Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

Dual aspect concept results in the 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 + Liabilities = Assets

  2. Revenue = Expenses

  3. Capital + Profit = Assets + Expenses

  4. none of these

Show answer
Correct Option: A
Explanation:

Dual aspect is the foundation or basic principle of accounting. This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places.

The duality principle is commonly expressed in terms of fundamental Accounting Equation, which is as follows :

Assets = Liabilities + Capital

In other words, the equation states that the assets of a business are always equal to the claims of owners and the outsiders. The claims also called equity of owners is termed as Capital(owners’ equity) and that of outsiders, as Liabilities(creditors equity).

On 31st Dec. 2006 assets of the business are Rs.3,00,000 and its capital is Rs.1,00,000. Its liabilities on that date will be __________.

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. $4,00,000$

  2. Rs. $2,00,000$

  3. Rs. $1,00,000$

  4. none of the above

Show answer
Correct Option: B

Net worth of the business means _________________.

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

  1. Total assets minus depreciation

  2. Including expensene and debts.

  3. Total assets minus total outside liabilities

  4. Fixed assets minus current assets

Show answer
Correct Option: C

Suppose P start a business with $Rs. 50,000$ cash and then buys furniture from F.F. Co. on credit for $Rs. 2,000$. Now, the accounting equation
$Assets = Capital + Liabilities$ will be __________________.

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

  1. $52,000 = 50,000 + 2,000$

  2. $50,000 = 50,000 + 0$

  3. $50,000 = 48,000 + 2,000$

  4. $48,000 = 50,000 - 2,000$

Show answer
Correct Option: A

Which of the following equations is correct?

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

  1. Gross Profit $+$ Sales $+$ Direct expenses $+$ Purchases $+$ Closing stock $=$ Opening stock

  2. Gross Profit $+$ Sales $+$Direct expenses $+$ Purchases $=$ Opening Stock

  3. Gross Profit $+$ Opening Stock $+$ Direct expenses $+$ Purchases $-$ Closing stock $=$ Sales

  4. Gross Profit $-$ Opening Stock $+$ Direct expenses $+$ Purchases $+$ Closing stock $=$ Sales

Show answer
Correct Option: C

Both assets and owner's equity (i.e. capital) would be increased by ___________.

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

  1. Proprietor's withdrawals

  2. Sale of good on credit

  3. Purchasing a machinery on credit

  4. Retained earnings

Show answer
Correct Option: D
Explanation:

When Owner is retaining earnings , it will  increase owners equity along with the cash or bank balance. 

Hence, option D is correct.

X started business with a capital of $Rs. 2,00,000$ and purchased goods worth $Rs. 20,000$ on credit. These transactions may be expressed in the form of 'Accounting Equation' such as___________. 

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

  1. $Rs. 2,20,000 = Rs. 2,00,000 + Rs. 20,000$

  2. $Rs. 2,20,000 = Rs. 2,00,000 - Rs. 20,000$

  3. $Rs. 20,000 = Rs. 2,00,000 - Rs. 2,00,000$

  4. $Rs. 2,20,000 = 0 + Rs. 2,20,000$

Show answer
Correct Option: A

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. Materiality concept

Show answer
Correct Option: B
Explanation:

Dual aspect is the foundation or basic principle of accounting. This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places.

The duality principle is commonly expressed in terms of fundamental Accounting Equation, which is as follows :

Assets = Liabilities + Capital

In other words, the equation states that the assets of a business are always equal to the claims of owners and the outsiders. The claims also called equity of owners is termed as Capital(owners’ equity) and that of outsiders, as Liabilities(creditors equity).

A business entity has assets of $Rs. 2,60,000$ and liabilities of $Rs. 60,000$. Owner's equity in this case is__________. 

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

  1. $Rs. 3,20,000$

  2. $Rs. 2,60,000$

  3. $Rs. 2,00,000$

  4. $Rs. 60,000$

Show answer
Correct Option: C

If outside liabilities and owners equity are added we get ______________.

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

  1. Total Liabilities

  2. Net worth

  3. Shareholders Fund

  4. Gross Block

Show answer
Correct Option: A