Tag: accounting equation

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Questions Related to accounting equation

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

Adjustments helps to provide true and fair view of the ____________ of the business.

  1. State of affairs

  2. Position of cash

  3. Capital composition

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

The Companies Act requires that every balance sheet of a company should give a true and fair view of the state of affairs of the company as at the end of the financial year and every profit and loss of a company should give a true and fair view of the profit or loss of the company for the financial year.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

Sometimes opening and closing stock are  _________ through purchase account.

  1. Appreciated

  2. Depreciatrion

  3. Adjusted

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

Adjusted purchases means opening stock plus purchases less closing stock. 

When one effect is included in trial balance by way of inclusion in adjusted purchases the other should also form part of trial balance.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

__________ = income received + o/s income - income received in advance.

  1. Total expense

  2. Total income

  3. Asset

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

It is also known as Unearned Income and is received before the related benefits are provided. This revenue is not related to the current accounting period, for example, Rent received in advance, Commission received in advance, etc. It is a personal account and shown on the liability side of a balance sheet.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

An entry reduces amount in purchase account and is also known as ________.

  1. Adjusted closing stock

  2. Adjusted purchases

  3. Adjusted sales

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

Adjusted purchases means opening stock plus purchases less closing stock. Closing stock has two effects. When one effect is included in trial balance by way of inclusion in adjusted purchases the other should also form part of trial balance.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

Outstanding expense is ____________ for business.

  1. Liability

  2. Asset

  3. Expense

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

 Outstanding expenses are recorded in books of finance at the end of an accounting period to show the true numbers of a business. The outstanding expense is a personal account and is treated as a liability for the business. It is also shown on the liability side of a balance sheet.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

In case of adjusted purchases closing stock will appear in _________.

  1. Trial balance

  2. Trading account

  3. Profit and loss account

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

Adjusted purchases means opening stock plus purchases less closing stock. Closing stock has two effects. When one effect is included in trial balance by way of inclusion in adjusted purchases the other should also form part of trial balance.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

Outstanding expense are _________ to expense.

  1. Added

  2. Deducted

  3. No effect

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

An outstanding expense is a liability and shown in Balance Sheet as a liability. An outstanding expense is added to the respective expense in profit and loss account.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

Expense incurred but not paid is called ____________.

  1. Outstanding expense.

  2. Prepaid expense.

  3. Income Received in Advance.

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

Outstanding expenses are those expenses which have been incurred during the current accounting period and are due to be paid, however, the payment is not made. Such an item is to be treated as a payable for the business. Examples – Outstanding salary, outstanding rent, outstanding subscription, outstanding wages, etc.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

Cost of unsold goods represents ___________. 

  1. Goods

  2. Closing stock

  3. Opening stock

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

Closing stock is the unsold Goods that are remains in stores (finished goods,raw materials, work-in-process), in accounting terminology it is called as Asset. Closing stock = Opening stock + Purchases - Cost of goods sold.