Accounting: Basic Records

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Name Business Email Phone Number

Which of the following is an example of personal account

Machinery

Rent

Cash

Creditor

Salary

None

Payment received from debtor

Decreases the total asset

Increases the total asset

Results in no change in total asset

Increases the total liabilities

Decreases the total liabilities

None

Payment of salary is recorded by

Debiting Salary account, crediting cash account

Debiting cash a/c, crediting salary a/c

Debiting employee a/c, crediting salary a/c

Debiting cash a/c, crediting employee a/c

Debiting employee a/c , crediting salary a/c

None

Cash purchases

Increases assets

Results in no change in total assets

Increases the total liabilities

Decreases assets

Decreases liabilities

None

Journal is a

a. book of original entry

b. Classified summary of all transactions

c. Permanent record

Both a and b

None of the above

None

Purchase of goods on credit from ABC is recorded as

Debit purchases a/c, Credit cash a/c

Debit ABC a/c, Credit Purchases a/c

Debit purchases a/c, Credit ABC a/c

Debit stock a/c. Credit purchases a/c

Debit ABC a/c, Credit Stock a/c

None

Goods returned fro X is entered as

Debit X a/c; Credit Purchase returns a/c

Debit X account; Credit cash a/c

Debit sales Return a/c; Credit X a/c

Debit x a/c; Credit Sales a/c

Debit sales a/c; Credit X's a/c

None

Difference in bank balance as per bank pass book and cash book may arise on account of

Cheque issued but not presented

Cheque issued but dishonoured

Direct payments by customers in bank

Cheque deposited and credited by bank

All of the above

None

When fixed assets are sold

The total assets will increase

The total liabilities will increase

The total assets will decrease

The is no change in total assets

The liabilities will decrease

None

Withdrawn of goods from stock by the owner of the business for personal use should be recorded by

Debiting stock account and crediting capital account

Debiting capital account ad crediting drawings account

Debitig drawings account and crediting cash account

Debiting stock account and crediting drawings account

Debiting drawings account and crediting stock account

None

Which of the following statements is /are true?

When there are cheques deposited but not collected by the banker, overdraft balance as per passbook will be less than that as per cash book

When the payment side of the cash book is undercast, over draft balance as per cahs book wibb be more than over draft balance as per passbook

When reconcilliation is to be done with the extracts of cashbook and pass book relating to the same period, the transactions which do not figure in one of the extracts are to be noted

Bank interest debited in the passbook is to be added to overdraft balance as per passbook to arrive at the overdraft balance as per cash book

All of the above

None

Which of the following transactions would cause a change in owners equity?

a. Repayment fo bank loan

b. Payments of dividends and unprofitable operations

c. Sale of land on credit

d. Purchase of assets and incurrence of liabilities

Both b and c

None

Goods returned bu customers is entered by

Debiting Purchase account and crediting customers account

Debiting Customers account and crediting sales account

Debiting sales returns account and crediting customers account

Debiting customers account and crediting goods account

Debiting purchases account and crediting sales account

None

Withdrawals by proprietor would

Reduce both assets and owners equity

Reduce assets and increase liabilities

Reduce owners equity and increase liabilities

Have no effect on balance sheet

Reduce owners equity and increase assets

None

Which of the following is true?

The payment of liability causes an increase i owners liability

The collection of an account receivable will cause the total assets to increase

The accounting equation may be stated as: Assets + Liabilities = Owners equity

The purchase of an asset such as office equipment, either for cash or on credit, does not change the owners equity

A balance sheet reports financial activities for a specific time period such as a year

None

Purchase of goods from ABC is to be recorded by:

Debiting purchases account and crediting ABC account

Debiting cash account and crediting ABC account

Debiting purchases account and crediting cash account

Debiting ABC account and crediting cash account

Debiting cash account and crediting purchases account

None

Which of the following statements is/are true?

a. Cash book records all cash receipts and cash payments

b. Cash book records all sale and purchase transactions of goods both in cash and on credit

c. Cash books record discount on cash payments

Only a

Only b

Both a and c

All of a, b and c

None

Trade discount allowed at the time of sale of goods

Is recorded in sales book

Is recorded in cash book

Is recorded in journal

Is not recorded in the books of accounts

Is recorded in petty cash book

None

The periodical total Sales Return Book is posted to the

Credit of sales account

Debit of sales account

Debit of sales return account

Credit of sales return account

Debit of debtors account

None

If the petty cash fund is not reimbursed just prior to year end and an appropriate adjusting entry is not made, then

A complete audit is necessary

The petty cash account is to be returned to the cashier

Expenses are overstated and cash is understated

Cash is overstated and expenses are understated

Cash is overstated and expenses are overstated

None

The bank reconciliation statement is prepared

To rectify the mistakes in cash book

To rectify the mistakes in the bank statement

To arrive at the bank balance

To arrive at the cash balance

To bring out the reason for the differences between the balance as per cash book and the balance as per the bank statement

None

ABC Ltd paid wages of Rs 8000 for erection of machinery. the journal entry for the transaction is

Debit wages and credit cash

Debit machinery and credit cash

Debit wages and credit erection charges

Debit machinery and credit erection charges

Debit wages and credit machinery account

None

Which of the following statements is false?

When a bank column of cash book shows a credit balance, it means an amount is due to bank

When passbook shows a debit balance, it means overdraft as per passbook

While preparing bank reconciliation statement, cheques paid into bank but not yet cleared are deducted from the debit balance as p[er cash book to arrive at the balance as per passbook.

A bank reconciliation statement is a part of passbook

A bank reconciliation statement is a statement, but not the account by the customer of the bank

None

Which of the following statements is/are true?

A sale of an asset is recorded in the sales book

Total of return outward book is debited to return outward account

The balance of petty cash book is a liability

Cash book is a subsidiary book as well as a ledger

Purchase book makes a record of all purchases

None

Which of the following is true regarding closing entries?

They must be followed by reversing entries

They transfer the balances in all of the nominal accounts to the trading and profit and loss account

They must be made after the reversing entries but before the adjusting enteries

They must be made after the adjusting entries but before the reversing enteries

They transfer the balances in all real accounts to profits and loss accounts

None

Purchase of goods on credit

Increases liabilities

Increases assets

Increases both assets and liabilities

Decreases assets

Decreases liabilities

None

Purchase of raw material for cash

Increases total assets

Increases total liabilities

Leaves total assets unchanged

Increases total fixed assets

Increases total current assets

None

Which of the following is not an asset?

Stock of stationery

Good will

Profit and loss account ( Credit balance)

Accounts receivable

Cash at bank

None

The process of balancing an account involves equalization of bothsides of the account. If the debit side of an account exceeds the credit side, the difference is put on the credit side. The said balance is

a. A Debit balance

b. A Credit balance

c. An expenditure or an asset

d. An income or an liability

Only b

Only d

Both a and c

Both b and c

Both b and d

None

Which of the following statements is false?

Wages paid on installation of machinery should be credited to cash account

A sale of computer that has been used in the business should be debited to cash account

Error of posting of a correctly recorded transaction affects one or more accounts

Repairs of machinery purchased second hand should be debited to machinery account

Withdrawal of goods by the proprietor of the business should be credited to capital account.

None

Which of the following transactions of a business is/are recorded in journal proper?

a. Purchase of goods on credit

b. Sale of office furniture for cash

c. Discounting of bill of exchange with bank

d. Endorsement of a bill of exchange in settlement of debt of the businesst

Only a

Only d

Both b and d

a, c and d

a, b, c, and d

None

Which of the following statements is/are true?

a. Drawings account is a nominal account

b. Capital account is a real account

c. Sales account is a nominal account

d. Outstanding salaries account is a nominal account

e. Patents account is a personal account

Only a

Only c

Both b and d

Both b. d and e

a, b. c and d

None

The entry to record the collection of cash from sundry debtors would involve a

Debit to sundry debtors

Debit to cash account

Credit to sundry debtors

Credit to cash account

Debit to Cash account and Credit to sundry debtors

None

A company makes payments to its sundry creditors through cheques and the cash discount received on these payments is recorded in triple columnar cash book. In the event of dishonour of any such cheques, the discount so received should be written back through

a. A debit to discount column of the cash book

b. A credit to discount column of the cash book

c. A credit to bank column of the cash book

d. A debit to discount through proper journal proper

e. A credit to creditor's account through Journal proper

Only a

Only b

Only d

Both a and c

Both d and e

None

A company purchases on credit. If the purchases are not as per the specifications, the company returns them to the suppliers. The book that is used to record such returns is

Returns inward book

Returns outward book

Cash book

Journal Proper

Purchases day book

None

If office equipment is purchased for cash, what effect will this transaction have on the financial position of the company?

There is no change in the assets, liabilities and owners equity

There is a decrease in assets liabilities and owners equity

There is a decrease in assets, no change in liabilities and a decrease in owners equity

There is an increase in assets, decrease in liabilities and no change in owners equity

There is an increase in assets, no change in liabilities and an increase in owners equity

None

The periodical total of discount column on receipts side of a triple column cash book is recorded to the

Credit side of discount account

Credit side of provision for discount account

Debit side of provision account

Credit side of Debtors account

Credit side of creditors account

None

Which of the following statements is false?

Credit side total of discount column of cash book is an income

Credit balance of bank passbook is an overdraft

Debit balance of bank column of cash book is an asset

Credit balance of bank column of cash book is a liability

None

Withdrawal of goods from stock by the owner of the business for personal use should be recorded by debiting

Drawings account and crediting cash account

Drawings account and crediting purchases account

Capital account and crediting drawings account

Purchases account and crediting drawings account

Purchases account and crediting capital account

None

Purchases of fixed assets on credit is originally recorded in

Purchases book

Ledger

Cash book

Journal Proper

Ledger and Journal

None

Double entry book keeping involves

Two accounts being effected for each transaction which are equal and opposite to one another

Two sets of books being kept for the business

Business book keeping being kept by more than one person

Every entry in the business books being checked twice

Every transaction is recorded once in the journal and again in the ledger

None

The amount of owners equity in a business is not affected by

Percentage of total assets held in cash

Investments made in the business by the owner

The profitability of the business

The amount of dividends paid to stockholders

Sale of an asset for an amount less than book value

None

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Accounting: Basic Records

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