Tag: basic accounting terms

Questions Related to basic accounting terms

An economic event that involves transfer of money or money's worth is a/are _______________.

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. financial transactions

  2. barter system

  3. settlements

  4. receipts/payments

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Correct Option: A
Explanation:

Any event which involves transfer of money or money's worth is known as financial transaction. It is an agreement, or communication, carried out between a buyer and a seller to exchange an asset for payment. It is still a transaction if the goods are exchanged at one time, and the money at other.

On March 31 after sale of goods worth Rs 10,000, there is closing stock of Rs 20,000. This is _____________.

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. An event

  2. A transaction

  3. A transaction as well as an event.

  4. Neither a transaction nor an event.

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Correct Option: A
Explanation:

Unsold items i.e Closing stock is captured in the financial statements as 'Current Assets'.

An event can be internal or external. This is an internal event.
There is no exchange of goods or services or money. Hence, it cannot be termed as a 'transaction'.

Ram paid rent of Rs 10,000. This can be classified as _____________.

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. An event

  2. A transaction

  3. A transaction as well as an event.

  4. Neither a transaction nor an event.

Show answer
Correct Option: B
Explanation:

'Transaction' involves money or money's worth, and hence, has a financial impact in the books of accounts.

Event may or may not have a financial impact in the books of accounts.
Example: Change of Operations Manager of the company.
In the given example amount paid as rent involves a financial element as amount is paid by one person to another. 
Therefore, it is a transaction and not an event.

Closing Stocks with X and Y are 26400 & 60000 respectively. In the books of Y, what will be the treatment of closing stock in joint venture?

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. Stock of 60000 will be shown as closing credit balance in Y's Account as 'To Balance c/d'.

  2. Stock of 26400 will be shown as closing debit balance in Y's Account as 'By Balance c\d'.

  3. Closing stock of 60000 will not appear in Y's Account.

  4. None of these.

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Correct Option: A

Discount charges of Rs 1000 on discounting a B/R by one of the co-venture, maintaining all joint ventures transactions in his books of account will be __________.

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. debited to Joint Venture Account.

  2. debited to Profit & Loss Account.

  3. debited to Other Co-venturer's Account

  4. None of the above.

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Correct Option: A

If adjusting entries are not passed __________________.

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. Trial Balance will be not be tallied

  2. Balance Sheet will not be tallied

  3. Both trial balance & Balance Sheet will be tallied

  4. None of these

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Correct Option: C
Explanation:

Adjusting entries are the entries which are passed at the year end. The balance sheet as well as the trial balance will tally but the financial statements will not show a correct picture of the financial position of the company.

"Debit the receiver and credit the giver" is the golden rule for which type of account?

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. Real A/c

  2. Personal A/c

  3. Nominal A/c

  4. None of these

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Correct Option: B
Explanation:

"Debit the receiver, and credit the giver" is a golden rule for Personal A/c. Personal accounts are the accounts for individual, firms, companies etc. By debit the receiver means the person who is receiving goods on credit will be debited and the person who is giving will be credited.  

General reserve account and dividend equalization fund account are ______________.

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. Personal A/C

  2. Real A/C

  3. Nominal A/C

  4. None

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Correct Option: C

What rate of commission is charged by the bank issuing the credit card?

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. 1% to 3%

  2. 3% to 6%

  3. 2% to 5%

  4. 1% to 4%

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Correct Option: D
Explanation:

The bank issuing the credit card charges a commission from anywhere between 1% to 4% for each such transaction. The commission charged is immediately debited to the seller's bank account.

When the form and flow of operations of an entity are so devised that automatic checks are carried out as the transaction occurs, it is called _________________.

commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

  1. Test check

  2. Internal check

  3. Internal control

  4. Internal audit

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Correct Option: B