Nature of Accounts and Rules of Debit and Credit Test 7

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Nature of Accounts and Rules of Debit and Credit Test 7

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Question 1
1 / -0

The term 'Debt' is derived from Latin word_________.

A
debere

B
debonare

C
debtor

D
none of these

Solution

When we want to express an obligation or responsibility, the word "deber" is used. Its a Spanish word which signifies as debt. Debts is considered to be a liability in the financial statement. Once a firm takes money from any money lender, this has to be classified as debt.
Question 2
1 / -0

______ describes a record of the transaction.

A
Income statement

B
Journal

C
General ledger

D
Charter of accounts

Solution

The transactions are recorded first of all in the journal and then they are posted to the ledger. Thus the journal is the book of first or original entry while the ledger is the book of second entry. Journal records transactions in a chronological order. Journal is more reliable then ledger. The process of recording transactions is termed as journalising.
Question 3
1 / -0

________ is concerned with the recording process of accounting.

A
Ledger

B
Preparation of profit and loss a/c

C
Journalising

D
Balancing and ledger

Solution

The number and kinds of books of accounts kept by any business depends upon its particular need. But there are two major books which must invariably be maintained by every business i.e. journal and ledger. Every transaction is first recorded in the journal which is considered as subsidiary books of account. Journal merely helps the posting of entries in to ledger, that's why it is called as subsidiary books of account.
Question 4
1 / -0

_______ accounts relates to persons, debtors, creditors etc.

A
Personal a/c

B
Real a/c

C
Nominal a/c

D
Impersonal a/c

Solution

There are mainly three types of accounts: Real, Personal and Nominal accounts. Personal accounts are classified into 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 good suppliers, capital, drawings, etc.
Question 5
1 / -0

Which side represent credit _____ .

A
Left

B
Right

C
Side having larger total

D
Side having shorter total

Solution

In accounting, a credit is an entry on the right side of a double-entry bookkeeping system that represents the reduction of a liability or revenue.
Question 6
1 / -0

In an account prepared under Double entry system ____ prefix suggest that the concerned account is credited.

A
to

B
by

C
balance cd

D
balance bd

Solution

Posting is a process of transferring debit and credit aspects of the entries appearing in the journal and other books of original entry to the and credit sides of the relevant accounts in the ledger. Posting are made using the word "To" and "By" as a prefix. For debit side entry "To" prefix is used and for credit side "By" prefix is used.
Question 7
1 / -0

When a liability is discharged _____ is debited.

A
creditor a/c

B
cash account

C
profit and loss a/c

D
miscellaneous expenses a/c

Solution

A creditor is an entity (person or institution) that extends credit by giving another entity permission to borrow money intended to be repaid in the future. Hence when the liability is cleared or discharged creditor account is debited.
Question 8
1 / -0

Rent receivable is a ________.

A
Nominal A/c

B
Real A/c

C
Personal A/c

D
Representative personal A/c

Solution

Representative personal accounts are those which represent a certain person or a group directly or indirectly. E.g. Let's say that wages paid in advance to an employee-a wage prepaid account will be opened in the books of accounts. This wages prepaid account is a representative personal account indirectly linked to the person. Representative personal accounts include outstanding salaries, rent receivable, prepaid rent, etc.
Question 9
1 / -0

Proprietor's A/c is a _______ account.

A
Personal

B
Real

C
Nominal

D
None of the above

Solution

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 good suppliers, capital, drawings, etc.

There are three types of personal accounts:Natural, Artificial and Representative.
Natural personal accounts are the simplest of all and includes all God's creations who have ability to deal, who, in most cases, are people.
E.g. Kumar's A/c, Proprietor's A/c, Adam's A/c etc.
Question 10
1 / -0

Personal A/c can have _______.

A
Debit balance only

B
Credit balance only

C
No balance

D
All the three are possible
Solution
There are mainly three types of accounts: Real, Personal and Nominal accounts.
Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of good suppliers, accounts of credit customers, capital, drawings, etc. Personal a/c can have debit balance only, credit balance only and no balance. The debit balance of a personal account indicates debts owing by the person and credit balance indicates owing to the person concerned, For the business, the first one is accounts receivable or asset, while the second is accounts payable or liability.
The debit balance of all personal accounts on a certain date put together will make sundry debtors and the credit balance of all personal accounts put together will make sundry creditors.

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Nature of Accounts and Rules of Debit and Credit Test 7

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Nature of Accounts and Rules of Debit and Credit Test 7

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SHARING IS CARING

Question 1

debere

debonare

debtor

none of these

Solution

Question 2

Income statement

Journal

General ledger

Charter of accounts

Solution

Question 3

Ledger

Preparation of profit and loss a/c

Journalising

Balancing and ledger

Solution

Question 4

Personal a/c

Real a/c

Nominal a/c

Impersonal a/c

Solution

Question 5

Left

Right

Side having larger total

Side having shorter total

Solution

Question 6

to

by

balance cd

balance bd

Solution

Question 7

creditor a/c

cash account

profit and loss a/c

miscellaneous expenses a/c

Solution

Question 8

Nominal A/c

Real A/c

Personal A/c

Representative personal A/c

Solution

Question 9

Personal

Real

Nominal

None of the above

Solution

Question 10

Debit balance only

Credit balance only

No balance

All the three are possible

Solution

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