Tag: elements of accounts

Quizzes (156) Questions (701)

Questions Related to elements of accounts

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

From the point of view of Registration, the debentures are classified as -

  1. Secured and unsecured Debentures

  2. Redeemable Debentures and Irredeemable Debentures

  3. Convertible Debentures and Non-convertible Debentures

  4. Registered Debentures and Bearer Debentures
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Debentures are classified as Registered (where the company maintains a register of holders) or Bearer (where the holder is the owner by possession).

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

Which is not the salient feature of sinking fund method?

  1. Interest is an integral part

  2. Amount released is affected by fractionations in interest rate

  3. Investment in securities

  4. Premium is paid in advance at the beginning of year
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Similar to question 412249, paying a premium in advance at the beginning of the year is not a feature of the sinking fund method.

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

Interest is credited to profit and loss account in ________________.

  1. annuity method

  2. sinking fund method

  3. insurance policy method

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

In the sinking fund method, interest earned on the sinking fund investments is credited to the Sinking Fund account, but the interest on the debentures themselves is an expense charged to the Profit and Loss account.

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

Identify the statement which is common in sinking fund method from the following.

  1. The amount received at the end of the life of an asset is fixed

  2. The amount received at the end of the life of an asset is not fixed

  3. The amount received at the beginning of the life of an asset is fixed.

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

This is a duplicate of question 412251. In the sinking fund method, the amount received at the end of an asset's life is NOT fixed because it depends on investment returns that fluctuate with market interest rates. If the amount were fixed, it would be characteristic of an annuity or insurance policy method. The variability of the final amount is specifically due to interest rate fluctuations affecting the accumulated sinking fund.

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

Profit on sale of sinking fund investment is credited to ______________.

  1. General reserve

  2. Capital reserve

  3. Sinking fund

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

Profit or loss on sale of investments is transferred to sinking fund. After the redemption of all debentures, balance left in sinking fund is transferred to general reserve but the portion of the profit on sale of sinking fund investment is preferably transferred to capital reserve.

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

Sinking fund is _________.

  1. always general purpose fund

  2. always for some specific purpose

  3. both purposes (A & B)

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

A sinking fund is always created for a specific purpose, such as the redemption of debentures or the replacement of a specific asset.

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

After the redemption of debentures, any credit balance in the Sinking Fund A/c is transferred to ______ A/c.

  1. General reserve

  2. Capital reserve

  3. P & L

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

After the redemption of all debentures, balance left in sinking fund is transferred to general reserve but the portion of the profit on sale of sinking fund investment is preferably transferred to capital reserve.

Multiple choice elements of accounts cash book and its types petty cash book meaning, importance and components of voucher bank book and petty cash book

Perpetual inventory system involves ____________.

  1. bincard and stores ledger

  2. bill of material and material requisition

  3. purchase requisition and purchase order

  4. inward and outward invoices
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A perpetual inventory system maintains continuous records of inventory levels. This is achieved by tracking every receipt and issue of stock using documents like bincards and stores ledgers.

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

Accounting information system is important component of the organisational MIS in an organisation. 

  1. True

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

Accounting information system is important component of the organisational MIS in an organisation. It receives information and provides information and provides information to the other functional MIS.

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

___________ reports will be prepared only when the management requests them.

  1. Summary

  2. Exception

  3. Demand

  4. Customer/Supplier
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Demand reports are generated specifically when requested by management to address a particular inquiry or need. Unlike scheduled reports, they are not produced automatically.