Tag: bases of accounting

Questions Related to bases of accounting

The consignment accounting is made on __________ .

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Accrual Basis

  2. Realisation Basis

  3. Cash Basis

  4. All of these

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Correct Option: A
Explanation:

The consignment accounting is made on Accrual basis.

As goods are sold in credit and and income to be earned are recorded in accounts.

Adjustment of accrued/outstanding income/expenses is not necessary in ______ system of accounting.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Mercantile

  2. Cash

  3. Double Entry

  4. All the three

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Correct Option: B
Explanation:

Cash accounting is an accounting method in which payment receipt are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid. Hence, in this question accounting adjustment is not required for accrual/outstanding expenses/incomes.

The act by members of a trade union, persuading others not to work is called as _________ .

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Non-cooperation

  2. Picketing

  3. Sit-in-strike

  4. Strike

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Correct Option: D
Explanation:

The act by members of a trade union, persuading others not to work is called as strike. A strike is a type of refusal by the workers to work so that the employers can approve their demands. 

X sends out 100 bags to Y costing Rs 1000 each. 60 bags were sold at 10% above cost price. Sale value will be ______________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Rs 66,000

  2. Rs 65,000

  3. Rs 60,000

  4. Rs 65,500

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Correct Option: A

Cash cannot be misappropriated by ___________. 

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. omitting to enter cash received

  2. entering less amount than has been actually received

  3. making fictitious entries on the payments side of the cash book

  4. making fictitious entries on the Receipt book side of the cash

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Correct Option: D

State the reasons whether the following statement is true or false:
Accrual concept implies accounting on cash basis.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. True

  2. False

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Correct Option: B

From the following details calculate net profit on accrual basis.

Particulars Rs.
Goods sold for cash $5,00,000$
Credit sales $25,000$
Cash purchases $4,00,000$
Credit purchases $50,000$
Wages paid $20,000$
Outstanding expenses $10,000$
Rent paid $5,000$
Rent outstanding $2,000$
Depreciation on building $10,000$
Loss on sales of fixed assets $1,000$
commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Rs. $75,000$

  2. Rs. $27,000$

  3. Rs. $32,000$

  4. Rs. $40,000$

Show answer
Correct Option: B
Explanation:

                                                      Net Profit for the year Ended..

          Amount |          Particular |          Amount | | --- | --- | --- | --- | | To Purchase a/c Cash -400000 Credit-50000 | 450000 | By Sales a/c Cash-500000 Credit-25000 | 525000 | | To Wages Paid A/c | 20000 |   |   | | To O/s Expenses A/c | 10000 |   |   | | To Rent Paid A/c            5000

  • O/s 2000 | 7000 |   |   | | To Depreciation on building A/c | 10000 |   |   | | To loss on sale of fixed assets A/c | 1000 |   |   | | To Net profit transferred A/c | 27000 |   |   | |   | 525000 |   | 525000 |

 

In accrual basis or mercantile basis of accounting, the financial effect of the transaction is recorded in the books ___________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. as and when they occur

  2. on the basis of actual receipt and payment of cash

  3. on confirmation of orders but before the delivery of goods take place

  4. All of the above

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Correct Option: A

In cash system of accounting, entries are recorded ____________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. when income is earned by a business or expenditure is incurred by it

  2. on the basis of actual receipt of cash or actual payment of cash

  3. when order for goods to be purchased in placed and order for goods to be sold is received

  4. All of the above

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Correct Option: B

Which of the following has no relevance whether the receipts pertain to previous period or future period?

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Accrual system of accounting

  2. Cash system of accouting

  3. Hybrid system of accounting

  4. None of the above

Show answer
Correct Option: B