Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

__________ does not help in assuming accuracy of balances of various accounts and preparation of the financial statements.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Totals Method

  2. Balances Method

  3. Totals-cum-balances Method

  4. None of the above

Show answer
Correct Option: A
Explanation:

In total method, total of each side in the ledger is ascertained separately and shown in the trial balance in the respective columns. However, this method is not widely used in practice, as it does not help in assuming accuracy of balances of various accounts and preparation  of financial statements.

Accrued Income means _______.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. income not earned

  2. income earned but not received in cash

  3. income received in advance but not earned

  4. income earned but realization doubtful

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Correct Option: B
Explanation:

Accrued income is income which has been earned but not yet received. Income must be recorded in the accounting period in which it is earned. Therefore, accrued in, a corresponding income must be recognized in the accounting period in which it arises rather than in the subsequent period in which it will be received. As income will be credited to record  the accrued income, a corresponding receivable mist be created to account for the debit side of the transaction. The accounting entry to record accrued income will be as follows: 

Debit-Income Receivable and Credit-Income 

______ is time consuming and hardly serves any addition or special purpose.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Total Method

  2. Balances Method

  3. Totals-cum-balances Method

  4. None of the above

Show answer
Correct Option: C
Explanation:

Total-cum-balances Method is a combination of totals method and balances method.  Under this method four columns for amount are prepared. Two columns for writing the debit and credit totals of various accounts and two columns for writing the debit and credit balances of these accounts. This method is time consuming and hardly serves any additional or special purpose.

_______ is the most widely used method in practice.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Total Method

  2. Balance Method

  3. Totals-cum-balances Method

  4. None of the above

Show answer
Correct Option: B
Explanation:

Under balances method trial balance is prepared by showing the balances of all ledger accounts and then totalling up the debit and credit columns of the trial balance to assure their correctness. Balances Method is the most widely used method in practice.

A's trial balance contains the following information :
Discount allowed, Rs 1,000
Provision for discount, Rs. 3,000 on debtors
It is desired to make a provision for discount on debtors, Rs. 3,500. The amount to be debited to profit and loss a/c is____________.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Rs. 4,500

  2. Rs. 4,000

  3. Rs. 1,500

  4. Rs. 500

Show answer
Correct Option: C
Explanation:
P & L A/c to be debited = New provision +Discount allowed - old provision 
                                                       = Rs 3,500 + Rs 1000 - Rs 3,000.
                                                       = Rs 1,500 to be debited.  

Where is the closing stock appearing in the Trial Balance is shown?

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. On the Dr. side of Trading A/c.

  2. On the Cr. side of Trading A/c.

  3. On the Assets side of Balance Sheet.

  4. On the Cr. side of Trading A/c and on the assets side of Balance Sheet.

Show answer
Correct Option: C
Explanation:

Closing stock is usually not shown in the trial balance and is shown as an adjustment below the trial balance. Hence. when its shown in the trial balance it will only appear in the balance sheet on the assets side and not in the trading account.  It is the stock left in business at the end of the year. 

It is basically the inventory the company has hands on at the end of the year or is unsold. It includes work-in-progress, raw materials, finished goods etc .

If 'Prepaid Wages' is given in Trail Balance, it is shown in _____________.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Debit of Trading A/c

  2. Debit of Trading A/c and Assets

  3. Debit of P&L A/c

  4. Assets

Show answer
Correct Option: D
Explanation:

At the end of the financial year, adjustment entries are also need to be passed for various adjustments. These adjustments are like outstanding expenses, prepaid expenses etc. Once these adjustment entries are passed, a final trial balance is prepared. 

Prepaid expenses appearing in trial balance will be shown in asset side of the balance sheet. 

The post-closing trial balance will __________.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. contain only income statement accounts

  2. contain only balance sheet accounts

  3. contain both income statement and balance sheet accounts

  4. be prepared before closing entries are posted to the ledger

Show answer
Correct Option: B
Explanation:

The post-closing trial balance will contain only balance sheet accounts. A Post-closing trial balance is prepared after all the adjusting entries are passed. Basically, it contains all the balances of permanent account i.e., balance sheet. 

Balance appearing on the debit side of the trial balance is _________.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. A loss

  2. A expense

  3. An asset

  4. All of these

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Correct Option: D

The preparation of a trial balance is for________________.

elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Locating errors of commiission

  2. Locating errors of principle

  3. Locating clerical errors

  4. All of these

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Correct Option: C