Introduction to accounting Test

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Introduction to accounting Test - 23

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Question 1
1 / -0

The withdrawal of goods from the business by the proprietor should be recorded in the __________.

A
Drawing Account

B
Purchase Account

C
Capital Account

D
Profit and Loss Account

Solution

An account is set up in the balance sheet to record the transactions taken place of money removed from the company by the owners. This is known as the 'drawing account'. In the drawing account, the amount withdrawn by the owner is recorded as a debit. If goods are withdrawn, the amount recorded is at cost value.
Question 2
1 / -0

Which of the following is a credit transaction?

A
Sold goods

B
Sold goods for cash

C
Sold goods to a customer for cash

D
Sold goods to a customer

Solution

Sold goods to customer is defined as credit sales.

Rest three statements are specifically denotes cash sales.
Question 3
1 / -0

All those to whom business owes money are ___________.

A
debtors

B
investors

C
creditors

D
customers

Solution

In accounting, customers who owe money to the business are called debtors.
Creditors are stakeholders who are owed money by the business. Creditors are typically suppliers that have delivered goods or services to the business but the business has not yet paid the supplier for those goods and services.
Question 4
1 / -0

What are the important objectives of accounting?
I. To maintain records of a business
II. Calculation of profit or loss
III. Depiction of financial position
IV. To make information available to various groups and users.

A
I and II

B
I and III

C
I, II and III

D
I, II, III and IV

Solution

Definition of accounting is:
" Accounting is an art of recording, classifying and summarizing in terms of money transactions and events of a financial character and interpreting the results thereof"

It specifies that, accounting starts when all the business transactions are recorded. Accounting provides detailed information on financial position of the business to all the interested stake holders. The interested stake holders are creditors, lenders, customers, present and potential investors.
Question 5
1 / -0

In every business transaction, at least _______ parties are involved.

A
Two

B
Three

C
Four

D
Six

Solution

Any business transaction will involve at least two parties. One can not do the transaction with himself. One party may be receiver and another will be give.

For example, XYZ Ltd sold goods to ABC Ltd. In this case, XYZ Ltd is the giver who is transferring the goods and ABC Ltd is the receiver who is accepting the goods.
Question 6
1 / -0

All those to whom business owes money are ____________.

A
Debtors

B
Creditors

C
Investors

D
Owners

Solution

Creditors are those to whom the business owes money. When goods or services are taken by the business on a credit basis against which the payment to be done in near future are called creditors.
Creditors may be against the goods purchased or services.
Question 7
1 / -0

Accounting is defined as "the __________ of recording, classifying and summarizing in terms of money transactions and events of a financial character and interpreting the results thereof".

A
Art

B
Science

C
Method

D
None of these

Solution

Definition of accounting is:
" Accounting is an art of recording, classifying and summarizing in terms of money transactions and events of a financial character and interpreting the results thereof"
Accounting definition specifically defines that only monetary transactions should be recorded in the books of account.
Question 8
1 / -0

Which of the following involves the preparation of reports and statements from the classified data (ledger) understandable and useful to management and other interested parties?

A
Classifying

B
Recording

C
Summarizing

D
All of the above

Solution

Summarizing involves the preparation and presentation of reports and statements from the classified data (ledger) to make it understandable and useful to management and other interested parties.
The data is summarized to help users of financial statements to make meaningful and informed decisions.
There are mainly two types of users of financial statements.
1. Internal Users. example- owner
2. External Users. example- shareholder.
Question 9
1 / -0

Which of the following is/are the branch of accounting?
(P) Financial Accounting
(Q) Cost Accounting
(R) Management Accounting

A
(P)

B
(Q)

C
(R)

D
All of the above

Solution

There are various branches of accounting:
Financial Accounting: This branch deal with the recording of all business transactions , classifying, summarizing and interpreting the financial data to provide the logical information to the management in the form of financial statement.
Cost Accounting: It seeks to ascertain the cost of each product or job produced or undertaken by the business.
Management Accounting: It has the objective of collecting systematically and regularly all such information as will help the management in discharging functions in managerial decision making.
Question 10
1 / -0

An amount which is allowed for the prompt settlement of debt arising out of a sale within a specified time and calculated on a percentage basis is known as ___________________.

A
Trade discount

B
Special discount

C
Cash discount

D
None of the above
Solution
Discount can be classified as:
Trade Discount
Cash Discount
Trade discount is allowed to promote the sales. It is allowed on the list price of the product and only net price is recorded as sales.

Cash discount is allowed to speed up the cash collection from the customers to whom the credit sales is done. Cash discount is allowed to only those customers which are making the payment earlier than the specified credit period. It is allowed if the customer is making the payment within the specific period and calculated on a certain percentage basis.

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Introduction to accounting Test - 23

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Introduction to accounting Test - 23

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SHARING IS CARING

Question 1

Drawing Account

Purchase Account

Capital Account

Profit and Loss Account

Solution

Question 2

Sold goods

Sold goods for cash

Sold goods to a customer for cash

Sold goods to a customer

Solution

Question 3

debtors

investors

creditors

customers

Solution

Question 4

I and II

I and III

I, II and III

I, II, III and IV

Solution

Question 5

Two

Three

Four

Six

Solution

Question 6

Debtors

Creditors

Investors

Owners

Solution

Question 7

Art

Science

Method

None of these

Solution

Question 8

Classifying

Recording

Summarizing

All of the above

Solution

Question 9

(P)

(Q)

(R)

All of the above

Solution

Question 10

Trade discount

Special discount

Cash discount

None of the above

Solution

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