Nature of Accounts and Rules of Debit and Credit Test 21

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Nature of Accounts and Rules of Debit and Credit Test 21

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Weekly Quiz Competition

Question 1
1 / -0

Journal is a book of __________.

A
original entry

B
all cash transactions

C
secondary entry

D
all non-cash transactions
Solution
As the transactions are recorded first time in journal therefore it is known as books of original entry.
Journal is sub divided into number of Subsidiary books. They 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 2
1 / -0

DEBIT signifies _________________.

A
Increase in assets account

B
Decrease in liability account

C
Decrease in capital account

D
All of the above

Solution

In book keeping there are two parts one is debit and other is credit. Debit is one half of the bookkeeping. Assets have a debit balance and hence an increase in the asset is debited, likewise liabilities have a credit balance and so a decrease in liabilities will be debited, Capital account has a credit balance as it is a liability for the company hence decrease in the capital account is debited as liability decreases.
Question 3
1 / -0

Journal and subsidiary books in which transactions and events are first recorded are known as _____________.

A
Secondary books.

B
Memorandum books.

C
Primary books.

D
Principal books.

Solution

Journal and subsidiary books in which transactions and events are first recorded are known as Primary books.
Primary book is a book or record in which certain types of transaction are recorded before becoming part of the double-entry book-keeping system.
Question 4
1 / -0

Accounting entries for the repayment of a loan received from Richard, the owner's friend is _____________________.

A
Debit Cash account and Credit capital account

B
Credit cash account and Debit Richard's loan account

C
Credit cash account and Debit capital account

D
Debit cash account and Credit Richard's loan account

Solution

Debit - Loan Account
The debit to the Richard's loan account records the reduction in principal of the loan balance which is the cash repayment less the interest expense.
Credit - Cash Account
Cash has been used to make the the annual repayment to the lender on the due date in accordance with the loan agreement.
Question 5
1 / -0

The _________ is a document that a seller passes to a buyer at the time of a specific purchase of goods or services. It is the equivalent of an invoice and is only used to record transactions that are paid for using cash, rather than bank transactions.

A
Voucher

B
Invoice

C
Cash memo

D
Credit memo

Solution

Cash Memo. A cash memo is documentary evidence of the payment made. The content of a cash memo and invoice are the same. An invoice is document that is given by the buyer to the purchaser when goods are purchased on credit.
Question 6
1 / -0

What will be journal entry when cash is withdrawn from bank for personal use?

A
Drawings A/c debit, bank A/c credit

B
Cash A/c debit, drawings A/c credit

C
Bank A/c debit, drawings A/c credit

D
Bank A/c debit, capital A/c credit

Solution

Drawings are the amounts taken by the owner of a business for his personal use in anticipation of profit. Drawings are usually made in the form of cash, but there could be other assets or goods withdrawn by the owner for his personal use.
Journal Entry will be:-
Drawing A/c Dr.
To Bank A/c.
Question 7
1 / -0

If wages are paid for construction of business premises,_______A/c is credited and ____ A/c is debited.

A
Wages, Cash

B
Premises, Cash

C
Cash, Wages

D
Cash, Premises

Solution

If wages are paid for construction of business premises the amount of wages will be debited to the premises account because, according to IFRS, any expense that brings the asset to use or brings the asset in existence should be added to the cost of that machinery.
Cash account is credited because cash is being paid for incurring the wages.
Question 8
1 / -0

A ______ is an accounting document representing an internal intent to make a payment to an external entity, such as a vendor or service provider.

A
Debit Note

B
Credit Note

C
Voucher

D
Invoice

Solution

A voucher is an accounting document representing an internal intent to make a payment to an external entity, such as a vendor or service provider.
Question 9
1 / -0

A ___________ voucher is a document which comprises of all the details of an accounting transaction.

A
Journal

B
Petty Cash

C
Debit

D
Credit

Solution

A Journal voucher is a voucher that consists of all the details of transactions like the date of transactions, amount, etc. A journal voucher is prepared for every transaction. They are serially numbered for convenience purpose so that journal can be prepared.
Question 10
1 / -0

When a liability is reduced or decreased, it is recorded on the ______________.

A
left or credit side of the liability account

B
right or debit side of the liability account

C
right or credit side of the liability account

D
left or debit side of the liability account

Solution

Since the Liability shows credit balance as per the accounting equation. When a liability is reduced or decreased, it is recorded on the debit side of the liability account.

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Nature of Accounts and Rules of Debit and Credit Test 21

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Nature of Accounts and Rules of Debit and Credit Test 21

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Rank

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SHARING IS CARING

Question 1

original entry

all cash transactions

secondary entry

all non-cash transactions

Solution

Question 2

Increase in assets account

Decrease in liability account

Decrease in capital account

All of the above

Solution

Question 3

Secondary books.

Memorandum books.

Primary books.

Principal books.

Solution

Question 4

Debit Cash account and Credit capital account

Credit cash account and Debit Richard's loan account

Credit cash account and Debit capital account

Debit cash account and Credit Richard's loan account

Solution

Question 5

Voucher

Invoice

Cash memo

Credit memo

Solution

Question 6

Drawings A/c debit, bank A/c credit

Cash A/c debit, drawings A/c credit

Bank A/c debit, drawings A/c credit

Bank A/c debit, capital A/c credit

Solution

Question 7

Wages, Cash

Premises, Cash

Cash, Wages

Cash, Premises

Solution

Question 8

Debit Note

Credit Note

Voucher

Invoice

Solution

Question 9

Journal

Petty Cash

Debit

Credit

Solution

Question 10

left or credit side of the liability account

right or debit side of the liability account

right or credit side of the liability account

left or debit side of the liability account

Solution

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