Tag: source documents

Questions Related to source documents

Debit and credit notes act as the authenticate proof for the ___________ by the purchasers or sellers.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Goods purchased

  2. Goods sold

  3. Goods destroyed

  4. Goods returned

Show answer
Correct Option: D
Explanation:

Debit and credit notes act as the authenticate proof for the goods returned by the purchasers or sellers. Debit and credit notes are issued to correct the issues of short debit or short credit given earlier. They give an advantage of not editing the books of original entry and still altering the accounts by either debiting or crediting the accounts so needed respectively. 

It is not possible to pass journal entries using the debit and credit note which will help in correcting the books of accounts.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

False.  Debit and credit notes are issued to correct the issues of short debit or short credit given earlier. They give an advantage of not editing the books of original entry and still altering the accounts by either debiting or crediting the accounts so needed respectively. 

Cash sales, accounts receivables and rental receipts all are known as _____________.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. cash receipts

  2. budget receipts

  3. goods manufactured

  4. total goods sold

Show answer
Correct Option: A
Explanation:

Cash sales, accounts receivables and rental receipts all are known as cash receipts. A cash receipt is a printed statement of the amount of cash received in a cash sale transaction.

A debit and credit note will always have the amount which is mentioned in words only.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

False. A debit and a credit note will always have the amount mentioned in words as well as figures. Amount is written in words as well as figures for the clarity of the person reading the amount and for confirmation.

Which of the following approaches advocates that the costs of equity capital ad debt capital remain unaltered when the degree of leverage varies?

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Net Income Approach

  2. Net Operating Income Approach

  3. Traditional Approach

  4. Modigillani-Miller Approach

  5. Both (A) and (B) above

Show answer
Correct Option: A
Explanation:

According to the net income approach the cost of equity capital and the cost of debt capital remain unchanged when degree of leverage varies.

 __________ is a statement issued by buyer to seller giving full details of goods returned.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Debit note

  2. Credit note

  3. Cash memo

  4. Credit memo

Show answer
Correct Option: A
Explanation:

A debit note is a note which is issued when goods purchased are returned by the purchaser to the vendor or in other words when goods are returned by the buyer to the seller. A debit note signifies that the liability of the buyer has been reduced for payment or expense. Whereas a credit note is a note which is issued by the vendor or seller to the purchaser in respect of return of goods. 

__________ document is prepared when the goods are sold on credit.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Credit memo

  2. Cash memo

  3. Cash voucher

  4. Patty cash voucher

Show answer
Correct Option: A
Explanation:
A credit memo is document issued by the supplier when goods are purchased on credit. It is similar to an invoice, 
A petty cash voucher is issued when the payments are issued from the petty cash fund. A petty cash fund is created to meet expenditures of small amount on daily basis.

State True or False:
Receipts and payments account highlights total income and expenditure.

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

Receipt and Payments account is a summary of all cash or bank receipts and payments over a certain period with a cash bank balance at the beginning as well as at the end of the period.

Which of the following statement is correct and which is incorrect ?
(I) In Receipt & Payment A/c all receipts and payments are shown irrespective of the year to which they pertain.
(II) The difference at Dr. side of Receipt & Payment A/c account is known as surplus or deficit and deducted from capital fund.
(III) Income & Expenditure A/c is always accompanied by balance sheet.
(IV) Going concern assumption is not relevant for accounting of non-profit organization.
Select the correct answer from the options given below.  

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. (I) - correct, (II) - incorrect (IIl) - correct, (IV) - incorrect

  2. (I) - incorrect, (II) - correct (II) - incorrect, (IV) - correct

  3. (I) - incorrect, (II) - incorrect (II) - correct, (IV) - correct

  4. (I) - incorrect, (II) - incorrect (II) - correct, (IV) - incorrect

Show answer
Correct Option: A
Explanation:
(I) Correct- In Receipts and payments account only cash transactions are taken in account whether or not they are related to this year.
(ii) Incorrect- The difference at the debit side of receipts and payments account is balance of cash at the end of the year, Receipts and payments account is just like a cash account. Hence, after taking into account all the transactions what is left is balance of cash at the end of the year. 
(iii) Correct- Income and  expenditure account is always accompanied by  balance sheet because it contains the balance that occur in the year end. Income and expenditure doesn't account for advances and outstanding payments.
(iv) Incorrect - Going concern means it is assumed that the business will go on forever. This accounting assumption is relevant for all companies without any exception.

Which among the following situation will best explain about issuing debit note to a customer:
A) When the amount payable by buyer to seller increases.
B) Return of goods due to bad quality.
C) When the amount payable by buyer to seller decreases.
D) Goods delivered has charged an extra price.  

elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. A and B

  2. B and C

  3. A and D

  4. B and D

Show answer
Correct Option: B
Explanation:

A debit note is a note which is issued when goods purchased are returned by the purchaser to the vendor or in other words when goods are returned by the buyer to the seller. A debit note signifies that the liability of the buyer has been reduced for payment or expense. Whereas a credit note is a note which is issued by the vendor or seller to the purchaser in respect of return of goods.