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

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 _________.

  1. $14, 700

  2. $68, 000

  3. $8, 000

  4. $42, 000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Conversion cost includes direct labour and manufacturing overhead. Given conversion cost is Rs. 25,000 and direct manufacturing labour is Rs. 17,000, manufacturing overhead must be the difference: Rs. 25,000 - Rs. 17,000 = Rs. 8,000. The question appears to have some repetition in the text but the calculation is straightforward.

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

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

  1. relevant carrying cost

  2. relevant ordering cost

  3. purchase order lease time

  4. number of purchase orders
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The reorder point formula relates to the lead time. Dividing the reorder point by the usage rate per unit of time yields the lead time (purchase order lead time).

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

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

  1. primary product

  2. First incremental product

  3. Second incremental product

  4. Third incremental product
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In incremental revenue allocation, the first product is the primary product, and subsequent products are ranked as first, second, etc., incremental products.

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

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

  1. Sales book

  2. Purchase book

  3. Sales return book

  4. Purchase return book
Reveal answer Fill a bubble to check yourself
D Correct answer
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.

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

 Cash discount is ___________.

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

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

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 ______.

  1. Simple entry

  2. Compound entry

  3. Complex entry

  4. Contra entry
Reveal answer Fill a bubble to check yourself
B Correct answer
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.

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

Purchase Returns Account shows ______________.

  1. Debit balance

  2. Credit balance

  3. Zero balance

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

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

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

  1. Simple entry

  2. Double entry

  3. Compound entry

  4. Complex entry
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

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

Narration is not necessary for each and every journal entry. 

  1. True

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