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All questions of Unit 1: Basic Accounting Procedures - Journal Entries for CA Foundation Exam
Unexpired expenses is ______account. - a)Real
- b)Nominal
- c)Personal
- d)Representative Personal
Correct answer is 'D'. Can you explain this answer?
Unexpired expenses is ______account.
a)
Real
b)
Nominal
c)
Personal
d)
Representative Personal
|
Priya Patel answered |
Unexpired expense is a representative personal account. These accounts are not in the name of any person or organisation but are represented as personal accounts.
Can you explain the answer of this question below: Bank overdraft account is a :
- A:
Personal account
- B:
Real account
- C:
Nominal account
- D:
Representative personal account
The answer is a.
Bank overdraft account is a :
Personal account
Real account
Nominal account
Representative personal account
|
Anu Sen answered |
Bank Overdraft is an artificial Personal account, so will be classified as Personal Account.
If wages are paid for construction of business premises, ________ A/c is credited and ____ A/c is debited.
- a)Wages, Cash
- b)Premises, Cash
- c)Cash, Wages
- d)Cash, Premises
Correct answer is option 'D'. Can you explain this answer?
If wages are paid for construction of business premises, ________ A/c is credited and ____ A/c is debited.
a)
Wages, Cash
b)
Premises, Cash
c)
Cash, Wages
d)
Cash, Premises
|
Freedom Institute answered |
If wages are paid for construction of business premises the amount of wages will be debited to the premises account because, according to IFRS, any expense that brings the asset to use or brings the asset in existence should be added to the cost of that machinery.
Cash account is credited because cash is being paid for incurring the wages.
Goods worth Rs. 10,000 were withdrawn by the proprietor for his personal use. The account to be credited is - a)Sales A/c
- b)Drawing A/c
- c)Purchases A/c
- d)Expenses A/c
Correct answer is 'C'. Can you explain this answer?
Goods worth Rs. 10,000 were withdrawn by the proprietor for his personal use. The account to be credited is
a)
Sales A/c
b)
Drawing A/c
c)
Purchases A/c
d)
Expenses A/c
|
|
Freedom Institute answered |
When the proprietor withdraws goods for personal use of Rs 10,000 it should be credited/deducted from the stock while calculating cost of goods sold and hence are deducted from purchases.
In case of bad debts, which account is credited?- a)Bad debts Account
- b)Creditors Account
- c)Debtors Account
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
In case of bad debts, which account is credited?
a)
Bad debts Account
b)
Creditors Account
c)
Debtors Account
d)
None of these
|
Isha Chopra answered |
The correct answer is option C: Debtors Account.
Explanation:
When a debtor fails to make a payment on time or defaults on their debt, it becomes a bad debt for the company. In accounting, bad debts are considered as losses for the company and need to be accounted for properly.
To account for bad debts, the company uses the allowance method. Under this method, a provision for bad debts is created by estimating the amount of bad debts that are likely to occur in the future. This provision is recorded as an expense in the profit and loss account and a corresponding amount is debited to the bad debts account.
The bad debts account is a nominal account and is classified as an expense. It is used to record the amount of debts that are considered uncollectible and are written off from the debtor's account. By debiting the bad debts account, the company recognizes the loss incurred due to non-payment by the debtor.
On the other hand, when a debtor fails to make a payment, their account remains outstanding in the books of the company. The outstanding amount is recorded as a receivable in the debtor's account. When the bad debt is confirmed, the debtor's account is credited with the amount of the bad debt. This reduces the outstanding balance of the debtor and reflects the loss incurred by the company.
Therefore, in case of bad debts, the debtor's account is credited, as it represents the reduction in the amount receivable from the debtor. This allows the company to accurately reflect the financial impact of the bad debt and adjust its accounts accordingly.
Explanation:
When a debtor fails to make a payment on time or defaults on their debt, it becomes a bad debt for the company. In accounting, bad debts are considered as losses for the company and need to be accounted for properly.
To account for bad debts, the company uses the allowance method. Under this method, a provision for bad debts is created by estimating the amount of bad debts that are likely to occur in the future. This provision is recorded as an expense in the profit and loss account and a corresponding amount is debited to the bad debts account.
The bad debts account is a nominal account and is classified as an expense. It is used to record the amount of debts that are considered uncollectible and are written off from the debtor's account. By debiting the bad debts account, the company recognizes the loss incurred due to non-payment by the debtor.
On the other hand, when a debtor fails to make a payment, their account remains outstanding in the books of the company. The outstanding amount is recorded as a receivable in the debtor's account. When the bad debt is confirmed, the debtor's account is credited with the amount of the bad debt. This reduces the outstanding balance of the debtor and reflects the loss incurred by the company.
Therefore, in case of bad debts, the debtor's account is credited, as it represents the reduction in the amount receivable from the debtor. This allows the company to accurately reflect the financial impact of the bad debt and adjust its accounts accordingly.
Bill payable account.
- a)Personal
- b)Real
- c)Nominal
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Bill payable account.
a)
Personal
b)
Real
c)
Nominal
d)
None of the above
|
Shereen Shaik answered |
It is a personal account because it is related to proprietor
Capital of business is Rs. 75,000 and liability is Rs. 25,000 then total assets of business would be: - a)Rs. 1,00,000
- b)Rs. 15,000
- c)Rs. 75,000
- d)Rs. 50,000
Correct answer is option 'A'. Can you explain this answer?
Capital of business is Rs. 75,000 and liability is Rs. 25,000 then total assets of business would be:
a)
Rs. 1,00,000
b)
Rs. 15,000
c)
Rs. 75,000
d)
Rs. 50,000
|
Arjun Singhania answered |
Description: Assets= Capital+ Liabilities
1,00,00= 75,000+ 25,000
Therefore, the total assets would be Rs.1,00,000
Goods given as charity credited to :- a)Charity A/c
- b)Purchase A/c
- c)Drawings A/c
- d)Sales A/c
Correct answer is option 'B'. Can you explain this answer?
Goods given as charity credited to :
a)
Charity A/c
b)
Purchase A/c
c)
Drawings A/c
d)
Sales A/c
|
Neha Choudhury answered |
Explanation:
When goods are given as charity, it means that the business entity is giving away its products without expecting any payment in return. In such cases, the goods should be credited to the Purchase Account.
Reasons why goods given as charity should be credited to Purchase Account:
1. Charity is not a part of the normal business operations.
2. The cost of goods given as charity is a direct expense and should be charged to the Profit and Loss Account.
3. The Purchase Account represents the cost of goods purchased or acquired by the business, and it is used to calculate the cost of goods sold.
4. By crediting the Purchase Account, the cost of goods given as charity is deducted from the total cost of goods purchased, which results in a lower cost of goods sold and a higher gross profit.
Conclusion:
When goods are given as charity, they should be credited to the Purchase Account. This will ensure that the cost of goods given as charity is properly accounted for and deducted from the total cost of goods purchased.
When goods are given as charity, it means that the business entity is giving away its products without expecting any payment in return. In such cases, the goods should be credited to the Purchase Account.
Reasons why goods given as charity should be credited to Purchase Account:
1. Charity is not a part of the normal business operations.
2. The cost of goods given as charity is a direct expense and should be charged to the Profit and Loss Account.
3. The Purchase Account represents the cost of goods purchased or acquired by the business, and it is used to calculate the cost of goods sold.
4. By crediting the Purchase Account, the cost of goods given as charity is deducted from the total cost of goods purchased, which results in a lower cost of goods sold and a higher gross profit.
Conclusion:
When goods are given as charity, they should be credited to the Purchase Account. This will ensure that the cost of goods given as charity is properly accounted for and deducted from the total cost of goods purchased.
Can you explain the answer of this question below:X is a dealer of electrical goods (such as Refrigerator, Washing Machines, Televisions etc.) He purchased two Air Conditioners and installed in his showroom. In the books of X, the cost of air conditioner would be debited in:
- A:
Drawings Account
- B:
Capital Account
- C:
Fixed asset account
- D:
Purchase account
The answer is c.
X is a dealer of electrical goods (such as Refrigerator, Washing Machines, Televisions etc.) He purchased two Air Conditioners and installed in his showroom. In the books of X, the cost of air conditioner would be debited in:
Drawings Account
Capital Account
Fixed asset account
Purchase account
|
Tejas Joshi answered |
Explanation:
When X purchased two air conditioners and installed them in his showroom, the cost of the air conditioners would be debited in the Fixed Asset Account. Here's why:
1. Fixed Asset Account:
Fixed assets are long-term tangible assets that are used to produce goods or services, and are not intended for sale to customers. Examples of fixed assets include land, buildings, machinery, and equipment. Since the air conditioners purchased by X are not intended for sale to customers, they would be classified as fixed assets.
2. Cost of Air Conditioners:
The cost of the air conditioners includes the purchase price, transportation costs, installation costs, and any other expenses incurred to bring the asset into its present condition and location. As such, the cost of the air conditioners would be debited in the Fixed Asset Account.
3. Purpose of Fixed Asset Account:
The purpose of the Fixed Asset Account is to track the cost of fixed assets over their useful life, and to record any depreciation or impairment of the assets as they are used in the business. By debiting the cost of the air conditioners in the Fixed Asset Account, X can track the value of the air conditioners over time and record any depreciation or impairment as necessary.
In conclusion, the correct answer is option 'C' Fixed Asset Account, as it is the appropriate account to record the cost of the air conditioners as fixed assets.
When X purchased two air conditioners and installed them in his showroom, the cost of the air conditioners would be debited in the Fixed Asset Account. Here's why:
1. Fixed Asset Account:
Fixed assets are long-term tangible assets that are used to produce goods or services, and are not intended for sale to customers. Examples of fixed assets include land, buildings, machinery, and equipment. Since the air conditioners purchased by X are not intended for sale to customers, they would be classified as fixed assets.
2. Cost of Air Conditioners:
The cost of the air conditioners includes the purchase price, transportation costs, installation costs, and any other expenses incurred to bring the asset into its present condition and location. As such, the cost of the air conditioners would be debited in the Fixed Asset Account.
3. Purpose of Fixed Asset Account:
The purpose of the Fixed Asset Account is to track the cost of fixed assets over their useful life, and to record any depreciation or impairment of the assets as they are used in the business. By debiting the cost of the air conditioners in the Fixed Asset Account, X can track the value of the air conditioners over time and record any depreciation or impairment as necessary.
In conclusion, the correct answer is option 'C' Fixed Asset Account, as it is the appropriate account to record the cost of the air conditioners as fixed assets.
“Debit the receiver and credit the giver” is the golden rule for which type of account?- a)Real A/c
- b)Personal A/c
- c)Nominal A/c
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
“Debit the receiver and credit the giver” is the golden rule for which type of account?
a)
Real A/c
b)
Personal A/c
c)
Nominal A/c
d)
None of these
|
|
Miss U Jaan answered |
It's B Personal Account
Personal Account ka rule h Debit the receiver and credit the giver.
Personal Account ka rule h Debit the receiver and credit the giver.
A withdrawal of cash from business by the proprietor of the firm should be debited to ___________.
- a)Cash account
- b)Capital account
- c)Drawing account
- d)Purchase account
Correct answer is option 'C'. Can you explain this answer?
A withdrawal of cash from business by the proprietor of the firm should be debited to ___________.
a)
Cash account
b)
Capital account
c)
Drawing account
d)
Purchase account
|
|
Arun Khanna answered |
C: Drawings Account
The transaction is based on the separate entity concept which signifies that business and its proprietor are treated two separate legal entity.
Withdrawal of cash by proprietor should be debited to drawing account in the books of the business. Same amount should be credited by the proprietor in cash account.
A Furniture dealer during the financial year 2010-11, sold furniture of Rs. 25,000 to Mr. Sunil on cash basis. In the books of dealer _____ account will be debited and _________ account will be credited. - a)Cash, Fixed Assets
- b)Cash, Furniture
- c)Cash, Sales
- d)Cash, Sunil’s
Correct answer is option 'C'. Can you explain this answer?
A Furniture dealer during the financial year 2010-11, sold furniture of Rs. 25,000 to Mr. Sunil on cash basis. In the books of dealer _____ account will be debited and _________ account will be credited.
a)
Cash, Fixed Assets
b)
Cash, Furniture
c)
Cash, Sales
d)
Cash, Sunil’s
|
Gowri Chavan answered |
C)Cash, Sales
Capital Account is a _________.- a)Real A/c
- b)Personal A/c
- c)Nominal A/c
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
Capital Account is a _________.
a)
Real A/c
b)
Personal A/c
c)
Nominal A/c
d)
None of these
|
|
Alok Mehta answered |
Capital Account is a Personal Account because it represents owner of the business.
Personal Accounts:
The elements or accounts which represent persons and organizations.
Mrs. Vimla a/c - representing Mrs. Vimla a person.
M/s Bharat & Co a/c - representing M/s Bharat & Co, an organisation.
Capital a/c - representing the owner of the business, a person or organisation.
Bank a/c - representing Bank, an organisation.
Hence, the correct answer is Option B
For notes On Base Of Accounting Click on the link given below:
Value of goods drawn by proprietor should be credited to:
- a)Capital Account
- b)Sales Account
- c) Drawings Account
- d) Purchases Account
Correct answer is option 'D'. Can you explain this answer?
Value of goods drawn by proprietor should be credited to:
a)
Capital Account
b)
Sales Account
c)
Drawings Account
d)
Purchases Account
|
Rajat Patel answered |
The correct option is D.
The goods taken by the proprietor for personal use, reduce the inventory of the business. Hence, it is placed on a temporary drawings account. It reduces the Owner's equity account. It is not an expense of the business.
The goods taken by the proprietor for personal use, reduce the inventory of the business. Hence, it is placed on a temporary drawings account. It reduces the Owner's equity account. It is not an expense of the business.
DEBIT signifies: - a)Increase in Assets account
- b)Decrease in Liability account
- c)Decrease in Capital account
- d)All of the above
Correct answer is 'D'. Can you explain this answer?
DEBIT signifies:
a)
Increase in Assets account
b)
Decrease in Liability account
c)
Decrease in Capital account
d)
All of the above
|
Gowri Chakraborty answered |
In bookkeeping, a debit can signify an increase in an asset, an expense, and the owner's draws. A debit can also signify a decrease in a liability, revenues, and owner's equity.
A debit is one-half of bookkeeping's double-entry system. The other half is a credit.
Sunset Tours has a Rs. 3,500 account receivable from Mohan. On January 20, the Rotary makes a partial payment of Rs. 2100 to Sunset Tours. The journal entry made on January 20 by Sunset Tours to record this transaction includes:
- a)A credit to the received account of Rs. 2,100.
- b)A credit to the Account receivable account of Rs. 2,100.
- c)A debit to the cash account of Rs. 1,400.
- d)A debit to the Account receivable account of Rs. 1,400.
Correct answer is option 'B'. Can you explain this answer?
Sunset Tours has a Rs. 3,500 account receivable from Mohan. On January 20, the Rotary makes a partial payment of Rs. 2100 to Sunset Tours. The journal entry made on January 20 by Sunset Tours to record this transaction includes:
a)
A credit to the received account of Rs. 2,100.
b)
A credit to the Account receivable account of Rs. 2,100.
c)
A debit to the cash account of Rs. 1,400.
d)
A debit to the Account receivable account of Rs. 1,400.
|
Apaar Singh answered |
Cash account is Dr by 2100 and account recievebale account is credited because. cash is inc and debtors is decreased and when decrease in asset we credit that account
Cash account is a - a)Personal account
- b)Real account
- c)Nominal account
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
Cash account is a
a)
Personal account
b)
Real account
c)
Nominal account
d)
None of the above.
|
|
Gayatri Khanna answered |
Cash account can be classified as a real account. A real account is an account that retains and rolls forward its ending balance from period to period. The areas in the balance sheet in which real accounts are found are assets, liabilities, and equity.
Can you explain the answer of this question below:Recovery of bad debts written off previously will be ?
- A:
Credited to debtors A/c
- B:
Adjusted against provision for doubtful debts
- C:
Debited to debtors A/c
- D:
Credited to Profit and Loss A/c
The answer is d.
Recovery of bad debts written off previously will be ?
Credited to debtors A/c
Adjusted against provision for doubtful debts
Debited to debtors A/c
Credited to Profit and Loss A/c
|
Madhurima Dasgupta answered |
Recovery of bad debts written off previously will be credited to Profit and Loss A/c. This can be explained in the following points:
1. Bad debts: When a debtor fails to pay the outstanding dues, it is considered as bad debt. The company writes off such bad debts from its books of accounts as they are considered as irrecoverable.
2. Provision for doubtful debts: To account for the possibility of bad debts, companies create a provision for doubtful debts. This provision is created by estimating the amount of bad debts that are likely to occur in the future.
3. Recovery of bad debts: Sometimes, a debtor who has been written off as bad debt pays the outstanding dues. This is considered as the recovery of bad debts.
4. Accounting treatment: The recovery of bad debts is credited to Profit and Loss A/c because it is a gain for the company. The bad debt was written off in the past, which means that the company had already accounted for the loss. Therefore, the recovery of bad debts is considered as a gain for the company, and it is credited to the Profit and Loss A/c.
5. Impact on provision for doubtful debts: The recovery of bad debts does not impact the provision for doubtful debts. This is because the provision was created based on an estimate of bad debts that are yet to occur. The recovery of bad debts is an unexpected event, and it does not change the estimate of future bad debts.
In conclusion, the recovery of bad debts written off previously will be credited to Profit and Loss A/c because it is a gain for the company. It does not impact the provision for doubtful debts as it is an unexpected event.
1. Bad debts: When a debtor fails to pay the outstanding dues, it is considered as bad debt. The company writes off such bad debts from its books of accounts as they are considered as irrecoverable.
2. Provision for doubtful debts: To account for the possibility of bad debts, companies create a provision for doubtful debts. This provision is created by estimating the amount of bad debts that are likely to occur in the future.
3. Recovery of bad debts: Sometimes, a debtor who has been written off as bad debt pays the outstanding dues. This is considered as the recovery of bad debts.
4. Accounting treatment: The recovery of bad debts is credited to Profit and Loss A/c because it is a gain for the company. The bad debt was written off in the past, which means that the company had already accounted for the loss. Therefore, the recovery of bad debts is considered as a gain for the company, and it is credited to the Profit and Loss A/c.
5. Impact on provision for doubtful debts: The recovery of bad debts does not impact the provision for doubtful debts. This is because the provision was created based on an estimate of bad debts that are yet to occur. The recovery of bad debts is an unexpected event, and it does not change the estimate of future bad debts.
In conclusion, the recovery of bad debts written off previously will be credited to Profit and Loss A/c because it is a gain for the company. It does not impact the provision for doubtful debts as it is an unexpected event.
“Machinery sold for Rs. 30,000 on credit.” In which subsidiary book this transaction will be recorded?- a)Sales Register
- b)Cash Book
- c)Journal
- d)No Entry will be made
Correct answer is option 'C'. Can you explain this answer?
“Machinery sold for Rs. 30,000 on credit.” In which subsidiary book this transaction will be recorded?
a)
Sales Register
b)
Cash Book
c)
Journal
d)
No Entry will be made
|
Jayant Mishra answered |
Sales Register records the sale of goods in trade of the business whereas cash book records all cash receipts and expenses of regular nature. Machinery is an asset and is sold on credit so it will be recorded in journal.
Note: Entries that are not recorded in any subsidiary book are recorded in journal.
Recovery of bad debts written off previously will be ?
- a)Credited to debtors A/c
- b)Adjusted against provision for doubtful debts
- c)Debited to debtors A/c
- d)Credited to Profit and Loss A/c
Correct answer is option 'D'. Can you explain this answer?
Recovery of bad debts written off previously will be ?
a)
Credited to debtors A/c
b)
Adjusted against provision for doubtful debts
c)
Debited to debtors A/c
d)
Credited to Profit and Loss A/c
|
Rahul Chaudhary answered |
Recovery of Bad Debts Written Off
Bad debts refer to the amount owed by customers that are unlikely to be recovered. Sometimes, businesses write off these bad debts as a loss in their financial statements. However, there may be instances where these bad debts can be recovered at a later time. In such cases, the recovery of bad debts written off previously will be credited to the Profit and Loss A/c.
Reasons for Recovering Bad Debts
There are several reasons why a business may be able to recover bad debts that were previously written off, including:
- The debtor may have come into money and is now able to pay the debt.
- The business may have found more effective methods of collecting outstanding debts.
- The debtor may have declared bankruptcy and the business has been able to recover some of the outstanding debts through the bankruptcy proceedings.
Accounting Treatment
When a bad debt is written off, it is typically recorded as a debit to the provision for doubtful debts account and a credit to the debtor's account. However, when the bad debt is recovered, the accounting treatment would be as follows:
- The debtor's account would be credited for the amount recovered.
- The provision for doubtful debts account would be debited for the amount of the recovery.
- Finally, the Profit and Loss A/c would be credited for the amount of the recovery.
Conclusion
Recovering bad debts that were previously written off can have a positive impact on a business's financial performance. It is important to have effective methods in place for collecting outstanding debts and to regularly review the provision for doubtful debts account to ensure that it accurately reflects the likelihood of recovering outstanding debts.
Bad debts refer to the amount owed by customers that are unlikely to be recovered. Sometimes, businesses write off these bad debts as a loss in their financial statements. However, there may be instances where these bad debts can be recovered at a later time. In such cases, the recovery of bad debts written off previously will be credited to the Profit and Loss A/c.
Reasons for Recovering Bad Debts
There are several reasons why a business may be able to recover bad debts that were previously written off, including:
- The debtor may have come into money and is now able to pay the debt.
- The business may have found more effective methods of collecting outstanding debts.
- The debtor may have declared bankruptcy and the business has been able to recover some of the outstanding debts through the bankruptcy proceedings.
Accounting Treatment
When a bad debt is written off, it is typically recorded as a debit to the provision for doubtful debts account and a credit to the debtor's account. However, when the bad debt is recovered, the accounting treatment would be as follows:
- The debtor's account would be credited for the amount recovered.
- The provision for doubtful debts account would be debited for the amount of the recovery.
- Finally, the Profit and Loss A/c would be credited for the amount of the recovery.
Conclusion
Recovering bad debts that were previously written off can have a positive impact on a business's financial performance. It is important to have effective methods in place for collecting outstanding debts and to regularly review the provision for doubtful debts account to ensure that it accurately reflects the likelihood of recovering outstanding debts.
Debit the receiver and credit the giver is correct for.
- a)Personal
- b)Real
- c)Nominal
- d)Hypothetical
Correct answer is option 'A'. Can you explain this answer?
Debit the receiver and credit the giver is correct for.
a)
Personal
b)
Real
c)
Nominal
d)
Hypothetical
|
|
Priyanshu Tiwari answered |
Debit the receiver, and credit the giver" is a golden rule for Personal A/c. Personal accounts are the accounts for individual, firms, companies etc. By debit the receiver means the person who is receiving goods on credit will be debited and the person who is giving will be credited.
Bank overdraft account is a : - a)Personal account
- b)Real account
- c)Nominal account
- d)Representative personal account
Correct answer is option 'A'. Can you explain this answer?
Bank overdraft account is a :
a)
Personal account
b)
Real account
c)
Nominal account
d)
Representative personal account
|
|
Saumya Khanna answered |
Bank Overdraft is an artificial Personal account, so will be classified as Personal Account.
Which account is the odd one out?
- a)Office furniture & Equipment
- b)Freehold land and Buildings
- c)Inventory of materials
- d)Plant and Machinery
Correct answer is option 'C'. Can you explain this answer?
Which account is the odd one out?
a)
Office furniture & Equipment
b)
Freehold land and Buildings
c)
Inventory of materials
d)
Plant and Machinery
|
|
Madhurima Dasgupta answered |
B)Accounts payable
c)Inventory
d)Sales revenue
Ans: d) Sales revenue is the odd one out as it is a revenue account, whereas the other three options are balance sheet accounts.
c)Inventory
d)Sales revenue
Ans: d) Sales revenue is the odd one out as it is a revenue account, whereas the other three options are balance sheet accounts.
Profit is : - a)Revenue
- b)Expense
- c)Asset
- d)Owner Capital
Correct answer is option 'D'. Can you explain this answer?
Profit is :
a)
Revenue
b)
Expense
c)
Asset
d)
Owner Capital
|
Sparsh Sen answered |
Profit is Owner Capital
Profit is one of the most important financial metrics that a business owner must know. It is the difference between total revenue and total expenses incurred during a specific period. Profit is a key indicator of a business's financial health and sustainability. The correct answer to this question is option 'D', i.e., Owner Capital.
Explanation:
Profit is the amount of money that a business owner earns after deducting all expenses and taxes. It is the money that is left over from the revenue generated by the business. Profit is a measure of how well a business is doing financially.
Owner Capital refers to the amount of money that the owner has invested in the business. It includes the initial investment made by the owner and any additional investments made over time. The profit earned by the business is considered as the return on the owner's investment. Therefore, profit is directly related to owner capital.
In simple terms, profit increases the owner's equity in the business. It is the money that the owner can use to reinvest in the business or take out as personal income. Profit is essential for the growth and sustainability of a business.
Conclusion:
In conclusion, profit is the difference between total revenue and total expenses incurred during a specific period. It is a measure of how well a business is doing financially. Profit is directly related to the owner's capital, which includes the initial investment and any additional investments made over time. Profit is essential for the growth and sustainability of a business, and it increases the owner's equity in the business.
Profit is one of the most important financial metrics that a business owner must know. It is the difference between total revenue and total expenses incurred during a specific period. Profit is a key indicator of a business's financial health and sustainability. The correct answer to this question is option 'D', i.e., Owner Capital.
Explanation:
Profit is the amount of money that a business owner earns after deducting all expenses and taxes. It is the money that is left over from the revenue generated by the business. Profit is a measure of how well a business is doing financially.
Owner Capital refers to the amount of money that the owner has invested in the business. It includes the initial investment made by the owner and any additional investments made over time. The profit earned by the business is considered as the return on the owner's investment. Therefore, profit is directly related to owner capital.
In simple terms, profit increases the owner's equity in the business. It is the money that the owner can use to reinvest in the business or take out as personal income. Profit is essential for the growth and sustainability of a business.
Conclusion:
In conclusion, profit is the difference between total revenue and total expenses incurred during a specific period. It is a measure of how well a business is doing financially. Profit is directly related to the owner's capital, which includes the initial investment and any additional investments made over time. Profit is essential for the growth and sustainability of a business, and it increases the owner's equity in the business.
The rent paid to landlord is credited to:
- a)Cash Account
- b)Rent Account
- c)Landlord`s Account
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
The rent paid to landlord is credited to:
a)
Cash Account
b)
Rent Account
c)
Landlord`s Account
d)
None of these
|
|
Arun Khanna answered |
Landlord`s Account
In double-entry accounting, payments for expenses are typically recorded by debiting the expense account and crediting the cash account. However, if the payment is made to a specific individual or organization, it is generally credited to their account.
In this case, the rent paid to the landlord is an expense for Sunset Tours. To record the payment, Sunset Tours would debit the rent expense account and credit the cash account to reduce the amount of cash on hand. However, since the payment is made to the landlord, it would also be credited to the landlord's account to reduce the amount owed.
The journal entry would be:
Rent Expense (Debit) Cash (Credit) Landlord (Credit)
Options B, C, and D are incorrect because they do not accurately reflect the transaction. The rent account is an expense account and would be debited, not credited. The cash account would be credited to reduce the amount of cash on hand, but it would not be credited to the landlord's account. The transaction does not involve any of the other options listed.
It is important to understand the rules for recording transactions in order to accurately prepare financial statements and effectively manage a business.
Prepaid salary account.- a)Personal
- b)Real
- c)Nominal
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Prepaid salary account.
a)
Personal
b)
Real
c)
Nominal
d)
None of the above
|
|
Priya Patel answered |
Prepaid salary, prepaid rent etc. Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business. Prepaid (Unexpired) expense is a personal account and is shown on the Assets side of a balance sheet. Expenses are amounts paid for goods or services purchased.
The rule regarding PERSONAL ACCOUNT is :- a)Debit what comes in, credit what goes out.
- b)Debit all expenses and losses, credit all incomes and gains
- c)Debit the receiver, credit the giver
- d)None
Correct answer is option 'C'. Can you explain this answer?
The rule regarding PERSONAL ACCOUNT is :
a)
Debit what comes in, credit what goes out.
b)
Debit all expenses and losses, credit all incomes and gains
c)
Debit the receiver, credit the giver
d)
None
|
|
Arjun Singhania answered |
Personal Account:
The accounts relating to induviduals, firms, associations or companies are known as personal account.
Three golden rules of Personal Accounting:
Debit is the receiver.
Credit is the giver.
An example of this kind of transaction is Vendor/Customer relations.
eg - When business receives any sum it is debited and vice versa
A diamond ring worth Rs. 1,00,000 was stolen from the shop of M/s Shine Jewellers during the accounting year 2011-12. Insurance claim of Rs. 60,000 was admitted by the insurance company but not disbursed up to the end of the accounting year. In this regard no entry was passed in the books of accounts. The correct journal entry for preparing the final accounts for the year ended 31st March 2012, would be: - a)Profit & Loss A/c Dr. 1,00,000
To Purchases A/c 1,00,000 - b)Insurance claim
receivable A/c Dr. 60,000
Loss by theft A/c Dr. 40,000
To Purchases A/c 1,00,000 - c)Profit & Loss A/c Dr. 40,000
Insurance claim
receivable A/c Dr. 60,000
To Purchase A/c 1,00,000 - d)Insurance claim
receivable A/c Dr. 60,000
Insurance company
A/c Dr. 40,000
To Purchases A/c 1,00,000
Correct answer is 'C'. Can you explain this answer?
A diamond ring worth Rs. 1,00,000 was stolen from the shop of M/s Shine Jewellers during the accounting year 2011-12. Insurance claim of Rs. 60,000 was admitted by the insurance company but not disbursed up to the end of the accounting year. In this regard no entry was passed in the books of accounts. The correct journal entry for preparing the final accounts for the year ended 31st March 2012, would be:
a)
Profit & Loss A/c Dr. 1,00,000
To Purchases A/c 1,00,000
To Purchases A/c 1,00,000
b)
Insurance claim
receivable A/c Dr. 60,000
Loss by theft A/c Dr. 40,000
To Purchases A/c 1,00,000
receivable A/c Dr. 60,000
Loss by theft A/c Dr. 40,000
To Purchases A/c 1,00,000
c)
Profit & Loss A/c Dr. 40,000
Insurance claim
receivable A/c Dr. 60,000
To Purchase A/c 1,00,000
Insurance claim
receivable A/c Dr. 60,000
To Purchase A/c 1,00,000
d)
Insurance claim
receivable A/c Dr. 60,000
Insurance company
A/c Dr. 40,000
To Purchases A/c 1,00,000
receivable A/c Dr. 60,000
Insurance company
A/c Dr. 40,000
To Purchases A/c 1,00,000
|
Nabanita Deshpande answered |
And Loss A/c Dr. 40,000
To Suspense A/c 40,000
Explanation:
As the insurance claim of Rs. 60,000 was admitted by the insurance company, the loss suffered by M/s Shine Jewellers is only Rs. 40,000 (Rs. 1,00,000 – Rs. 60,000). As no entry was passed in the books of accounts regarding this loss, the amount should be transferred to a Suspense A/c. Therefore, the journal entry would be to debit the Profit and Loss A/c for Rs. 40,000 and credit the Suspense A/c for the same amount.
To Suspense A/c 40,000
Explanation:
As the insurance claim of Rs. 60,000 was admitted by the insurance company, the loss suffered by M/s Shine Jewellers is only Rs. 40,000 (Rs. 1,00,000 – Rs. 60,000). As no entry was passed in the books of accounts regarding this loss, the amount should be transferred to a Suspense A/c. Therefore, the journal entry would be to debit the Profit and Loss A/c for Rs. 40,000 and credit the Suspense A/c for the same amount.
Accounts payable : - a)Revenue
- b)Expense
- c)Asset
- d)Liability
Correct answer is option 'D'. Can you explain this answer?
Accounts payable :
a)
Revenue
b)
Expense
c)
Asset
d)
Liability
|
|
Arjun Singhania answered |
Accounts payable is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents
Rent of proprietor’s house paid from business account by cash will __________:-- a)Decrease the profit
- b)Increase the profit
- c)Reduce the capital of business
- d)Reduce the cash as well as capital of business
Correct answer is option 'D'. Can you explain this answer?
Rent of proprietor’s house paid from business account by cash will __________:-
a)
Decrease the profit
b)
Increase the profit
c)
Reduce the capital of business
d)
Reduce the cash as well as capital of business
|
|
Priyanshu Tiwari answered |
Because it is drawing and drawing reduce cash and capital
A sale of goods to Ram for cash should be debited to:
- a)Ram
- b)Cash
- c)Sales
- d)Capital
Correct answer is option 'B'. Can you explain this answer?
A sale of goods to Ram for cash should be debited to:
a)
Ram
b)
Cash
c)
Sales
d)
Capital
|
Target Study Academy answered |
Debiting a Sale of Goods to Ram for Cash to Cash Account:
- When a sale of goods is made to Ram for cash, it means that cash is being received in exchange for the goods sold.
- The cash received in this transaction will increase the cash balance of the business.
- Therefore, the transaction should be recorded by debiting the Cash Account.
- Debiting the Cash Account will reflect the increase in cash balance resulting from the sale.
- It is important to record transactions accurately to maintain the integrity of the accounting records.
Proprietor’s Account is ________Account.- a)Real
- b)Nominal
- c)Personal
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
Proprietor’s Account is ________Account.
a)
Real
b)
Nominal
c)
Personal
d)
None of these
|
Sinjini Tiwari answered |
A proprietor is an individual who owns and operates a business. They are responsible for all aspects of the business, including finances, decision-making, and day-to-day operations. A proprietor may be the sole owner of the business or may have partners, but they have ultimate control and authority over the business. They are also personally liable for any debts or legal issues that arise from the business.
Rent account.- a)Personal
- b)Real
- c)Nominal
- d)None of the above
Correct answer is option 'C'. Can you explain this answer?
Rent account.
a)
Personal
b)
Real
c)
Nominal
d)
None of the above
|
|
Shradha Rajput answered |
Nominal accounts means income, gain , revenue, expenses , losses so rent is a expense that's y it is a nominal account
Salaries are : - a)Revenue
- b)Expense
- c)Asset
- d)Liability
Correct answer is option 'B'. Can you explain this answer?
Salaries are :
a)
Revenue
b)
Expense
c)
Asset
d)
Liability
|
Sounak Chaudhary answered |
Salaries are an Expense
Expense is one of the categories of accounts that are used in accounting. Salaries are a type of expense incurred by a business or organization in order to compensate employees for their work. Therefore, the correct answer is option 'B' which states that salaries are an expense.
Explanation
To understand why salaries are considered an expense, it's important to define what an expense is. An expense is any cost that a business incurs in order to generate revenue. Salaries are a cost that a business incurs in order to compensate its employees for their work. Therefore, salaries are classified as an expense.
Salaries are not an asset because assets are resources that a business owns and controls that can be used to generate revenue. While employees are a valuable resource for a business, they are not owned or controlled by the business in the same way that physical assets, such as equipment or property, are owned and controlled.
Salaries are not a liability because a liability is a debt or obligation that a business owes to another party. While a business may owe its employees wages for work that has been completed, this is not considered a liability in accounting terms because the employee is not a separate entity from the business.
Conclusion
In conclusion, salaries are classified as an expense because they are a cost that a business incurs in order to compensate its employees for their work. Expenses are one of the categories of accounts used in accounting to track the costs associated with generating revenue.
Expense is one of the categories of accounts that are used in accounting. Salaries are a type of expense incurred by a business or organization in order to compensate employees for their work. Therefore, the correct answer is option 'B' which states that salaries are an expense.
Explanation
To understand why salaries are considered an expense, it's important to define what an expense is. An expense is any cost that a business incurs in order to generate revenue. Salaries are a cost that a business incurs in order to compensate its employees for their work. Therefore, salaries are classified as an expense.
Salaries are not an asset because assets are resources that a business owns and controls that can be used to generate revenue. While employees are a valuable resource for a business, they are not owned or controlled by the business in the same way that physical assets, such as equipment or property, are owned and controlled.
Salaries are not a liability because a liability is a debt or obligation that a business owes to another party. While a business may owe its employees wages for work that has been completed, this is not considered a liability in accounting terms because the employee is not a separate entity from the business.
Conclusion
In conclusion, salaries are classified as an expense because they are a cost that a business incurs in order to compensate its employees for their work. Expenses are one of the categories of accounts used in accounting to track the costs associated with generating revenue.
Capital of business is Rs. 75,000 and liability is Rs. 25,000 then total assets of business would be: - a)Rs. 1,00,000
- b)Rs. 15,000
- c)Rs. 75,000
- d)Rs. 50,000
Correct answer is option 'A'. Can you explain this answer?
Capital of business is Rs. 75,000 and liability is Rs. 25,000 then total assets of business would be:
a)
Rs. 1,00,000
b)
Rs. 15,000
c)
Rs. 75,000
d)
Rs. 50,000
|
|
Puja Das answered |
Calculation of Total Assets in a Business
To calculate the total assets of a business, we need to add up all the assets owned by the business, which includes capital and liabilities. Here is how we can calculate the total assets of the given business:
1. Identify the Capital and Liability:
- Capital: Rs. 75,000
- Liability: Rs. 25,000
2. Add Capital and Liability:
- Rs. 75,000 + Rs. 25,000 = Rs. 1,00,000
3. Conclusion:
- The total assets of the business would be Rs. 1,00,000.
Therefore, the correct answer is option 'A' - Rs. 1,00,000.
To calculate the total assets of a business, we need to add up all the assets owned by the business, which includes capital and liabilities. Here is how we can calculate the total assets of the given business:
1. Identify the Capital and Liability:
- Capital: Rs. 75,000
- Liability: Rs. 25,000
2. Add Capital and Liability:
- Rs. 75,000 + Rs. 25,000 = Rs. 1,00,000
3. Conclusion:
- The total assets of the business would be Rs. 1,00,000.
Therefore, the correct answer is option 'A' - Rs. 1,00,000.
‘A’ owed Rs. 25,000 to ‘B’ ‘A’ becomes insolvent. ‘B’ got A’s computer valuing Rs. 11,500 in his full settlement. Journal Entry will be passed in the books of ‘B’. - a)Purchase A/c Dr. 11,500
To A 11,500 - b)Computer Dr. 11,500
Bad-debts Dr. 13,500
To A 25,000 - c)Computer A/c Dr. 25,000
To A 25,000 - d)Computer A/c Dr. 11,500
Purchases A/c Dr. 13,500
To A 25,000
Correct answer is option 'B'. Can you explain this answer?
‘A’ owed Rs. 25,000 to ‘B’ ‘A’ becomes insolvent. ‘B’ got A’s computer valuing Rs. 11,500 in his full settlement. Journal Entry will be passed in the books of ‘B’.
a)
Purchase A/c Dr. 11,500
To A 11,500
To A 11,500
b)
Computer Dr. 11,500
Bad-debts Dr. 13,500
To A 25,000
Bad-debts Dr. 13,500
To A 25,000
c)
Computer A/c Dr. 25,000
To A 25,000
To A 25,000
d)
Computer A/c Dr. 11,500
Purchases A/c Dr. 13,500
To A 25,000
Purchases A/c Dr. 13,500
To A 25,000
|
Advait Chakraborty answered |
Some potential causes of hunger and poverty can include:
1. Lack of access to education: Without proper education and skills training, individuals may struggle to find stable employment and earn a sufficient income to meet their basic needs.
2. Limited access to resources: People living in rural or remote areas may lack access to essential resources such as clean water, fertile land, and healthcare facilities. This can hinder their ability to grow food, stay healthy, and escape the cycle of poverty.
3. Unemployment: High levels of unemployment, especially among young people, can lead to poverty and hunger. Limited job opportunities and a lack of skills or qualifications can make it difficult for individuals to secure stable employment.
4. Political instability and conflict: Countries experiencing political instability or armed conflict often face higher levels of poverty and hunger. These situations can disrupt agricultural production, destroy infrastructure, and displace populations, leading to food shortages and economic hardship.
5. Discrimination and inequality: Marginalized groups, such as women, ethnic minorities, and people with disabilities, often face discrimination and unequal access to resources. This can contribute to higher levels of poverty and hunger within these communities.
6. Climate change and environmental degradation: The impacts of climate change, such as droughts, floods, and extreme weather events, can devastate agricultural production and livelihoods. Additionally, environmental degradation, such as deforestation and soil erosion, can reduce the availability of natural resources needed for food production.
7. Lack of social safety nets: Inadequate social protection programs and safety nets, such as unemployment benefits, food assistance programs, and health insurance, can leave vulnerable populations without a safety net to fall back on in times of crisis.
Addressing these causes requires a multi-faceted approach that includes investing in education and skills training, increasing access to resources and job opportunities, promoting peace and stability, reducing discrimination and inequality, implementing climate change adaptation strategies, and strengthening social safety nets. Additionally, international cooperation and support are crucial in addressing these global challenges.
1. Lack of access to education: Without proper education and skills training, individuals may struggle to find stable employment and earn a sufficient income to meet their basic needs.
2. Limited access to resources: People living in rural or remote areas may lack access to essential resources such as clean water, fertile land, and healthcare facilities. This can hinder their ability to grow food, stay healthy, and escape the cycle of poverty.
3. Unemployment: High levels of unemployment, especially among young people, can lead to poverty and hunger. Limited job opportunities and a lack of skills or qualifications can make it difficult for individuals to secure stable employment.
4. Political instability and conflict: Countries experiencing political instability or armed conflict often face higher levels of poverty and hunger. These situations can disrupt agricultural production, destroy infrastructure, and displace populations, leading to food shortages and economic hardship.
5. Discrimination and inequality: Marginalized groups, such as women, ethnic minorities, and people with disabilities, often face discrimination and unequal access to resources. This can contribute to higher levels of poverty and hunger within these communities.
6. Climate change and environmental degradation: The impacts of climate change, such as droughts, floods, and extreme weather events, can devastate agricultural production and livelihoods. Additionally, environmental degradation, such as deforestation and soil erosion, can reduce the availability of natural resources needed for food production.
7. Lack of social safety nets: Inadequate social protection programs and safety nets, such as unemployment benefits, food assistance programs, and health insurance, can leave vulnerable populations without a safety net to fall back on in times of crisis.
Addressing these causes requires a multi-faceted approach that includes investing in education and skills training, increasing access to resources and job opportunities, promoting peace and stability, reducing discrimination and inequality, implementing climate change adaptation strategies, and strengthening social safety nets. Additionally, international cooperation and support are crucial in addressing these global challenges.
Consider the following statements and identify the wrong statement.- a)All personal and real accounts ultimately show balance.
- b)The balances of nominal accounts are transferred to Profit and Loss Account
- c)Separate account is opened in ledger book for each account
- d)Rent is a personal account but outstanding rent is a nominal account.
Correct answer is option 'D'. Can you explain this answer?
Consider the following statements and identify the wrong statement.
a)
All personal and real accounts ultimately show balance.
b)
The balances of nominal accounts are transferred to Profit and Loss Account
c)
Separate account is opened in ledger book for each account
d)
Rent is a personal account but outstanding rent is a nominal account.
|
|
Sparsh Sen answered |
Wrong Statement: Rent is a personal account but outstanding rent is a nominal account.
Explanation:
Personal Account: It records transactions related to individuals, firms, companies, or any other entity. These accounts are classified based on their nature, such as natural persons, artificial persons, and representative persons. Examples of personal accounts are the accounts of debtors, creditors, bank, and capital.
Real Account: It records transactions related to assets, liabilities, and capital of the business. These accounts are classified based on their nature, such as tangible assets, intangible assets, and liabilities. Examples of real accounts are the accounts of cash, land, building, machinery, and loans.
Nominal Account: It records transactions related to expenses, losses, incomes, and gains of the business. These accounts are classified based on their nature, such as indirect expenses, direct expenses, and incomes. Examples of nominal accounts are the accounts of salaries, rent, interest, commission, and profit.
All personal and real accounts ultimately show balance as they are affected by the debit and credit transactions. On the other hand, the balances of nominal accounts are transferred to the Profit and Loss Account at the end of the accounting period.
A separate account is opened in the ledger book for each account to record the transactions related to that account.
However, the statement that "Rent is a personal account but outstanding rent is a nominal account" is wrong. Rent account is a nominal account as it records the expenses of the business. Outstanding rent is also a nominal account as it represents the expenses that are due but not paid yet. Hence, both rent and outstanding rent are nominal accounts.
Explanation:
Personal Account: It records transactions related to individuals, firms, companies, or any other entity. These accounts are classified based on their nature, such as natural persons, artificial persons, and representative persons. Examples of personal accounts are the accounts of debtors, creditors, bank, and capital.
Real Account: It records transactions related to assets, liabilities, and capital of the business. These accounts are classified based on their nature, such as tangible assets, intangible assets, and liabilities. Examples of real accounts are the accounts of cash, land, building, machinery, and loans.
Nominal Account: It records transactions related to expenses, losses, incomes, and gains of the business. These accounts are classified based on their nature, such as indirect expenses, direct expenses, and incomes. Examples of nominal accounts are the accounts of salaries, rent, interest, commission, and profit.
All personal and real accounts ultimately show balance as they are affected by the debit and credit transactions. On the other hand, the balances of nominal accounts are transferred to the Profit and Loss Account at the end of the accounting period.
A separate account is opened in the ledger book for each account to record the transactions related to that account.
However, the statement that "Rent is a personal account but outstanding rent is a nominal account" is wrong. Rent account is a nominal account as it records the expenses of the business. Outstanding rent is also a nominal account as it represents the expenses that are due but not paid yet. Hence, both rent and outstanding rent are nominal accounts.
X Purchased land for Rs. 10,00,000. He gave a cheque of Rs. 2,00,000 and accepts a bill of Rs. 8,00,000 due after 60 days. As a result:- a)Total assets increased by Rs. 10,00,000 & total liabilities decreased by Rs. 10,00,000
- b)Total assets increased by Rs. 8,00,000 & total liabilities decreased by Rs. 8,00,000
- c)Total assets increased by Rs. 8,00,000 & total liabilities increased by Rs. 8,00,000
- d)Total assets increased by Rs. 10,00,000 & total liabilities increased by Rs. 10,00,000
Correct answer is option 'C'. Can you explain this answer?
X Purchased land for Rs. 10,00,000. He gave a cheque of Rs. 2,00,000 and accepts a bill of Rs. 8,00,000 due after 60 days. As a result:
a)
Total assets increased by Rs. 10,00,000 & total liabilities decreased by Rs. 10,00,000
b)
Total assets increased by Rs. 8,00,000 & total liabilities decreased by Rs. 8,00,000
c)
Total assets increased by Rs. 8,00,000 & total liabilities increased by Rs. 8,00,000
d)
Total assets increased by Rs. 10,00,000 & total liabilities increased by Rs. 10,00,000
|
|
Isha Chopra answered |
B)Cash decreased by Rs. 2,00,000
c)Bills payable increased by Rs. 8,00,000
d)Net increase in liabilities by Rs. 8,00,000.
c)Bills payable increased by Rs. 8,00,000
d)Net increase in liabilities by Rs. 8,00,000.
Mr. X purchased a computer for Rs. 60,000 by making a down payment of Rs. 10,000 and balance Rs. 50,000 signing the agreement of bills payable due in 50 days. As a result of these transactions.- a)Total assets increased by Rs. 50,000 with the corresponding increase in liability Rs. 50,000
- b)Total assets increased by Rs. 50,000
- c)Total assets increased by Rs. 60,000 with the corresponding increase in liability by Rs. 50,000
- d)Total assets increased by Rs. 60,000 with the corresponding increase in liability by Rs. 60,000
Correct answer is option 'A'. Can you explain this answer?
Mr. X purchased a computer for Rs. 60,000 by making a down payment of Rs. 10,000 and balance Rs. 50,000 signing the agreement of bills payable due in 50 days. As a result of these transactions.
a)
Total assets increased by Rs. 50,000 with the corresponding increase in liability Rs. 50,000
b)
Total assets increased by Rs. 50,000
c)
Total assets increased by Rs. 60,000 with the corresponding increase in liability by Rs. 50,000
d)
Total assets increased by Rs. 60,000 with the corresponding increase in liability by Rs. 60,000
|
Puja Nambiar answered |
Explanation:
Total assets refer to the total value of all assets owned by a company. In this case, Mr. X purchased a computer for Rs. 60,000. Let's analyze the transaction to understand its impact on total assets and liabilities.
1. Down Payment: Mr. X made a down payment of Rs. 10,000, which means he paid Rs. 10,000 from his pocket. This transaction does not impact the total assets and liabilities.
2. Signing the Agreement: Mr. X signed an agreement to pay the balance Rs. 50,000 in 50 days. This transaction increases the liability of Mr. X by Rs. 50,000. The computer is now an asset of Mr. X, which increases his total assets by Rs. 60,000.
Therefore, the correct option is 'A,' which states that total assets increased by Rs. 50,000 with the corresponding increase in liability Rs. 50,000.
To summarize:
- Down Payment: No impact on total assets and liabilities.
- Signing the Agreement: Increases the liability by Rs. 50,000.
- Computer Purchase: Increases the assets by Rs. 60,000.
Hence, the net impact is an increase in total assets by Rs. 60,000 and an increase in total liabilities by Rs. 50,000. However, option 'A' is correct because it states that there is a corresponding increase in assets and liabilities by Rs. 50,000.
Total assets refer to the total value of all assets owned by a company. In this case, Mr. X purchased a computer for Rs. 60,000. Let's analyze the transaction to understand its impact on total assets and liabilities.
1. Down Payment: Mr. X made a down payment of Rs. 10,000, which means he paid Rs. 10,000 from his pocket. This transaction does not impact the total assets and liabilities.
2. Signing the Agreement: Mr. X signed an agreement to pay the balance Rs. 50,000 in 50 days. This transaction increases the liability of Mr. X by Rs. 50,000. The computer is now an asset of Mr. X, which increases his total assets by Rs. 60,000.
Therefore, the correct option is 'A,' which states that total assets increased by Rs. 50,000 with the corresponding increase in liability Rs. 50,000.
To summarize:
- Down Payment: No impact on total assets and liabilities.
- Signing the Agreement: Increases the liability by Rs. 50,000.
- Computer Purchase: Increases the assets by Rs. 60,000.
Hence, the net impact is an increase in total assets by Rs. 60,000 and an increase in total liabilities by Rs. 50,000. However, option 'A' is correct because it states that there is a corresponding increase in assets and liabilities by Rs. 50,000.
The debt written off as bad, subsequently collected by proprietor in his personal capacity and kept by him. What is accounting treatment for this transaction?
- a)Debit – Drawings A/c & Credit Debtors A/c
- b)Debit – Cash A/c & Credit – Bad debts Recovered A/c
- c)Debit – Drawings A/c & Credit Bad debts Recovered A/c
- d)Simply ignore the transaction.
Correct answer is option 'C'. Can you explain this answer?
The debt written off as bad, subsequently collected by proprietor in his personal capacity and kept by him. What is accounting treatment for this transaction?
a)
Debit – Drawings A/c & Credit Debtors A/c
b)
Debit – Cash A/c & Credit – Bad debts Recovered A/c
c)
Debit – Drawings A/c & Credit Bad debts Recovered A/c
d)
Simply ignore the transaction.
|
Bayshore Academy answered |
The debt that was written off as bad and subsequently collected by the proprietor in his personal capacity, but kept by him instead of being brought into the business, should be treated as a personal transaction. Since the amount was recovered personally and not through the business, it would be considered a drawing.
The correct accounting treatment:
- Debit the Drawings Account (since the proprietor is taking money out of the business).
- Credit the Bad Debts Recovered Account (to recognize that the bad debt has been recovered, but the benefit has been taken personally by the proprietor).
So, the correct answer is:
3. Debit – Drawings A/c & Credit Bad debts Recovered A/c
Narration is given along with journal entry:- a)To signify the impact of entry on profitability.
- b)To disclose the profit or loss of the transaction.
- c)To give a precise explanation for proper understanding of the entry.
- d)To secretly understanding the inner meaning of entries.
Correct answer is option 'C'. Can you explain this answer?
Narration is given along with journal entry:
a)
To signify the impact of entry on profitability.
b)
To disclose the profit or loss of the transaction.
c)
To give a precise explanation for proper understanding of the entry.
d)
To secretly understanding the inner meaning of entries.
|
|
Priyanshu Tiwari answered |
A short explanation of each transaction is written under each entry which is called narration. ... Besides this, if there be any mistake in determining debit or credit aspect of a transaction, it can be easily detected from narration. "A journal entry is not complete without narration".
Debit the receiver and credit the giver is correct for. - a)Personal
- b)Real
- c)Nominal
- d)Hypothetical
Correct answer is option 'A'. Can you explain this answer?
Debit the receiver and credit the giver is correct for.
a)
Personal
b)
Real
c)
Nominal
d)
Hypothetical
|
|
Rahul Chaudhary answered |
When recording financial transactions using double-entry bookkeeping, it is important to understand the concept of debits and credits. Debits and credits are used to record the flow of assets, liabilities, and equity in a business. In this case, the statement "debit the receiver and credit the giver" is correct for personal accounts.
Personal Accounts:
Personal accounts are accounts that represent individuals or entities with whom the business has a direct relationship. These accounts could include accounts receivable, accounts payable, or capital accounts. When a business receives money from a person or entity, it is considered a debit to the receiver and a credit to the giver.
Explanation:
Debit the receiver and credit the giver means that when money is received from a person or entity, it is recorded as a debit in the receiver's account and a credit in the giver's account. This follows the fundamental accounting equation, which states that assets = liabilities + equity.
- Debit the receiver: This means that the receiver's account is increased. For example, if a business receives payment from a customer, the accounts receivable account is debited. This reflects an increase in the amount owed to the business by the customer.
- Credit the giver: This means that the giver's account is decreased. Using the same example, the customer's account would be credited, reflecting a decrease in the amount owed by the customer.
This method of recording transactions ensures that the accounting equation remains in balance. The total debits must always equal the total credits in a transaction.
Example:
Let's say a business receives a payment of $500 from a customer. The journal entry to record this transaction would be as follows:
- Debit Accounts Receivable: $500 (increase in the receiver's account)
- Credit Cash: $500 (decrease in the giver's account)
This entry reflects the fact that the business has received $500 from the customer, increasing the amount owed to the business and decreasing the customer's available cash.
Conclusion:
In summary, "debit the receiver and credit the giver" is the correct rule to follow when recording transactions in personal accounts. It ensures that the accounting equation remains balanced and accurately reflects the flow of assets, liabilities, and equity in the business.
Personal Accounts:
Personal accounts are accounts that represent individuals or entities with whom the business has a direct relationship. These accounts could include accounts receivable, accounts payable, or capital accounts. When a business receives money from a person or entity, it is considered a debit to the receiver and a credit to the giver.
Explanation:
Debit the receiver and credit the giver means that when money is received from a person or entity, it is recorded as a debit in the receiver's account and a credit in the giver's account. This follows the fundamental accounting equation, which states that assets = liabilities + equity.
- Debit the receiver: This means that the receiver's account is increased. For example, if a business receives payment from a customer, the accounts receivable account is debited. This reflects an increase in the amount owed to the business by the customer.
- Credit the giver: This means that the giver's account is decreased. Using the same example, the customer's account would be credited, reflecting a decrease in the amount owed by the customer.
This method of recording transactions ensures that the accounting equation remains in balance. The total debits must always equal the total credits in a transaction.
Example:
Let's say a business receives a payment of $500 from a customer. The journal entry to record this transaction would be as follows:
- Debit Accounts Receivable: $500 (increase in the receiver's account)
- Credit Cash: $500 (decrease in the giver's account)
This entry reflects the fact that the business has received $500 from the customer, increasing the amount owed to the business and decreasing the customer's available cash.
Conclusion:
In summary, "debit the receiver and credit the giver" is the correct rule to follow when recording transactions in personal accounts. It ensures that the accounting equation remains balanced and accurately reflects the flow of assets, liabilities, and equity in the business.
In case of a debt becoming bad, the amount should be created to :- a)Trade receivables account.
- b)Bad Debts Account
- c)Cash Account
- d)Sales Account
Correct answer is option 'A'. Can you explain this answer?
In case of a debt becoming bad, the amount should be created to :
a)
Trade receivables account.
b)
Bad Debts Account
c)
Cash Account
d)
Sales Account
|
|
Sinjini Gupta answered |
When a debt becomes bad and doubtful the following entry is passed:
Bad Debts A/c Dr.
To Debtors A/c
( Being bad debts written off)
Bad Debts A/c Dr.
To Debtors A/c
( Being bad debts written off)
A withdrawal of cash from business by the proprietor should be credited to:- a)Drawing account
- b)Capital account
- c)Cash account
- d)Purchase account
Correct answer is option 'C'. Can you explain this answer?
A withdrawal of cash from business by the proprietor should be credited to:
a)
Drawing account
b)
Capital account
c)
Cash account
d)
Purchase account
|
Stuti Kumar answered |
Withdrawal of Cash from Business by Proprietor
When a proprietor withdraws cash from the business, it is considered as his personal expense and reduces the amount of cash available in the business. The transaction needs to be recorded to ensure proper accounting of the business transactions.
Account to be Credited
The cash account needs to be credited when the proprietor withdraws cash from the business. This is because cash is being reduced from the business and the cash account needs to be reduced accordingly.
Option C - Cash Account
The correct option is 'C' which states that the withdrawal of cash from the business by the proprietor should be credited to the cash account. This is because cash is being reduced from the business and the cash account needs to be reduced accordingly.
Importance of Recording Transactions
Recording transactions is important for maintaining accurate financial records of the business. It helps in monitoring the financial health of the business and making informed decisions. It also helps in preparing financial statements and tax returns.
Conclusion
In conclusion, when a proprietor withdraws cash from the business, it needs to be recorded by crediting the cash account. This ensures proper accounting of the transaction and helps in maintaining accurate financial records of the business.
When a proprietor withdraws cash from the business, it is considered as his personal expense and reduces the amount of cash available in the business. The transaction needs to be recorded to ensure proper accounting of the business transactions.
Account to be Credited
The cash account needs to be credited when the proprietor withdraws cash from the business. This is because cash is being reduced from the business and the cash account needs to be reduced accordingly.
Option C - Cash Account
The correct option is 'C' which states that the withdrawal of cash from the business by the proprietor should be credited to the cash account. This is because cash is being reduced from the business and the cash account needs to be reduced accordingly.
Importance of Recording Transactions
Recording transactions is important for maintaining accurate financial records of the business. It helps in monitoring the financial health of the business and making informed decisions. It also helps in preparing financial statements and tax returns.
Conclusion
In conclusion, when a proprietor withdraws cash from the business, it needs to be recorded by crediting the cash account. This ensures proper accounting of the transaction and helps in maintaining accurate financial records of the business.
Rs. 1500 withdrawn for personal use should be debited to ______- a)Expense Account
- b)Purchases Account
- c)Sales Account
- d)Drawings Account
Correct answer is option 'D'. Can you explain this answer?
Rs. 1500 withdrawn for personal use should be debited to ______
a)
Expense Account
b)
Purchases Account
c)
Sales Account
d)
Drawings Account
|
Arnav Kulkarni answered |
Debiting Rs. 1500 withdrawn for personal use to Drawings Account is the correct accounting treatment. Let's understand why.
Explanation:
Personal withdrawals by the owner of a business are not considered as business expenses. Instead, these withdrawals are recorded in the Drawings Account. Drawings are the amounts that an owner withdraws from the business for personal use. It is a reduction of the owner's equity in the business. It is a contra equity account.
Drawings Account is a temporary account and is closed at the end of each accounting period. The balance of the Drawings Account is transferred to the owner's capital account in the balance sheet. The purpose of the Drawings Account is to keep track of the owner's personal withdrawals and to ensure that these withdrawals are not mistaken for business expenses.
Therefore, when an owner withdraws Rs. 1500 for personal use, it is debited to the Drawings Account. The journal entry for this transaction would be:
Drawings A/c Dr. 1500
To Cash A/c 1500
Conclusion:
To summarize, personal withdrawals by the owner of a business are debited to the Drawings Account. This helps in keeping track of the owner's personal withdrawals and ensures that they are not mistaken for business expenses.
Explanation:
Personal withdrawals by the owner of a business are not considered as business expenses. Instead, these withdrawals are recorded in the Drawings Account. Drawings are the amounts that an owner withdraws from the business for personal use. It is a reduction of the owner's equity in the business. It is a contra equity account.
Drawings Account is a temporary account and is closed at the end of each accounting period. The balance of the Drawings Account is transferred to the owner's capital account in the balance sheet. The purpose of the Drawings Account is to keep track of the owner's personal withdrawals and to ensure that these withdrawals are not mistaken for business expenses.
Therefore, when an owner withdraws Rs. 1500 for personal use, it is debited to the Drawings Account. The journal entry for this transaction would be:
Drawings A/c Dr. 1500
To Cash A/c 1500
Conclusion:
To summarize, personal withdrawals by the owner of a business are debited to the Drawings Account. This helps in keeping track of the owner's personal withdrawals and ensures that they are not mistaken for business expenses.
Rs. 1,500 received from Ram which were written off as bad-debts earlier. To record this receipt, cash account will be debited and _________ account will be credited. - a)Ram’s
- b)Bad – debts
- c)Bad – debt recovered
- d)Sales
Correct answer is option 'C'. Can you explain this answer?
Rs. 1,500 received from Ram which were written off as bad-debts earlier. To record this receipt, cash account will be debited and _________ account will be credited.
a)
Ram’s
b)
Bad – debts
c)
Bad – debt recovered
d)
Sales
|
|
Alok Mehta answered |
The entry for recording recovery of bad debts will be:
Cash A/c Dr.
To Bad Debts Recovered A/c
Thus, account will be credited is Bad- Debts recovered A/c.
Accounts receivable is :- a)Revenue
- b)Expense
- c)Asset
- d)Liability
Correct answer is option 'C'. Can you explain this answer?
Accounts receivable is :
a)
Revenue
b)
Expense
c)
Asset
d)
Liability
|
|
Rajat Patel answered |
Accounts receivable is the amount owed to a seller by a customer. As such, it is an asset, since it is convertible to cash on a future date. Accounts receivable is listed as a current asset in the balance sheet, since it is usually convertible into cash in less than one year.
Purchase of second- hand computer on credit by a cloth merchant will be recorded in:- a)Journal
- b)Cash Book
- c)Purchase Book
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Purchase of second- hand computer on credit by a cloth merchant will be recorded in:
a)
Journal
b)
Cash Book
c)
Purchase Book
d)
None of the above
|
|
Arjun Singhania answered |
When a transaction cannot be recorded in any of the subsidiary books, it will be recorded in journal. In the given case, purchase of second hand computer on credit cannot be recorded in cash book as it is on credit. It can also not be recorded in Purchase book as purchase book shows purchase of goods in trade and not of purchase of any other asset. Therefore, purchase of second hand computer will be recorded in Journal. Such journal is called Journal Proper.
Proprietor account- a)Personal
- b)Real
- c)Nominal
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Proprietor account
a)
Personal
b)
Real
c)
Nominal
d)
None of the above
|
|
Arjun Singhania answered |
Correct Option is (d)
Although having two bank accounts appears inconvenient, you shouldn't use a personal account for your business finances primarily because it can affect your legal liability. In fact, one of the first steps to owning a business should be opening a business bank account, in addition to a personal bank account.
Although having two bank accounts appears inconvenient, you shouldn't use a personal account for your business finances primarily because it can affect your legal liability. In fact, one of the first steps to owning a business should be opening a business bank account, in addition to a personal bank account.
Chapter doubts & questions for Unit 1: Basic Accounting Procedures - Journal Entries - Accounting for CA Foundation 2025 is part of CA Foundation exam preparation. The chapters have been prepared according to the CA Foundation exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for CA Foundation 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
Chapter doubts & questions of Unit 1: Basic Accounting Procedures - Journal Entries - Accounting for CA Foundation in English & Hindi are available as part of CA Foundation exam.
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Accounting for CA Foundation
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