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CBSE Questions for Class 11 Commerce Accountancy Recording Of Transactions - I Quiz 4 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Recording Of Transactions - I
Quiz 4
State whether the following statement is True or False
On credit sale of goods,Goods A/c is to be credited.
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True
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False
Explanation
Goods A/c is a Real A/c. The rule for the Real A/c is Debit what comes in and Credit what goes out. Thus, we credit Goods or Sales A/c. In case of credit sales, the debtors or buyers A/c is debited.
Thus, the correct answer is A.
________ is concerned with the recording process of accounting.
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Ledger
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Preparation of profit and loss a/c
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Journalising
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Balancing and ledger
Explanation
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.
The word 'Credit' is derived from Latin word ________ .
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cradate
0%
crude
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credential
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credere
Explanation
Credit is the trust which allows one party to provide money or resources to another party where that second party does not reimburse the first party immediately, but instead promises either to repay or return those resources at a later date. The word credit is derived from Latin word credere which means "to trust, entrust, believe".
_________ is concerned with the classification process of Accounting.
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Ledger
0%
Preparation of profit and loss a/c
0%
Journalising
0%
Balancing of leger
Explanation
Once the business transactions are recorded in journal, this has to be posted in ledger. Posting of transaction in a ledger depends on the nature of transaction. Hence this is very much desired to have a proper classification of ledger. This may be classified in the form of personal ledger and impersonal ledger.
In an account prepared under Double entry system ____ prefix suggest that the concerned account is credited.
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to
0%
by
0%
balance cd
0%
balance bd
Explanation
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.
Which side represent credit _____ .
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Left
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Right
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Side having larger total
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Side having shorter total
Explanation
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.
When a liability is discharged _____ is debited.
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creditor a/c
0%
cash account
0%
profit and loss a/c
0%
miscellaneous expenses a/c
Explanation
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.
Book of original entries is also known as ______.
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Invoice book
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Journal
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Debit/credit notebook
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Ledger
Explanation
Keeping the kind of books for recording the business transaction depends on the business need but there are two important books which are essentially to kept by each business i.e. journal and ledger. Any transaction which occurs in the business need to be first recorded in journal first. Hence all the original entries can be found from journal itself.
In an account prepared under a double-entry system, ________ prefix suggests that the concerned account is debited.
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To
0%
By
0%
Balance cd
0%
Balance bd
Explanation
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.
The term 'Debt' is derived from Latin word_________.
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debere
0%
debonare
0%
debtor
0%
none of these
Explanation
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.
Which side represents debit ?
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Left side
0%
Right side
0%
Side having shorter total
0%
Side having larger total
Explanation
Accounting is based on a unique concept i.e double entry system which means for every transaction there will be a debit and credit too. While preparing the financial statement, debits are shown in the left side and credits are shown on the right side.
______ describes a record of the transaction.
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Income statement
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Journal
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General ledger
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Charter of accounts
Explanation
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.
_______ accounts relates to persons, debtors, creditors etc.
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Personal a/c
0%
Real a/c
0%
Nominal a/c
0%
Impersonal a/c
Explanation
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.
_______ is an artificial personal A/c.
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ICICI Bank A/c
0%
Goodwill A/c
0%
Mohan A/c
0%
Building A/c
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, bank, outstanding/prepaid accounts, accounts of credit customers, accounts of good suppliers, capital, drawings, etc. Personal accounts are personal accounts which are created artificially by law, such as corporate bodies and institutions, are called Artificial personal accounts. E.g. Pvt Ltd companies, LLCs, LLPs, clubs, schools, etc. ICICI Bank A/s is an artificial personal A/c.
Purchase of office equipment for cash would cause __________.
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Cash in hand to decrease
0%
External liability to decrease
0%
Total liabilities to increase
0%
Total assets to increase
Explanation
Cash exists as a company's most liquid asset. Purchasing office equipment for cash will reduce a company's assets (i.e. reduction in cash in hand). Since owner's equity equals assets minus liabilities, owner's equity will be reduced as a result of buying office equipment with cash.
Which of these represents usual accounting equation?
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Owners Equity $$=$$ Assets $$+$$ Liability
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Owners Equity $$+$$ Outside liability $$=$$ Total Assets
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Assets $$+$$ Owners Equity $$=$$ Outside Liability
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Outside Equity $$+$$ Profit $$=$$ Total Assets
Explanation
The accounting equation is the foundation of double entry accounting. The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company's shareholders. Thus, the accounting equation is: Assets = Liabilities + Owner's equity. The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and owner's equity.
Personal A/c can have _______.
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Debit balance only
0%
Credit balance only
0%
No balance
0%
All the three are possible
Explanation
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.
The balance of personal account shows ______.
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Cash Balance
0%
Profit and Loss
0%
Amount due to or due from other persons, organization
0%
Liquidity Position
Explanation
There are mainly three types of account: 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, outstanding/prepaid accounts, banks, accounts of credit customers, accounts of good suppliers, capital, drawings, etc. Natural personal accounts is the simplest to understand out of all and includes God's creations who have ability to deal, who, in most cases, are people. Artificial personal accounts are created artificially by law, such as corporate bodies and institutions. Representative personal accounts represent a certain person or a group directly or indirectly. The balance of personal account shows amount due to or due from other persons, organizations.
Rent receivable is a ________.
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Nominal A/c
0%
Real A/c
0%
Personal A/c
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Representative personal A/c
Explanation
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.
Proprietor's A/c is a _______ account.
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Personal
0%
Real
0%
Nominal
0%
None of the above
Explanation
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.
Sales proceed of own flat put in business by proprietor would cause ____________.
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Cash in hand and owners capital to increase
0%
External liability to decrease
0%
Total liabilities to increase
0%
Total assets remain unchanged
Explanation
The owner's capital is the part of the accounting equation that represents the liquid cash that the company has earned, which it has on hand for daily operations as well as capital investments. Sales proceed of own flat put in business will increase cash in hand of business (as it is capital investment) and ultimately increases owners capital as it is the addition to the existing cash balance of business.
The difference between assets and liabilities is?
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Bank overdraft
0%
Retained profit
0%
Capital or owner's equity
0%
Creditors
Explanation
The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company's shareholders. Thus, the accounting equation is: Assets = Liabilities + Owner's equity. The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and owner's equity. The difference between assets and liabilities is capital or owner's equity i.e. Owner's equity = Assets - Liabilities.
_______ accounts relates to expenses, losses, income,
gain, revenue etc.
Report Question
0%
Personal a/c
0%
Real a/c
0%
Nominal a/c
0%
Impersonal a/c
Explanation
Accounts are classified in to three categories:
1) Personal Account i.e. Account of any person
2) Real Account i.e. Account of assets or things
3) Nominal Account i.e. Account of expenses, losses, income gain
For each nominal account, a separate account will be opened in the ledger.
Which of the following is a Real A/c?
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Building A/c
0%
Preliminary Expenses
0%
Discount received A/c
0%
Ram Mohan A/c
Explanation
There are mainly three types of accounts: Real, Personal and Nominal accounts. All assets of a firm, which are tangible or intangible, fall under the category "Real accounts". Tangible real accounts are related to those things that can be touched and physically felt. Few examples of tangible real accounts are buildings, machinery, stock, land, etc. Intangible real accounts are those which can't be touched and physically felt. Few examples of intangible real accounts are trademarks, patents, goodwill, etc.
Cash withdrawn from bank for business purpose would cause ____________.
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0%
Increase in current assets
0%
No change in assets and liabilities
0%
Increase in owner's equity
0%
Increase in new working capital
Explanation
When cash withdrawn from bank then the amount is deducted from bank account and added in the cash account of business hence, there is no effect of this transaction on asset or liability side of balance sheet i.e. the effect of transaction is nullified.
Purchase of RBI bonds for cash would lead to ____________.
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0%
No change in total assets
0%
Total assets to decrease
0%
Total assets to increase
0%
Total liabilities to increase
Explanation
Bonds are considered to be an investment and part of assets, similarly cash is also an asset. If RBI bonds are purchased that will increase the assets against the cash which is going to be reduced. Hence there will be no change in assets.
Bank A/c is a __________.
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Real a/c
0%
Nominal a/c
0%
Personal a/c
0%
Dummy a/c
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.
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.
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.
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.
Excess of Assets over liabilities is ___________.
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0%
Owner's capital
0%
Net profit
0%
Gross profit
0%
Net worth
Explanation
The accounting equation is the foundation of double entry accounting. The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company's shareholders. Thus, the accounting equation is: Assets = Liabilities + Owner's equity (Net worth). Which also means excess of asserts over liabilities is nothing but owner's equity i.e.
Assets - Liabilities = Owner's equity (Net worth).
Real a/c can have a _______ balance only.
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0%
credit
0%
debit
0%
both
0%
None
Explanation
There are mainly three types of accounts: Real, Personal and Nominal 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 or physically felt, whereas intangible real accounts are those that can't be touched and physically felt. Real accounts relate to assets. When assets are received in the business the particular asset accounts are debited. When assets are sold or otherwise disposed of, the particular asset accounts are credited. So, if an asset account has a balance it must be a debit balance. It indicates the value of asset in the possession of the business.
A summary record of the changes in a particular asset, liability or owners equity is known as _________.
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Account
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Account current
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Proforma Account
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Ledger
Explanation
The detailed record of all the changes that have occurred in a particular asset, liability, or owner's equity during a period is known as account. It is a record or statement of financial expenditure and receipts relating to a particular period or purpose.
The transferring of amount from the journal to the appropriate accounts in the ledger is called _________.
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0%
Recording
0%
Journalising
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Journal entry
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Posting
Explanation
All journal entries must be transferred to a book to have the summary of each account. The book where these individual account are opened is called ledger. Process of transferring the entries from journal to ledger is called posting.
Rs. 2100 received from Mr. David which was earlier written off as bad debt will be credited to ___________.
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0%
David A/c
0%
Debtors A/c
0%
Bad debts recovered A/c
0%
profit and loss A/c
Explanation
The amount which are not recoverable from the customers to whom goods were sold on credit, considered as loss to the business. These are called bad debts and to be debited to bad debts written off a/c.
If the same amount is recovered later on, this will be treated as income and to be credited to "Bad debts recovered a/c."
In Real A/c credit means _______.
Report Question
0%
what comes in
0%
what goes out
0%
income
0%
losses
Explanation
Golden rule of accounting for real account is.
Debit what comes in i.e. addition
Credit what goes out i.e. reduction
In Real A/c debit means __________.
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0%
what comes in
0%
what goes out
0%
income
0%
losses
Explanation
Golden rule of accounting for real account is:
Debit what comes in i.e. addition
Credit what goes out i.e. reduction
A journal is also known by_____.
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Account current
0%
Book of original entry
0%
Purchase day book
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Current Account
Explanation
Every business transaction must first be recorded in journal. Hence all original entries are found in journal itself which is a subsidiary books.
Subsidiary books of accounts are also called book of original entry as all the transactions are recorded originally or at the first instance in these books.
In Nominal a/c credit means ____________.
Report Question
0%
what comes in
0%
what goes out
0%
income/gains
0%
losses
Explanation
Golden rule for Nominal accounts says that:
Debit all the expenses and losses.
Credit all the revenue and gains.
When a entry involves only two accounts it is called _______.
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0%
Simple entry
0%
Double entry
0%
Compound entry
0%
Complex entry
Explanation
Accounting is based on double entry system. that means every transaction will have two impact. When only two accounts are involved, its called simple entry.
Goods worth Rs.500 purchased on cash.
Goods account and Cash account will be impacted.
In Nominal A/c debit means _________.
Report Question
0%
What comes in
0%
What goes out
0%
Income
0%
Expenses/losses
Explanation
Golden rule for Nominal accounts says that:
Debit all the expenses and losses
Credit all the revenue and gains
Book of Original entry is called _____.
Report Question
0%
a journal
0%
memorandum A/c
0%
kachha record
0%
voucher
Explanation
Every business transaction must first be recorded in journal. Hence all original entries are found in journal itself which is a subsidiary books. Subsidiary books of accounts are also called book of original entry as all the transactions are recorded originally or at the first instance in these books.
An entry made in the journal is called _______.
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0%
Journal entry
0%
Diarizing
0%
Recording
0%
Narration
Explanation
Every business transaction must first be recorded in journal. These are called journal entry. Hence all original entries are found in journal itself which is a subsidiary books.
How many columns are in a journal?
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4
0%
5
0%
6
0%
3
Explanation
Date
Particulars
Ledger Folio no
Dr. Amount
Cr. Amount
There are 5 columns in a journal:
When a entry involves two or more accounts it is called ________.
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0%
Simple entry
0%
Double entry
0%
Compound entry
0%
Complex entry
Explanation
When a transaction is involving more than two accounts, entry is called a compound entry.
Goods worth Rs.1000 is purchased on a discount of Rs.100 by paying cash of Rs.900 is an example of combined entry where accounting entry will be:
By Goods A/c Dr. Rs.1000
To Cash A/c Cr. Rs.900
To Cash discount A/c Cr. Rs.100
Rs 1200 being advance income tax of the proprietor paid by the firm is treated as ______.
Report Question
0%
Business expense
0%
Drawing
0%
Business tax of the firm
0%
Loss
Explanation
Income Tax is a personal liability of the proprietor. Hence any amount paid or withdraw from the business for personal purposes is to be debited to drawing account.
____________ has a debit balance.
Report Question
0%
Debtors Account
0%
Sales Account
0%
Creditors Account
0%
Overdraft Account
Explanation
When the goods are sold on credit, the customer who owes money for the goods is known as debtor. Amount is receivable from such debtors and hence it is considered as an asset for the business entity. Also assets will show a debit balance.
Hence, debtors being an asset to the entity will show a debit balance of an amount which is receivable from them.
______________ has a credit balance.
Report Question
0%
Purchase account
0%
Sales Account
0%
Goodwill account
0%
Cash account
Explanation
As per the rules of accounting, revenue account will always have a credit balance showing income for the business entity.
Sales refers to the amount of goods or services provided to the customers in the course of business.
Sales being a revenue to the business entity will always have credit balance.
Interest received A/c will have ________.
Report Question
0%
Debit balance
0%
Credit balance
0%
Nil
0%
Debit or credit balance
Explanation
Interest 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 Interest received is an income therefore, it will have credit balance.
___________ is not a subsidiary book.
Report Question
0%
Sales day book
0%
Purchase day book
0%
Cash book
0%
Purchase Account
Explanation
A journal is sub divided into number the books for some specific transactions to be recorded which are known as subsidiary books.
These can be purchase day book, sales day book, purchase returns, sales returns, cash book, etc.
While closing the purchase day books, sum of the total of purchase day book is transferred to purchase account. Purchase account is an account and hence, cannot be considered as a subsidiary book.
Sales A/c will have ________.
Report Question
0%
Debit Balance
0%
Credit Balance
0%
Nil
0%
Debit or Credit balance
Explanation
Sales account is a real account. Rule of real account says credit what goes out. Accordingly sale of goods are recorded as credit. Sales a/c will always have the credit balance.
Received Rs 1100 from M/s M in settlement of Rs 1250 due from him. The nature of the journal entry to be passed for this transaction is ______.
Report Question
0%
Simple entry
0%
Compound entry
0%
Complex entry
0%
Contra entry
Explanation
A compound journal entry is an accounting entry in which there is more than one debit, more than one credit, or more than one of both debits and credits.
Hence, it is a compound entry, as cash account and discount allowed A/c is to be debited.
Goods worth Rs 3000 were purchased on which the trader allowed Rs 200 as trade discount and 5% as cash discount if paid immediately. Purchase a/c will be debited by _____.
Report Question
0%
Rs 3000
0%
Rs 2800
0%
Rs 2750
0%
Rs 2660
Explanation
Discount are categorized as trade discount and cash discount. If any discount is allowed by the trader without any condition, its a general or trade discount. In such situation, purchases will be recorded in the books of account on the net price paid. In given situation purchase account will be debited by Rs.2800/-
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