Recording of Transactions

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Recording of Transactions - I Test 49

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following is an item of a debtors control account?

A
Cash sale

B
Credit sales

C
Credit purchase

D
Cash purchases
Question 2
1 / -0

Which of the following accounting equation is correct?

A
Capital (Rs. $$15,000$$)$$=$$Fixed Assets (Rs. $$12,000$$)$$+$$ Cash (Rs. $$4,000$$)

B
Trade payables (Rs. $$3,000$$) $$+$$ Capital (Rs. $$17,000$$)$$+$$Bill Payable (Rs. $$4,000$$) $$=$$ Fixed Assets (Rs. $$20,000$$)

C
Capital (Rs. $$15,000$$)$$=$$Cash (Rs. $$3,000$$) $$+$$ Fixed Assets (Rs. $$9,000$$)

D
Trade payables ($$8,000$$)$$+$$ Capital (Rs. $$7,000$$)$$=$$Fixed Assets (Rs. $$8,000$$) $$+$$ Cash at Bank (Rs. $$4,000$$) $$+$$ Cash (Rs. $$3,000$$)

Solution

According to accounting equation
Capital + Trade Liabilities =Assets(or)
Capital + Trade Liabilities =Fixed Assets + Current Assets
Capital =7,000
Assets=Assets (8,000)+ Cash at Bank (4,000)+ Cash (3,000)=Rs. 15,000.
Therefore Liabilities= Capital + Trade Payable
=Rs.7000+Rs.8000
=Rs.15000
Question 3
1 / -0

Goods worth Rs. $$10,000$$ were purchased by B on which the traders allowed Rs. $$500$$ trade discount and offer to give $$5\%$$ cash discount if immediate payment is made. The Purchase A/c will be debited by _________.

A
Rs. $$10,000$$

B
Rs. $$9,800$$

C
Rs. $$9,000$$

D
Rs. $$9,500$$

Solution

Discount are two types , trade discount and cash discount.
Trade discount is allowed on the list price hence amount of trade discount is not reflected in books of account.
Net price i.e. after deducting trade discount is only recorded in the books of account.

Purchase Price Rs.10000
Less: Trade Discount Rs.500
Net Purchase Price Rs.9500

Hence, Purchase account will be debited by Rs.9500.
Question 4
1 / -0

The Working Capital (or Net Current Assets) of a business is ___________.

A
current assets less current liabilities

B
capital plus liabilities which are not expected to be paid within a year of the balance sheet date

C
the capital introduced by the proprietor at commencement of business

D
non current assets plus current assets less current liabilities

Solution

Working Capital is that capital which is required for day to day operation of the business. Its basically the fund required for a business cycle. Working Capital is the difference between Current Assets and Current Liabilities.

Current Assets: (A)
Cash on Hand
Cash at Bank
Sundry Debtors
Bills Recievables
Inventory
Current Liabilities: (B)
Sundry Creditors
Bills Payable
Bank Overdraft
Working Capital: A-B.
Question 5
1 / -0

Bank account is a ________.

A
Real account

B
Personal account

C
Nominal account

D
Valuation account

Solution

Accounts recording transactions with a person or group of persons are known as personal accounts. These accounts are necessary, in particular, to record credit transactions. Personal accounts are of the following types:
1. Natural persons: An account recording transactions with an individual is termed as a natural persons' personal account. For e.g., Kamal's account, Mala's account. Both males and females are included in it.
2. Artificial or legal persons: An account recording financial transactions with an artificial person created by law or otherwise is termed as an artificial persons' personal account. For e.g. Firms' accounts, limited companies' account.
3. Representative personal account: An account indirectly representing a person or persons is known as representative personal account. When accounts are of similar nature and their number is large, it is better to group them under one head and open a representative personal account. For e.g. prepaid insurance, outstanding wages,etc.
Bank account is a personal account as it is related to a banking firm which is an artificial person. All those accounts which are related to a person, whether artificial or natural, are termed as personal accounts.
Question 6
1 / -0

Discount allowed is an example of ________.

A
Increase in Asset & Owner's Liability

B
Decrease in Asset & Owner's Liability

C
Increase in Liability & Owner's Liability

D
Decrease in Liability & Increase in Owner's Liability

E
Increase in Liability & Decrease in Owner's Liability

Solution

Discount allowed is an expense. It is allowed when the debtor makes payment.
The journal Entry for Discount allowed is
Discount allowed a/c Dr.
To Debtors a/c

Therefore, there is a Decrease in Asset & Owner's Liability in this case.
Question 7
1 / -0

Accounts recording transactions with a person or group of persons are known _____________.

A
Personal accounts

B
Real accounts

C
Nominal accounts

D
Impersonal accounts

Solution

There are mainly three types of accounts: Real, Personal and Nominal accounts. Personal accounts are classified into three subcategories: Artificial, Natural, and Representative. Personal accounts are related to individuals, firms, companies, etc.
A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.
The golden rule of personal accounts is :Debit the receiver; Credit the giver.
Question 8
1 / -0

Goods withdrawn by owner for personal use is an example of __________.

A
No change in Owner's Equity

B
Increase in Asset & Owner's Equity

C
Decrease in Liability & Owner's Equity

D
None of these

Solution

The effect of Goods withdrawn by owner for personal use
Goods will be reduced which implies decrease in Assets
as it is withdrawn for personal use by owner which will result in decrease in capital.
Therefore, there is decrease in asset and capital.
Question 9
1 / -0

Income earned which is yet to be received results in _________________.

A
Increases in capital and increase in liability

B
Decrease in liability and increase in capital

C
Increase in asset and increase in liability

D
Increase in capital and increase in asset.

Solution

Accrued Income is income that is earned but not received in cash by the organisation. Accrued Income is an asset.
Here, accrued income will be increase which is an asset and income will be added to the capital account. Therefore, there will be an increase in capital and an increase in the asset.
Question 10
1 / -0

Atul purchased a car for Rs. $$5,00,000$$, by making a down payment of Rs. $$1,00,000$$ and signing a Rs. $$4,00,000$$ bill payable due in $$60$$ days. As a result of this transaction ____________________.

A
total assets increased by Rs. $$5,00,000$$

B
total liabilities increased by Rs. 4,00,000

C
total assets increased by Rs. 3,00,000

D
total assets increased by Rs. 4,00,000

Solution

On purchase of a Car, total assets of balance sheet will be increased by $$Rs. 5,00,000$$ and on making of down payment of $$Rs.1,00,000$$ total assets will decrease by $$Rs. 1,00,000$$. The result will be that total assets of Balance sheet will increase by $$Rs.4,00,000$$.
On other hand a liability of $$Rs.4,00,000$$ has been made so the liability side of Balance Sheet will be increased by $$Rs.4,00,000$$.

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Recording of Transactions - I Test 49

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Recording of Transactions - I Test 49

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Question 1

Cash sale

Credit sales

Credit purchase

Cash purchases

Question 2

Capital (Rs. $$15,000$$)$$=$$Fixed Assets (Rs. $$12,000$$)$$+$$ Cash (Rs. $$4,000$$)

Trade payables (Rs. $$3,000$$) $$+$$ Capital (Rs. $$17,000$$)$$+$$Bill Payable (Rs. $$4,000$$) $$=$$ Fixed Assets (Rs. $$20,000$$)

Capital (Rs. $$15,000$$)$$=$$Cash (Rs. $$3,000$$) $$+$$ Fixed Assets (Rs. $$9,000$$)

Trade payables ($$8,000$$)$$+$$ Capital (Rs. $$7,000$$)$$=$$Fixed Assets (Rs. $$8,000$$) $$+$$ Cash at Bank (Rs. $$4,000$$) $$+$$ Cash (Rs. $$3,000$$)

Solution

Question 3

Rs. $$10,000$$

Rs. $$9,800$$

Rs. $$9,000$$

Rs. $$9,500$$

Solution

Question 4

current assets less current liabilities

capital plus liabilities which are not expected to be paid within a year of the balance sheet date

the capital introduced by the proprietor at commencement of business

non current assets plus current assets less current liabilities

Solution

Question 5

Real account

Personal account

Nominal account

Valuation account

Solution

Question 6

Increase in Asset & Owner's Liability

Decrease in Asset & Owner's Liability

Increase in Liability & Owner's Liability

Decrease in Liability & Increase in Owner's Liability

Increase in Liability & Decrease in Owner's Liability

Solution

Question 7

Personal accounts

Real accounts

Nominal accounts

Impersonal accounts

Solution

Question 8

No change in Owner's Equity

Increase in Asset & Owner's Equity

Decrease in Liability & Owner's Equity

None of these

Solution

Question 9

Increases in capital and increase in liability

Decrease in liability and increase in capital

Increase in asset and increase in liability

Increase in capital and increase in asset.

Solution

Question 10

total assets increased by Rs. $$5,00,000$$

total liabilities increased by Rs. 4,00,0004,00,000

total assets increased by Rs. 3,00,0004,00,000

total assets increased by Rs. 4,00,0004,00,000

Solution

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total liabilities increased by Rs. 4,00,000

total assets increased by Rs. 3,00,000

total assets increased by Rs. 4,00,000