Tag: bases of accounting

Quizzes (4) Questions (115)

Questions Related to bases of accounting

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Adjustment of accrued/outstanding income/expenses is not necessary in ______ system of accounting.

  1. Mercantile

  2. Cash

  3. Double Entry

  4. All the three
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash accounting is an accounting method in which payment receipt are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid. Hence, in this question accounting adjustment is not required for accrual/outstanding expenses/incomes.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

The act by members of a trade union, persuading others not to work is called as _________ .

  1. Non-cooperation

  2. Picketing

  3. Sit-in-strike

  4. Strike
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The act by members of a trade union, persuading others not to work is called as strike. A strike is a type of refusal by the workers to work so that the employers can approve their demands. 

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Cash cannot be misappropriated by ___________. 

  1. omitting to enter cash received

  2. entering less amount than has been actually received

  3. making fictitious entries on the payments side of the cash book

  4. making fictitious entries on the Receipt book side of the cash
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Misappropriation of cash usually involves under-recording receipts or over-recording payments. Making fictitious entries on the receipt side would actually increase the recorded cash balance, which does not facilitate stealing cash.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

State the reasons whether the following statement is true or false:
Accrual concept implies accounting on cash basis.

  1. True

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

The accrual concept requires that transactions be recorded when they occur, regardless of when cash is received or paid. The cash basis of accounting, conversely, only records transactions when cash changes hands.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

From the following details calculate net profit on accrual basis.

Particulars Rs.
Goods sold for cash $5,00,000$
Credit sales $25,000$
Cash purchases $4,00,000$
Credit purchases $50,000$
Wages paid $20,000$
Outstanding expenses $10,000$
Rent paid $5,000$
Rent outstanding $2,000$
Depreciation on building $10,000$
Loss on sales of fixed assets $1,000$

  1. Rs. $75,000$

  2. Rs. $27,000$

  3. Rs. $32,000$

  4. Rs. $40,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

                                                      Net Profit for the year Ended..

          Amount |          Particular |          Amount | | --- | --- | --- | --- | | To Purchase a/c Cash -400000 Credit-50000 | 450000 | By Sales a/c Cash-500000 Credit-25000 | 525000 | | To Wages Paid A/c | 20000 |   |   | | To O/s Expenses A/c | 10000 |   |   | | To Rent Paid A/c            5000

  • O/s 2000 | 7000 |   |   | | To Depreciation on building A/c | 10000 |   |   | | To loss on sale of fixed assets A/c | 1000 |   |   | | To Net profit transferred A/c | 27000 |   |   | |   | 525000 |   | 525000 |

 

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

In accrual basis or mercantile basis of accounting, the financial effect of the transaction is recorded in the books ___________.

  1. as and when they occur

  2. on the basis of actual receipt and payment of cash

  3. on confirmation of orders but before the delivery of goods take place

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

Under the accrual basis, revenue and expenses are recognized in the period they are earned or incurred, regardless of the timing of cash receipts or payments.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

In cash system of accounting, entries are recorded ____________.

  1. when income is earned by a business or expenditure is incurred by it

  2. on the basis of actual receipt of cash or actual payment of cash

  3. when order for goods to be purchased in placed and order for goods to be sold is received

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

The cash system of accounting is strictly based on the actual movement of cash. Transactions are only recorded when money is physically received or paid out.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Which of the following has no relevance whether the receipts pertain to previous period or future period?

  1. Accrual system of accounting

  2. Cash system of accouting

  3. Hybrid system of accounting

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

In the cash system, the timing of the receipt or payment is the only factor that matters for recording, making the period to which the receipt pertains irrelevant.