Tag: elements of accounts

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Questions Related to elements of accounts

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

An increase in marginal cost of capital and capital rationing are two arising complications of _____________.

  1. maximum capital budget

  2. greater capital budget

  3. optimal capital budget

  4. minimum capital budget
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An optimal capital budget seeks to balance the cost of capital and investment opportunities, often leading to complications like capital rationing and rising marginal costs.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

Under sales on return or approval basis (when transactions are few), the seller sends goods by treating these as ________________.

  1. An ordinary sale and no entry is passed in the books

  2. An ordinary sale and entry for normal sale is passed in the books

  3. Sale on approval and no entry is passed

  4. Any one of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When transactions are few, it is common accounting practice for the seller to treat goods sent on approval as an ordinary sale, recording the entry immediately.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

How is the date of receipt of consideration by the supplier determined?

  1. Date on which the receipt of payment is entered in the books of account

  2. Date on which the receipt of payment is credited in the bank account

  3. Earlier of (a) & (b)

  4. (a) & (b) whichever is later
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The date of receipt of consideration is generally determined as the earlier of the date the payment is entered in the books or the date the payment is credited to the bank account.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

An outstanding bonds are also classified as _______________.

  1. standing bonds

  2. outdated bonds

  3. dated bonds

  4. seasoned bonds
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Seasoned bonds are bonds that have been outstanding for a significant period and are actively traded in the secondary market.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

A risk which is classified as its contribution to risk of portfolio is classified as __________.

  1. classified risk

  2. contributed risk

  3. irrelevant risk

  4. relevant risk
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Relevant risk is the risk that cannot be diversified away and is measured by its contribution to the risk of a portfolio, often represented by beta.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

The Reserve Bank of India has decided to help banks, as a temporary measure, by providing additional liquidity support under LAF. What is the full form of LAF?

  1. Loan Adjustment Fund

  2. Liquidity Adjustment Facility

  3. Long Awaited Funds

  4. Loan Against Funds
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

LAF stands for Liquidity Adjustment Facility, which is a tool used by the Reserve Bank of India to manage liquidity in the banking system.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

Source document are useful to record business transactions in the books of accounts.

  1. True

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

The source document is essential to the bookkeeping and accounting process as it provides evidence that a financial transaction has occurred. During an accounting or tax audit, source documents back up the accounting journals and general ledger as an indisputable transaction trail.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

Cash memo is used for credit purchase/sale.

  1. True

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

Whenever goods are sold in cash, a seller prepares a cash memo and records therein details of goods sold. This memo includes quantity, rate and total amount of goods sold, along with the date of transaction. 

All cash transactions are recorded in the books of accounts on the basis of the cash memos. 
A cash memo is prepared when goods are sold for cash. 
Thus, a cash memo is given by a trader in the case of sale and it is received in the case of purchases.
Cash memos are used for cash purchases/sales in order to record the credit purchases/sales, an invoice or bills are prepared by the seller.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

Trade discount allowed on the sales, if appearing in the trial balance, is shown in the final accounts ____________.

  1. on the debit side of trading account

  2. on the debit side of the profit and loss account

  3. by way of deduction from the sales in the trading account

  4. credit of profit & loss Account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Trade discount is a reduction from the list price. When it appears in the trial balance, it is deducted directly from sales in the trading account to arrive at net sales.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

When does a entry termed as a combined entry ____________________.

  1. If two transactions of one company are involved

  2. If there is debit and credit both

  3. Transactions are of the same nature and they take place on the same day.

  4. An the accounts are debited the very same day
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A combined entry (or compound entry) is used when multiple accounts are affected by transactions of the same nature occurring on the same day.