Question by CA (Dr.) G.S.GREWAL – Series 3

  1. Ledger is known as Book of Original Entry.
  1. Cash Account can have either ______________________ or _________________ balance.
  1. In Accounting, Goods is defined as:

(a)     Items which purchased for own consumption.

(b)     Items which are purchased for charity.

(c)     Items which are purchased for resale.

(d)     Items without any defect.

Answer – Series 3

  1. False

Reason All entries primarily are first recorded in the Journal thereafter the recorded transactions are posted into Ledger Accounts. Therefore, Journal is termed as Book of Original Entry.

  1. debit balance or nil
  2. (c)

Question – Series 27

  1. The amount invested by the proprietor in a business is called Cash.
  1. Goods taken by the owner for personal use are called _________________.
  1. A liability arises because of

(a)     Cash transactions

(b)     Credit transactions

(c)     Cash as well as Credit transactions

(d)     None of the above

Answer – Series 27

  1. False

Reason: The amount invested by the proprietor in a business is called Capital.

  1. drawings
  2. (b)

Reason: Only because of credit transaction liability arises.

Question – Series 28

  1. Accounting is the language of business.
  1. Identified and measured economic events should be recorded in _________________ order.
  1. Which is the last step of accounting as a process of information?

(a)     Recording economic events in the books of account.

(b)     Preparation of financial statements.

(c)     Communication of information.

(d)     Analysis and interpretation of information.

Answer – Series 28

  1. True

Reason: Accounting is primarily concerned with recording of financial transactions and events in the books of account, summarising them and communicating the financial information to the users, i.e., proprietors (shareholders in the case of companies), lenders, creditors, debtors, investors, government, banks, employees, etc., Accounting being a medium of communication is known as Language of Business.

  1. Chronological
  2. (c)

The last step in the process of Accounting Cycle is to communicate the result to its various users.

Question – Series 36

  1. ₹ 5,000 received from Ramesh whose account was previously written off as bad debts should be credited to Ramesh’s Account.
  2. Sale of goods to Hari for cash will be debited to ______________ Account.
  3. Purchase of Machinery against cheque is debited to:

(a)     Machinery Account

(b)     Goods Account

(c)     Equipment Account

(d)     Cash Account

Answer – Series 36

  1. False

Reason: ₹  5,000 due from Ramesh had been earlier written off as expense being a bad debt. It means Ramesh’s Account in the books had been written off. The amount now received is an income for the business and therefore, is to be credited to Bad- debts Recovered Account.

  1. Cash
  2. (a)

Reason: Purchase of Machinery is debited to Machinery Account, it being a fixed asset and carried in the balance sheet. It is depreciated over its useful life.

Question Series – 53

  1. Accounting aims to communicate financial information to investors only .

      2. Scope of accountancy is _______________ than that of Book Keeping.

  1. Which is the last step of accounting as a process of information?

(a)     Recording economic events in the books of account.

(b)     Preparation of financial Statements

(c)     Communication of information.

(d)     Analysis and interpretation of information.

Answer – Series 53

  1. False

Reason: Accounting communicate the financial information to both internal and external user of Accountancy like management, Bank, Creditors etc.

  1. wider
  2. (c)

Reason:  The last step in the process of Accounting as a process of information is to communicate the financial result to various user of Accountancy which include both internal and external user of Accountancy.

Question – Series 54

  1. A liability arises because of cash as well as credit transaction.

      2. A person who owes money to the firm for sale of goods is a _______________.

  1. Purchase refers to the buying of

(a)     Goods for sale.

(b)     Stationery for office use.

(c)     Goods for the factory.

(d)     All of the above.

Answer – Series 54

  1. False

Reason: Liability arises only because of credit transactions.

  1. debtor
  2. (a)

Reason:  Purchase refers to the buying of goods for resale.

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