Tag: elements of book keeping and accountancy

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Questions Related to elements of book keeping and accountancy

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

Which of these accounts is debited by a drawee of a bill of exchange on its discounting?

  1. Bills Receivable

  2. Cash

  3. Discount

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

The drawee of a bill of exchange is the person who accepts the bill (the debtor). When the drawer discounts the bill, the drawee is not involved in that transaction and does not record any entry for the discounting.

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

Ram drew a bill on Shyam for Rs. 4,500 for mutual accommodation in the ratio 2:1. Shyam accepted the bill and returned to Ram. Ram discounted the bill for Rs. 4,230 and remitted 1/3rd proceeds to Shyam. Before the due date, not having funds to meet the bill, Shyam drew a bill on Ram for Rs. 6,300 on the same terms as to mutual accommodation. The second bill was discounted for Rs. 6,120. The first bill was honoured on the due date and a net amount of Rs. 1,080 was remitted to Ram by Shyam. What will be the proportionate discount charged on the second bill to be borne by Ram?

  1. Rs. 180

  2. Rs. 150

  3. Rs. 300

  4. Rs. 120
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The second bill is for 6,300 and discounted for 6,120, meaning the discount is 180. The ratio is 2:1. Ram bears 2/3 of the discount: 180 * (2/3) = 120.

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

Ram draws on Mohan a bill for Rs. 60,000 on April 1,2005, for two months. Mohan accepts the bill and sends it to Ram, who gets the bill discounted for Rs. 58,800. Ram remits Rs. 19,600 to Mohan. On the due date Ram being unable to remit due amount to Mohan, agrees to accept a bill for Rs. 84,000 for two months. This bill is discounted by Mohan, for Rs. 82,200. Mohan remits Rs. 14,800 to Ram. What will be the discount borne by Ram on second bill?

  1. Rs. 1,200

  2. Rs. 1,800

  3. Rs. 1,100

  4. Rs. 800
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The second bill is for 84,000 and discounted for 82,200, so the discount is 1,800. The ratio is 2:1. Ram bears 2/3 of the discount: 1,800 * (2/3) = 1,200.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

It is a check on the accuracy of posting. If the trial balance agrees it proves that - 
1. The books are arithmetically accurate 
2. Both the aspects of the transactions have correctly recorded in the books of original entry as well as in the ledger. 
The correct answer is ___________________.

  1. $1$ but not $2$

  2. $2$ but not $1$

  3. Both $1$ & $2$

  4. Either $1$ or $2$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A trial balance only checks the arithmetic accuracy of the ledger balances. It does not guarantee that transactions were recorded in the correct accounts or that the original entries were conceptually correct.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Which of the following involves the preparation of reports and statements from the classified data (ledger) understandable and useful to management and other interested parties? 

  1. Classifying

  2. Recording

  3. Summarizing

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

Summarizing is the stage in the accounting cycle where ledger balances are used to prepare financial statements and reports for management. Recording is the initial entry, and classifying involves posting to the ledger.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Ledger book is popularly known as ____________.

  1. Secondary book of accounts

  2. Principal book of accounts

  3. Subsidiary book of accounts

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

The ledger is referred to as the principal book of accounts because it contains all the final accounts of a business, whereas the journal is the book of original entry.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

At the end of the accounting year all the nominal accounts of the ledger book are ______________________.

  1. Balanced but not transferred to profit and loss account .

  2. Not balanced and also the balance is not transferred to the profit and loss account.

  3. Balanced and the balance is transferred to the balance sheet.

  4. Not balanced and their balance is transferred to the profit and loss account.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Nominal accounts represent revenues and expenses. At the end of the year, these accounts are closed by transferring their balances to the profit and loss account to determine net income.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

The total of the amount of the bills payable book is posted to the _____ in the ledger.

  1. Dr. of bills payable account

  2. Cr. of bills payable account

  3. Cr. of bills receivable account

  4. Dr. of bills receivable account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Bills payable is a liability. The total of the bills payable book represents an increase in liabilities, which is recorded on the credit side of the bills payable account.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

At the end of the accounting year all the nominal accounts of the ledger book are _________________.

  1. Balanced but not transferred to profit and loss account

  2. Not balanced and also the balance is not transferred to the profit and loss account

  3. Balanced and the balance is transferred to the balance sheet

  4. Not balanced and their balance is transferred to the profit and loss account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is a duplicate of question 425066 with identical content and answer. Nominal accounts are not balanced at year-end. Their balances are transferred to the Trading and Profit and Loss Account to determine profit or loss.