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 accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

An increase in one liability may lead to _________________.

  1. Increase in another asset

  2. Decrease in liability

  3. Both (A) and (B)

  4. Either (A) or (B)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An increase in one liability can be balanced by a decrease in another liability (e.g., paying off a creditor with a bank loan) or an increase in an asset (e.g., taking a loan to buy equipment).

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

Capital is the difference between.

  1. Income and expenses

  2. Sales and Cost of goods sold

  3. Assets and liabilites

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

Capital represents the owner's claim on the business assets. It is calculated as Total Assets minus Total Outside Liabilities.

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

If assets are increased by 2,000 and liabilities are increased by 1,200. What will be the effect on business equity?

  1. 800

  2. 2,000

  3. 3,200

  4. 1,200.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
The duality principle is commonly expressed in terms of fundamental Accounting Equation, which is as follows:
Assets = Liabilities + Equity ( Capital)
Equity = Assets - Liabilities
            = 2,000 - 1,200 
            = 800.

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

Sriram purchased a furniture for Rs. 6,000, the accounts affected from this transaction will be _________________.

  1. Capital account and cash account

  2. Furniture account and cash account

  3. Furniture account and capital account

  4. Capital account and bank account.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Purchasing furniture for cash involves an increase in the Furniture account (asset) and a decrease in the Cash account (asset).

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

Listed in random order are the balance sheet figures of Mr. Q as at 31st March, 2015.

Trade receivables Rs. $50,000$
Trade payables Rs. $30,000$
Building Rs. $90,000$
Capital Rs. $1,00,000$
Bank loan Rs. $40,000$
Inventories Rs. $10,000$
Cash Rs. $20,000$
Reserves Rs. $50,000$
Intangible assets Rs. $30,000$
Shares Rs. $20,000$
Equipment Rs. $40,000$
Retained earnings        Rs. $40,000$


Determine the owner's equity?

  1. Rs. $2,10,000$

  2. Rs. $1,90,000$

  3. Rs. $1,20,000$

  4. Rs. $1,70,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Owner's equity is the sum of Capital, Reserves, and Retained Earnings. 1,00,000 + 50,000 + 40,000 = 1,90,000.

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

Which of the following accounting equation is correct?

  1. Capital (Rs. $15,000$)$=$Fixed Assets(Rs. $12,000$) $+$ Cash ($4,000$)

  2. Trade Payable (Rs. $3,000$) $+$ Capital (Rs. $17,000$) $+$ Bills Payable (Rs. $4,000$) $=$Fixed Assets (Rs. $20,000$)

  3. Capital (Rs. $15,000$) $=$Cash ($3,000$) $+$ Fixed Assets (Rs. $9,000$)

  4. Trade Payable (Rs. $8,000$) $+$ Capital (Rs. $7,000$) $=$Fixed Assets (Rs. $8,000$)$+$ Cash at bank (Rs. $4,000$)$+$Cash (Rs. $3,000$)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting Equation :- Total Assets = Capital+ Liabilities 

                                    = 15000 = 15000
Option D is Correct

Multiple choice elements of book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

In India __________ has a pre-dominant share in the debt market.

  1. Government Securities

  2. Corporate Deposits

  3. Corporate Equities

  4. Global Depository Receipts
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Debt market refers to the financial market where investors buy and sell debt securities, mostly in the form of bonds. These markets are important source of funds, especially in a developing economy like India. India debt market is one of the largest in Asia. 

It is also the most dominant category in the India debt market. Bond Market: It consists of Financial Institutions bonds, Corporate bonds and debentures and Public Sector Units bonds.

Multiple choice elements of book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

The source document required for recording transactions in Purchase Return Book.

  1. Debit note

  2. Credit note

  3. Cash memo

  4. Credit memo
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When the goods are returned a debit note is prepared and is sent to the supplier with the returned goods. An original copy is sent to the supplier, informing him of the amount for which his account has been debited on account of the returned goods. A duplicate copy of the debit note becomes the source document, on the basis of which entries are recorded in the purchase return book. Thus a debit note is required for recording the transactions in the Purchase return book.

Multiple choice elements of book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

In the purchase book, the record is in respect of _________.

  1. Cash purchase of goods

  2. Credit purchase of goods dealt in

  3. All purchases of goods dealt in

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

The purchase book is exclusively used to record credit purchases of goods that the business deals in for resale.

Multiple choice elements of book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

Mr. N returns the goods of  50,000 purchased on credit to Mr. Z. This transaction will recorded by Mr. N in ______ and by Mr. Z in ______.

  1. Sales Return Book, Purchases Return Book

  2. Purchases Return Book Sales Return Book

  3. Sales Return Book, Sales book

  4. Purchases Return Book, Purchase Book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is identical to question 407389. Mr. N (buyer) records in Purchases Return Book, and Mr. Z (seller) records in Sales Return Book. Option B has a minor spacing issue but is clearly the correct answer.