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Recording of Transactions - I Test 11

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Recording of Transactions - I Test 11
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  • Question 1
    1 / -0
    Outstanding Income Account is ______.
    Solution
    Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts are debtors, creditors, banks, outstanding.prepaid accounts, accounts of goods suppliers, capital, drawings, etc. 
    Representative personal accounts represent a certain person or group directly or indirectly.
    Outstanding Income account is a representative personal account, as it represents the outstanding income from several persons/sources. Hence, it can be classified as a personal account.
  • Question 2
    1 / -0
    Furniture Account is ________.
    Solution
    Real accounts are the accounts that have their existence even after the close of the accounting period. In the next account period, these accounts start with a non-zero balance carried forward from the previous accounting period. 
    Real accounts are the accounts of assets which the company owns and accounts of liabilities which the company owes. Real accounts may also consist of some intangible assets. hey consist following types of accounts:
    1. Building account
    2. Furniture Account
    3. Land Account
    4. Machinery Account
    Furniture account is the tangible asset of a business whose value can be measured in terms of money. Hence, it is classified as a real account.
  • Question 3
    1 / -0
    Right hand side of an account is __________.
    Solution
    All the accounts identified on the basis of transactions recorded in different journals/books such as Cash Book, Purchase Book, Sales Book etc. will be opened and maintained in a separate book called Ledger. So a ledger book; in which all types of accounts relating to assets, liabilities, capital, expenses and revenues are maintained. It is a complete set of accounts of a business enterprise. 
    A ledger account has two sides, namely left hand and right hand side. Left hand side is called the debit side while the right hand side is called the credit side.
  • Question 4
    1 / -0
    Discount Account is_____.
    Solution
    Accounts relating to income, revenue, gain, expenses and losses are termed as nominal accounts. These accounts are also known as fictitious accounts as they do not represent any intangible asset. A separate account is maintained for each head or expense or loss and gain or income. Wages account, Rent account, Commission account are some examples of nominal account. The rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.
    Discount account can be the indirect income (if received) or indirect expenses (if paid) of a business and hence, they are classified as nominal accounts.
  • Question 5
    1 / -0
    Name the account which is debited for payment of import duty.
    Solution
    Expenses account are nominal account. The rule for the nominal account is "debit all the expenses and credit all the incomes. Hence, all the expense accounts are debited. 
    Import duty payment on purchases is a part of direct expenses. Therefore, on payment of import duty, Import duty Account is debited. 
  • Question 6
    1 / -0
    A cash memo is prepared and issued by__________.
    Solution
    A cash memo is prepared by the seller when the goods are sold for cash. The cash memo is similar to an invoice, only difference being invoice is issued for credit sale and cash memo for cash sales.
  • Question 7
    1 / -0
    Recording of an entry from journal to ledger is called as __________.
    Solution
    The process of recording transactions in the journal is called Journalizing. Once journalizing process is completed, the journal entry provides a complete and useful description of the event's effect on the organisation. 

    The process of transferring journal entry to individual accounts is called posting. 

  • Question 8
    1 / -0
    Sales accounts always shows ________ balance.
    Solution
    Accounts of every type of assets and expenses have debit balances and accounts of every type of liabilities and incomes have credit balance.
  • Question 9
    1 / -0
    All entries are posted from journal to _______.
    Solution
    The first step involves identifying the transactions to be recorded and preparing the source documents which are in turn recorded in the basic book of original entry called journal and are then posted to individual accounts in the principal book called ledger. 

    The process of transferring journal entry to the individual accounts is called posting. 
    This sequence causes the journal to be called the Book of Original Entry and the ledger account is the Principal Book of Entry.
  • Question 10
    1 / -0
    ____________ is a process of transferring journal entry to ledger.
    Solution
    Posting is the process of transferring the entries from the books of original entry (journal) to the ledger. In other words, posting means grouping of all the transactions in respect to a particular account at one place for meaningful  conclusion and to further the accounting process. Positing from the journal is done periodically, may be, weekly or fortnightly or monthly as per the requirements and convenience of the business. 
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