Tag: book keeping and accountancy

Quizzes (126) Questions (1524)

Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Purchase of furniture for cash would ______________________.

  1. Increase the fixed assets and reduce the current assets

  2. Reduce the fixed assets and increase the current assets

  3. Increase total assets

  4. Both (a) and (b)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Purchasing furniture for cash involves an exchange of assets: cash (a current asset) decreases, and furniture (a fixed asset) increases. Since both are assets, the total asset value remains unchanged, but the composition shifts.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

If an individual asset is increased, there will be a corresponding ____________________.

  1. Increase of another asset or increase of capital

  2. Decrease of another asset or increase of liability

  3. Decrease of specific liability or decrease of capital

  4. Increase of drawings and liabiltiy
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to the accounting equation (Assets = Liabilities + Equity), if an asset increases, the balance must be maintained by either a decrease in another asset, an increase in a liability, or an increase in equity (capital).

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Purchase of office equipment on credit results in ________________.

  1. Decrease in liability

  2. Decrease in Capital

  3. Increase in Capital

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

Purchasing office equipment on credit increases the asset (equipment) and simultaneously increases a liability (accounts payable). The total assets increase.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Purchase of machinery for cash ________________.

  1. Decrease total assets

  2. Increases total assets

  3. No change in the total assets

  4. Decreases total liabilities
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When machinery is purchased for cash, one asset (cash) decreases while another asset (machinery) increases by the same amount. Therefore, the total value of assets remains unchanged.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Which of the following is true when a debtor pays his dues?

  1. The asset side of the balance sheet will decrease

  2. The asset side of the balance sheet will increase

  3. The liability side of the balance sheet will increase

  4. There is no change in total assets or total liabilities
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a debtor pays their dues, cash (an asset) increases and accounts receivable (another asset) decreases by the same amount. Consequently, there is no net change in total assets or liabilities.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Mr. Bhandari purchased a car for Rs. 50,000, making a down payment of Rs. 10,000 and signing a Rs. 40,000 bill payable due in 60 days. As a result of this transaction ___________________.

  1. Total assets increased by Rs. 50,000

  2. Total liabilities increased by Rs. 40,000

  3. Total assets increased by Rs. 40,000

  4. Total assets increased by Rs.. 40,000 with corresponding increase in liabilities by Rs. 40,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The total asset (car) increases by 50,000. Cash (an asset) decreases by 10,000, and a liability (bills payable) increases by 40,000. The net increase in assets is 40,000 (50,000 - 10,000), which matches the increase in liabilities.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Income earned and collected results in _________________.

  1. Increase of assets and increase in capital

  2. Decrease in assets and increase in capital

  3. Increase in assets and decrease in liability

  4. Decrease in assets and increase in liability
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When income is earned and collected, cash (an asset) increases. Since income increases the owner's equity (capital), both assets and capital increase.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Capital brought in by the proprietor will result in _______________.

  1. Increase in asset and increase in liability

  2. Increase in liability and decrease in asset

  3. Increase in asset and decrease in liability

  4. Increase in one asset and decrease in another asset
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

In case of unexpired entry following entry should be made _________________.

  1. It should be shown as an asset in the balance sheet

  2. It is shown as a expense in profit and loss account

  3. Both A & B

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

An unexpired expense (prepaid expense) represents a benefit to be received in the future, so it is recorded as an asset. The portion that has expired is recorded as an expense in the Profit and Loss account.