Tag: golden rules of debit and credit (traditional approach)

Quizzes (0) Questions (98)

Questions Related to golden rules of debit and credit (traditional approach)

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

An accounting transaction with an individual human being is termed as a ______________.

  1. Artificial or legal person's account

  2. Natural person's personal account

  3. Representative personal account

  4. Any of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accounts recording transactions with a person or group of persons are known as personal accounts. These accounts are necessary, in particular, to record credit transactions. Personal accounts are of three types: Natural, Artificial and Representative personal accounts.

An account recording transactions with an individual is termed as a natural person's personal account. 
For e.g., Kamal's accounts, Mala's account, Sharma's account. 

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Real accounts can be further classified into _____________.

  1. Tangilble

  2. Intangible

  3. (A) or (B)

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

There are mainly three types of accounts: Real, Personal and Nominal accounts. 

Personal accounts are classified into three subcategories: 

Artificial, Natural, and Representative. All assets of a firm, which are tangible or intangible, fall under the category "Real Accounts". 

Tangible real accounts are related to things that can be touched and felt physically.

Intangible real accounts are related to things that can't be touched and felt physically.

The golden rule of real accounts is: Debit what comes in; Credit what goes out.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

An account recording financial transactions with an artificial person created by law or otherwise are termed as _______________.

  1. Artificial or legal persons account

  2. Natural persons personal account

  3. Representative personal accounts

  4. Any of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Artificial or legal persons Account - An account recording financial transactions with an artificial person created by law or otherwise is called as an Artificial personal Account. 

E.g. Co-operative society account.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

State with reasons whether the following statement is true or false:
Rent paid account is a Nominal Account whereas, Rent received account is a Real account.

  1. True

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

Both Rent Paid and Rent Received are nominal accounts because they represent expenses and incomes, respectively. Neither is a real account.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Personal accounts is of the various types namely, __________.

  1. Natural, Real, Representative

  2. Artificial, Legal, Nominal

  3. Natural, Artificial, Representative

  4. Any of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Accounts recording transactions with a person or group of persons are known as personal accounts. These accounts are necessary, in particular, to record credit transactions. Personal accounts are of the following types:


1. Natural persons: An account recording transactions with an individual is termed as a natural persons' personal account. For e.g. Kamal's account, Mala's account. Both males and females are included in it.


2. Artificial or legal persons: An account recording transactions with an artificial person created by law or otherwise is termed as an artificial persons' personal account. For e.g. Firms' accounts, limited companies' accounts.

3. Representative personal accounts: An account indirectly representing a person or persons is known as representative personal account. When accounts are of similar nature and their number is large, it is better to group them under one head and open a representative personal account. For e.g. prepaid insurance, outstanding salaries, etc.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

State with reasons whether the following statement is true or false:
Patent-Right is in the nature of Real A/c.

  1. True

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

Intangible real accounts represents assets and properties which cannot be seen, touched or felt but can be measured in terms of money. 

For e.g. Goodwill account, Trademark account, Patents account. Patent account is an intangible asset and hence, is classified as a real account.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

State with reasons whether the following statement is true or false.
Outstanding expenditure is a nominal account.

  1. True

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

Outstanding expenditure are those expenses which have been incurred and consumed during an accounting period and are due to be paid but are not paid. 

Examples include outstanding salary, outstanding rent, etc. 

Outstanding expenditure are recorded in the books at the end of an accounting period to show true numbers of a business. 
Outstanding expenses is a personal account and is shown in the liability side of a balance sheet.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

All accounts are classified into _______________.

  1. Personal

  2. Real

  3. Nominal accounts

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

Modern approach. According to modern approach, the accounts are classified as asset accounts, liability accounts, capital or owner's equity accounts, withdrawal accounts, revenue/income accounts and expense accounts.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Bad debt recovered is _______________.

  1. Real Account

  2. Personal Account

  3. Nominal Account

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

 Bad debt recovery is a payment received for a debt that was written off and considered uncollectible. The receivable may come in the form of a loan, credit line, or any other accounts receivable. Because it generally generates a loss when it is written off, bad debt recovery usually produces income.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

_________ represents assets and properties which cannot be seen, touched or felt but they can be measured in terms of money.

  1. Tangible real accounts

  2. Intangible real accounts

  3. Representative personal accounts

  4. Artificial or legal persons account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accounts relating to properties or assets are known as "Real accounts". A separate account is maintained for each asset e.g. Cash, Machinery, Building, etc. Real accounts can be further classified into tangible and intangible.


1. Tangible real accounts: These accounts represent assets and properties which can be seen, touched, felt, measured, purchased and sold. For e.g. Machinery account, Cash account, Furniture account.


2. Intangible real account: These accounts represent assets and properties which cannot be seen, touched or felt but they can measured in terms of money. For e.g. Patents account, Goodwill account.

The rule for Real accounts is: Debit what comes in; Credit what goes out.