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

Cash cannot be misappropriated by ___________. 

  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
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Misappropriation of cash usually involves under-recording receipts or over-recording payments. Making fictitious entries on the receipt side would actually increase the recorded cash balance, which does not facilitate stealing cash.

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

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

  1. True

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

The accrual concept requires that transactions be recorded when they occur, regardless of when cash is received or paid. The cash basis of accounting, conversely, only records transactions when cash changes hands.

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

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 $1,000$
  1. Rs. $75,000$
  2. Rs. $27,000$
  3. Rs. $32,000$
  4. Rs. $40,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
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 |

 

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

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

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under the accrual basis, revenue and expenses are recognized in the period they are earned or incurred, regardless of the timing of cash receipts or payments.

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

In cash system of accounting, entries are recorded ____________.

  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
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The cash system of accounting is strictly based on the actual movement of cash. Transactions are only recorded when money is physically received or paid out.

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

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

  1. Accrual system of accounting

  2. Cash system of accouting

  3. Hybrid system of accounting

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

In the cash system, the timing of the receipt or payment is the only factor that matters for recording, making the period to which the receipt pertains irrelevant.

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

Which of the following is/are the essential features of accrual basis of accounting?
(I) Revenue is recognized only when cash is received.
(II) Costs are matched against revenues on the basis of relevant time period to determine periodic income.
(III) Costs which are not charged to income are carried forward and are kept under continuous review.
(IV) Receipts or incomes are recorded as and when cash is received or becomes due on the other hand payments are recorded only when cash is actually paid.
The correct answer is _________________.

  1. (I) & (IV) only

  2. (I), (III) & (IV) only

  3. (III) & (IV) only

  4. (II) & (III) only
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accrual accounting matches costs against revenues in the relevant period (II) and treats uncharged costs as assets to be carried forward (III). Statements (I) and (IV) describe cash-based accounting practices.

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

According to which of the following concepts, revenue is recognised when it is earned rather than when it is collected and recognises when assets or benefits are used rather than they are paid for?

  1. Accrual concept

  2. Realisation concept

  3. Cost concept

  4. Money measurement concept
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The accrual concept dictates that revenue is recognized when earned and expenses are recognized when incurred, matching them to the period they relate to.

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

Purpose of ac an accounting system include all the following except _______________________.

  1. Interpret and record the effects of business transaction

  2. Classify the effects of transactions to facilitate the preparation of reports

  3. Summarize and communicate information to decision makers

  4. Dictate the specific types of business enterprise transactions that the enterprises may engage in.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting systems are designed to record, classify, and summarize financial data to provide useful information. They do not have the authority to dictate or restrict the types of business transactions an enterprise chooses to engage in.

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

______ is incompatible with the matching principle of income determination.

  1. Accrual system of accounting.

  2. Cash basis of accounting

  3. Hybrid system of accounting

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

The matching principle requires that expenses be recognized in the same period as the revenues they help generate. The cash basis violates this because it records expenses only when paid, which may be in a different period than the associated revenue.