Tag: double entry system

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Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

In single entry system it is not possible to prepare _____.

  1. Balance sheet

  2. Receipts and payments account

  3. Trial balance

  4. Account sales
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under single entry system Books of accounts are not maintained hence, Trial Balance is not Possible to Prepare.

Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

A statement of ____________ is to be prepared in order to find out the profit and loss under a single entry system.

  1. Income

  2. Affairs

  3. Revenue

  4. Profit and loss
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Profit or loss earned by the business under single entry system is based on the difference between its Opening and closing capital.
To ascertain this capital Statement of affairs are prepared.

Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

__________system is usually adopted by traders who have less knowledge of Accounting.

  1. Double entry system

  2. Single entry system

  3. Dual aspect system

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

Single Entry System of Accounting, also known as Accounting from Incomplete Records, is a non-standard and non-scientific system of accounting. This system is adopted by small businessmen as they do not have enough capital and expertise to employ the standard double entry system of accounting in their business.

Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

In _____ forms of business the owners are directly responsible for the debts of the business.

  1. Sole proprietor

  2. Corporate body

  3. Both

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

Sole proprietorship is type of enterprise that is owned and run by one natural person and in which there is no legal distinction between the owner and business entity. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debt, loans, loss, etc.

Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

Income -tax of the sole trader paid is shown ___________.

  1. Debited to profit and Loss A/c

  2. Debited to Trading A/c

  3. Debited to his Capital A/c

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

For a Sole Proprietor, income tax is not an expense incurred to generate revenue hence it is not treated as an expense to be paid out of profits. In this case, income tax is treated as a personal expense resulting in drawings from the business concluding to a reduction of capital.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Lenders can study the creditworthiness of the business firm with the help of books of accounts.

  1. True

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

Lenders rely on financial statements and books of accounts to assess the financial health, liquidity, and solvency of a business before extending credit.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Book-keeping enables investors to take a decision whether to invest or not.

  1. True

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

Bookkeeping allows investors to have up-to-date and accessible information. Investors will be able to make better, well informed, decisions which is the ultimate purpose of bookkeeping. Bookkeeping is not only for current investors but for future investors too.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Various departments of government will be able to find out the taxes due from various sources with the help of books of accounts.

  1. True

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

The above statement is true.

Government can access books of accounts of business from various source of the to find out the taxes due.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Book-keeping does not help the owners to find out profit, losses, assets and liabilities.

  1. True

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

Book-keeping is the systematic recording of financial transactions, which is the foundational step for preparing financial statements that reveal profits, losses, assets, and liabilities.

Multiple choice book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

For which of the following adjustments would a reversing entry facilitate book-keeping procedures?

  1. Adjustment for depreciation expense

  2. Adjustment to allocate prepaid insurance to the current period

  3. Adjustment made as a result of inventory of supplies

  4. Adjustment for drawings in goods
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Reversing entries are typically used for accruals and prepayments that were adjusted at the end of the period. Allocating prepaid insurance to the current period is a classic example of an adjustment that benefits from a reversing entry at the start of the next period.