Tag: commercial studies

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Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

General reserve account and dividend equalization fund account are ______________.

  1. Personal A/C

  2. Real A/C

  3. Nominal A/C

  4. None
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

General reserves and dividend equalization funds are appropriations of profit. They are not personal accounts (people) or real accounts (assets), but rather nominal accounts representing equity reserves.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

What rate of commission is charged by the bank issuing the credit card?

  1. 1% to 3%

  2. 3% to 6%

  3. 2% to 5%

  4. 1% to 4%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The bank issuing the credit card charges a commission from anywhere between 1% to 4% for each such transaction. The commission charged is immediately debited to the seller's bank account.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

When the form and flow of operations of an entity are so devised that automatic checks are carried out as the transaction occurs, it is called _________________.

  1. Test check

  2. Internal check

  3. Internal control

  4. Internal audit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Internal check refers to an arrangement of duties where the work of one person is automatically checked by another, ensuring that no single person has control over all aspects of a transaction.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Vouching may be formed as ____________________.

  1. Identification of the documentary evidence supporting the transaction

  2. Verification of the document supporting the transaction

  3. Authentication of document supporting the transaction

  4. Verification of the accuracy and authenticity of the transaction
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Vouching is the process of verifying the authenticity and accuracy of transactions by examining the supporting documentary evidence, such as invoices, receipts, and vouchers.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Which is an unearned income?

  1. Insurance premium received in advance

  2. Rent received in advance

  3. Depreciation

  4. Both A & B
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Unearned Income is that income which is received in advance. That mean income received against which services are not provided so far.

Insurance premium received in advance and Rent received in advance are the cases of unearned income. Accounting entry will be passed as under:

Income A/c                             Dr.
       To Unearned Income

Unearned Income is a liability and to be shown in the balance sheet. 

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

The bank statement reports a credit transfer of Rs.$4000$ from a customer. Accounting entries for this is _____________________.

  1. A debit in the cash account and a credit the account of the debtor concerned

  2. A debit in the bank account and a credit in the cash account

  3. A debit in the bank account and a credit in the account of the customer concerned

  4. A debit in the account of the debtor concerned and a credit in the bank account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As per double entry system of accounting, every transaction affects two account. In the given transaction, Bank and customer account are affected. Bank account is a real account and customer account is a personal account. 

Following the rule of real account and personal account, below entry will be passed:

Bank A/c                                     Dr.                   4000
         To Customer A/c                                                        4000
        

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

The characteristic that is always present with joint venture is _____________.

  1. it has an end life

  2. there is no specific act for joint venture

  3. profit is ascertained only after the end of the specific venture

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A joint venture is a business entity created by two or more parties generally to share the ownership to complete a specific task or venture. 

Joint venture is having a specific end life i.e. when the task is completed, the joint venture comes to an end. 
There is no specific act for joint venture as it is a kind of temporary partnership to conclude a specific task. Hence all applicable laws have to be followed.
Profit of joint venture is calculated only when the specific joint venture is completed. 

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Which of the following is correct?

  1. Operating profit = Operating profit - Non-operating expenses - Non-operating incomes

  2. Operating profit = Net profit + Non-operating expenses + Non-operating incomes

  3. Operating profit = Net profit + Non-operating expenses - Non-operating incomes

  4. Operating profit = Net profit - Non-operating expenses + Non-operating incomes
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Operating profit is the profit earned through the operating activities of the firm. This has been calculated as:


Gross Profit - Operating expenses = Operating Profit 

Net Profit = Operating Profit - Non Operating Expenses + Non Operating Income.

Else,

Operating Profit = Net Profit + Non Operating Expense - Non Operating income

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

While calculating operating profit, the following are not taken into account:

  1. Normal transactions

  2. Direct expenses

  3. Expenses of purely financial nature

  4. Both (ii) and (iii)

  5. Both (i) and (iii)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Operating profit is calculated by deducting the operating expenses from the operating income. Operating expenses are those which are directly related to the core business activity. 

Expense of purely financial nature are not taken in to account while calculating the operating profit. 

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

If the total of the credit side of the profit and loss account is more than the total of the debit side, the difference is the net profit.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Excess of credit over debit in profit and loss account is net profit generated by the business. This can be shown as follows:


                                                 Profit & Loss Account
Particulars                               Amount                Particulars                 Amount
To Rent                                    5000                 By Gross Profit             75000
To Rent                                   15000
To Insurance                           12000
To Stationery                            4000
To Other Expense                    4000
To Net Profit                            35000
                                              --------------                                                 --------------
                                                 75000                                                     75000
                                              --------------                                                 ---------------