Tag: commercial applications

Quizzes (170) Questions (1551)

Questions Related to commercial applications

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

Non-monetary events like, death, dispute, sentiments, efficiency etc. are _______ in the books, even though these may have a great effect. 

  1. Not recorded

  2. Recorded

  3. Recorded if suggested by external auditors

  4. Recorded if suggested by internal auditors
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Accounting only records events that can be expressed in monetary terms. Non-monetary events, despite their impact, are not recorded in the books.

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

In accrual system of accounting ______________________.

  1. Revenues are taken care of irrespective whether cash is received or not

  2. Cost incurred during the period is taken care of

  3. Both a & b

  4. Cost of last financial period is only taken care of
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Accrual accounting recognizes revenues when earned and costs when incurred, regardless of the timing of cash payments or receipts.

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

The total amount column of the purchases return book is _______________.

  1. Credited to purchases returns account

  2. Debited to sales return account

  3. Credited to sales return account

  4. Debited to purchases returns account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The total of the purchases return book represents goods returned to suppliers. Since purchases have a debit balance, returns have a credit balance.

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

Rs. 1,000 being the monthly total of discount allowed to customers was credited to discount account in the ledger. If rectification is done before preparation of trial balance then which of the following is correct? 

  1. Discount A/c Dr. 2,000
    To Suspense A/c 2,000

  2. Discount A/c Dr. 1,000
    To Suspense A/c 2,000

  3. Credit the Discount Account with Rs. 2,000 saying "To Rectification of wrong credit of Rs. 1,000 for discount allowed.... Rs. 2,000.

  4. Debit the Discount Account with Rs. 2,000 saying "By Rectification of wrong credit of Rs. 1,000 for discount allowed.... Rs. 2,000.
Reveal answer Fill a bubble to check yourself
D Correct answer
Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

If an amount paid for servicing vehicles has been posted in error to Motor Vehicles account the journal entry necessary to correct this error should require which of the following _________________.

  1. Debit Vehicle Maintenance A/c and credit Motor Vehicles A/c

  2. Debit Cash A/c and credit Motor Vehicles A/c

  3. Debit Motor Vehicles A/c and credit Vehicle Maintenance A/c

  4. Debit Vehicle Maintenance A/c and credit Cash A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Servicing vehicles is a revenue expenditure (maintenance), not a capital expenditure. It should be debited to Vehicle Maintenance A/c. Since it was wrongly debited to Motor Vehicles A/c, we must credit Motor Vehicles A/c to remove the error and debit Vehicle Maintenance A/c to record the expense.

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

If the change in accounting policy has a material effect in current period and the effect of change is ascertainable in part _________________.

  1. The amount of change should be disclosed

  2. The fact of change should be disclosed

  3. The fact of change should not be disclosed

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When an accounting policy change has a material effect, the entity must disclose the fact of the change to ensure transparency. While the amount of the change is also relevant, the fundamental requirement is to disclose that a change has occurred.