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CBSE Questions for Class 11 Commerce Accountancy Recording Of Transactions - I Quiz 11 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Recording Of Transactions - I
Quiz 11
Discount Allowed Account will have ____________.
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0%
Debit balance
0%
Credit balance
0%
Nil
0%
Debit or credit balance
Explanation
Discount Allowed is an Expense therefore it is a Nominal Account.
The rule for Nominal Account is
Debit- All increase in expense or losses
Credit- All Increase in Income and Gains
As Discount Allowed is an Expense therefore, it will have debit balance.
Commission received A/c will have __________.
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0%
Debit balance
0%
Credit balance
0%
Nil
0%
Debit or credit balance
Explanation
Commission received is an income therefore it is a Nominal Account.
The rule for Nominal Account is
Debit- All increase in expense or losses
Credit- All Increase in Income and Gains
As commission is an income therefore, it will have credit balance.
Withdrawal of money by the owner is not a expense but a reduction of __________.
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0%
Cash only
0%
Cash and capital
0%
Capital only
0%
All of these
Explanation
Separate business entity concept of accounting defines that the owner and business are treated two separate entity in the eyes of law.
Any amount contributed towards capital is considered as liabilities in the business books. On the similar line, any amount withdrawn by the owner for personal use is called as drawings which is deducted from capital and will further reduce the cash.
Accounting entry will be as under:
Drawings A/c Dr.
To Cash A/c.
Rent account is a ___________.
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0%
personal account
0%
real account
0%
nominal account
0%
none of the above
Explanation
Accounts relating to income, revenue, gain, expenses and losses are termed as nominal accounts. These accounts are also known as fictitious accounts as they do not represent any tangible asset. A separate account is maintained for each head or expense or loss and gain or income. Rent account is a nominal account. Other examples of nominal accounts are wages account, commission account, interest received account. The rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.
Three months rent of the next financial year is paid in advance, how this transaction effects accounting equation
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0%
Total assets remains unchanged, total liabilities remains unchanged.
0%
Total assets increases, total liabilities decreases.
0%
Total assets decreases, total liabilities increases.
0%
Total assets increases but total liabilities remains the same.
Explanation
The Entry for Above transaction will be
Prepaid Rent a/c Dr.
To Cash
Both are assets therefore, there will be no change in the assets and liabilities
A voucher refers to a/an __________.
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0%
invoice received from suppliers
0%
document in support of an entry made in the books of account
0%
receipt issued to a customer for cash received
0%
all the above
Explanation
For each of the business transaction, a physical documents need to be attached with the books of account as proof of evidence of the transaction. Such document is called as voucher.
There are various kinds of vouchers for each of the business transaction:
Invoice received from suppliers against the purchase of goods.
Cash receipts issued to customer against cash received
Expenses voucher to support the expense amount.
A second-hand car is purchased for Rs. 80,000, the amount of Rs. 1,000 is spent on its repairs, Rs. 500 is incurred to get the car registered in owners name and Rs.
1,500 is paid as dealers commission. The amount debited to car account will be __________.
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0%
Rs. 81,000
0%
Rs. 81,500
0%
Rs. 80,000
0%
Rs. 83,000
Explanation
second hand car Rs.80000
add : repairs charges Rs.1000
add : registration charges Rs. 500
add : dealers charges Rs. 1500
so, the amount debited to car account will be Rs.83000
If the premium is paid on the life policy of the proprietor of the business, it is _____________.
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0%
treated as the drawings and is shown by way of deduction from the capital account
0%
taken to the Trading Account
0%
taken to the Profit and Loss Account and is shown as an expense
0%
taken to the Balance Sheet and is shown as an asset
Explanation
Separate entity concept of accounting defines that owner and business are considered two separate legal entity in the eye of law.
If any amount is contributed by by the owner in the business is treated as capital and to be shown as liability.
If any amount is withdrawn by the proprietor for personal use, this will be treated as drawings and to be deducted from the capital. Life Insurance premium is a personal expense and to be recorded as drawings.
On 31st Dec. 2006 assets of the business are Rs.3,00,000 and its capital is Rs.1,00,Its liabilities on that date will be __________.
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0%
Rs. $$4,00,000$$
0%
Rs. $$2,00,000$$
0%
Rs. $$1,00,000$$
0%
none of the above
Explanation
As per Accounting equation,
Assets = liabilities + Capital
300,000 = Liabilities + 100,000
Liabilities = 200,000
How does depreciation effect basic accounting equation
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0%
Leads to decreases in assets and shareholders equity
0%
Leads to decrease in assets only
0%
Leads to increase in liability and decrease in assets
0%
Leads to decrease in shareholders equity
Explanation
Depreciation is an expense on the income statement it effects shareholders' equity through net income which can impact the assets.
The higher the depreciation implies the lower the net income and assets, thus lower owners' equity.
Depreciation leads to increase in the assets and the shareholder's equity.
The creditors accounts, generally, have credit balance. Debit balance may be due to _________.
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0%
advance paid against an order
0%
goods returned
0%
wrong debit to supplier account
0%
any of these
Explanation
Following accounting will be passed when goods are purchased on credit:
Goods A/c Dr.
To Creditors
In such situation, creditors account will always shows the credit balance or nil balance if all the payments are done. Creditors account may have debit balance in the below cases:
There are cases when goods is returned to the supplier after making the final payment. In such situation creditor account will show a debit balance.
In case of advance payment is done to the creditor before supply of goods, in such situation also, there will be a debit balance in creditors account.
Debit balance may also arise in creditors account if any wrong debit is done in the creditors account.
Which of the following would prevent double payment of the same voucher?
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0%
The person signing the cheque should cancel the supporting documents.
0%
Cheques should be signed by at best two persons.
0%
The data of payment of vouchers of similar nature should be the same of close to each other.
0%
All of the above.
Explanation
To prevent the double payment of a voucher, a process of affixing a stamp "PAID" has to be followed or voucher need to be cancelled/crossed to notify that the payment against this voucher is already done.
The rule for nominal accounts is ____________.
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0%
debit the receiver, credit the giver
0%
debit what comes in, credit what goes out
0%
debit all expenses and losses, credit all incomes and gains
0%
all of the above
Explanation
Accounts relating to income, revenue, gain, expenses and losses are termed as nominal accounts. These accounts are also known as fictitious accounts as they do not represent any tangible asset. A separate account is maintained for each head or expense or loss and gain or income. Wages account, Rent account, Commission account are some examples of nominal accounts.
The rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.
Atul purchased a car for Rs. $$5,00,000$$, by making a down payment of Rs. $$1,00,000$$ and signing a Rs. $$4,00,000$$ bill payable due in $$60$$ days. As a result of this transaction ____________________.
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0%
total assets increased by Rs. $$5,00,000$$
0%
total liabilities increased by Rs.
4
,
00
,
000
4,00,000
0%
total assets increased by Rs. 3
,
00
,
000
4,00,000
0%
total assets increased by Rs.
4
,
00
,
000
4,00,000
Explanation
On purchase of a Car, total assets of balance sheet will be increased by $$Rs. 5,00,000$$ and on making of down payment of $$Rs.1,00,000$$ total assets will decrease by $$Rs. 1,00,000$$. The result will be that total assets of Balance sheet will increase by $$Rs.4,00,000$$.
On other hand a liability of $$Rs.4,00,000$$ has been made so the liability side of Balance Sheet will be increased by $$Rs.4,00,000$$.
Which of the following is (are) benefits of subsidiary ledger accounts to business?
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0%
It tells about customer attitude of payments
0%
It can be checked against the control account to pick up recording errors
0%
It tells about the complete history of transactions of business client
0%
All of the above
An increase in one liability may lead to _________________.
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0%
Increase in another asset
0%
Decrease in liability
0%
Both (A) and (B)
0%
Either (A) or (B)
Explanation
An increase in one liability may lead to
1.
Increase in another asset or
2.
Decrease in liability
Goods worth Rs. $$10,000$$ were purchased by B on which the traders allowed Rs. $$500$$ trade discount and offer to give $$5\%$$ cash discount if immediate payment is made. The Purchase A/c will be debited by _________.
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0%
Rs. $$10,000$$
0%
Rs. $$9,800$$
0%
Rs. $$9,000$$
0%
Rs. $$9,500$$
Explanation
Discount are two types , trade discount and cash discount.
Trade discount is allowed on the list price hence amount of trade discount is not reflected in books of account.
Net price i.e. after deducting trade discount is only recorded in the books of account.
Purchase Price Rs.10000
Less: Trade Discount Rs.500
Net Purchase Price Rs.9500
Hence, Purchase account will be debited by Rs.9500.
Bank account is a ________.
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0%
Real account
0%
Personal account
0%
Nominal account
0%
Valuation account
Explanation
Accounts recording transactions with a person or group of persons are known as personal accounts. These accounts are necessary, in particular, to record credit transactions. Personal accounts are of the following types:
1. Natural persons: An account recording transactions with an individual is termed as a natural persons' personal account. For e.g., Kamal's account, Mala's account. Both males and females are included in it.
2. Artificial or legal persons: An account recording financial transactions with an artificial person created by law or otherwise is termed as an artificial persons' personal account. For e.g. Firms' accounts, limited companies' account.
3. Representative personal account: An account indirectly representing a person or persons is known as representative personal account. When accounts are of similar nature and their number is large, it is better to group them under one head and open a representative personal account. For e.g. prepaid insurance, outstanding wages,etc.
Bank account is a personal account as it is related to a banking firm which is an artificial person. All those accounts which are related to a person, whether artificial or natural, are termed as personal accounts.
The Working Capital (or Net Current Assets) of a business is ___________.
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0%
current assets less current liabilities
0%
capital plus liabilities which are not expected to be paid within a year of the balance sheet date
0%
the capital introduced by the proprietor at commencement of business
0%
non current assets plus current assets less current liabilities
Explanation
Working Capital is that capital which is required for day to day operation of the business. Its basically the fund required for a business cycle. Working Capital is the difference between Current Assets and Current Liabilities.
Current Assets: (A)
Cash on Hand
Cash at Bank
Sundry Debtors
Bills Recievables
Inventory
Current Liabilities: (B)
Sundry Creditors
Bills Payable
Bank Overdraft
Working Capital: A-B.
Discount allowed is an example of ________.
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0%
Increase in Asset & Owner's Liability
0%
Decrease in Asset & Owner's Liability
0%
Increase in Liability & Owner's Liability
0%
Decrease in Liability & Increase in Owner's Liability
0%
Increase in Liability & Decrease in Owner's Liability
Explanation
Discount allowed is an expense. It is allowed when the debtor makes payment.
The journal Entry for Discount allowed is
Discount allowed a/c Dr.
To Debtors a/c
Therefore, there is a Decrease in Asset & Owner's Liability in this case.
Accounts recording transactions with a person or group of persons are known _____________.
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0%
Personal accounts
0%
Real accounts
0%
Nominal accounts
0%
Impersonal accounts
Explanation
There are mainly three types of accounts: Real, Personal and Nominal accounts. Personal accounts are classified into three 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 goods suppliers, capital, drawings, etc.
The golden rule of personal accounts is :Debit the receiver; Credit the giver.
Goods withdrawn by owner for personal use is an example of __________.
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0%
No change in Owner's Equity
0%
Increase in Asset & Owner's Equity
0%
Decrease in Liability & Owner's Equity
0%
None of these
Explanation
The effect of Goods withdrawn by owner for personal use
Goods will be reduced which implies decrease in Assets
as it is withdrawn for personal use by owner which will result in decrease in capital.
Therefore, there is decrease in asset and capital.
Income earned which is yet to be received results in _________________.
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0%
Increases in capital and increase in liability
0%
Decrease in liability and increase in capital
0%
Increase in asset and increase in liability
0%
Increase in capital and increase in asset.
Explanation
Accrued Income is income that is earned but not received in cash by the organisation. Accrued Income is an asset.
Here, accrued income will be increase which is an asset and income will be added to the capital account. Therefore, there will be an
increase in capital and an increase in the asset.
Cash withdrawn by owner personal for use is an example of _________.
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0%
Increase in Asset & Owner's liability
0%
Decrease in Asset & Owner's liability
0%
Increase in Liability & Owner's liability
0%
Decrease in Liability & Increase in Owner's liability
0%
Increase in Liability & Decrease in Owner's liability
Explanation
Here, Cash is an Asset and it is being withdrawn which will result in a decrease in capital and assets.
Therefore, Cash withdrawn by the owner personal for use is an example of a
Decrease in Asset & Owner's liability.
Ram has assets of Rs. 10,000 and liabilities of Rs. 2,his capital would be ________.
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0%
Rs. 10,000
0%
Rs. 12,000
0%
Rs. 8,000
0%
None of these
Explanation
As per Accounting Equation
Assets = Liabilities + Capital
10,000 = 2000 + Capital
Capital = 8000
An example of a Decrease in liabilities and increase in owner's capital is _________.
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0%
Accrued Interest
0%
Outstanding Rent
0%
Bills Payable Accepted
0%
Conversion of Partner's loan into capital
Explanation
The journal entry for
Conversion of Partner's loan into capital is
Partner's loan a/c Dr.
To Capital a/c
Therefore, Conversion of Partner's loan into capital is an example of decrease in liabilities and increase in owner's capital.
Donation & Charity Account is _______________.
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0%
An Asset Account
0%
A Liability Account
0%
A Revenue Account
0%
An Expense Account
Explanation
Donation is the object that is given, such as blood, money, toys, clothing, and so on. The act of donating items to someone in need is known as charity. Because charity and donation are considered income by the NPO, donation and charity A/c are nominal in nature.
So option d is the correct answer.
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Practice Class 11 Commerce Accountancy Quiz Questions and Answers
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