Recording of Transactions

Result

Recording of Transactions - I Test 47

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Weekly Quiz Competition

Question 1
1 / -0

Goods worth Rs.2000 distributed as free sample is treated as _______.

A
Sales

B
Purchase return

C
Sales Promotion Expenses

D
Business Loss

Solution

Distribution of goods as free sample is a business expense which will give benefit to the business hence this has to be recorded as sales promotion expense.

Question 2

1 / -0

ABC Ltd. acquired a new Machine for Rs. $$500,000$$ on $$1$$st April $$2013$$ and spent Rs. $$10,000$$ on its installation and Rs. $$5,000$$ on transportation. The useful life of the machine is estimated $$10$$ years. The firm provides depreciation using sum of years digit method. what is the depreciation for the year $$2013-14$$.

Rs. $$93,636$$

Rs. $$89,100$$

Rs. $$75,908$$

Rs. $$1,01,300$$

Solution

Depreciation expense is calculated under sum of year's digit method as:

Depreciation expense = (Remaining useful life of the asset / Sum of the year's digit) x Depreciable cost

Depreciable cost = Purchase cost + Installation cost + Transportation

Depreciable cost = Rs. 5,00,000 + Rs. 10,000 + Rs. 5,000 = Rs. 5,15,000

Year	Deprecation base (a)	Remaining life (b)	Depreciation fraction (b/sum)	Depreciation expense	Book value
1	5,15,000	10	10/55	93,636	4,21,364
2	5,15,000	9	9/55	84,273	4,30,727
3	5,15,000	8	8/55	74,909	4,40,091
4	5,15,000	7	7/55	65,545	4,49,455
5	5,15,000	6	6/55	56,182	4,58,818
6	5,15,000	5	5/55	46,818	4,68,182
7	5,15,000	4	4/55	37,455	4,77,545
8	5,15,000	3	3/55	28,091	4,86,909
9	5,15,000	2	2/55	18,727	4,96,273
10	5,15,000	1	1/55	9,364	5,05,636
	Total	55

Question 3
1 / -0

For real a/c debit means _____.

A
Addition

B
Reduction

C
Consumption

D
Exhaustion

Solution

Golden rule of accounting for real account is.

Debit what comes in i.e. addition
Credit what goes out i.e. reduction

For Eg : if goods worth Rs.500 purchased that will have addition in goods account.
Question 4
1 / -0

Journal is also called ______.

A
Subsidiary book

B
Daily event book

C
History sheet

D
Log book

Solution

Journal is called as subsidiary books because it does not give any summarized details about an account. Journal merely helps the posting of entries in to ledger.
Question 5
1 / -0

Journalising process is in __________.

A
Analytical manner

B
Summarized manner

C
Chronological order

D
None of the above.

Solution

All business transaction must be recorded as soon it occur.
Hence, every entry will be passed in a chronological order in journal.
Question 6
1 / -0

Three months rent of the next financial year is paid in advance, how this transaction effects accounting equation

A
Total assets remains unchanged, total liabilities remains unchanged.

B
Total assets increases, total liabilities decreases.

C
Total assets decreases, total liabilities increases.

D
Total assets increases but total liabilities remains the same.

Solution

The Entry for Above transaction will be
Prepaid Rent a/c Dr.
To Cash

Both are assets therefore, there will be no change in the assets and liabilities
Question 7
1 / -0

Rent account is a ___________.

A
personal account

B
real account

C
nominal account

D
none of the above

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 tangible asset. A separate account is maintained for each head or expense or loss and gain or income. Rent account is a nominal account. Other examples of nominal accounts are wages account, commission account, interest received account. The rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.
Question 8
1 / -0

Withdrawal of money by the owner is not a expense but a reduction of __________.

A
Cash only

B
Cash and capital

C
Capital only

D
All of these

Solution

Separate business entity concept of accounting defines that the owner and business are treated two separate entity in the eyes of law.

Any amount contributed towards capital is considered as liabilities in the business books. On the similar line, any amount withdrawn by the owner for personal use is called as drawings which is deducted from capital and will further reduce the cash.

Accounting entry will be as under:

Drawings A/c Dr.
To Cash A/c.
Question 9
1 / -0

Discount Allowed Account will have ____________.

A
Debit balance

B
Credit balance

C
Nil

D
Debit or credit balance

Solution

Discount Allowed is an Expense therefore it is a Nominal Account.
The rule for Nominal Account is
Debit- All increase in expense or losses
Credit- All Increase in Income and Gains
As Discount Allowed is an Expense therefore, it will have debit balance.
Question 10
1 / -0

Commission received A/c will have __________.

A
Debit balance

B
Credit balance

C
Nil

D
Debit or credit balance

Solution

Commission received is an income therefore it is a Nominal Account.
The rule for Nominal Account is
Debit- All increase in expense or losses
Credit- All Increase in Income and Gains
As commission is an income therefore, it will have credit balance.

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Recording of Transactions - I Test 47

Result

Recording of Transactions - I Test 47

Score

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Rank

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SHARING IS CARING

Question 1

Sales

Purchase return

Sales Promotion Expenses

Business Loss

Solution

Question 2

Rs. $$93,636$$

Rs. $$89,100$$

Rs. $$75,908$$

Rs. $$1,01,300$$

Solution

Question 3

Addition

Reduction

Consumption

Exhaustion

Solution

Question 4

Subsidiary book

Daily event book

History sheet

Log book

Solution

Question 5

Analytical manner

Summarized manner

Chronological order

None of the above.

Solution

Question 6

Total assets remains unchanged, total liabilities remains unchanged.

Total assets increases, total liabilities decreases.

Total assets decreases, total liabilities increases.

Total assets increases but total liabilities remains the same.

Solution

Question 7

personal account

real account

nominal account

none of the above

Solution

Question 8

Cash only

Cash and capital

Capital only

All of these

Solution

Question 9

Debit balance

Credit balance

Nil

Debit or credit balance

Solution

Question 10

Debit balance

Credit balance

Nil

Debit or credit balance

Solution

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