Tag: meaning, importance and specimen of journal

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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

Business is treated as a separate entity accounts for __________.

  1. role trader

  2. partnership

  3. company

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

Separate entity concept defines that the owner and business are having a separate legal entity in the eye of law. Any amount contributed by the owner is considered as liability to the business. 

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

The business form(s) in which the owners is (are) personally liable is (are) _________.

  1. Partnership only

  2. Proprietorship only

  3. Corporation only

  4. Partnership and Proprietorship
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a sole proprietorship and a partnership, the owners have unlimited personal liability for the debts of the business. In contrast, a corporation is a separate legal entity where shareholders generally have limited liability.

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

Co-operative society __________.

  1. has a separate legal identity

  2. has no separate legal identity

  3. owners have the ultimate authority

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

A co-operative society is registered under the Co-operative Societies Act, which grants it a separate legal identity distinct from its members. This allows it to own property and enter into contracts in its own name.

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 vacant position that arises because of the resignation of the director can only be filed in __________.

  1. Annual general meeting

  2. Board meeting

  3. Board meeting but expired at the general meeting

  4. Both a & b
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When a director resigns, the board of directors can fill the vacancy in a board meeting, but this appointment is temporary and must be approved or regularized by the shareholders at the next general meeting.

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

Sole traders differ from other types of trading organizations. Which of the following statements correctly summarizes the key characteristics of a sole trader's business?

  1. Liability is limited to the providers of loan finance and only the trader takes an active part in managing the business.

  2. The trader has unlimited liability and runs the business in conjunction with the providers of loan finance.

  3. The trader has unlimited liability and must have the business accounts audited.

  4. The trader has unlimited liability, takes sole responsibility for management of the busines.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A sole trader is an individual who owns and manages the business alone. Because there is no legal distinction between the owner and the business, the owner bears unlimited liability for all business debts and is responsible for all management decisions.

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 TRUE about the sole trader form of business?

  1. A sole trader is liable to pay income tax on his/her earnings

  2. Sole traders must have to prepare books of accounts by law

  3. Sole traders must register the name of their business with the Registrar of Companies

  4. All of the given options
Reveal answer Fill a bubble to check yourself
D Correct answer
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 one of the following is NOT a feature of sole proprietorship business?

  1. Easy Formation

  2. Easy Dissolution

  3. Unlimited Liability

  4. Separate Legal Entity
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Separate entity concept defines that the owner/proprietor and business are treated two separate legal entity in the eyes of law. Hence any contribution made by owner as part of capital is treated as liability in the business. 


In case of proprietorship, owner and business both are same as the proprietor is only the sole owner of the business. Hence separate legal entity concept does not applies in the proprietorship business. 

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

Accounting transactions are recorded in terms of ________.

  1. money

  2. purpose

  3. characteristics

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


In accounting we can communicate only those business transactions and other events which can be expressed in monetary units. This is called monetary unit assumption.  Therefore, only money or money's worth transactions are recorded in the books of account. 


Non monetary events like death, dispute etc. may have a great influence on the organization but these factors will not form the part of accounts as they can be calculated on monetary basis.

We may simply say " wherever there is money, there is an accounting, no money, no accounting". 

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

Atul purchased a car for Rs. $5,00,000$, by making a down payment of Rs. $1,00,000$ and signing a Rs. $4,00,000$ bill payable due in $60$ days. As a result of this transaction ____________________.

  1. total assets increased by Rs. $5,00,000$

  2. total liabilities increased by Rs. <span class="MathJax_Preview"><span class="MathJax"><span class="math"><span class="mrow"><span class="mn">4<span class="mo">,<span class="mn">00<span class="mo">,<span class="mn">000<span class="MJX_Assistive_MathML">4,00,000

  3. total assets increased by Rs. 3<span class="MathJax"><span class="math"><span class="mrow"><span class="mo">,<span class="mn">00<span class="mo">,<span class="mn">000<span class="MJX_Assistive_MathML">4,00,000

  4. total assets increased by Rs. <span class="MathJax_Preview"><span class="MathJax"><span class="math"><span class="mrow"><span class="mn">4<span class="mo">,<span class="mn">00<span class="mo">,<span class="mn">000<span class="MJX_Assistive_MathML">4,00,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

On purchase of a Car, total assets of balance sheet will be increased by $Rs. 5,00,000$ and on making of down payment of $Rs.1,00,000$ total assets will decrease by $Rs. 1,00,000$. The result will be that total assets of Balance sheet will increase by $Rs.4,00,000$.
On other hand a liability of $Rs.4,00,000$ has been made so the liability side of Balance Sheet will be increased by $Rs.4,00,000$.

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

Revenue from sales of products is generally accounted in the period in which __________.

  1. cash is collected

  2. sales in made

  3. products are manufactured

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


Business transactions are recorded when they occur and not when the related payments are received or made. This concept is called accrual basis of accounting and it is fundamental to the usefulness of financial accounting information.


Thus sale of products is recorded when sales is made and not when cash is collected or when products are manufactured.