Tag: book keeping and accountancy

Quizzes (126) Questions (1524)

Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

Debenture premium cannot be used to -

  1. Write off the discount on issue of shares or debentures

  2. Write off the premium on redemption of shares or debentures

  3. Pay dividends

  4. Write off underwriting commission
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to the Companies Act, the Securities Premium Account (often referred to as debenture premium when applied to debentures) has restricted uses. It cannot be used to pay dividends to shareholders.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Lenders can study the creditworthiness of the business firm with the help of books of accounts.

  1. True

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

Lenders rely on financial statements and books of accounts to assess the financial health, liquidity, and solvency of a business before extending credit.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Book-keeping enables investors to take a decision whether to invest or not.

  1. True

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

Bookkeeping allows investors to have up-to-date and accessible information. Investors will be able to make better, well informed, decisions which is the ultimate purpose of bookkeeping. Bookkeeping is not only for current investors but for future investors too.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Various departments of government will be able to find out the taxes due from various sources with the help of books of accounts.

  1. True

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

The above statement is true.

Government can access books of accounts of business from various source of the to find out the taxes due.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Book-keeping does not help the owners to find out profit, losses, assets and liabilities.

  1. True

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

Book-keeping is the systematic recording of financial transactions, which is the foundational step for preparing financial statements that reveal profits, losses, assets, and liabilities.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

For which of the following adjustments would a reversing entry facilitate book-keeping procedures?

  1. Adjustment for depreciation expense

  2. Adjustment to allocate prepaid insurance to the current period

  3. Adjustment made as a result of inventory of supplies

  4. Adjustment for drawings in goods
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Reversing entries are typically used for accruals and prepayments that were adjusted at the end of the period. Allocating prepaid insurance to the current period is a classic example of an adjustment that benefits from a reversing entry at the start of the next period.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

There are ______ systems of keeping records.

  1. Single Entry System & Double Accounts System

  2. Single Account System & Double Accounts System

  3. Single Entry System & Double Entry System

  4. Single Entry System & Duplicate Accounts System
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The two primary systems for maintaining financial records are the Single Entry System and the Double Entry System.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Which of the following is/are merit of double entry system?

  1. It keeps a complete record of business transactions.

  2. It provides a check on the arithmetical accuracy of accounts.

  3. The detailed profit and loss account can be prepared to show profit earned or loss suffered during any given period.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The double entry system is comprehensive; it ensures complete records, allows for arithmetical accuracy checks via a trial balance, and facilitates the preparation of detailed financial statements.

Multiple choice book keeping and accountancy reserve and fund kinds of reserves secret reserve reserves

Capital reserves are normally created out of free of distributable profits.

  1. True

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

Capital reserves are those reserves which are not created out of operating profits. Capital reserves refers to the amounts which are not free for distribution by way of dividend.. In case of companies, following are examples of capital reserves :

  • Profit prior to incorporation.
  • Premium on the issue of shares and debentures.
  • Profit on reissue of forfeited shares.
  • Profit on redemption of debentures.
  • Profit on sale of fixed assets.
  • Profit on revaluation of fixed assets.
  • Profit on a sale of  the whole undertaking or a part of it.