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

When the proprietor withdraws or takes away some goods from the business for his personal use of consumption, he records the withdrawals at ________________.

  1. Selling price

  2. Cost price

  3. Selling price or cost price whichever is higher

  4. Selling price or cost price whichever is lower
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When goods are withdrawn for personal use, they are removed from inventory at their cost price to ensure the business does not record a profit on transactions with itself.

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

Advance received from customers is___________. 

  1. an item of current liability

  2. an item of non-current asset

  3. an item of contingent liability

  4. an item of non-cash cost
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Money received in advance from customers for goods or services not yet provided represents an obligation to perform or refund, which is classified as a current liability.

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

While preparing final account, to record outstanding income which of the following adjustment entry will be passed?

Income A/cTo Outstanding Income A/c Dr.
Outstanding Expenses A/cTo Income A/c Dr.
Profit & Loss A/cTo Outstanding Income A/c Dr.
Outstanding Income A/cTo Income A/c Dr.

  1. A

  2. B

  3. C

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

Outstanding income is income earned but not yet received. To record this, we debit the asset account (Outstanding Income) and credit the income account to recognize the revenue in the current period.

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

While preparing final account, to adjust income received in advance which of the following adjustment entry will be passed?

Income Received in Advance A/cTo Income A/c Dr.
Income A/cTo Income Received in Advance A/c Dr.
Income Received in Advance A/cTo Outstanding Income A/c Dr.
Income Received in Advance A/cTo Profit & Loss A/c Dr.

  1. A

  2. B

  3. C

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

Income received in advance must be removed from the current income account because it has not been earned yet. We debit the income account and credit the liability account (Income Received in Advance).

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

Choose the true statement.

  1. Accrued incomes represent income unearned but realized in cash

  2. Accrued incomes represent income earned but not realized in cash

  3. Accrued income A/c is shown on the liability side

  4. No tax is payable on accrued income
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accrued income is revenue that has been earned by providing goods or services, but for which payment has not yet been received. It is an asset to the business.

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

Which of the following accounting treatments is/are TRUE in respect of accrued commission appearing on the debit side of a trial balance?

  1. It is shown on the debit side of the Profit & Loss A/c

  2. It is shown on the credit side of the Profit & Loss A/c

  3. It is shown on the liabilities side of the Balance Sheet

  4. It is shown on the assets side of the Balance Sheet
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If an item appears on the debit side of the trial balance, it is an asset or an expense. Accrued commission is an asset because it is income earned but not yet received.

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

From the following particulars, calculate the amount of income to be credited to profit and loss account for the year ended $31$st March $2012$.

$31-3-2011$ $31-3-2012$
Outstanding Income $1,500$ $1,200$
Income received in advance $900$ $540$

A sum of Rs. $14,670$ was received as income during the year ended $31$st March $2012$.

  1. $15,930$

  2. $14,010$

  3. $15,330$

  4. $14,730$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Income to be credited = Cash received + Closing Outstanding - Opening Outstanding - Closing Advance + Opening Advance. Calculation: 14670 + 1200 - 1500 - 540 + 900 = 14730.

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

Unaccrued Interest is an example of __________.

  1. Increase in asset & decrease in owner's liability

  2. Increase in liability & decrease in owner's liability

  3. Decrease in liability & owner's liability

  4. Increase in asset & owner's liability
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Unaccrued interest (interest received in advance) is a liability. Receiving it increases the company's liability and decreases the owner's equity (or represents a future obligation).

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 is an example of _________.

  1. Increase in asset & decrease in owner's liability

  2. Increase in liability & decrease in owner's liability

  3. Decrease in liability & owner's liability

  4. Increase in asset & owner's liability
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accrued interest is interest earned but not yet received, which is an asset. Recognizing it increases assets and increases the owner's equity (via 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

Star Tour has a Rs. 5,000 account receivable from Mr. X. On February 5, Mr. X makes a partial payment of Rs. 3,000 to Star Tours. The journal entry made on February 5 by Star Tours to record this transaction includes:

  1. A credit to the cash received account of Rs. 3000

  2. A credit to the Accounts receivable account of Rs 3000

  3. A debit to the Account of Rs. 2000

  4. A debit to the accounts receivable account of Rs 2000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When a customer pays a partial amount on their account, the cash account is debited and the accounts receivable account is credited to reduce the balance owed by the customer.