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 recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

A General Cash book acts as a __________.

  1. Journal

  2. Ledger

  3. Both

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

A cashbook is a book of prime entry in which cash and bank transactions of business are recorded. It acts as a book of original entry and a ledger. Hence, it is both Journal and Ledger.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

A discount of Rs. 2000 was given to a supplier on his prompt repayment of debt but the cashier did not enter in the cash book. What should be the adjustment in cash to work out the correct balance of cash book? 

  1. Rs.2000 will be debited in cash book

  2. Rs.2000 will be credited in cash book

  3. Rs.4000 will be debited in cash book

  4. Rs.4000 will be credited in the cash book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In a three-column cash book, discount received from a supplier is recorded in the discount column on the credit side. Since the cashier omitted this entry, the correct adjustment is to credit the discount amount of Rs. 2000 in the cash book. This ensures that the discount received is properly accounted for alongside the payment.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Goods returned by customer should be debited to which of the following accounts?

  1. Sales income account

  2. Sales account

  3. Return inward account

  4. Expenses account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When customers return goods, it is recorded as a sales return, which is also known as return inward. Since sales have a credit balance, the return of those sales must be debited to reduce the net sales revenue. Therefore, the Return Inward Account is debited.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

A company was entered in hire purchase agreement and had to pay Rs.1000 per month. Three payment we accounted but no entry was found in cash book. Identify the correct adjustment in cash book. 

  1. Rs. 1000 will be added to cash book balance

  2. Rs. 2000 will be deducted from cash book balance

  3. Rs. 3000 will be added to cash book balance

  4. Rs. 3000 will be subtracted from cash book balance
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Bank charges amounting to Rs. $5000$ was not entered in the cash book. Identify the correct adjustment in accounts_____________.

  1. bank charges will be debited in cash book

  2. bank charges will be added to cash book balance

  3. bank charges will be credited in cash book

  4. bank charges need no adjustment in cash book
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Bank charges are expenses levied by the bank, which reduce the business's bank balance. In the cash book, all payments and reductions in the bank balance are recorded on the credit side. Therefore, to correct the omission, the bank charges must be credited in the cash book.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Favourable balance of cash book implies the ___________.

  1. credit balance of cash book

  2. debit balance of cash book

  3. bank overdraft

  4. adjusted balance of cash book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A cash book records cash receipts on the debit side and cash payments on the credit side. A favorable balance means the business has positive cash or bank reserves, which is represented by a debit balance. Conversely, an unfavorable balance represents a credit balance (overdraft).

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

In case of three columnar cash book, contra entry is used for ____________.

  1. Bank account only

  2. Cash and discount account

  3. Cash account only

  4. Cash and bank account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In case of Contra Entry of cash book when a transaction involves both cash and bank accounts, it is entered on both sides of the cash book, one in the cash column and other in the bank column, though on opposite sides.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

A record of transaction between the bank and the holder of ____________ is bank statement.

  1. A foreign currency account

  2. A current account

  3. A saving account

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A bank statement is a document (also known as an account statement) that is typically sent by the bank to the account holder every month, summarizing all the transactions of an account during the month.

It includes current account holder, saving account holder and foreign currency account holder.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

If a piece of furniture's list price is f $28,000$ and it is sold at 10%trade discount and 2%cash discount. The cash safe price of furniture would be ________________.

  1. Rs. $25,200$

  2. Rs. $24,640$

  3. Rs. $24,696$

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

Trade discount on furniture = 28000*10/100

                                               = 2800
Sale price of furniture would be Rs 25200 (28000-2800)
Cash Sale price after allowing cash discount 2% is Rs 24696.
Cash discount = 25200*2/100
                         = 504
   25200 - 504 = 24696 

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Which of the following is a double column cash book?

  1. One column for cash and another for bank

  2. One column for cash and another for discount

  3. One for bank and another for discount

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A double-column cash book is a cash book that contains two money columns on both the debit and credit sides. These columns can be configured as cash and bank, cash and discount, or bank and discount depending on the needs of the business. Thus, all the options represent valid forms of a double-column cash book.