Last Updated on: 5th July 2024, 01:45 pm
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1. Balance of the nominal accounts of ledger is transferred to
(a) Profit & Loss A/c
(b) Trail Balance
(c) Profit and Loss Appropriation A/c.
(d) Balance Sheet.
To determine profit and loss, the balance of nominal accounts have to be transferred to profit and loss A/c. So, option (a) is correct.
2. The book with assorted transactions of an Account is called ___________.
(a) Journal
(b) Ledger
(c) Journal Proper
(d) Trial Balance.
Ledger records all transactions of a specific account. So, option (b) is correct
3. ‘To Balance b/f” or ‘By Balance b/f’ are indicated for
(a) An opening entry.
(b) A closing entry.
(c) An adjusting entry.
(d) All of the above.
Any new account or any opening balance is referred as “To balance b/f or By balance b/f”. So, option (a) is correct.
4. Which of the following account has a credit balance?
(a) Carriage inward.
(b) Carriage outward.
(c) Returns Inward.
(d) Returns outward.
The entry for goods returned to supplier, Returns Outwards is credited. So, option (d) is correct
5. Which of the following is an account?
(a) Cash account
(b) Balance sheet
(c) Trial balance
(d) Journal.
Cash Account is a separate type of ledger account where, cash receipts and payments are shown separately. So, option (a) is correct
Balance Sheet and Trial Balance both are statements of account. So option (b) and option (c) are not correct.
Journal is not an account. It is Primary book of Entry, where all transactions are recorded first. So, option (d) is not correct
6. Closing entries are passed
(a) At the end of the financial year
(b) At the beginning of the year
(c) To rectify errors
(d) To under cast profit.
Closing entries are passed at the end of the year to transfer balances of nominal accounts to P & L a/c. So, option (a) is correct.
7. Which of the followings is not a book of original entry?
(a) Cash book
(b) Ledger
(c) Sales Day Book
(d) None of the above.
Ledger contains entries from books of original entry (like Journal). So, Ledger is not a book of original entry. So, option (c) is correct
8. Posting of wrong amount from Day Books in the ledger book will cause
(a) The Ledger A/cbalance will not be affected
(b) The Trial Balance will not tally.
(c) Balance Sheet will not be affected.
(d) None of the above.
If wrong amount is posted in ledger, the ledger balance will be wrong and consequently Trial balance will not tally. So, option (b) is correct
9. Which of the following accounts, balance is increased by debit entries?
(a) Machinery account on purchase of machinery
(b) Discount earned account when discount is allowed by supplier on goods purchased.
(c) Sales account when goods are sold.
(d) All of these.
Machinery Account is real account to which rule of real account “Debit” what comes in and “Credit” what goes applies. So, normally Machinery Account (which is a Real A/c) has ‘Debit’ balance as when a machinery is purchased (i.e Machinery comes in), the account is debited. So, option (a) is correct.
10. The Miscellaneous Expenses A/c is shown in
(a) Profit & Loss Account in Debit Side
(b) Profit & Loss Account in Credit Side
(c) Balance Sheet in Asset Side
(d) Balance Sheet in Liabilities Side
Misc expenses is shown in balance sheet (not P & L a/c) in Asset Side, representing expenses not fully recovered in the current year. So, it is appears as fictitious Asset in Balance Sheet. So, option (c) is correct.
11. Personal A/c ‘Dr’ balance indicates.
(a) Debtor in Asset side
(b) Creditor in Liabilities side
(c) Profit in P & L Account
(d) Loss in P & L Account
The personal accounts with debit balances are debtor to the company and appears in the asset side of balance sheet.
12. Prepaid insurance account appears as
(a) Expense in P L Account
(b) Revenue in P L Account
(c) Asset in Balance Sheet
(d) Liability in Balance Sheet
Prepaid insurance account is a representative personal account and it has debit balance and is shown under asset side of balance sheet. So, option (c) is correct.
13. Provision for discount on debtors account has a ________ balance.
(a) Debit
(b) Credit
(c) Both Debit or credit
(d) None.
Provision is a type of liability. So, it always has credit balance. So, option (b) is correct.
14. Drawings are shown in the ________ column of the trial balance.
(a) Debit
(b) Credit
(c) Both Debit or credit
(d) None.
When money or goods are withdrawn from the business by the proprietor is called drawing. So, in that sense drawings is the receiver under personal account, So, it has debit balance (debit the receiver). So, option (a) is correct.
15. Year-end Balances of Assets and liabilities accounts appearing in the ledger are summarized in the _____________.
(a) Balance Sheet
(b) Profit and Loss A/c
(c) Statements of affairs.
(d) Cash flow Statement.
At the end of the year the accounts of assets and liabilities are summarized in Balance Sheet. So, option (a) is correct.
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