Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

Which of the following specialized journals will record "goods returned by the business"?

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Purchase journal

  2. Sales journal

  3. Purchases return journal

  4. Sales return journal

Show answer
Correct Option: C

The term 2/10-n/30 implies that discount will be given if the payment made within ______ day is receivable within 30 days.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. 2, 10

  2. 10, 2

  3. 10, 30

  4. 3, 15

Show answer
Correct Option: A
Explanation:

2/10 net 30, defined as the trade credit in which clients can opt to either receive a 2 percent discount for payment to a vendor within 10 days or pay the full amount (net) of their accounts payable in 30 days, is extremely common in business to business sales.

A Company makes a purchase on $10^{th}$ may some office equipment . The correct journal entry will be

Debit Credit
1 Office equipment Supplies 
2 Purchases  Office equipment
3 Accounts payable Office equipments
4 Office equipment Accounts payable
elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. 1

  2. 2

  3. 3

  4. 4

Show answer
Correct Option: A

If salary is given to proprietor ______________________.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Proprietors salary account is debited

  2. Capital account is credited

  3. Both a & b

  4. None of the above

Show answer
Correct Option: D
Explanation:

Salary to proprietor can't be paid and it is not permissible expenditure under income tax act,1961. 

Proprietor is owner of the business and he enjoys gain of the business and hence he is not entitle for separate salary.

Which of the following should be entered in the Journal?
(i) Payment for purchases
(ii) Fixtures bought on credit
(iii) Credit sale of goods
(iv) Sale of surplus machinery.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. (i) and (iii)

  2. (i) and (iv)

  3. (ii) and (iv)

  4. (iii) and (iv)

Show answer
Correct Option: B
Explanation:

In accounting and bookkeeping, a journal is a record of financial transactions in order by date. Traditionally, a journal has been defined as the book of original entry.

Credit transactions are recorded in sales book and purchase book.

Which of the following are not errors of principle?
(i) Motor expenses entered in Motor Vehicles account.
(ii) Purchases of machinery entered in Purchases account.
(iii) Sales of Rs. 250 to Varun completely omitted from books.
(iv) Sales to a Varun entered in Amit's account.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. (i) and (iv)

  2. (ii) and (iii)

  3. (i) and (ii)

  4. (iv) and (iii)

Show answer
Correct Option: A,C

Which of the following item is found in a Journal entry?
$1$. Date of each transaction
$2$. Rupee amount of each debit and credit
$3$. Explanation of each transaction.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. $1$ only

  2. $1$ & $2$ only

  3. $2$ & $3$ only

  4. All of the above

Show answer
Correct Option: D
Explanation:

The essential elements of the journal entry format are as follows:

  • A header line may include a journal entry number and entry date. The number is used to index the journal entry, so that it can be properly stored and retrieved from storage.
  • The first column includes the account number and account name into which the entry is recorded. This field is indented if it is for the account being credited.
  • The second column contains the debit amount to be entered.
  • The third column contains the credit amount to be entered.
  • A footer line may also include a brief description of the reason for the entry. An entry in the footer line is highly recommended, since there are so many journal entries that it is easy to forget why each entry was made.

Which of the following is accounting equation?

elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

  1. Capital = Assets + Liabilities

  2. Capital = Assets - Liabilities

  3. Assets = Liabilities - Capital

  4. Liabilities = Assets + Capital

Show answer
Correct Option: B
Explanation:

The basic accounting equation, also called as the balance sheet equation, represents the relationship between the assets, liabilities and capital of a business. It is the foundation for the double entry book-keeping system. For each transaction, the total debit equals the total credit. Following is the accounting equation:

Asset = Liability + Capital.

The accounting equation is based on __________.

elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

  1. Going concern concept

  2. Dual aspect concept

  3. Money measurement concept

  4. All of the above

Show answer
Correct Option: B
Explanation:

Dual aspect concept is the basic concept of accounting, According to which every business transactions has a dual effect. As the name implies , the entry made for each transaction is composed of two parts- one for the debit and the other for the credit. Every debit has an equal amount of credit. So, the total of all debits equal to the total of all credits. This gives basic accounting equation:

Assets = Liabilities + Capital.

The outside liabilities of a business are Rs. $20,000$. The proprietor's capital is Rs. $50,000$. Total assets of the firm are worth ___________.

elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

  1. Rs. $50,000$

  2. Rs. $30,000$

  3. Rs. $70,000$

  4. Rs. $20,000$

Show answer
Correct Option: C