Tag: elements of accounts

Questions Related to elements of accounts

Debtors and Creditors Ledgers are known as __________________.

elements of accounts ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

  1. Bought ledger adjustment Account.

  2. Subsidiary Ledgers.

  3. General Ledgers.

  4. Sold ledgers adjustment Account.

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Correct Option: B

Interest A/c will have ________.

elements of accounts ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

  1. Debit balance

  2. Credit balance

  3. Nil

  4. Debit or credit balance

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Correct Option: D
Explanation:

Interest may have both the accounting treatment. If interest is received , its an income to the business and if interest is paid, its an expenses for the business. 

Hence, interest account may have debit or credit balance.

Commission A/c will have __________.

elements of accounts ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

  1. Debit balance

  2. Credit balance

  3. Nil

  4. Debit or credit balance

Show answer
Correct Option: D
Explanation:

Commission may have both the accounting treatment. 

If commission is received ,its an income to the business and if commission is paid, its an expenses for the business. 
Hence, commission account may have debit or credit balance.

Expenses A/c will always have _______.

elements of accounts ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

  1. debit balance

  2. credit balance

  3. nil

  4. debit or credit balance

Show answer
Correct Option: A

State whether the following statement is True or False.
In trial balance purchases returns are recorded on Debit side.

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. True

  2. False

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Correct Option: B

From the following particulars of Mrs. Dropadi Ltd., 
i) Monthly cash requirements =Rs.60,000
ii) Fixed cost per transaction = Rs.10. 
iii) Interest rate on marketable securities =  $6\%$ p.a.
Calculate the optimum cash balance of the company .

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Rs.60,000

  2. Rs.16,000

  3. Rs.15,000

  4. Rs.30,000

Show answer
Correct Option: C
Explanation:

Optimum cash balance
 = $\sqrt\frac{2b \ T}{I}$
 = $\sqrt\frac{2 X 10 X 60,000}{.005}$
= Rs. 15,492 or Rs.15,000
I = $6\%$ p.a. or $0.5\%$ per month or = .005.

If 'Prepaid Wages' is given in Trial Balance,it is shown in_______________.

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Debit of Trading A/c

  2. Debit of Trading A/c and Assets side of B/S

  3. Debit of P & L A/c

  4. Asset side of the B/S

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Correct Option: D
Explanation:

Wages are an obligation on the part of the company. When an obligation is met in advance its a right. Hence, wages paid in advance is a right and a right is an asset of the company.  

Apprenticeship Premium received appearing in the Trial Balance are shown:

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. on the debit side of Profit and Loss A/c

  2. on the credit side of Profit and Loss A/c

  3. on the Assets side of the Balance Sheet

  4. on the liabilities side

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Correct Option: B

In the trial balance are shown Debtors Rs. 2400, Bad Debts Rs 221, Bad Debts Reserve Rs 324. For creating a Reserve for Doubtful Debts @ $10\%$ on debtors, the P & L A/c will be debited by :

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. 137

  2. 240

  3. 343

  4. 9

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Correct Option: A
Explanation:
New reserve to be created = 2,400 x 10/100
                                              = RS-240.
P & L A/c to be debited ;-
= New reserve - (Old reserve - Bad debts)
= 240 - (324 - 221)
= 240 - 103
= Rs-137. 

On 1st January 1999, the balances on different accounts in the books of Bhushan were as follows: Stock on hand Rs. 3,500; Investments Rs. 3,000; Loans from Ramji Rs. 3,500; Owing by debtors Rs. 2,500; Owing to creditors Rs. 1,500; Plant and Machinery Rs. 3,000; Bills payable Rs. 1,250; Cash at bank Rs. 2,000.
The amount of capital of Bushan on this date was.

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Rs. 750

  2. Rs. 1,750

  3. Rs. 2,750

  4. Rs. 7,750

Show answer
Correct Option: D
Explanation:
Capital fund = Total assets - Total liabilities (WN 1)
                     = 14,000 - 6,250
                     = RS-7,750.

Working note:-
Total assets :- 
= stock + investments + debtors + plant and machinery + cash 
= 3,500 + 3,000 + 2,500 + 3,000 + 2,000
= RS-14,000.

Total liabilities :-
= Loans from Ramji + Creditors + Bills payable 
= 3,500 + 1,500 + 1,250
= RS-6,250.