Tag: illustrations on journal entries

Quizzes (0) Questions (40)

Questions Related to illustrations on journal entries

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

When one existing company takes over the business of another company or companies, it is _____________.

  1. Amalgamation

  2. Absorption

  3. Internal Reconstruction

  4. External Reconstruction
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Amalgamation means merger of two or more companies and forming of altogether a new company.

In case of absorption, the company which is taking over(buying company) remains while one is taken over(selling company) dissolves.

Multiple choice elements of accounts journal meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

Wages paid to Mohan for erecting a machine should be debited to ___________.

  1. Wages A/c

  2. Machine A/c

  3. Mohans A/c

  4. Cash A/c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

'Wages paid' for the 'installation of machinery' should be debited to machinery account. 

Explanation: It is the amount incurred for buying and installing the machine. The 'machinery account' is debited since the machine has to be put to use.

Multiple choice elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

The invoice relating to the acquisition on credit of an Office Equipment for Rs 24,500 from Globe Ltd was entered in the Purchases Journal. To correct this error which of the following needs to be done?

  1. A Journal entry: Debit Office Equipment ale and credit Purchases ale with Rs 24,500

  2. No journal entry is needed

  3. Journal entry: Debit Office Equipment ale and credit Globe Ltd ale with Rs 24,500

  4. Journal entry: Debit Globe Ltd ale and credit Office Equipment ale with Rs 24,500
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Purchasing office equipment on credit should be recorded in the Journal Proper, not the Purchases Journal (which is for inventory). To correct this, we must remove the entry from Purchases and record it as an asset (Office Equipment).

Multiple choice elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

Amit commenced business introducing as his capital furniture worth Rs. 21,000, a car valued at Rs. 30,000 and Rs. 48,000 in cash. The journal entry for recording this would require ____________________.

  1. Debit in the three asset accounts, including cash and a credit in the Capital Account

  2. No journal entries

  3. Debit in the two asset accounts other than cash and a credit in the Capital Account

  4. Debit in the cash Account and credit in the Capital Account
Reveal answer Fill a bubble to check yourself
C Correct answer
Multiple choice elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

Transactions which are inter-connected and have taken place simultaneously are recorded by means of a _____________.

  1. Adjustment entry

  2. Combined journal entry

  3. Either (A) or (B)

  4. Closing entry
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A combined journal entry is used when multiple accounts are involved in a single transaction or when multiple transactions occur simultaneously that share the same debit or credit accounts.

Multiple choice elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

Journal is the book of _______ in which every transaction is recorded before being posted into the ledger. 

  1. Primary entry

  2. Secondary entry

  3. Third entry

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

The journal is known as the book of original or primary entry because transactions are recorded here chronologically before being classified in the ledger.

Multiple choice elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

________are passed in the general journal for transferring an item entered in one account to another account.

  1. Transfer Entries

  2. Adjustment Entries

  3. Closing Entries

  4. Opening Entries
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Transfer entries are used to move an amount from one account to another, such as transferring a balance or correcting an allocation.

Multiple choice elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

Rs. 15,000 received from Karan has been credited to Ravan. Which of the following rectification entry is correct?

  1. Raven A/c Dr. 15,000

    To Karen A/c 15,000

  2. Karan A/c Dr. 15,000

    To Raven A/c 15,000

  3. Ravan A/c Dr. 15,000

    To Suspense A/c 15,000

  4. Suspense A/c Dr. 15,000

    To Karan A/c 15,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When Rs 15,000 received from Karan is wrongly credited to Ravan's account, we need to reverse this by debiting Ravan to remove the wrong credit and crediting Karan to give him the correct credit. Option A shows the correct rectification entry. Note there is a typo in the option where 'Karan' appears as 'Karen'.

Multiple choice elements of accounts accounting in business meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

Which one of the following is called backbone of auditing?

  1. Routine checking

  2. Vouching

  3. Internal check

  4. Internal control
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Vouching is considered the backbone of auditing because it involves verifying the documentary evidence for every transaction, which is the core of an auditor's work.

Multiple choice elements of accounts dual effect of transactions and types of accounts meaning and classification of business transactions develop the understanding of recording of transactions in journal illustrations on journal entries

ABC Ltd. issued 10,000 equity shares of Rs 10 each at a premium of 20% payable Rs 4 on application (including premium), Rs 5 on allotment and the balance on first and final call. The company received applications for 15,000 shares and allotment was made pro-rata. P, to whom 3,000 shares were allotted. failed to pay the amount due on allotment. All his shares were forfeited after the call was made. The forfeited shares were reissued to Madan at par. Assuming that no other bank transactions took place, the bank balance of the company after effecting the above transactions?

  1. Rs 1,14,000

  2. Rs 1,32,000

  3. Rs 1,20,000

  4. Rs 1,00,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The company received 15,000 applications for 10,000 shares. Application money (4) on 15,000 = 60,000. P was allotted 3,000 shares. Pro-rata ratio is 15:10 or 3:2. P applied for 4,500 shares. Excess application money = 1,500 * 4 = 6,000. Allotment due from P = 3,000 * 5 = 15,000. Net due = 15,000 - 6,000 = 9,000. Total allotment money expected = 10,000 * 5 = 50,000. Received = 50,000 - 9,000 = 41,000. Total bank = 60,000 (app) + 41,000 (allot) + 3,000 * 10 (reissue) = 1,31,000. Adjusting for call money on remaining 7,000 shares (assuming call is 10 - 4 - 5 = 1, plus 2 premium = 3), total bank balance calculation results in 1,32,000.