Tag: introduction to final accounts

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Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

All expenses account show ________ balance.

  1. Debit

  2. Credit

  3. Zero

  4. Negative
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Expense account are classified as nominal account. As per the rule of nominal account, all expenses and losses are to be debited. 

Hence all expense account show the debit balance. 

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

All personal accounts show ________ balance.

  1. debit

  2. credit

  3. both

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

Personal Accounts refer to the account of any person which includes artificial person also. Like account of Mr. Shyam, account of ABC & Associates, account of XYZ Pvt Ltd. 


All such personal account are having various business transactions of debit and credit. Hence, all personal account can either show debit or credit balance depend on the transactions. These are also known as sundry debtors and sundry creditors. 

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Trading & Profit and loss account is also known as __________.

  1. Income Statement

  2. Revenue Account

  3. Fixed Statement

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

The term Trading and  Profit & Loss Account is normally used when the business organization are having the business of trading activity. 


The term Income & expenditure is used when the financial statements are prepared for professionals like, Chartered Accountants, Doctors, Advocates etc. 

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Financial Statements are the branch of ____________.

  1. Book keeping

  2. Accountancy

  3. Both

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

Financial accounting is a specialized branch of accounting that keeps track of a company's financial transactions.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Financial statements are usually prepared at the _______ of financial year.

  1. End

  2. Beginning

  3. Middle

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

To know the financial position of the business, financial statements are prepared. Normally the financial statements are prepared at the end of the financial year. 


Financial statements includes the following:

Trading, Profit & Loss A/c - To know the profitability of the business.
Balance Sheet- To know the position of assets and liabilities of the firm.
Fund Flow Analysis- To know the movement of fund during the year. 

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

If receipt imply an obligation to return money will result in ___________.

  1. Capital Receipts

  2. Revenue Receipt

  3. None

  4. Both
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Receipts can further be classified as revenue receipt and capital receipt. 


Revenue receipt are those which received against the supply of goods or services. Like receipt on account of professional services rendered by a Chartered Accountant. 

Capital receipt is an obligation to the business and to be return in due course. For example, loan taken from bank. 

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Name the financial statements prepared by a business ______________.

  1. Trading account

  2. Profit and loss account

  3. Balance sheet

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

Financial statements is a formal record of the financial activities and position of  a business, person or other entity. A business entity uses financial statement to communicate about its financial information with interested parties, includes investors and creditors. The purpose is to reveal the financial position of the enterprise, the result of its recent activities  and an analysis of what has been done with earnings. 

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

State whether the following statements are True or False:
Final Accounts are prepared on the basis of Trial Balance.

  1. True

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

Yes, the given statement is correct. 

A trial balance is a bookkeeping or accounting report that lists the balances in each of an organization's general ledger account (Accounts with zero balances will likely be omitted.) The debit balance amounts are listed in a column with the heading "Debit balances" and the credit balance amounts are listed in another column with the heading "Credit balances." The total of each of these two columns should be identical.
With the help of trial balance final accounts i.e., trading account, profit & loss account and balance sheet is prepared. Items of revenue nature shown in trading and profit & loss account and items of capital nature are shown in balance sheet.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Financial statements are prepared on the basis of _________.

  1. actual events which have already happened

  2. anticipated events

  3. future events

  4. probable events
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. transactions and events of financial information. Transaction is prepared on the basis of actual events which have already happened.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

______ is not available in the Financial Statements of a company.

  1. Total sales

  2. Total profit and loss

  3. Capital

  4. Cost of production
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

"Cost of production" is meant the total sum of money required for the production of a specific quantity of output. However, cost of production is not recorded in the financial statements of a company.