Tag: elements of accounts

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Questions Related to elements of accounts

Multiple choice 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

Debtors and Creditors Ledgers are known as __________________.

  1. Bought ledger adjustment Account.

  2. Subsidiary Ledgers.

  3. General Ledgers.

  4. Sold ledgers adjustment Account.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Debtors and Creditors ledgers are maintained separately from the general ledger to keep the main ledger concise. These are collectively referred to as subsidiary ledgers.

Multiple choice 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

Interest A/c will have ________.

  1. Debit balance

  2. Credit balance

  3. Nil

  4. Debit or credit balance
Reveal answer Fill a bubble to check yourself
D Correct answer
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.

Multiple choice 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

Commission A/c will have __________.

  1. Debit balance

  2. Credit balance

  3. Nil

  4. Debit or credit balance
Reveal answer Fill a bubble to check yourself
D Correct answer
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.

Multiple choice 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

Expenses A/c will always have _______.

  1. debit balance

  2. credit balance

  3. nil

  4. debit or credit balance
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to the rules of debit and credit, expenses increase on the debit side. Therefore, expense accounts typically maintain a debit balance.

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

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

  1. True

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

Purchases returns (or return outwards) represent a reduction in purchases. Since purchases are debited, purchases returns are credited in the ledger and thus appear on the credit side of the trial balance.

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

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 .

  1. Rs.60,000

  2. Rs.16,000

  3. Rs.15,000

  4. Rs.30,000
Reveal answer Fill a bubble to check yourself
C Correct answer
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.

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

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

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

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

Apprenticeship Premium received appearing in the Trial Balance are shown:

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

Apprenticeship premium received is an income for the business. All incomes are credited to the Profit and Loss account.

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

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 :

  1. 137

  2. 240

  3. 343

  4. 9
Reveal answer Fill a bubble to check yourself
A Correct answer
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. 
Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

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.

  1. Rs. 750

  2. Rs. 1,750

  3. Rs. 2,750

  4. Rs. 7,750
Reveal answer Fill a bubble to check yourself
D Correct answer
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.