Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

The total of all payments irrespective of their nature (whether capital or revenue) and whether they pertain to past, current and future periods are to be shown on its credit side is step ____ in preparation of Receipt and Payment Account.

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. 1

  2. 2

  3. 3

  4. 4

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Correct Option: C
Explanation:

The third step in preparation of Receipt and Payment account is showing the total amounts of all payments on credit side whether of capital or revenue nature and whether pertaining to past, current and future periods.

________is/are example(s) of capital receipts.

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. Sale proceed of fixed asset

  2. Loan raised from financial institutions

  3. Capital raised through book building process

  4. All of the above

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Correct Option: D
Explanation:

b'Option D is correct. Capital receipts refer to those receipts which either create a liability or cause a reduction in the assets of the firm. They are non-recurring or non-routine in nature. Sale proceeds of fixed assets leads to reduction in assets. Loan and Capital raised create liability for firm. All are capital receipts. '

________ is/are a capital receipt.

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. Money raised through issue of shares

  2. Bank loan

  3. Sale of investments

  4. All of the above

Show answer
Correct Option: D
Explanation:

b'Option D is correct. Capital receipts refer to those receipts which either create a liability or cause a reduction in the assets of the firm. They are non-recurring or non-routine in nature. Sale of investments leads to reduction in assets. Bank loan and money raised through issue of shares create liability for firm. All are capital receipts. '

Interest charged by the bank will be deducted, when the overdraft as per the Cash Book is made the starting point for making the Bank Reconciliation Statement. (True/False)

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. True

  2. False

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Correct Option: B

The credit balance in the bank account is_______.

book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. An asset

  2. A liability

  3. An expense

  4. Contingent liability

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Correct Option: B
Explanation:

A credit balance in bank account means that the person in whose account this belongs to is under an obligation to pay the bank back the entitlement of such balances. This money has been owned to the account holder by the bank and must be repaid i.e. it is a liability.

In technical term a cash memo is called a cash voucher.

book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. True

  2. False

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Correct Option: A
Explanation:

A cash memo is prepared when goods are sold or purchased for cash, i.e. cash receipts and payments. 

A cash voucher is prepared for cash purchases or sales. It serves as the source document to record entries in the cash book.
Both are Same.

Where fixed production overhead is debited to work in progress as standard hours of work times the standard absorption rate, a favourable overhead volume variance is debited to _________________.

book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Work-in-progress account

  2. Overhead volume variance account

  3. Production overhead control account

  4. Profit and loss account

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Correct Option: C

Goods destroyed by fire should be credited to______.

book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Purchases account

  2. Sales account

  3. Loss of goods by fire account

  4. Insurance account

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Correct Option: A
Explanation:

Loss of goods by fire, it is just possible that some goods may catch fire and result in loss to the business. This is definitely loss, so "Loss of goods by fire" account will be debited. Such goods have been destroyed, not sold, so their  valuation will be made at cost price. So, purchases account will be credited. The journal entry for this transaction will be made as under:


Loss of goods by fire A/c       Dr.
       To Purchases A/c

Wages paid for erection of machinery are debited to ____________.

book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Wages Account

  2. Machinery Account

  3. Profit and Loss Account

  4. Deferred Wages Account

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Correct Option: B
Explanation:

All incidental charges incurred for installation of assets are charged to the cost of that asset. Wages paid on erection of machinery is a capital expenditure and will be debited to machinery account.

Which of the following account may have a debit or credit balance?

book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

  1. Discount received account

  2. Sales account

  3. Trade expenses account

  4. Loan account

Show answer
Correct Option: D
Explanation:

A debit balance increases the balance in an expense account and a credit balance decreases the balance. Loan account may have debit or credit balance i.e. when a business secures a loan it records it as an increases in the appropriate asset account and corresponding increases in an account called loan.