Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

_____________ includes identifying, recording, classifying and summarizing the transactions.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Accounting posting

  2. Accounting cycle

  3. Tally of accounts

  4. All of the above

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Correct Option: B
Explanation:

Accounting cycle is a step-by-step process of recording, classification and summarization of economic transactions of a business. It generates useful information in the form of financial statements including  income statement, balance sheet, cash flow statement and statement of changes in equity.

The time period principle requires that a business should prepare its financial statements on periodic basis. Therefore, cycle is followed once during each accounting period. Accounting cycle starts from the recording of individual transactions and ends on the preparation of financial statements and closing entries.

Trading account is a ______________.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Personal account

  2. Real account

  3. Nominal account

  4. Valuation account

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Correct Option: C
Explanation:

Trading account is nominal account which is prepared at the end of accounting year. It helps to find out gross profit or gross loss during the accounting period. 

Trading account consists of two sides 'debit and credit'. All direct expenses are debited and direct incomes are credited in trading account.

Prepaid salary is _______________.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Real Accounts

  2. Personal Accounts

  3. Nominal Accounts

  4. None of above

Show answer
Correct Option: B
Explanation:

Prepaid expenses are those expenses which have been paid in advance and related benefits are not consumed within the same accounting period. The benefits of expenses incurred are carried to the next accounting period. Examples-prepaid salary, prepaid rent, etc. Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business. 

Prepaid (Unexpired)  salary is a personal account and is shown on the assets side of balance sheet.

Economic order quantity is that quantity at which cost of holding and carrying inventory is ________________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Maximum and equal

  2. Minimum and equal

  3. It can be maximum or minimum depending upon case to case

  4. Minimum and unequal

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Correct Option: B

If a venturer draws a bill on his co-venturer and if the drawer discounts the bill with same sets of books maintained, the discounting charges will be borne by _______________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. The drawer of the bill

  2. The drawee of the bill

  3. The discounting charges will be debited in the joint venture A/c

  4. The discounting charges will be borne by bank

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Correct Option: C

A purchased goods costing 45,000. B sold goods costing Rs. 40,000 at Rs. 50,000. Balance goods were taken over by A at same gross profit percentage as in case of sale. The amount of goods taken over will be ________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Rs. 6,250

  2. Rs. 5,000

  3. Rs. 6,000

  4. Rs. 10,000

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Correct Option: A

A and B enter into a joint venture sharing profits and losses equally. A provides goods from his stock Rs. 10,000. He pays expenses amounting to Rs 1000. B incurs further expenses on carriage Rs. 2,000. He receives cash for sales Rs. 15,000. He also takes over goods to the value of Rs. 3,000. What will be the amount to be remitted by B to A Rs.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Rs. 13,500

  2. Rs. 15,000

  3. Rs. 11,000

  4. Rs. 10,000

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Correct Option: A

M and N enter into a joint venture where M supplies goods worth Rs. 6,000 and spends Rs. 300 on various expenses. N sells the entire lot for Rs. 7,800 meeting selling expenses amounting to Rs. 300. Profit sharing ratio equal. N remits to M the amount due. The amount of remittance will be _______________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Rs. 6,900

  2. Rs. 7,500

  3. Rs. 6,300

  4. Rs. 6,600

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Correct Option: A

A bond whose price will rise above its face value is classified as _______________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. premium face value

  2. premium bond

  3. premium stock

  4. premium warrants

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Correct Option: B

A invoiced out certain goods so as to show a profit of 20% on invoice price. 1/10th of the goods were lost in transit. The cost price of goods lost is Rs 40,000. The invoice value of goods sent out will be ___________.

elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

  1. Rs 5,00,000

  2. Rs 4,00,000

  3. Rs 4,50,000

  4. Rs 4,80,000

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Correct Option: A