Tag: income-expenditure account

Questions Related to income-expenditure account

"Debit the receiver and credit the giver" is the golden rule for which type of account?

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  1. Real A/c

  2. Personal A/c

  3. Nominal A/c

  4. None of these

Show answer
Correct Option: B
Explanation:

"Debit the receiver, and credit the giver" is a golden rule for Personal A/c. Personal accounts are the accounts for individual, firms, companies etc. By debit the receiver means the person who is receiving goods on credit will be debited and the person who is giving will be credited.  

General reserve account and dividend equalization fund account are ______________.

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  1. Personal A/C

  2. Real A/C

  3. Nominal A/C

  4. None

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Correct Option: C

What rate of commission is charged by the bank issuing the credit card?

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  1. 1% to 3%

  2. 3% to 6%

  3. 2% to 5%

  4. 1% to 4%

Show answer
Correct Option: D
Explanation:

The bank issuing the credit card charges a commission from anywhere between 1% to 4% for each such transaction. The commission charged is immediately debited to the seller's bank account.

When the form and flow of operations of an entity are so devised that automatic checks are carried out as the transaction occurs, it is called _________________.

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  1. Test check

  2. Internal check

  3. Internal control

  4. Internal audit

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Correct Option: B

Vouching may be formed as ____________________.

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  1. Identification of the documentary evidence supporting the transaction

  2. Verification of the document supporting the transaction

  3. Authentication of document supporting the transaction

  4. Verification of the accuracy and authenticity of the transaction

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Correct Option: B

Which is an unearned income?

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

  1. Insurance premium received in advance

  2. Rent received in advance

  3. Depreciation

  4. Both A & B

Show answer
Correct Option: D
Explanation:

Unearned Income is that income which is received in advance. That mean income received against which services are not provided so far.

Insurance premium received in advance and Rent received in advance are the cases of unearned income. Accounting entry will be passed as under:

Income A/c                             Dr.
       To Unearned Income

Unearned Income is a liability and to be shown in the balance sheet. 

The bank statement reports a credit transfer of Rs.$4000$ from a customer. Accounting entries for this is _____________________.

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  1. A debit in the cash account and a credit the account of the debtor concerned

  2. A debit in the bank account and a credit in the cash account

  3. A debit in the bank account and a credit in the account of the customer concerned

  4. A debit in the account of the debtor concerned and a credit in the bank account

Show answer
Correct Option: C
Explanation:

As per double entry system of accounting, every transaction affects two account. In the given transaction, Bank and customer account are affected. Bank account is a real account and customer account is a personal account. 

Following the rule of real account and personal account, below entry will be passed:

Bank A/c                                     Dr.                   4000
         To Customer A/c                                                        4000
        

The characteristic that is always present with joint venture is _____________.

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  1. it has an end life

  2. there is no specific act for joint venture

  3. profit is ascertained only after the end of the specific venture

  4. All of the above

Show answer
Correct Option: D
Explanation:

A joint venture is a business entity created by two or more parties generally to share the ownership to complete a specific task or venture. 

Joint venture is having a specific end life i.e. when the task is completed, the joint venture comes to an end. 
There is no specific act for joint venture as it is a kind of temporary partnership to conclude a specific task. Hence all applicable laws have to be followed.
Profit of joint venture is calculated only when the specific joint venture is completed. 

India suffered from deficit balance both in trade and balance and not invisibles, hence took up a number of Steps to manage the problem. Which one is not appropriate for this?

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  1. Export control

  2. Current Account Convertibility

  3. Liberalised Export Policy

  4. Unified Exchange Rate

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Correct Option: A
Explanation:

 Export control regulations are federal laws that prohibit the unlicensed export of certain commodities or information for reasons of national security or protections of trade.

Current assets are those assets which get converted into cash ___________ .

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  1. within six months

  2. within one year

  3. between one and three years

  4. between three and five years

Show answer
Correct Option: B
Explanation:

Current assets are assets that can be converted into cash within one fiscal year or one operating cycle. Current assets are used to facilitate day-to-day operational expenses and investments. As a result, short-term assets are liquid meaning they can be readily converted into cash.

Hence, current assets which get converted into cash within one year.