Tag: nature of accounts and rules of debit and credit

Questions Related to nature of accounts and rules of debit and credit

Which of the following statements is correct?

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Consignee will pass a journal entry on receiving goods from consignor

  2. Consignee will not pass any journal entry on receiving goods from consignor

  3. The ownership of goods will be transferred to consignee at the time he receives goods

  4. Consignee will treat consignor as creditor when he receives goods

Show answer
Correct Option: B
Explanation:

There are no entries passed in the books of the consignee for the consignment of goods sent by the consignee and also for any expenses incurred by the consignor.

Insurance unexpired account is a __________.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Real account

  2. Personal account

  3. Nominal account

  4. None of these

Show answer
Correct Option: B
Explanation:

Unexpired insurance is an another term which is used for prepaid insurance. Prepaid insurance is deducted from the insurance premium expenses account in profit & loss account and shown in balance sheet as current assets.  These accounts are not in the name of a specific person but are represented as personal account.

When the consignee receives the goods from the consignor, in the books of consignee __________________.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Goods are debited to goods received on consignment account

  2. No entry is to be passed

  3. Credits consignor's personal account

  4. Debits Purchases A/c

Show answer
Correct Option: B
Explanation:

No entry is made in the books of account. The consignee is not the owner of the goods and therefore he makes no entry when he receives the goods. The consignor's account will be closed by debiting it with cash or final bill or draft in settlement.

L.F. (i.e., Ledger Folio) column in the journal is filled at the time of _________.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. journalising

  2. balancing

  3. posting

  4. casting

Show answer
Correct Option: C
Explanation:

 Ledger Folio , abbreviated as L.F., is a column in the journal where in the page number of the ledger book on which the relevant account appears is recorded. In the journal, this column is filled up at the time of posting and not at the time of making journal entry.

Which one of the following statement is TRUE?

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Capital of the firm is reduced by borrowing.

  2. When there is no change in proprietor's capital, it is indication of loss in business.

  3. Nominal accounts refer to false transactions.

  4. Real accounts relates to the assets of a business.

Show answer
Correct Option: D
Explanation:

Real accounts contain the balances of assets, liabilities, and owners' equities at a specific point in time, such as at the close of business on the last day of the year. The balance in a real account is the net amount after subtracting decreases from increases in the account.

_____ is a book of account; in which all types of accounts relating to assets, liabilities, capital, expenses and revenues are maintained.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Ledger

  2. Journal

  3. Primary entry book

  4. None of above

Show answer
Correct Option: B

The total of the amount of the bills receivable book is posted to the ______ in the ledger.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Dr. of bills payable account

  2. Cr. of bills payable account

  3. Dr. of bills receivable account

  4. None of these.

Show answer
Correct Option: C

Cash account is ______________.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Personal account

  2. Real account

  3. Nominal account

  4. Valuation account

Show answer
Correct Option: B
Explanation:

It's the real accounts that show the assets, liabilities and owner's equity in a company. 

Cash, accounts receivable, accounts payable, notes payable and owner's equity are all real accounts that are found on the balance sheet.

Journal is the book of _______ in which every transaction is recorded before being posted into the ledger.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Primary entry

  2. Secondary entry

  3. Third entry

  4. None of above

Show answer
Correct Option: A
Explanation:

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

_______ is a book in which all the business transactions are originally recorded in chronological order and from which they are posted to the ledger accounts at any convenient time.

elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

  1. Ledger

  2. Journal

  3. Purchases returns books

  4. Sales book

Show answer
Correct Option: B
Explanation:

Journal is a book of accounts in which all day to day business transactions are recorded in a chronological order i.e. in the order of their occurence. 

Transactions when recorded in a Journal are known as entries.It is the book in which transactions are recorded for the first time.