Tag: journals

Questions Related to journals

A purchased a machinery amounting to Rs.15,00,000 on 1st April, 2000. On 31st March, 2006, the similar machinery could be purchased for Rs. 25,00,000. The present discounted value of the future net cash inflows of that machinery was calculated as Rs. 13,00,000.
On the basis of above the current cost of the machinery is ____________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Rs. 10,00,000

  2. Rs. 25,00,000

  3. Rs. 15,00,000

  4. Rs. 13,00,000

Show answer
Correct Option: B
Explanation:

Current cost of machinery refers to the cost of machinery on today's date. 


There can be difference between current cost of machinery and cost of same machinery on any previous date. This difference can be due to either inflation or deflation.
Current cost does not get affected by the present discounted value of the future net cash inflows.

If machinery cost to Rs. 1500000 on 1st April, 2000 and the same machine cost to Rs. 2500000 on 31st March, 2006, this difference in prices can be because of Inflation.
The present discounted value of the future net cash inflows plays no role in determining current cost.

Sales returns book is used to record __________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. returns of fixed assets sold on credit

  2. returns of goods sold for cash

  3. returns of goods sold on credit

  4. none of above

Show answer
Correct Option: C
Explanation:

Goods sold on credit when returned by the customer is recorded in returned inward book or sales return book. Sales return book shows a debit balance as it is reverse to the sales, which has credit balance. When the goods are returned by the customer one note is prepared which is called as "Credit note". The returned outward book is used to record return of goods purchased on credit.

Credit note is the basis for recording purchase return in the purchase return book.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

A debit note is prepared when the goods are returned and is sent to the supplier with the returned goods. An original copy is sent to the supplier and on the basis of duplicate copy the transaction is recorded in the purchase return book. debit note informs supplier about the amount for which his account has been debited on account of returned goods. Thus, a debit note is required for recording the transactions in the purchase return book and not credit note is used to record the transaction related to sales returned.

When is it necessary to analyse a transaction in terms of debit and credit?

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. At the time of journalizing

  2. At the time of posting

  3. In both the cases

  4. In no case

Show answer
Correct Option: A

Received a first and final dividend of $60$ paise in the rupee from the Official Receiver of Mr. Ram who owed $Rs. 2,000$.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Discount allowed A/c be debited with $Rs. 800$

  2. Bad debts recovered A/c be debited with $Rs. 12,00$

  3. Bad debt A/c be credited with $Rs. 800

  4. Bad debt A/c be debited with $Rs. 800

Show answer
Correct Option: D
Explanation:

The Journal Entry will be..

Cash a/c Dr. 1200
Bad dept  a/c Dr 800
To Ram a/c.                  2000

When goods are purchased for the joint venture, the account to be debited is __________________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Purchases account

  2. Joint venture account

  3. Venture's capital account

  4. Joint ventures stock A/c

Show answer
Correct Option: B
Explanation:

A joint venture is an arrangement in which two or more parties agree to pool their resources for the purpose of a specific task or transaction.

A joint venture account is prepared for measurement of venture profit. This account is debited with all venture expenses and credited with all sales or collections. The excess balance of credit side over the debit side shows the profit on joint venture and vice versa. Profit /Loss are transferred to co-venturers’ accounts in the profit-sharing ratio.

Goods bought on joint venture as well as expenses incurred in connection with the business are debited to the joint venture account and credited to the seller's account or the joint bank account.

If the goods purchases are in transit, then the journal entry to record will be _______________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Purchase A/c Dr.

    To Supplier's A/c

  2. Goods-in-transit A/c Dr.

    To Purchase A/c

  3. Goods-in-transit A/c Dr.

    To Supplier's A/c

  4. Supplier's A'c Dr.

    To Goods-in-transit

Show answer
Correct Option: C

Bills Receivable Book is a part of the ___________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. ledger

  2. balance sheet

  3. journal

  4. profit and loss account

Show answer
Correct Option: C
Explanation:

Bills Receivable Book also known as a B/R book. 

Bills receivable book is a subsidiary or secondary book of accounting, where all bills of exchange, which are receivable for the business, are recorded. The total value of all the bills receivable for an accounting period is transferred to the books of accounts.

According to the Money Measurement concept, the following will be recorded in the books of Accounts __________________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Quality control in business

  2. Commission payable to salesman

  3. Extra profits made due to introduction of a budgetary control system

  4. All of the above

Show answer
Correct Option: B
Explanation:

According to money measurement concept, commission payable to a salesman is to be recorded in the books of accounts. It states that only those transactions should be recorded in the books of accounts that are capable of being measured in monetary terms.

The process of recording a transaction in the journal is called __________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. posting

  2. journalising

  3. tallying

  4. casting

Show answer
Correct Option: B
Explanation:

A journal may be defined as the book of original or prime entry containing a chronological record of the transactions from which posting is done to the ledger. The transactions are recorded first in the journal in the order in which they occur. The process of recording the transactions in a journal is called as journalizing.