Tag: accounting equations and transactions

Questions Related to accounting equations and transactions

When outstanding expense is recorded ___________ is credited.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Outstanding Expense account

  2. Prepaid expense

  3. Outstanding income

  4. None of the above

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Correct Option: A
Explanation:

As such, the amount of expenditure outstanding that has not yet been taken into the books is credited to the Expenditure Outstanding a/c. Expenses Outstanding a/c is a personal account with a credit balance. The balance indicates the amount that is owed by the organisation on account of unpaid expenditure.

Accounting entries passed in journal proper at the end of the year.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Opening entries

  2. Adjustment entries

  3. Closing entries

  4. Contra entries

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Correct Option: C
Explanation:

At the end of the financial year, all nominal accounts are closed by passing the closing entries. Respective expense account will be credited by debiting the trading and profit & loss account and respective income account will be debited by crediting the trading and profit & loss account. 


Example: 

Salary Account Balance Rs.5000

Profit & Loss A/c                          Dr. 5000
        To Salary A/c                                           5000

Inventory cost includes_______.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. taxes on purchase

  2. freight and insurance

  3. invoice valueless discounts and rebates

  4. all the three

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Correct Option: D

From the following details calculated Opening stock of BNT Ltd.
Purchases  Rs. 1,00,000
Manufacturing expenses = Rs. 45,000
Selling and Distribution expenses =Rs. 25,000
Administrative expenses =Rs. 10,000
Financial expenses =Rs. 5,000
Sales Rs. 2,40,000
Closing Stock  Rs. 25,000
Gross profit on sales  25 %

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Rs. 55,000

  2. Rs. 35,000

  3. Rs. 60,000

  4. Rs. 45,000

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Correct Option: C

Which of the following is not a part of inventory?

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Finished goods

  2. Raw material,components,consumables and supplies

  3. Spare parts of plants and machinery

  4. Work-in-progress

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Correct Option: C

The accounting entries which are passed into the books of account to bring certain items which do not appear in the trial balance, e.g. depreciation, further bad debts, closing stock, incomes receivable, etc. are called adjustment entries.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. True

  2. False

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Correct Option: A

Usually outstanding salary account will have a ________ balance.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. debit

  2. credit

  3. zero

  4. none of these

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Correct Option: B

Opening entries are passed________.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. at the end of the year

  2. at the beginning of the year

  3. for rectification of errors

  4. for suppressing profit

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Correct Option: B
Explanation:

At the end of the financial year, all the books of account are closed by passing the closing entries. In such case, all the nominal accounts are transferred to the trading and profit & loss account. All nominal account balances become zero. 


Assets and labilities account are carried over to next year. These are trasferred to the next year books of account by passing an opening entries at the beginning of the year. 

Accounting entries passed in journal proper in the beginning of the finance year.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Closing entries

  2. Adjustment entries

  3. Opening entries

  4. Contra entries

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Correct Option: C
Explanation:

After closure of the books of the previous financial year, all balances are need to be transferred to the next financial year as opening balances. The balances lying in assets and liabilities need to be transferred to current financial year as opening balance. 

This is done by passing the journal entries in the journal proper by passing opening entries.  

Gross is profit is equal to ___________.

book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

  1. Net profit minus expenses

  2. Purchases plus stock minus net sales

  3. Net sales plus selling price of stock minus purchases

  4. Net sales minus cost price of sales

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Correct Option: D