Tag: develop the understanding of recording of transactions in journal

Questions Related to develop the understanding of recording of transactions in journal

One debit account and more than one credit account in a entry is called compound entry.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. True

  2. False

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Correct Option: A
Explanation:

 Compound journal entries are those in which more than two accounts are affected. A compound entry may require that two or more accounts be debited or two or more accounts be credited. Suppose a business borrows money to purchase an asset, such as a building.

The amount brought in by the proprietor in the business should be credited to ____________.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Cash Account

  2. Capital Account

  3. Drawing Account

  4. Bank Account

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Correct Option: B
Explanation:

Business entity or separate entity concepts defines that the owner and the business are to be treated separately. 

If any amount is contributed by the owner should be treated as liability and to be credited in capital account. 
Journal Entry:-
Cash A/c Dr.
To Capital A/c.

Interest on capital is credited to ___________ account.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Expenses

  2. Income

  3. Capital

  4. Asset

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Correct Option: C
Explanation:

Capital is a contribution done by the owner in business. If any interest is payable, this need to be debited to Interest expenses and credited to the capital account.

A sale of goods of vidhya for cash should be debited to ______________.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Vidhya's account

  2. Cash account

  3. Sale of goods account

  4. Purchases account

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Correct Option: B
Explanation:

Sales of goods on cash involves cash and goods account. Both cash and goods are real account. Rule for real account says" debit what comes in". Against sale of goods cash is coming in the system, hence cash account should be debited.

The accounting entries which appear on both the sides of cash book are called journal entries.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. True

  2. False

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Correct Option: B
Explanation:

A contra entry is the entry that involves both the accounts, i/e/ Cash and Bank. When cash is deposited in a bank or withdrawn from the bank for office use, such transactions will be recorded on both sides of the cash book. Thus, it affects both the columns of the cash book, i.e. the cash column as well as the bank column. Thus, an entry recorded on both sides of the cash book is known as contra entry.

Cash discount does not appear in the books of accounts. 

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. True

  2. False

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Correct Option: B
Explanation:

Discounts are two types: 


Trade Discount is a discount which is allowed to the customers to promote the sales. Its allowed on list price and general discount available to all the customers.  Trade discount is not recorded in books of account. 

Cash discount is allowed to the customer to whom the goods sold on credit. Cash discount is allowed to speed up the cash collection. Its allowed to the customer if the payment is done within the specified period. Cash discount is a an indirect expenses and to be debited in profit & loss account.

A closing entry of sales account, which appears on the credit side of trial balance is as under _________________.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Sales A/c Dr.

    To P and L A/c

  2. Sales A/c Dr.

    To Trading A/c

  3. Trading A/c Dr.

    To Sales A/c

  4. P and L A/c Dr.

    To Sales A/c

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Correct Option: B

When the claim on account of loss of stock is partly accepted by the insurance company, the journal entry will be _________________________.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Insurance Claim A/c Dr.

    Profit and loss A/c Dr.

    To Trading A/c

  2. Insurance Claim A/c Dr.

    To Trading A/c

  3. Insurance Claim A/c Dr.

    To Profit and loss A/c

  4. Insurance Claim A/c Dr.

    Trading A/c

    To Profit and loss account

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Correct Option: A

When the claim on account of loss of stock is fully recoverable from the insurance company, the journal entry will be ______________________.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Cash A/c Dr.

    To Insurance Claim

  2. Insurance Claim A/c Dr.

    To Trading A/c

  3. Trading A/c Dr.

    To Insurance Claim A/c

  4. Insurance Claim A/c Dr.

    To P and L A/c

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Correct Option: B

What will be the necessary adjusting closing entry for the following adjustment as on $31^{st}$ March, $2005$. Insurance paid $Rs. 4,000$ (including premium of $Rs. 3,000$ per annum paid upto $30^{th}$ June, $2005$________________________.

elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

  1. Insurance prepaid A/c Dr. $Rs. 750$

    To Insurance A/c $Rs. 750$

  2. Insurance A/c Dr. $Rs. 750$

    Insurance prepaid A/c $Rs. 750$

  3. Insurance A/c Dr. $4000$

    To cash A/c $4000$

  4. Insurance A/c Dr. $3000$

    To cash A/c $3000$

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Correct Option: A