Nature of Accounts and Rules of Debit and Credit Test 20

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Nature of Accounts and Rules of Debit and Credit Test 20

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Question 1
1 / -0

Goods destroyed by fire is an example of __________.

A
Decrease in Assets and Owners Equity

B
Increase in Asset & Owner's Equity

C
Decrease in Liability & Owner's Equity

D
None of these

Solution

Goods Destroyed by Fire implies that there is a decrease in the number of goods. Goods are current assets for the business therefore, there is a decrease in assets.
Due to this transaction, there is a loss to the business which will result in a decrease in capital.
Therefore, Goods destroyed by fire is an example of Decrease in Assets and Owners Equity
Question 2
1 / -0

An example of increase in assets and increase in owner's capital is __________.

A
Goods purchased for cash

B
Goods purchased on credit

C
Goods brought in by owner

D
Capital introduced by owner

Solution

When capital is introduced by the owner then the cash will increase as well as capital will also increase.
Capital means the Amount invested by the Owner of the Business into the business.
As the business entity Concept, the Owner of the business is considered separate from the business. The amount invested by the Owner of the Business into the business.is known as Capital.
When the businessman withdraws some amount from the business for personal use then it is known as the drawings.
Question 3
1 / -0

Loan from Mahesh Account is ______________.

A
An Asset Account

B
A Liability Account

C
A Revenue Account

D
An Expense Account
Question 4
1 / -0

Goods destroyed by Fire is _______________.

A
An Asset Account

B
A Liability Account

C
A Revenue Account

D
An Expense Account
Question 5
1 / -0

Credit means ________.

A
an increase in asset

B
an increase in liability

C
a decrease in liability

D
a decrease in proprietor's equity

Solution

As per Modern Rule
Debit means decrease in liabilities and Capital and
Credit means an increase in liability and capital.
Therefore, Option B is correct.
Question 6
1 / -0

Debit means ________.

A
An increase in asset

B
An increase in liability

C
A decrease in asset

D
An increase in proprietor's equity.

Solution

As per Modern Rules,
Debit means an increase in assets. examples of assets are cash, bank, machinery, furniture etc.
Credit means a decrease in assets. example- Payment of cash.
Question 7
1 / -0

Making Provision for Discount on Debtors 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

It will reduce the debtors and increase expense therefore, there will be decrease in assets and capital.
Making Provision for Discount on Debtors is an example of Decrease in Asset & Owner's Liability
Question 8
1 / -0

Sale Return Book is a part of _______.

A
Journal.

B
Ledger.

C
Cash Book.

D
none of these.
Solution
Sales Return Book is the part of Journal.
Journal is divided into the number of subsidiary books. The main subsidiary books are
- Cash book.
- Purchases book.
- Sales book.
- Purchases return or return outwards book.
- Sales return or return inwards book.
- Bills receivable book.
- Bills payable book.
- Journal proper
Question 9
1 / -0

Sales of the Scrap of raw materials appearing in the trial balance are shown on the credit side of _______.

A
Trading account

B
Manufacturing account

C
Profit and Loss A/c

D
None of these
Question 10
1 / -0

Making Provision for Doubtful Debts 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

Provision for Doubtful Debts is a liability for the business. it is the charge against the profit. It is created as per the conservatism Concept. It reduces the amount of debtors. Debtors are Assets for the business.
Therefore, there will be a decrease in assets and capital.

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Nature of Accounts and Rules of Debit and Credit Test 20

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Nature of Accounts and Rules of Debit and Credit Test 20

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SHARING IS CARING

Question 1

Decrease in Assets and Owners Equity

Increase in Asset & Owner's Equity

Decrease in Liability & Owner's Equity

None of these

Solution

Question 2

Goods purchased for cash

Goods purchased on credit

Goods brought in by owner

Capital introduced by owner

Solution

Question 3

An Asset Account

A Liability Account

A Revenue Account

An Expense Account

Question 4

An Asset Account

A Liability Account

A Revenue Account

An Expense Account

Question 5

an increase in asset

an increase in liability

a decrease in liability

a decrease in proprietor's equity

Solution

Question 6

An increase in asset

An increase in liability

A decrease in asset

An increase in proprietor's equity.

Solution

Question 7

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 8

Journal.

Ledger.

Cash Book.

none of these.

Solution

Question 9

Trading account

Manufacturing account

Profit and Loss A/c

None of these

Question 10

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

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