Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

From the point of view of the lessee, a lease is a:

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. Working capital decision

  2. Financing decision

  3. Buy or make decision

  4. Investment decision

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Correct Option: B
Explanation:

Lease is a financing decision because investment is something from where you are will get back some returns in future. In leasing there is no return rather lessee is paying lease rentals per month. Moreover, lessee gets immediate access to the assets. It has tax benefits.

Extract of trial balance of Mr. Q is as follows:

Particulars Dr. Rs Cr. Rs
Sundry debtors 1,00,000 -
Sundry creditors - 78,000

Additional information:
Included in sundry debtors Rs 5,000 due from Mr A. Included in sundry creditors Rs 2,000 payable to Mr. A.
Sundry debtors and creditors will appear in balance sheet at Rs _________ & Rs ____________.

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. 97,000, 75,000

  2. 98,000, 76,000

  3. 95,000, 76,000

  4. 98,000, 72,000

Show answer
Correct Option: A
Explanation:

Mr. A is a common person which is included in Sundry Debtors and Sundry Creditors. A common amount of Rs.3000 has to be adjusted from sundry debtors and sundry creditors to show the net balance in the balance sheet. 

This will be presented as:
                                                       Sundry Debtors                Sundry Creditors
Amount as per trial balance:         Rs.100000                         Rs.78000
Less: Amount due to/from Mr. A   Rs.  3000                           Rs.  3000
                                                       ---------------------------        ---------------------------
Net Balance to be shown in B/S    Rs.97000                        Rs.75000
                                                       --------------------------         ---------------------------

If the trial balance do not agree after transferring the balance of ledger accounts including cash and bank balance and also errors are not located timely, then the trial balance is tallied by transferring the difference of debit and credit side to an account known as - 

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. Memorandum Account

  2. Capital Account

  3. Suspense Account

  4. Drawing Account

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Correct Option: C
Explanation:

Trial balance is prepared to check and confirm the posting of all accounting entries. Trial balance is prepared with the help of ledger account. All the balances from each of ledger account is taken in a list in the debit and credit column. Both the sides of trial balance must be equal as accounting is based on the double entry system of accounting. 

If the trial balance do not agree and errors not located before the finalization of accounts, the difference amount has to be transferred to suspense account.

Closing stock appearing in trial balance will be taken to _____________.

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. Trading account only

  2. Balance sheet only

  3. Trading account and balance sheet

  4. Profit & loss account only

Show answer
Correct Option: B
Explanation:

At the end of the financial year, while closing the books of account there are certain adjustment entries need to be passed by debiting/crediting  the trading account or profit & loss account. Entry for closing stock will be passed as: 


Closing Stock A/c                     Dr.
      To Trading Account

In the above situation, closing stock appearing in the trial balance will be taken to balance sheet.
Items that are shown in trial balance are recorded only once.

Cash account appearing in Trial balance is transferred to __________.

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. balance sheet asset side

  2. balance sheet liability side

  3. trading account

  4. profit and loss account

Show answer
Correct Option: A
Explanation:

Cash Account is a real account and part of assets. All assets account are shown in the balance sheet. Cash is a current assets and shown in current assets in the balance sheet. 

Assets sold on credit are entered in sales journal.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. True

  2. False

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Correct Option: B
Explanation:

Assets sold on credit are entered in sales journal.

The periodic total of purchase return journal is posted to ______________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Purchase Account

  2. Profit and loss Account

  3. Purchase return Account

  4. Furniture Account

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Correct Option: C
Explanation:

Posting from the purchases returns journal requires that the supplier's individual accounts are debited with the amount of returns and the purchases returns account is credited with the periodic total.

The periodic total of sales return journal is posted to_________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Sales Account

  2. Goods Account

  3. Purchase return account

  4. Sales return account

Show answer
Correct Option: D
Explanation:

Posting to the sales return journal requires that the customer's account be credited with the amount of return and the sales return account be debited with the periodic total in the same way as is done in case of posting from purchase journal.

Credit purchase of machine is entered in purchase journal.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. True

  2. False

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Correct Option: B
Explanation:

Accounting and journal entry for credit purchase includes two accounts, Creditor and Purchase.

In case of a journal entry for cash purchase, Cash account and Purchase account are used. 
The person to whom the money is owed is called a “Creditor” and the amount owed is a current liability for the company.

Assets sold on credit are entered in __________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Cash/bank account

  2. Sales Journal

  3. Ledger posting 

  4. Bank statment

Show answer
Correct Option: B
Explanation:

Assets sold on credit are entered in sales journal.