Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

If conversion cost is 25000 and direct manufacturing labour cost is 25000 and direct manufacturing labour cost is 17000, then manufacturing overhead cost would be _________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. $14, 700

  2. $68, 000

  3. $8, 000

  4. $42, 000

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Correct Option: C

Reorder point is divided by number of sold units for per unit of time to calculate ________________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. relevant carrying cost

  2. relevant ordering cost

  3. purchase order lease time

  4. number of purchase orders

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Correct Option: C

Second ranked product in incremental revenue allocation method is termed as __________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. primary product

  2. First incremental product

  3. Second incremental product

  4. Third incremental product

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Correct Option: B

Account current is a journal.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. True

  2. False

  3. Partly true

  4. Partly false

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Correct Option: B
Explanation:

Account current is a type of account that is ongoing between the two parties. Its a kind of summary report. Its not a journal.

Subsidiary book in which return of goods purchased on credit is recorded ____________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Sales book

  2. Purchase book

  3. Sales return book

  4. Purchase return book

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Correct Option: D
Explanation:

Return of goods, purchased on credit is recorded under Purchase Return Book or return outward book. Purchase book shows a debit balance, so purchase return book will show credit balance. While returning the goods buyer sent a "debit note" to the seller. The debit note contains the quantity of returned goods and reason of returning goods. The original copy of debit not is sent to the supplier for making necessary entries in his book and on the basis of duplicate copy entries are made in Purchase return book.

 Cash discount is ___________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Given to encourage prompt payment 

  2. Amount deducted from list price

  3. Not required to be shown in books of accounts

  4. All of the above

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Correct Option: A
Explanation:

Amount which is deducted by the seller from the amount due at the time of the receipt is called cash discount. it is given to encourage prompt payment.

Received Rs 1100 from M/s M in settlement of Rs 1250 due from him. The nature of the journal entry to be passed for this transaction is ______.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Simple entry

  2. Compound entry

  3. Complex entry

  4. Contra entry

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Correct Option: B
Explanation:

A compound journal entry is an accounting entry in which there is more than one debit, more than one credit, or more than one of both debits and credits.

Hence, it is a compound entry, as cash account and discount allowed A/c is to be debited.

Purchase Returns Account shows ______________.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Debit balance

  2. Credit balance

  3. Zero balance

  4. None of these

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Correct Option: B
Explanation:

A purchase return account shows the credit balance. Purchase return represents the amount of goods returned to the supplier. 


When goods are bought from a supplier, the purchases A/c will be debited and when the goods are returned, the purchase return A/c will be credited as stock is reduced. 
Thus, purchase return A/c shows the credit balance.

When a entry involves only two accounts it is called _______.

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. Simple entry

  2. Double entry

  3. Compound entry

  4. Complex entry

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Correct Option: A
Explanation:

Accounting is based on double entry system. that means every transaction will have two impact. When only two accounts are involved, its called simple entry.

Goods worth Rs.500 purchased on cash.
Goods account and Cash account will be impacted.

Narration is not necessary for each and every journal entry. 

elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

  1. True

  2. False

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Correct Option: B
Explanation:

A short explanation of each transaction is written under each entry which is called narration. The subject matter of the transaction can be ascertained through narration. Besides this, if there is any mistake in determining debit or credit aspect of a transaction, it can be easily detected from narration. "A journal entry is not complete without narration".

The statement is false because narration is a brief explanation of a transaction, together with necessary derails that are provided with the journal entry, which helps to understand the account which is to be debited or credited. Thus, a narration is necessary for each and every journal entry, as it provides the details of the journal entry and helps understand the entry.