Tag: meaning, advantages and limitations of journals

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Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Machinery purchased on account is recorded in ___________.

  1. Purchase Book

  2. Cash Book

  3. Journal Book

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

Journal book is meant for recording all such transactions for which no special journal has been maintained in the business. Therefore, in this journal, all such transactions are recorded which do not occur frequently and for these transactions no special journal  is required. 

For example, if Machinery is purchases on credit, it will be recorded in the journal book, because in the cash book only cash purchases of machinery is recorded.
Similarly, many other transactions, which do not find their place in the special journals will be recorded in the General Journal such as:
(i) Outstanding expenses - Salaries outstanding, rent outstanding, etc.

(ii) Prepaid expenses - Prepaid rent, salaries paid in advance, etc.
(iii) Income received in advance - Rent received in advance, interest received in  advance, etc.
(iv) Accrued incomes - Commission yet to be received, interest yet to be received
(v) Interest on capitals.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

_____________ includes identifying, recording, classifying and summarizing the transactions.

  1. Accounting posting

  2. Accounting cycle

  3. Tally of accounts

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accounting cycle is a step-by-step process of recording, classification and summarization of economic transactions of a business. It generates useful information in the form of financial statements including  income statement, balance sheet, cash flow statement and statement of changes in equity.

The time period principle requires that a business should prepare its financial statements on periodic basis. Therefore, cycle is followed once during each accounting period. Accounting cycle starts from the recording of individual transactions and ends on the preparation of financial statements and closing entries.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Trading account is a ______________.

  1. Personal account

  2. Real account

  3. Nominal account

  4. Valuation account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Trading account is nominal account which is prepared at the end of accounting year. It helps to find out gross profit or gross loss during the accounting period. 

Trading account consists of two sides 'debit and credit'. All direct expenses are debited and direct incomes are credited in trading account.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Prepaid salary is _______________.

  1. Real Accounts

  2. Personal Accounts

  3. Nominal Accounts

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

Prepaid expenses are those expenses which have been paid in advance and related benefits are not consumed within the same accounting period. The benefits of expenses incurred are carried to the next accounting period. Examples-prepaid salary, prepaid rent, etc. Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business. 

Prepaid (Unexpired)  salary is a personal account and is shown on the assets side of balance sheet.

Multiple choice book keeping and accountancy accounting procedures - rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Firm's accounts, limited companies accounts, educational institutions accounts, co-operative society account are example of ________________.

  1. Artificial or legal persons personal account

  2. Natural persons personal account

  3. Representative personal accounts

  4. Any of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Artificial or legal persons are entities created by law, such as companies and institutions, which can own property or enter into contracts. They are distinct from natural persons (human beings) and representative accounts.

Multiple choice book keeping and accountancy accounting procedures - rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

The words 'To Balance b/f' or By Balance b/f' are recorded in the Particulars column of an account at the time of posting of ________________.

  1. All compound entries.

  2. An opening entry.

  3. A closing entry.

  4. An adjusting entry.

  5. A transfer entry
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

At the beginning of a new journal page, the opening balance is quoted from the previous page, this balance pulled forward from the previous page to the current page is termed as “Balance B/F” or “Total B/F” (Brought Forward).

Multiple choice book keeping and accountancy accounting procedures - rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

When a cheque received on a particular date is not deposited the same day into bank, it is entered in ________________.

  1. Cash column on the debit side

  2. Bank column on the debit side

  3. Cash column on the credit side

  4. Cash column on the debit side and credit side.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
When a cheque received is not deposited on the same day, it is taken in the cash account and when it is deposited in bank, then a contra entry is passed. 
For example cheque received from Ram on 15th March is deposited on 18th March, following entries will be passed: 15/3 Cash A/c Dr.

Multiple choice book keeping and accountancy accounting procedures - rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Under Indian system, records are maintained in _________ language.

  1. Marathi

  2. Hindi

  3. Marwari

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Indian system of accounting, historically known as the Deshi Nama or Mahajani system, has traditionally used various regional languages including Marathi, Hindi, and Marwari for record-keeping.

Multiple choice book keeping and accountancy accounting procedures - rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Which is the most conventional system of accounting?

  1. Indian system

  2. Mahajani system

  3. Deshi Nama system

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Indian, Mahajani, and Deshi Nama are all names for the same traditional, indigenous system of accounting used in India. Therefore, all these terms refer to the same conventional system.

Multiple choice book keeping and accountancy accounting procedures - rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

An entry which has more than one debit and or credit is called ________.

  1. single

  2. multiple

  3. compound

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

A compound entry is an accounting entry that involves more than one debit or more than one credit. It is used to record multiple transactions or complex events in a single journal entry.