Tag: meaning and features of balance sheet

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Multiple choice 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

A business transaction in which money comes into the business immediately after the goods are delivered or services are rendered is called ____________.

  1. cash transaction

  2. credit transaction

  3. black money transaction

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

A cash transactions is a transaction where there is an immediate payment of cash for the purchases of an asset. It differs from other type of transactions that involves delayed delivery of purchased item, or delayed payment for the item.

Multiple choice 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

A post dated cheque bears ______ date.

  1. Past

  2. No

  3. Future

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

A post-dated check (or post-dated cheque) is a check written with a future date. In other words, the date that appears on the check is after the date when the check was written. Even with a future date appearing on the check, the check could clear (be paid from) the bank account prior to that date.

Multiple choice 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

Ram purchased goods of Rs. $10,000$. This can be classified as _________.

  1. an event

  2. a transaction

  3. a transaction as well as an event

  4. neither a transaction nor an event
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Any exchange of value for value ( for money or money's worth) is called a transaction. Something having value is received, and something having value goes out.  Selling or purchasing of goods or taking or granting any loan are examples of transactions. 

Ram purchased goods of Rs.10000 is a transaction. 

Multiple choice 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

On March 31, there is closing stock of Rs. $10,000$. This can be classified ________________.

  1. An event

  2. A transaction

  3. A transaction as well as an event

  4. Neither a transaction nor an event
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Unsold items i.e Closing stock is captured in the financial statements as 'Current Asset'. An event can be internal or external. This is an internal event. 

Multiple choice 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

State with reasons whether the following statement is true or false:
Transactions and events are guided by generally accepted accounting principles subject to law of land.

  1. True

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

Accounting is based on the certain concepts and conventions which are commonly known as Generally Accepted Accounting principles". 

Each transaction is based on some or other accounting concept. For example:
1) Furniture costing Rs.1000 is purchased- based on cost concept
2) Director is not having good health- based on money measurement concept which signifies that only those transactions are recorded which are having monetary value.  
3) Provision  for bad debts- based on conservatism convention which signifies that business records all anticipated losses. 

Multiple choice 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

Which of the following statement is false?

  1. Void agreements are punishable

  2. Illegal agreements are punishable

  3. Illegal agreements are forbidden under the law

  4. Collateral transactions of a void agreement are not void
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A void agreement is not punishable under law whereas an illegal agreement is considered as an offence, hence the parties to it are punishable and penalised under Indian Penal Code (IPC)


An illegal agreement is one which is forbidden by law ; but a void agreement may not be forbidden , the law may merely say that if it is made , the courts will not enforce it . Thus every illegal contract is void but a void contract is not necessarily illegal.

Collateral agreements of a void agreement may or may not be void i.e. they may be valid also. Conversely, collateral agreements of an illegal agreement cannot be enforceable by law as they are void ab initio.

Multiple choice 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

Which of the following is a cash transaction?

  1. Sold goods

  2. Sold goods to a customer

  3. Sold goods to a customer on credit

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

This can be summarized as:


Sold Goods- It represent the sale of goods on cash as nothing is mentioned about customer name or sold on credit. Hence this is considered as cash sales. 
Sold Goods to customer- Its a credit sale
Sold goods to customer on credit- Its a credit sales.
Sold goods to customer on account- Its also a credit sales.

Multiple choice 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

Which of the following is a credit transaction?

  1. Sold goods

  2. Sold goods for cash

  3. Sold goods to a customer for cash

  4. Sold goods to a customer
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Sold goods to customer is defined as credit sales. 


Rest three statements are specifically denotes cash sales.

Multiple choice 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

Posting means the recording of a transaction _____________.

  1. In any two accounts.

  2. On the debit side of an account related to that transaction.

  3. On the credit side of an account related to that transaction.

  4. On the proper side of two accounts related to that transaction.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Posting is the transfer of journal entries to a general ledger, which usually contains a separate form for each account. Journals record transactions in chronological order, while ledgers summarize transactions by account. Posting in accounting consists of a few simple steps.

Multiple choice 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

Adjusting entries are essential to the ___________.

  1. matching rule

  2. accrual accounting

  3. proper determination of net income

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

Before financial statements are prepared, additional journal entries, called adjusting entries, are made to ensure that the company's financial records adhere to the revenue recognition and matching principles. Adjusting entries are necessary because a single transaction may affect revenues or expenses in more than one accounting period and also because all transactions have not necessarily been documented during the period. Each adjusting entry usually affects one income statement account (a revenue or expense account) and one balance sheet account (an asset or liability account)