Tag: book keeping and accountancy

Quizzes (126) Questions (1524)

Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

Accrued interest will be ________ to interest account.

  1. Debited

  2. Credited

  3. No effect

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

The amount of accrued interest for the recipient of the payment is a debit to the interest receivable (asset) account and a credit to the interest revenue account. The debit is rolled into the balance sheet (as a short-term asset) and the credit into the income statement.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

Accrued income is ______ to the expenses in the profit and loss account.

  1. Added

  2. Deducted

  3. Rounded off

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

The Accrued Income A/c appears on the assets side of the Balance Sheet. While preparing the Trading and Profit and Loss A/c we need to add the amount of accrued income to that particular income.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

Calculate Outstanding interest on 10 % govt bonds Rs. 15000.

  1. 1520

  2. 1500

  3. 2000

  4. 2200
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Calculation of Interest on Govt Bonds = 15000 * 10 / 100 

                                                                 = 1500

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

Subscription received in advance Rs. 500 shall be ______________________.

  1. Added to subscription and shown under assets

  2. Added to subscription and shown under liabilities

  3. Deducted from subscription and shown under assets

  4. Deducted from subscription and shown under liability
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Subscription received in advance is money collected for a future period, creating an obligation for the business. Therefore, it is deducted from the total subscription income for the current period and recorded as a liability on the balance sheet.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

Rent Received Rs 2400 is for 15 months than Rs ________ is pre received income.

  1. 500

  2. 470

  3. 480

  4. 400
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Rent per month = 2400 / 15

                           = 160 Rs
Rent for 12 months = 160 * 12 = Rs 1920
Then, Prepaid expenses is 160 * 3 = Rs 480.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

When income is received in advance ___________ account is debited.

  1. Expense

  2. Profit and loss

  3. Income

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

 When a company receives money in advance of earning it, the accounting entry is a debit to the asset Cash for the amount received and a credit to the liability account such as Customer Advances or Unearned Revenues.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

If Incomes received in advance appears in the trial balance, it__________.

  1. will be shown in Profit and Loss Account by way of deduction from the income received

  2. will be credited to Profit and Loss Account

  3. will not be shown any where

  4. will be shown on the liabilities side of the balance sheet only
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If an item appears in the trial balance, it has already been recorded in the books. Income received in advance is a liability, so it is shown on the liabilities side of the balance sheet.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

Drawings account of a partner will have _____________. 

  1. debit balance

  2. credit balance

  3. either (a) or (b)

  4. neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Drawings represent a reduction in the partner's capital. Since capital accounts have credit balances, drawings are debited to the partner's account to reflect this reduction.