Tag: functions, advantages, objects and importance of journal

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Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

Goods returned by X is entered as __________________.

  1. Debit X A/c; Credit purchase return A/c

  2. Debit X A/c; Credit cash A/c

  3. Debit sales return A/c; Credit X A/c

  4. Debit X A/c; Credit sales A/c

  5. Debit sales A/c; Credit Xs A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When goods previously sold are returned by a customer (X), the transaction is recorded in the Sales Return book, debiting Sales Return A/c and crediting the customer's account (X A/c).

Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

The following comments below relate to the recording of journal entries. Which statement is true?

  1. For any given journal entry, debits must exceed credits.

  2. It is customary to record credits on the felt and debits on the right

  3. The chart of accounts reveals the amount to debit and credit to the affected accounts

  4. Journalization is the process of converting transactions and events into debit/credit format.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Journalization is indeed the process of converting transactions into debit/credit format for recording. Option A is wrong because debits must equal credits, not exceed them. Option B is incorrect because debits are recorded on the left, not 'felt' (likely a typo for 'left'). Option C is wrong because the chart of accounts only lists account names and numbers, not debit/credit amounts.

Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

For every entry in journal the transaction can be ___________.

  1. personal

  2. real

  3. nominal

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

Journal entries can involve personal accounts (individuals/entities), real accounts (assets), and nominal accounts (expenses/incomes/gains/losses).

Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

The following comments ail relate to the recording process. Which of these statements is correct?

  1. The general ledger is a chronological record of transactions.

  2. The general ledger is posted from transactions recorded In the general journal.

  3. The trial balance provides the primary source document for recording transactions into the general journal.

  4. Transposition is the transfer of information from the general journal to the general ledger.
Reveal answer Fill a bubble to check yourself
D Correct answer
Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

Journal and ledger records transactions in _________________.

  1. A chronological order and analytical order respectively.

  2. An analytical order and chronological order respectively.

  3. A chronological order only

  4. An analytical order only
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The journal records transactions chronologically as they occur, while the ledger organizes them analytically by account type.

Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

X Ltd., purchased goods for Rs.5,00,000 and sold 9/$10^{th}$ of the value of goods for Rs. 6,00,000. Net expenses during the year were Rs. 25,000. The company reported its net profit as Rs. 75,000. Which of the following concept is violated by the company?

  1. Realization

  2. Conservation

  3. Matching

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

The matching principle requires that expenses incurred to earn revenue must be recognized in the same period as the revenue. By only accounting for 9/10 of the costs against the revenue from 9/10 of the goods, the company failed to match the full cost of goods sold.

Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

A businessman purchased goods for Rs.25,00,000 and sold 80% of such goods during the accounting year ended $31^{st}$ March, 2019. the market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept of _________________.

  1. Periodicity

  2. Conservatism

  3. Money measurement

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

The principle of conservatism (prudence) dictates that inventory should be valued at the lower of cost or net realizable value. Valuing at cost when market value is lower violates this principle.

Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

A debit note for Rs $20,000$ issued to Mr. Z for goods returned by us is to be accounted for in _______________.

  1. Bills Receivable Book

  2. General Journal

  3. Purchases Return Book

  4. Purchase Book
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A debit note issued to a supplier for goods returned is recorded in the Purchases Return Book (also known as the Returns Outward Book).

Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

Mohan purchased a machinery amounting Rs.10,000 on 1.4.2010.
On 31.3.2019, similar machinery could be purchased for Rs.20,000 but the realizable value of the machinery (purchased on 1.4.2010) was estimated at Rs.15,000. The present discounted value of the future net cash inflows that the machinery was expected to generate in the normal course of business, was calculated as Rs 12,000.
The present value of machinery is ______________.

  1. Rs 10,000

  2. Rs 20,000

  3. Rs 15,000

  4. Rs 12,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to the historical cost concept, fixed assets are recorded at their original cost, and the present value is not adjusted for market fluctuations unless there is an impairment or specific accounting standard requirement.