Recording of Transactions Test - 5

Assets are property owned by business in its name. But loan is amount which business have to pay in future, it is an obligation or debt on business . So it is not assets.

there can be effect only on one side with many transaction and many transaction affect the both side of the equation by increase or decrease with equal amount. 

Like :- purchase of good affect only assets side with cash outflow and stoock increment.

But payment to creditor affect cash and liability.

Purchase book records credit transactions and daily balance of purchase book is transferred to purchase account.

debit note is issued by purchaser to vendor at the time of returning good.

A debit voucher helps in recording expenses or a liability and also helps in its payment. They are also called Source Documents as they help in identifying the source of a transaction. Examples include bill receipts, cash memos, pay-in-slips.

withdrawal amount for personal use is called drawings which decreases capital amount and assets too.

Sale Book is prepared for recording credit sale transaction.

Provision for bad debt  can deduct from debtors or can shown as a liability in the balance sheet. this will increase the liability balance or we can say reduces the assets balance.

Accounting equation is based on dual concept which is expressed by :- assets = Liabilty + capital.

There is always dual effect in accounting

Any journal entry which affect more than multiple account is called compuned entry and these entry are recorded in compound voucher because these affect multiple debit credit.

Credit note is a document given by seller to the purchaser who has return goods and he can adjust this amount with future purchases. So this means credit has been granted to the person named in the credit note.

Impersonal account means account other than personal. 

Rule of Personal account is debit the receiver credit the giver.

So, option 1 and option 3 is other than personal means Impersonal.

Credit voucher is concerned with receipts of cash for any transaction. So there payment of cash for good purchase which is not related to credit voucher.

Drawing is amount withdrawn out of business for personal purpose which ultimately affects capital balance. As much as Drawing increases then capital Decreases.

Assets are the property of a business in its name. So factory owned by company is example of assets

yes. Cash memo are prepared on cash sale or cash purchase and Invoices are on credit transaction of sale and purchase. 

these both are source documents, on the basis of which we record transaction.

Personal account is an account for use by individual for that person's own need. These account are in the name of person. Like Ram ,Shyam, SBI Bank Account.

Hence Assets are having real account ,so Investment Account is a Real Account not a personal account.

Assets are business owned property in its name which is cash, debtor furniture.

Liability are debt for the business which are trade payables, short term loans.

Income are amount earned by business which are sale or commission received.

Expenses are the amount paid for purchase or any expense which are purchase and salary.

Capital is amount invested in business which is Equity or owner fund.

True. Account Receivables are assets for business and when we will receive amount from them it will increase cash or bank amount which is also assets. This means one side assets increases with cash inflow or other side assets decrease with account receivable.

amount overdrawn on the firms account is the amount due on the part of firm to bank which increases liability.

Accounting equation is based on double entry system due to which every transaction affect atleast two or more account. 

Example:- 1. Paid to creditor will affect cash or liabilty.

 2. Sold goods on cash at a profit will affect three account because it will increase cash, and stock will get decrease and profit will increase capital balance.

If liability decrease by 5000 this means there is a payment for any liability which means cash outflow  . Cash is an assets which get decreases when we pay liability which means assets also decreases with same amount.

Assets are business property and have a debit balance. So when assets increases , it become debited in the books.

revenue is income earned by business entity which increases the assets balance and capital balance of the entity.

Purchase return book is prepared to record all credit returns of purchases. So the balance of purchase retrun book is transferred to purchase book on periodical basis.