of recording in the ledger is called posting

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Correct Option: B
Explanation:

Book of original entry refers to journal where all the business transactions are recorded first in chronological order whereas ledger is a book which records all journal entries in individual ledger account. 

Ledger Folio and index is necessary for ledger.

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. True

  2. False

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Correct Option: A
Explanation:

A ledger folio is the page number or folio number that is recorded in the L.F. column in the journal. It includes the page number of the ledger book on which the relevant account appears. 

An index is the list of all ledger accounts that is maintained in alphabetical order, indicating the page number of each ledger account. 
A ledger book contains various pages and an index helps in finding out any ledger account. Therefore, the ledger folio and index are necessary for a ledger.

A bound book of account is __________.

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. Ledger

  2. Journal

  3. Subsidiary Book

  4. Cash Book

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Correct Option: A
Explanation:

The ledger is the principal book of accounting system. It contains different accounts where transactions relating to that account are recorded. A ledger is the collection of all the accounts, debited or credited, in the journal proper and various special journal.  

It is very useful and is of utmost importance in the organisation. 
The net result of all transactions in respect of a particular account om a given date can be ascertained only from the ledger.

_________ is concerned with the classification process of Accounting.

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. Ledger

  2. Preparation of profit and loss a/c

  3. Journalising

  4. Balancing of leger

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Correct Option: A
Explanation:

Once the business transactions are recorded in journal, this has to be posted in ledger. Posting of transaction in a ledger depends on the nature of transaction. Hence this is very much desired to have a proper classification of ledger. This may be classified in the form of personal ledger and impersonal ledger. 

A transaction recorded on the credit side of cash book is transferred to the ledger _______________.

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. On debit side of the account

  2. On credit side of the account

  3. Is not posted anywhere

  4. Either (a) or (b).

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Correct Option: A
Explanation:

Rules regarding posting of cash book are given below: (i) Transactions recorded on the debit side of cash book are posted on the credit side of accounts opened in the ledger. (ii) Transactions recorded on the credit side of the cash book are posted on the debit side of different accounts in the ledger.

Balance of cash book is posted to the ledger ______________.

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. In the cash account

  2. In bank account

  3. Nowhere

  4. Either (a) or (b).

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Correct Option: C
Explanation:

A cash book is a financial journal that contains all cash receipts and disbursements, including bank deposits and withdrawals. Entries in the cash book are then posted into the general ledger.

Main object of preparing a Ledger is ____________.

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. to ascertain the debtors and creditors of the business

  2. to ascertain the financial position of the business

  3. to ascertain the profit or loss of the business

  4. to ascertain the collective effect of all transactions pertaining to a particular account

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Correct Option: D

In the ledger only __________ accounts are maintained.

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. personal

  2. real

  3. nominal

  4. all of the above

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Correct Option: D

Cash account will show ______________.

elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

  1. Debit or Credit balance

  2. a Credit balance

  3. a Debit balance

  4. None of the above

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Correct Option: C