Tag: accounting equations and transactions

Questions Related to accounting equations and transactions

The company paid Rs.15,000 as one of the installment of an outstanding bill. What effect this transaction have on the financial position of the company?

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

  1. No change in assets, liability decreases by Rs. 15,000

  2. Both cash and liability decrease by Rs.15,000

  3. Assets decrease by Rs.15,000, on change in liability

  4. Assets increase by Rs. 15,000, liability increase by Rs.15,000

Show answer
Correct Option: B

Salary outstanding A/c appearing in the trial balance is _____________.

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

  1. shown on the liability side of balance sheet

  2. shown on the assets side of the balance sheet

  3. shown on debit side of profit and loss A/c

  4. credited to profit and loss A/c

Show answer
Correct Option: A

Under statement of closing work-in progress in the period will _______________.

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

  1. Understate cost of goods manufactured in that period

  2. Overstate current assets

  3. Overstate gross profit from sales in that period

  4. Understate net income in that period.

Show answer
Correct Option: D

Provision for the outstanding liability/ expenses is _________.

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

  1. appropriation of profit

  2. siphoning of income

  3. charge to profit

  4. loss

Show answer
Correct Option: C

For which of the following adjustments would a reversing entry facilitate book-keeping procedures?

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

  1. Adjustment for depreciation expense

  2. Adjustment to allocate prepaid insurance to the current period

  3. Adjustment made as a result of inventory of supplies

  4. Adjustment for drawing in goods.

Show answer
Correct Option: B

If beginning and ending goods inventories are Rs. 400 and Rs. 700, respectively, and cost of goods sold is Rs. 3,400, net purchases are ______________.

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

  1. Rs. 3,700

  2. Rs. 3,400

  3. Rs. 3,100

  4. Cannot be determined

Show answer
Correct Option: A

In a general, the accounts in the income statement are known as ___________.

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

  1. permanent accounts

  2. temporary accounts

  3. unearned revenue accounts

  4. contra-asset accounts

Show answer
Correct Option: B

The recording of wages earned but not yet paid is an example of an adjustment that ________________.

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

  1. apportions revenues between two or more periods

  2. recognises an accrued expense

  3. recognise an unrecorded reveue

  4. None of the above

Show answer
Correct Option: B
Explanation:

Accrued expenses are expenses that have occurred, but are not yet recorded in the company's general ledger. This means these expenses will not appear in the financial statements unless an adjusting entry is passed prior to issuing the financial statements.

In a Trading and Profit and Loss Account the excess of net sales over the cost of goods sold is called _________________.

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

  1. Operating income

  2. Income from operations

  3. Gross profit

  4. Net income

Show answer
Correct Option: C

Which of the following accounts would be closed by transfer to the trading and Profit and Loss account at the end of a period?

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

  1. Sales

  2. Salary expenses

  3. Both sales and salary expense

  4. Neither sales nor salary expense

Show answer
Correct Option: C