Nature of Accounts and Rules of Debit and Credit Test 3

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Nature of Accounts and Rules of Debit and Credit Test 3

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Weekly Quiz Competition

Question 1
1 / -0

Journal means _______________.

A
A daily record of business transactions

B
Book of original entry

C
Both (A) and (B)

D
Purchase book

Solution

Journal has been derived from the french word 'jour' which means day. Journal is a book of original entry which records day to day transactons of a firm. It is the book where transactions are recorded for the first time. Hence, it is called book of original entry.
Question 2
1 / -0

Outstanding salary account is a _______ account.

A
Nominal account

B
Real account

C
Artificial person's account

D
Representative personal account

Solution

Outstanding expense are those expense which are due but not paid and to be added with the respective expenses head and shown as liability in the balance sheet.
Any amount which is due to a person against which the services are already provided for is an outstanding expense. These are personal account but put together clubbed and considered as representative person account.
Question 3
1 / -0

A book containing a chronological record of business transaction & original record is called a _________.

A
Journal

B
Ledger

C
Trial balance

D
None of the above

Solution

A journal is known as the original book of entry and is also called the prime entry. All the accounting transactions are first recorded in journal in the order of the transactions taking place. Such order is called a chronological order.
Therefore, journal is the original book of recording transactions in the chronological order.
Question 4
1 / -0

Which of the following is usually in the 'T' format and contains two sides?

A
Journal

B
Account

C
Ledger

D
Subsidiary books

Solution

An account is a record or statement of financial expenditure and receipts relating to a particular period or purpose. It consists of two sides. Right hand side is known as debit side which records all the payments and expenses whereas left hand side records all income recieved. It is in the form of 'T'.

Question 5

1 / -0

Match List-I with List-II and select the correct answer using the codes given the lists:

List-I(Types of accounts)	List-II(Principles)
I. Real Accounts	(a) Debit the receiver credit the giver
II. Nominal Accounts	(b) Debit what comes in credit what goes out
III. Personal Accounts	(c) Debit all expenses,losses credit all incomes,gains

I-(c), II-(b), III-(a)

I-(a), II-(c), III-(b)

I-(b), II-(c), III-(a)

I-(a), II-(b), III-(c)

Solution

There are mainly three types of accounts: Real, Personal and Nominal accounts. Personal accounts are classified into three subcategories: Artificial, Natural and Representative.

Real Accounts: All assets of a firm, which are tangible or intangible, fall under the category "Real Accounts". tangible real accounts are related to things that can be touched and felt physically. whereas, intangible real accounts are related to things that can't be touched and felt physically. The golden rule of real accounts is: Debit what comes in; Credit what goes out.

Personal accounts: These accounts are related to individuals, firms, companies, etc. A few example 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.

Nominal accounts: Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts. The dictionary meaning of the word "nominal" is "existing in name only" and the meaning remains absolutely true in accounting sense too, because nominal accounts so not really exist in physical form, but behind every nominal account money is involved. E.g. Purchase A/C, Salary A/c, Sales A/C, etc. The golden rule for nominal accounts is:Debit all expenses and losses; Credit all incomes and gains.

Question 6
1 / -0

The word 'Debit' means __________.

A
Due to that

B
Due for that

C
'What is'

D
What ought to be

Solution

Debit is an expense or an amount of money paid from an account which results in the increase or a decrease in a liability or owner's equity on the balance sheet. It is listed on the left hand side of the account. It also means due for that i.e. due for the amount paid.
Question 7
1 / -0

Journal is a book of ____________.

A
Primary entry

B
Original entry

C
Duplicate entry

D
Primary or original entry

Solution

Journal has been derived from the french word 'jour' which means day. Journal is a book of original entry which records day to day transactons of a firm. It is the book where transactions are recorded for the first time. Hence, it is called book of original entry or prime entry.
Question 8
1 / -0

Small firms may adopt _________.

A
The subsidiary book system

B
Journal system

C
Ledger

D
None of these

Solution

Recording of transactions helps to make the financial statement accurate. Recording of transaction in journal helps small firms to keep their track of transactions upto date. Hence small firms may adopt the journal system.
Question 9
1 / -0

The following comments each relate to the recording of journal entries. Which statement is true?

A
For any given journal entry. debits must exceed credits

B
It is customary to record credits on the left and debits on the right

C
The chart of accounts reveals the amount to debit and credit to the affected accounts

D
Journalization is the process of converting transactions and events into debit/credit format

Solution

All business transaction which are of monetary value need to be recorded in journal in chronological order.The process of making the journal entries is called as journalization. All the transactions are having two affects i.e. debit and credit.
Question 10
1 / -0

Which of the following is not a subsidiary book?

A
Purchase Book.

B
Sales Book.

C
Bills Receivable Book.

D
Pass book.

Solution

Subsidiary Books are the sub divisions of a Journal. These books are meant for recording the transactions of a similar nature in a separate book. When there are many transactions, the Journal is sub-divided into subsidiary books to record such voluminous transactions and events in one single book. These books are also termed as 'Special Purpose Books or Special Journals or Book of Original/Primary/Prime entry'.

A Pass Book is a copy of the ledger account maintained by a bank to record the transactions of its clients. Each customer is issued a separate passbook by the bank. It is the copy of the ledger account provided periodically to a customer in order to inform him/her about the transactions and balances in the account.

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Nature of Accounts and Rules of Debit and Credit Test 3

Result

Nature of Accounts and Rules of Debit and Credit Test 3

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Rank

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SHARING IS CARING

Question 1

A daily record of business transactions

Book of original entry

Both (A) and (B)

Purchase book

Solution

Question 2

Nominal account

Real account

Artificial person's account

Representative personal account

Solution

Question 3

Journal

Ledger

Trial balance

None of the above

Solution

Question 4

Journal

Account

Ledger

Subsidiary books

Solution

Question 5

I-(c), II-(b), III-(a)

I-(a), II-(c), III-(b)

I-(b), II-(c), III-(a)

I-(a), II-(b), III-(c)

Solution

Question 6

Due to that

Due for that

'What is'

What ought to be

Solution

Question 7

Primary entry

Original entry

Duplicate entry

Primary or original entry

Solution

Question 8

The subsidiary book system

Journal system

Ledger

None of these

Solution

Question 9

For any given journal entry. debits must exceed credits

It is customary to record credits on the left and debits on the right

The chart of accounts reveals the amount to debit and credit to the affected accounts

Journalization is the process of converting transactions and events into debit/credit format

Solution

Question 10

Purchase Book.

Sales Book.

Bills Receivable Book.

Pass book.

Solution

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