Tag: introduction to journal proper

Questions Related to introduction to journal proper

Accounts of an entity are closed down at the end of the accounting year.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. True

  2. False

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Correct Option: A
Explanation:

Accounting year is a period of 12 months which is different from the calendar year. All the books of accounts of an entity are prepared for an accounting year and closed at the end of an accounting year.

Excess of debit side total of an account over its credit side total is called _____.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. debit balance

  2. credit balance

  3. equal balance

  4. nil balance

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Correct Option: A
Explanation:

Accounts in the ledger are periodically balanced, generally at the end of the accounting period, with object of ascertaining the net position of each amount. Balancing of an account means that the two sides are totaled and the difference between them is shown on the side, which is shorter in order to make their totals equal. 

The words 'balance c/d' are written against the amount of the difference between the two sides. The amount of balance is brought (b/d) down in the next accounting period indicating that it is a continuing account, till finally settled or closed. 
In case, the debit side exceeds the credit side, the difference is written on the credit side and is called as debit balance. 
If the credit side exceeds the debit side, the difference between the two appears on the debit side and is called credit balance.

An account has a debit balance if the total of credit side is greater than the total of debit side.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. True

  2. False

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Correct Option: B
Explanation:

Balancing of an account means ascertaining the net effect of the transaction, i.e. the difference between the debit and credit side of the ledger account. 


Thus, when the debit side of the ledger account exceeds the credit side, the balancing figure is termed as Debit balance. 
All the assets expenses and losses show Debit balance.

Select the most appropriate alternative from those given below:
Reserve for discount on debtor has a _______ balance.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. credit

  2. debit

  3. nil

  4. positive

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Correct Option: A
Explanation:

All the reserves and provisions are made out of profit. Profit being a nominal account has a credit balance. Therefore, all the reserves and provisions also have a credit balance. 

Reserve for discount on debtors is made in order to make a provision to allow discount to the debtors on payment. Discount on debtors is an expense and thus the business provides for it in advance. 
The entry is:
Profit and Loss A/c............Dr.
To Reserve for discount on debtors A/c.
Thus, the correct option is A.

Bad debts reserve account always shows ________ balance.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. credit

  2. debit

  3. zero

  4. positive

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Correct Option: A
Explanation:

The bad debt reserve is a provision for the estimated amount of bad debt that is likely to arise from existing account receivable. A bad debt reserve is a contra account, which is designed to offset the receivables account with which it is prepared. The receivables account has a natural debit balance, while the bad debt reserve has a natural credit balance.

An account has a credit balance,if the total of credit side is greater than the total debit side.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. True

  2. False

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Correct Option: A
Explanation:

When the credit side of ledger account exceeds the debit side, then the balancing figure is termed as credit balance. All Liabilities, Incomes, and gains and Capital show credit balance.

State whether the following statements are True or False.
Capital Account rarely shows debit balance. 

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. True

  2. False

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Correct Option: B
Explanation:

A capital account shows credit balance. It represents the amount owed by a business to the owner of the business. Thus, it is a liability for  the business. All the liabilities represents the credit balance. Hence, Capital A/c represents the credit balance.

State whether the following statement are True or False.
Purchase account always shows debit balance.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. True

  2. False

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Correct Option: A
Explanation:

Purchase account is a part of trading A/c and shows the amount of goods purchased for a business by a trader for resale. 

Hence, Purchase A/c always shows debit balance.

The process of equalizing the two sides of an account by putting the difference on the side where amount is short is known as _____________.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. Balancing

  2. Posting

  3. Journalizing

  4. None of above

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Correct Option: A

State the reasons whether the following statement is true or false.
nominal accounts are balanced in the end of the accounting year.

elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

  1. True

  2. False

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Correct Option: B