Recording of Transactions

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Recording of Transactions - I Test 48

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Weekly Quiz Competition

Question 1
1 / -0

A voucher refers to a/an __________.

A
invoice received from suppliers

B
document in support of an entry made in the books of account

C
receipt issued to a customer for cash received

D
all the above
Solution
For each of the business transaction, a physical documents need to be attached with the books of account as proof of evidence of the transaction. Such document is called as voucher.
There are various kinds of vouchers for each of the business transaction:
Invoice received from suppliers against the purchase of goods.
Cash receipts issued to customer against cash received
Expenses voucher to support the expense amount.
Question 2
1 / -0

A second-hand car is purchased for Rs. 80,000, the amount of Rs. 1,000 is spent on its repairs, Rs. 500 is incurred to get the car registered in owners name and Rs. 1,500 is paid as dealers commission. The amount debited to car account will be __________.

A
Rs. 81,000

B
Rs. 81,500

C
Rs. 80,000

D
Rs. 83,000

Solution

second hand car Rs.80000
add : repairs charges Rs.1000
add : registration charges Rs. 500
add : dealers charges Rs. 1500
so, the amount debited to car account will be Rs.83000
Question 3
1 / -0

If the premium is paid on the life policy of the proprietor of the business, it is _____________.

A
treated as the drawings and is shown by way of deduction from the capital account

B
taken to the Trading Account

C
taken to the Profit and Loss Account and is shown as an expense

D
taken to the Balance Sheet and is shown as an asset

Solution

Separate entity concept of accounting defines that owner and business are considered two separate legal entity in the eye of law.
If any amount is contributed by by the owner in the business is treated as capital and to be shown as liability.
If any amount is withdrawn by the proprietor for personal use, this will be treated as drawings and to be deducted from the capital. Life Insurance premium is a personal expense and to be recorded as drawings.
Question 4
1 / -0

On 31st Dec. 2006 assets of the business are Rs.3,00,000 and its capital is Rs.1,00,000. Its liabilities on that date will be __________.

A
Rs. $4,00,000$

B
Rs. $2,00,000$

C
Rs. $1,00,000$

D
none of the above

Solution

As per Accounting equation,
Assets = liabilities + Capital
300,000 = Liabilities + 100,000
Liabilities = 200,000
Question 5
1 / -0

How does depreciation effect basic accounting equation

A
Leads to decreases in assets and shareholders equity

B
Leads to decrease in assets only

C
Leads to increase in liability and decrease in assets

D
Leads to decrease in shareholders equity

Solution

Depreciation is an expense on the income statement it effects shareholders' equity through net income which can impact the assets.
The higher the depreciation implies the lower the net income and assets, thus lower owners' equity.
Depreciation leads to increase in the assets and the shareholder's equity.
Question 6
1 / -0

The rule for nominal accounts is ____________.

A
debit the receiver, credit the giver

B
debit what comes in, credit what goes out

C
debit all expenses and losses, credit all incomes and gains

D
all 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. Wages account, Rent account, Commission account are some examples of nominal accounts.
The rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.
Question 7
1 / -0

Which of the following would prevent double payment of the same voucher?

A
The person signing the cheque should cancel the supporting documents.

B
Cheques should be signed by at best two persons.

C
The data of payment of vouchers of similar nature should be the same of close to each other.

D
All of the above.

Solution

To prevent the double payment of a voucher, a process of affixing a stamp "PAID" has to be followed or voucher need to be cancelled/crossed to notify that the payment against this voucher is already done.
Question 8
1 / -0

The creditors accounts, generally, have credit balance. Debit balance may be due to _________.

A
advance paid against an order

B
goods returned

C
wrong debit to supplier account

D
any of these
Solution
Following accounting will be passed when goods are purchased on credit:

Goods A/c Dr.
To Creditors

In such situation, creditors account will always shows the credit balance or nil balance if all the payments are done. Creditors account may have debit balance in the below cases:
There are cases when goods is returned to the supplier after making the final payment. In such situation creditor account will show a debit balance.
In case of advance payment is done to the creditor before supply of goods, in such situation also, there will be a debit balance in creditors account.
Debit balance may also arise in creditors account if any wrong debit is done in the creditors account.
Question 9
1 / -0

An increase in one liability may lead to _________________.

A
Increase in another asset

B
Decrease in liability

C
Both (A) and (B)

D
Either (A) or (B)

Solution

An increase in one liability may lead to
1. Increase in another asset or
2. Decrease in liability
Question 10
1 / -0

Which of the following is (are) benefits of subsidiary ledger accounts to business?

A
It tells about customer attitude of payments

B
It can be checked against the control account to pick up recording errors

C
It tells about the complete history of transactions of business client

D
All of the above

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Recording of Transactions - I Test 48

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Recording of Transactions - I Test 48

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SHARING IS CARING

Question 1

invoice received from suppliers

document in support of an entry made in the books of account

receipt issued to a customer for cash received

all the above

Solution

Question 2

Rs. 81,000

Rs. 81,500

Rs. 80,000

Rs. 83,000

Solution

Question 3

treated as the drawings and is shown by way of deduction from the capital account

taken to the Trading Account

taken to the Profit and Loss Account and is shown as an expense

taken to the Balance Sheet and is shown as an asset

Solution

Question 4

Rs. 4,00,0004,00,0004,00,000

Rs. 2,00,0002,00,0002,00,000

Rs. 1,00,0001,00,0001,00,000

none of the above

Solution

Question 5

Leads to decreases in assets and shareholders equity

Leads to decrease in assets only

Leads to increase in liability and decrease in assets

Leads to decrease in shareholders equity

Solution

Question 6

debit the receiver, credit the giver

debit what comes in, credit what goes out

debit all expenses and losses, credit all incomes and gains

all of the above

Solution

Question 7

The person signing the cheque should cancel the supporting documents.

Cheques should be signed by at best two persons.

The data of payment of vouchers of similar nature should be the same of close to each other.

All of the above.

Solution

Question 8

advance paid against an order

goods returned

wrong debit to supplier account

any of these

Solution

Question 9

Increase in another asset

Decrease in liability

Both (A) and (B)

Either (A) or (B)

Solution

Question 10

It tells about customer attitude of payments

It can be checked against the control account to pick up recording errors

It tells about the complete history of transactions of business client

All of the above

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