Tag: need for adjustments

Questions Related to need for adjustments

When ' Adjusted Purchases' appear in the total balance, it indicates that ______________________.

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

  1. Opening stock has been adjusted in the purchases.

  2. Closing stock has been adjusted in the purchases.

  3. Both opening and closing stocks have been adjusted in the purchases.

  4. expenses relating to purchases like carriage inward, Octroi duty etc. have been adjusted in the purchases.

Show answer
Correct Option: C
Explanation:

Adjustment Entries for Closing Stock in Final Accounts! The closing stock is the unsold goods lying in the concern.

The stock is always valued at cost or market price whichever is lower. Generally, the closing stock will not appear in the Trial Balance and it lies in the adjustment.

Which of the following is/are the adjustment of financial statements.

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

  1. Closing stock

  2. Outstanding expense

  3. Outstanding income

  4. All of the above

Show answer
Correct Option: D
Explanation:

All of the options are adjustments of financial statements and are recorded twice in financial accounting.

Adjustments helps to provide true and fair view of the ____________ of the business.

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

  1. State of affairs

  2. Position of cash

  3. Capital composition

  4. None

Show answer
Correct Option: A
Explanation:

The Companies Act requires that every balance sheet of a company should give a true and fair view of the state of affairs of the company as at the end of the financial year and every profit and loss of a company should give a true and fair view of the profit or loss of the company for the financial year.

Sometimes opening and closing stock are  _________ through purchase account.

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

  1. Appreciated

  2. Depreciatrion

  3. Adjusted

  4. None of these.

Show answer
Correct Option: C
Explanation:

Adjusted purchases means opening stock plus purchases less closing stock. 

When one effect is included in trial balance by way of inclusion in adjusted purchases the other should also form part of trial balance.

__________ = income received + o/s income - income received in advance.

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

  1. Total expense

  2. Total income

  3. Asset

  4. Liability

Show answer
Correct Option: B
Explanation:

It is also known as Unearned Income and is received before the related benefits are provided. This revenue is not related to the current accounting period, for example, Rent received in advance, Commission received in advance, etc. It is a personal account and shown on the liability side of a balance sheet.

An entry reduces amount in purchase account and is also known as ________.

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

  1. Adjusted closing stock

  2. Adjusted purchases

  3. Adjusted sales

  4. None of the above

Show answer
Correct Option: B
Explanation:

Adjusted purchases means opening stock plus purchases less closing stock. Closing stock has two effects. When one effect is included in trial balance by way of inclusion in adjusted purchases the other should also form part of trial balance.

Outstanding expense is ____________ for business.

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

  1. Liability

  2. Asset

  3. Expense

  4. Income

Show answer
Correct Option: A
Explanation:

 Outstanding expenses are recorded in books of finance at the end of an accounting period to show the true numbers of a business. The outstanding expense is a personal account and is treated as a liability for the business. It is also shown on the liability side of a balance sheet.

In case of adjusted purchases closing stock will appear in _________.

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

  1. Trial balance

  2. Trading account

  3. Profit and loss account

  4. None of these.

Show answer
Correct Option: A
Explanation:

Adjusted purchases means opening stock plus purchases less closing stock. Closing stock has two effects. When one effect is included in trial balance by way of inclusion in adjusted purchases the other should also form part of trial balance.

Outstanding expense are _________ to expense.

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

  1. Added

  2. Deducted

  3. No effect

  4. None of these.

Show answer
Correct Option: A
Explanation:

An outstanding expense is a liability and shown in Balance Sheet as a liability. An outstanding expense is added to the respective expense in profit and loss account.

Expense incurred but not paid is called ____________.

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

  1. Outstanding expense.

  2. Prepaid expense.

  3. Income Received in Advance.

  4. None.

Show answer
Correct Option: A
Explanation:

Outstanding expenses are those expenses which have been incurred during the current accounting period and are due to be paid, however, the payment is not made. Such an item is to be treated as a payable for the business. Examples – Outstanding salary, outstanding rent, outstanding subscription, outstanding wages, etc.