Tag: commercial studies

Questions Related to commercial studies

Conventional system of accounting is recognised by law.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

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Correct Option: B

What is the assumption of Double entry system of recording accounting information?

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Every transaction has one effect.

  2. Every transaction has two effect.

  3. Every transaction has multiple effect.

  4. None of the above.

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Correct Option: B

Accounts other than the impersonal account is _________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Personal account

  2. Real account

  3. Nominal account

  4. Both B and C

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Correct Option: A
Explanation:

IMPERSONAL ACCOUNT:In the accounts of the nominal ledger, we have different types of expenses for different purposes like rent, insurance, telephone and others. As these expenses are related NOT to the person to whom the money is paid and more concerned towards the reason for payment these are known as IMPERSONAL accounts.


Impersonal accounts are all accounts other than the personal accounts. They can further be categorized into Real Accounts and Nominal Accounts.

The accounts of expenses and losses is _________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Real

  2. Personal

  3. Nominal

  4. None of the above

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Correct Option: C
Explanation:

Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts. 

The dictionary meaning of the word "nominal" is "existing in name only" and the meaning remains absolutely true in accounting sense too, because nominal accounts do not really exist in physical form, but behind every nominal account money is involved.
E.g. Purchase A/c, Salary A/c, Sales A/c, Commission Received A/c, etc.

Loan account is personal account.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

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Correct Option: A
Explanation:

Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts are debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.

Personal accounts are classified into three subcategories: Artificial, Natural, and Representative.
Representative accounts represent a certain person or group directly or indirectly.
Loan account is a representative personal account, as it represents the person from whom the loan is obtained or to whom the loan is given. Hence, it is classified as a personal account.

Outstanding Wages A/c is Nominal A/c.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

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Correct Option: B
Explanation:

Accounts which are related to expenses, losses, incomes and gains are called nominal accounts. Examples of nominal accounts are Purchase A/c, Sales A.c, Salary A/c etc.

The final result of all nominal accounts is either profit or loss which is the transferred to the capital account. The golden rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.

Outstanding wages is classified as a personal account and not a nominal account. This account represents the accounts of all those persons to whom wages have not been paid and hence, are outstanding. Therefore, it is termed as  "Representative Personal Account" or simply personal account.

Nominal A/c is debited when business incurs expenses.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts. The dictionary meaning of the word "nominal" is "existing in name only" and the meaning remains absolutely true in accounting sense too, because nominal accounts do not really exist in physical form, but behind every nominal accounts money is involved. E.g. Purchase A/c, Salary A/c, Sales A/C. Commission Received A/c, etc.

The final result of all nominal accounts is either profit or loss which is then transferred to the capital account. 
The golden rule for nominal account is : Debit all expenses and losses; Credit all incomes and gains.

Commission received is Nominal Account.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

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Correct Option: A
Explanation:

Nominal accounts are the temporary accounts, such as the income statement accounts. In other words, nominal accounts are the accounts that report revenues, expenses, gains, and losses. 

Nominal or temporary accounts are closed at the end of each accounting year. This means that their account balances are transferred to a permanent account. This closing process allows the nominal accounts to start the next accounting year with zero balances.
Nominal accounts consist of the following types of accounts:
a. Insurance account
b. Wages account
c. Interest paid or received account
d. Commission paid or received account
e. Telephone expense account
f. Salary account.
Hence, commission received is a nominal account.

Conventional system of accounting cannot give a complete picture of all transactions.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

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Correct Option: A
Explanation:

Under conventional system of Accounting  :-

  • Since only one cash book is kept, personal and business transactions will be recorded together.
  • Real and Nominal accounts will be ignored by this system.
  • Profit or Loss can be ascertained but we cannot represent the financial position of the organization
  • No trial balance is prepared, so arithmetical accuracy of accounts cannot be verified
  • So, conventional or single entry system of accounting cannot give a complete picture of all transactions. 

Drawing account is real account.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

Drawings account is a personal account. 

Personal accounts are classified as :-
a) Natural person, 
b) Artificial person 
c) Representative personal accounts.
 A representative personal account represents a person/persons.

Drawings account is a representative personal account. 
Some examples of representative personal accounts are capital, outstanding wages, prepaid salaries.