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

The unadjusted and unrecorded items relating to a period are recorded in the journal by passing __________.

  1. transfer entry

  2. adjustment entry

  3. rectification entry

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

The matching principle states expenses must be matched with the revenue generated during the period. The purpose of adjusting entries is to ensure that all revenue and expenses from the period are recorded. Many adjusting entries deal with balances from the balance sheet, typically assets and liabilities, which must be adjusted. In addition to ensuring that all revenue and expenses are recorded, we are also making sure that all asset and liability accounts have the proper balances. Adjusting entries are dated for the last day of the period.

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

From the following details calculate Opening stock.
Purchases  Rs. 1,50,000
Manufacturing expenses =  Rs. 30,000
Selling and distribution expenses = Rs. 20,000
Administrative expenses = Rs. 10,000
Financial expenses = Rs. 5000
Sales Rs. 2,40,000
Closing stock  Rs. 30,000
Gross profit 25 % on sale 

  1. Rs. 65,000

  2. Rs. 30,000

  3. Rs. 85,000

  4. Rs. 95,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Calculation of Opening stock = (Sales + closing stock ) - (Purchase + manufacturing expense + Gross Profit*)

=( 240000 + 30000 ) - ( 150000 + 30000 + 60000)
= Rs 30000

Gross profit = 240000 * 25/100
                     = 60000