Tag: elements of book keeping and accountancy

Quizzes (38) Questions (832)

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

On 31-3-2015, bank balance as per cash book (Dr.) Rs. 10,000.A comparison of pass book and cash book revealed the following:
         - Cheques deposited for Rs.10,000 out of these cheques bank had credited                       cheques of Rs. 2,500.
         - Bank charges Rs.50 was not entered in cash books.
Balance as per pass book will be _______________.

  1. Rs. 20,050

  2. Rs. 17,550

  3. Rs. (50)

  4. Rs. 2,450
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Starting with a cash book debit balance of Rs. 10,000, we adjust for the differences to find the pass book balance. Out of Rs. 10,000 in cheques deposited, only Rs. 2,500 was credited, meaning Rs. 7,500 is still uncleared and must be subtracted (10,000 - 7,500 = 2,500). Additionally, unrecorded bank charges of Rs. 50 must be subtracted, resulting in a final pass book balance of Rs. 2,450 (2,500 - 50).

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 technique is used to ascertain the correctness of debtors balance in books?

  1. Observation

  2. Enquiry

  3. Computation

  4. Confirmation
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Confirmation is a technique to obtain audit evidences.
External confirmation - obtaining a written confirmation directly from a third party, such as bank or debtor.

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 which of the book cash purchase is recorded?

  1. Cash book

  2. Purchase book

  3. Both (a) and (b)

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

All cash transactions, including cash purchases of goods, must be recorded in the cash book. The purchase book is a specialized subsidiary book used solely to record credit purchases of goods. Therefore, cash purchases are never entered in the purchase 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

Unfavourable balance as per cash book means which of the following?

  1. Cr. balance in cash book

  2. Dr. balance in cash book

  3. Bank overdraft

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

An unfavorable balance in the cash book refers to a situation where the bank column has a credit balance, meaning the business has withdrawn more money than it has deposited. This state of having a negative bank balance is commonly known as a bank 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

On purchase of goods of the list of price Rs 10000 from Ram who allowed 10% trade discount and 5% cash discount for immediate payment _____________________.

  1. Purchase Account to be debited with Rs 10000

  2. Purchase Account to be debited with Rs 8500

  3. Purchase Account to be debited with Rs 8550

  4. Discount Received A/c to be credited with Rs 500

  5. Discount Received A/c to be credited with Rs 450
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

The list price of the goods is Rs. 10,000. Applying the 10% trade discount reduces the purchase value to Rs. 9,000 (10,000 - 1,000), which is the amount debited to the Purchase Account. The 5% cash discount is then calculated on this net amount of Rs. 9,000, which equals Rs. 450 (9,000 * 0.05) and is credited to the Discount Received Account.

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 cash purchase of goods for proprietor's personal use should be credited to __________________.

  1. Purchases Account

  2. Sales Account

  3. Drawings Account

  4. Cash Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When goods are purchased for the proprietor's personal use using business cash, it is treated as drawings. The journal entry to record this transaction is to debit the Drawings Account and credit the Cash Account. Therefore, the Cash Account is credited because cash is leaving the business.

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

Small payments are recorded in a book called _____________.

  1. Cash book

  2. Small payments book

  3. Purchase book

  4. Petty cash book
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A petty cash book is a subsidiary book used to record small, routine, and low-value expenses such as postage, stationery, cartage, and taxi fares. Recording these minor payments in a separate book prevents the main cash book from becoming cluttered and overloaded with small entries.

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

The primary book wherein the money received from head cashier and the amount of expenditure for a particular period of an organization are recorded in chronological order of dates in separate money columns of both sides, is called ______________  cash book.

  1. Analytical Petty cash book

  2. Columnar petty cash book

  3. Imprest petty cash book

  4. Single column cash book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A columnar petty cash book is designed with separate columns on both sides to record receipts from the head cashier and various categories of small expenditures in chronological order. This layout allows for easy classification and analysis of different expense heads at the end of the period.

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 three column cash book, when does contra entry arises?

  1. Withdrawl of cash from bank

  2. Payment to Creditors.

  3. Withdrawl of cash from bank for personal use

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

A contra entry occurs when a transaction affects both cash and bank accounts within the same cash book. Withdrawing cash from the bank for office use involves debiting the cash column and crediting the bank column, making it a contra entry. Withdrawing cash for personal use, however, is treated as drawings and is not a contra entry.