Tag: golden rules of debit and credit (traditional approach)

Questions Related to golden rules of debit and credit (traditional approach)

Prepaid insurance, outstanding salaries are example of _____________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Tangible real accounts

  2. Intangible real accounts

  3. Representative personal accounts

  4. Artificial or legal persons account

Show answer
Correct Option: C
Explanation:

Accounts recording transactions with a person or group of persons are known as personal accounts. These accounts are necessary, in particular, to record credit transactions. Personal accounts are of three types: Natural, Artificial and Representative accounts.

An account indirectly representing a person or persons is known as representative personal account. When accounts are of similar nature and their number is large, it is better to group them under one head and open a  representative personal account. For e.g. prepaid insurance, outstanding salaries, etc.

Goodwill accounts, patents account, trademarks account, copyrights account are examples of _____________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Tangible real accounts

  2. Intangible real accounts

  3. Representative personal accounts

  4. Artificial or legal persons account

Show answer
Correct Option: B
Explanation:

Accounts relating to properties or assets are known as "Real accounts". A separate account is maintained for each asset e.g. Cash, Machinery, Building, etc. Real accounts can be further classified into tangible and intangible.

Intangible real accounts represent assets and properties which cannot be seen, touched or felt but they can be measured in terms of money. For e.g. Goodwill account, Patent account, Trademark account, Copyright account, etc.

Prepaid salary is ______________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Real Account

  2. Personal Account

  3. Nominal Account

  4. None of above

Show answer
Correct Option: B
Explanation:

 Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business. Prepaid (Unexpired) expense is a personal account and is shown on the Assets side of a balance sheet. Expenses are amounts paid for goods or services purchased.

Purchase is _______________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Real Accounts

  2. Personal Accounts

  3. Nominal Accounts

  4. None of above

Show answer
Correct Option: C
Explanation:

Nominal Accounts are accounts related and associated to losses, expenses, income or gains. Examples include purchase account, sales account, salary A/c, commission A/c etc. 

Hence, purchase is nominal account.

______ is an intangible real account.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Land

  2. Building

  3. Goodwill

  4. Cash

Show answer
Correct Option: C
Explanation:

Goodwill in accounting is an intangible asset that arises when a buyer acquires an existing business. Goodwill represents assets that are not separately identifiable. 

It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched.

The following accounts are never balanced _____________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal Accounts

  2. Real Accounts

  3. Nominal Accounts

  4. None of these

Show answer
Correct Option: C

Salary Account is _________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal A/c

  2. Real A/c

  3. Nominal A/c

  4. None of these

Show answer
Correct Option: C

Personal Income Tax Account is _____________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal A/c

  2. Real A/c

  3. Nominal A/c

  4. None of these

Show answer
Correct Option: A

Accrued Interest Account is _____________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal A/c

  2. Real A/c

  3. Nominal A/c

  4. None of these

Show answer
Correct Option: A

Creditor's Account is ____________.

commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

  1. Personal A/c

  2. Real A/c

  3. Nominal A/c

  4. None of these

Show answer
Correct Option: A