Test: Ledgers - 1 - Commerce MCQ

The nominal accounts at the end of the year are not balanced but are closed by transferring their balance to the profit and loss accounts, hence they do not appear in the balance sheet.

Each journal item is transferred to the ledger in their respective account. It is termed as posting.

In bookkeeping and accounting, a ledger is a book (or record) for collecting historical transaction data from a journal and organizing entries by account. The ledger provides the transaction history and current balance in each accounting system account, throughout the accounting period.

In case of partnership type of ownership in a business, partner current account is prepared when capital is fixed. Transactions such as drawings, salary, and interest on capital and drawings are recorded. The balance of this account fluctuates every year. The balance can be both credit or debit.

Ledger is the principal book or computer file for recording and totaling monetary transactions by account, with debits and credits inseparate columns and a beginning balance and ending balance for each account.

The credit balance of a personal account shows the amount payable to a person as it denotes a liability due to a person. The person in whose books a personal account has a credit balance has to pay the amount as a debt due.

150+100+30+50= 330. Interest amount is not included in the reimbursement

The correct option is Option B.

In bookkeeping and accounting, a ledger is a book (or record) for collecting historical transaction data from a journal and organizing entries by account. The ledger provides the transaction history and current balance in each accounting system account, throughout the accounting period.

Credit Sales=Closing Debtors+Cash Received from Debtors+Bills Receivable−Opening Debtors

Given:

• Opening balance of Sundry Debtors on 1.4.10 = Rs. 12,000
• Bills Receivable accepted by customers = Rs. 13,000
• Closing balance of Sundry Debtors on 31.3.11 = Rs. 14,000
• Cash received from Debtors during the year = Rs. 38,400

Now, let's calculate:

Credit Sales=14,000+38,400+13,000−12,000

     Credit Sales=53,400

So, the correct answer is:

Option 4: Rs. 53,400

There are mainly three types of accounts:
i) Real
ii) Personal and
iii) Nominal accounts.

All assets of a firm, which are tangible or intangible, fall under the category "Real accounts".

Tangible real accounts are related to those things that can be touched and physically felt. Few examples of tangible real accounts are buildings, machinery, stock, land, etc.

Intangible real accounts are those which can't be touched and physically felt. Few examples of intangible real accounts are trademarks, patents, goodwill, etc.

Correct Answer :- a

Explanation : A cash payments journal is used to record transactions that are paid in the form of cash. A cash payment can include paying a creditor or commission fee, making an interest payment, or withdrawing cash. If any payment is made using cash, it is recorded in the cash payments journal.

A purchase return account shows the credit balance. Purchase return represents the amount of goods returned to the supplier. When goods are bought from a supplier, the purchases A/c will be debited and when the goods are returned, the purchase return A/c will be credited as stock is reduced.

Discount is a nominal account which can have either a debit or a credit balance because discount can be allowed as well as received. If it is discount allowed it can have a debit balance and if it is discount received it can have a credit balance.

Cash Account is 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.

Total sales = Cash sales + cash collected from debtors - (Debtors at beginning - Bad debts during year).
So, 50000 + 130000 - (10000 - 5000) = 175000

The prepaid amount will be reported on the balance sheet after inventory and could part of an item described as prepaid expenses. As the prepaid amount expires, the balance in prepaid insurance is reduced by a credit to prepaid insurance and a debit to insurance expense.

Miscellaneous expenses are nominal in nature and therefore the rules of nominal account apply to it.
The rule is:

• Debit all expenses and losses
• Credit all incomes and gains

Since, the expenses are to be debited as per the rule hence, it is likely to have debit entries generally.

Explanation:

The credit balance in a ledger can be classified as either a revenue or a liability. Here's a detailed explanation:

1. Revenue:

• A credit balance in a revenue account indicates that the business has earned more revenue than it has incurred expenses.
• Examples of revenue accounts include sales revenue, service revenue, interest income, etc.
• When a customer pays for goods or services in advance, it is recorded as a credit balance in a revenue account until the goods or services are provided.

2. Liability:

• A credit balance in a liability account represents an obligation or debt that the business owes to another party.
• Examples of liability accounts include accounts payable, accrued expenses, unearned revenue, etc.
• When a business receives payment in advance for goods or services that have not been delivered yet, it is recorded as a credit balance in a liability account until the goods or services are provided.

Therefore, the correct answer is option C: A credit balance in a ledger can be either a revenue or a liability.

After the preparation of ledgers, the next step is the preparation of trial balance. After, pupation of ledger accounts all the balances of the ledger accounts are transferred to trial balance and it should tally. The trial balance checks the arithmetical accuracy of the books of accounts.

Journal is a book of recording all the transactions. It does not give a summarize details of each of the account. An individual account is opened in ledger to record all the specific transactions of each activity. Each journal item is transferred to the ledger in their respective account. It is termed as posting.

Drawings are the amounts taken by the owner of a business for his personal use in anticipation of profit. Drawings are usually made in the form of cash, but there could be other assets or goods withdrawn by the owner for his personal use.

Correct Answer :- c

Explanation : If goods remain unsold then there will be no deduction of cash discount from total amount but trade discount will be deducted.

Therefore, trade discount = 20000 - 1000

= 19000.

Payment to a creditor means increase in assets and decrease in liability. Decrease in assets and decrease in liability. Decrease in assets and increase in liability.

Bad debts were 10000 but 5000 has been recovered so - 5000 from bad debts.

Now Bad debts + Cash sales + Amount received from Dr.= Total sale 5000 + 80000 + 150000 = 235000.

Balancing of an accounts means ascertaining the net effect of the transactions, i.e. the difference between the debit and credit side of the ledger account. Thus, when the debit side of the ledger account exceeds the credit side, the balancing figure is termed as debit balance and vice versa. All the assets, expenses and losses show debit balance. Whereas, all liabilities, incomes and gains and capital show credit balance.

Ledger is known as the principal book of accounts or the chief book in which the financial information is classified by its nature and relevance.

Correct Answer :- b

Explanation :The journal folio (JF), on the other hand, is the page number of your journal. Both the journal and ledger folio can be numeric or alphanumeric. They are listed in separate columns. 

The amount brought into the business by the proprietor should be credited to the Capital account.

The capital account represents the owner's equity in the business and is used to track the initial investment and subsequent contributions made by the proprietor. When the proprietor brings in funds into the business, it increases the owner's equity and therefore should be recorded as a credit to the capital account.

Explanation:

• Cash Account: The cash account is used to track the inflows and outflows of cash in the business. While the proprietor's funds may be received in cash, they should not be directly credited to the cash account as it would not reflect the owner's equity.
• Capital Account: The capital account represents the owner's equity or the proprietor's investment in the business. It is credited when the proprietor brings in funds, increasing the owner's equity.
• Drawings Account: The drawings account is used to record the withdrawals made by the proprietor from the business for personal use. It is not relevant to record the proprietor's initial investment in this account.
• Suspense Account: A suspense account is used to temporarily hold transactions that cannot be immediately classified or identified. It is not appropriate to credit the proprietor's funds to a suspense account as it is a specific type of account used for different purposes.