Tag: accounting equations and transactions

Quizzes (0) Questions (112)

Questions Related to accounting equations and transactions

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

When outstanding expense is recorded ___________ is credited.

  1. Outstanding Expense account

  2. Prepaid expense

  3. Outstanding income

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

As such, the amount of expenditure outstanding that has not yet been taken into the books is credited to the Expenditure Outstanding a/c. Expenses Outstanding a/c is a personal account with a credit balance. The balance indicates the amount that is owed by the organisation on account of unpaid expenditure.

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

Accounting entries passed in journal proper at the end of the year.

  1. Opening entries

  2. Adjustment entries

  3. Closing entries

  4. Contra entries
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

At the end of the financial year, all nominal accounts are closed by passing the closing entries. Respective expense account will be credited by debiting the trading and profit & loss account and respective income account will be debited by crediting the trading and profit & loss account. 


Example: 

Salary Account Balance Rs.5000

Profit & Loss A/c                          Dr. 5000
        To Salary A/c                                           5000

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

Inventory cost includes_______.

  1. taxes on purchase

  2. freight and insurance

  3. invoice valueless discounts and rebates

  4. all the three
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Inventory cost includes all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition. This includes taxes, freight, insurance, and is net of trade discounts.

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 calculated Opening stock of BNT Ltd.
Purchases  Rs. 1,00,000
Manufacturing expenses = Rs. 45,000
Selling and Distribution expenses =Rs. 25,000
Administrative expenses =Rs. 10,000
Financial expenses =Rs. 5,000
Sales Rs. 2,40,000
Closing Stock  Rs. 25,000
Gross profit on sales  25 %

  1. Rs. 55,000

  2. Rs. 35,000

  3. Rs. 60,000

  4. Rs. 45,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

Which of the following is not a part of inventory?

  1. Finished goods

  2. Raw material,components,consumables and supplies

  3. Spare parts of plants and machinery

  4. Work-in-progress
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Inventory typically includes assets held for sale (finished goods), in the process of production (WIP), or in the form of materials to be consumed (raw materials). Spare parts for machinery are generally classified as Property, Plant, and Equipment (PPE) or supplies, not as inventory for sale.

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

The accounting entries which are passed into the books of account to bring certain items which do not appear in the trial balance, e.g. depreciation, further bad debts, closing stock, incomes receivable, etc. are called adjustment entries.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The definition provided correctly describes adjustment entries, which are necessary to bring the books up to date for items not yet recorded or requiring allocation at the end of the period.

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

Opening entries are passed________.

  1. at the end of the year

  2. at the beginning of the year

  3. for rectification of errors

  4. for suppressing profit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

At the end of the financial year, all the books of account are closed by passing the closing entries. In such case, all the nominal accounts are transferred to the trading and profit & loss account. All nominal account balances become zero. 


Assets and labilities account are carried over to next year. These are trasferred to the next year books of account by passing an opening entries at the beginning of the year. 

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

Accounting entries passed in journal proper in the beginning of the finance year.

  1. Closing entries

  2. Adjustment entries

  3. Opening entries

  4. Contra entries
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

After closure of the books of the previous financial year, all balances are need to be transferred to the next financial year as opening balances. The balances lying in assets and liabilities need to be transferred to current financial year as opening balance. 

This is done by passing the journal entries in the journal proper by passing opening entries.  

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

Gross is profit is equal to ___________.

  1. Net profit minus expenses

  2. Purchases plus stock minus net sales

  3. Net sales plus selling price of stock minus purchases

  4. Net sales minus cost price of sales
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Gross profit is the profit a company makes after deducting the costs associated with making and selling its products (COGS) from its revenue (Net Sales).