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Recording of Transactions - I Test 3

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Recording of Transactions - I Test 3
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  • Question 1
    1 / -0
    The amount brought in by the proprietor in the business should be credited to ____________.
    Solution
    Business entity or separate entity concepts defines that the owner and the business are to be treated separately. 
    If any amount is contributed by the owner should be treated as liability and to be credited in capital account. 
    Journal Entry:-
    Cash A/c Dr.
    To Capital A/c.
  • Question 2
    1 / -0
    Jay account is a __________ account.
    Solution
    There are three types of account, personal account, real account and nominal account. Account which are related to the person are called as personal account. Real accounts are those which are not closed at the end of the financial year and the balance of these accounts are carried over to the next financial year. Accounts of expense and incomes are nominal account. Jay is a person hence it is a personal account.
  • Question 3
    1 / -0
    A withdrawal of cash from business by the proprietor of the firm should be debited to ___________.
    Solution
    The transaction is based on the separate entity concept which signifies that business and its proprietor are treated two separate legal entity.
    Withdrawal of cash by proprietor should be debited to drawing account in the books of the business. Same amount should be credited by the proprietor in cash account. 
  • Question 4
    1 / -0
    Salary account is by its nature a _________.
    Solution
    Accounts are classified in three categories i.e. personal a/c, real a/c and nominal a/c. Account of any person is a personal account, the real account is an account which does not closed at the end of accounting year and the balances are carried over to the next year. 
    All expense account are nominal account. Salary account is an expense account and is a nominal account.
  • Question 5
    1 / -0
    _________ is given to promote sales.
    Solution
    Discount can be classified as trade discount and cash discount. Trade discounts are generally given to promote the sales.

    Trade discount is referred to as a discount, given by the seller to the buyer at the time of purchase of goods, as a deduction in the list price of the quantity sold. The trade discount is used by the sellers to attract more customers and increase the quantity sales.
  • Question 6
    1 / -0
    Ledger is a book of _________.
    Solution
    Ledger is book of Principal entry of books.
    Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.
  • Question 7
    1 / -0
    The process of recording financial transactions in the journal is called ___________.
    Solution
    All business transactions are to be first recorded in journal in chronological order. Process of recording the transaction is called journalizing.
  • Question 8
    1 / -0
    A sale of goods to Vaibhav for cash should be debited to ___________.
    Solution
    Goods sold to Vaibhav for cash affect two account, i.e. cash and goods which are real account. Rule of real account defines that "debit whats comes in and credit what goes out".
    In the given transaction, cash is coming in business hence cash account should be debited by crediting the goods account. 
  • Question 9
    1 / -0
    Journal is known as book of _________ entry.
    Solution
    Every business transaction must be recorded in books of account in chronological order. All transactions are first recorded in a book which is called journal.
    Journal is called the book of original entry.
  • Question 10
    1 / -0
    Sales made to Mahesh for cash should be debited to ________.
    Solution
    Every accounting transaction will have two affect. One for debit and one for credit as the accounting is based on double entry system of accounting.

    Sales made to Mahesh for cash affect two accounts i.e cash and goods. Both are real account. Rule of real account says "Debit whats comes in and credit what goes out"

    Accordingly the accounting entry will be:

    Cash A/c           Dr.
        To Goods A/c.
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