Financial Accounting | Study Mode

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Question 1
A
It is a special account 
B
It is a list of balances in the books 
C
It reveals the financial position of a business 
D
It shows all the entries in the books of a business 
Explanation.
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Atrial balanceis a bookkeeping or accounting report that lists the balances in each of an organization's general ledger accounts.


Correct Option:
B
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Question 2
A
Affordability 
B
Timeliness 
C
Accuracy 
D
Completeness 
Explanation.
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  • Relevance: information makes a difference in decision making
  • Reliability: information is verifiable, factual, and neutral
  • Comparability: information can be used to compare different entities
  • Consistency: information is consistently presented from year to year

Correct Option:
A
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Question 3
A
Closing Capital - Drawings - Capital Introduced 
B
Opening Capital + Drawings - Closing Capital 
C
Closing Capital + Opening Capital - Drawings 
D
Closing Capital + Drawings - Opening Capital 
Explanation.
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Your net income or net loss equals your total revenuesminusyour total expenses for an accounting period. If your revenues are greater than expenses, you have net income. If revenues are less than expenses, you have a net loss. example

Net profit or loss = Revenue - total expenses


Correct Option:
C
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Question 4
A
Purchases Account 
B
Cash Book 
C
Sales Journal 
D
Purchases Journal 
Explanation.
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Purchases account. Thepurchases accountis a general ledgeraccountin which is recorded the inventorypurchasesof a business. Thisaccountis used to calculate the amount of inventory available for sale in a periodic inventory system.

Purchase journal is used for recording goods bought on credit


Correct Option:
A
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Question 5
A
Asset Account, Crediting Cash Account 
B
Cash Account, Crediting Asset Account 
C
Purchase of Business Account, Crediting Sale of Business Account 
D
Asset Account, Crediting Purchase of Business Account 
Explanation.
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Debit the appropriateassetaccount in ajournal entryin your records by the cost of theasset. Credit the cash account in the samejournal entryby the amount of cash you used toward thepurchase. If you paid all cash, this amount is the same as theasset'scost.


Correct Option:
A
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Question 6
A
Debited to returns outward account 
B
Credited to returns outwards account 
C
Debited to returns inwards account 
D
Credited to returns inwards account 
Explanation.
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When merchandise purchased for cash arereturned to supplier, we need to record twojournal entries. In firstentrywe debit accounts receivable account and credit purchases returns and allowances account (returns outwards would ve credited because goods are going out of the business). Thisentryis made to recognize thereturnof merchandise.


Correct Option:
B
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Question 7
A
Plant account 
B
Salaries account 
C
Creditors account 
D
Trading account 
Explanation.
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Examplesofreal accountsare:

  • Cash.
  • Accountsreceivable.
  • Fixed assets.
  • Accountspayable.
  • Retained earnings.

Correct Option:
B
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Question 8
A
debtors account, credit sales account 
B
creditors account, credit sales account 
C
sales account, credit debtors account 
D
sales account, credit creditors account 
Explanation.
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Accounting and journalentry for credit salesinclude 2 accounts, debtor andsales. In case of a journalentryfor cashsales, cash account andsalesaccount are used. The person who owes the money is called a debtor and the amount owed is a current asset for the company. Since thegoods were sold on credit, debtor acount will be debited (increase in the amount of money being owed to the business), and sales account will be credited.


Correct Option:
A
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Question 9
A
Sales journal 
B
Purchases account 
C
Cash account 
D
Return inwards journal 
Explanation.
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Books of original entryrefers to the accounting journals in which business transactions are initially recorded. They include;

  1. Sales journal
  2. purchase day book
  3. returns inwards
  4. returns outwards
  5. cash book
  6. general ledger

Correct Option:
B
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Question 10
A
Credit sales account and debit cash account 
B
Credit plant and machinery account and debit Wilson's account 
C
Credit sales account and debit Wilson's Account 
D
Credit plant and machinery account and debit cash account 
Explanation.
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Thesalesand receipts classes of transactions are the typicaljournal entries, that debit accounts receivable (debtors)andcredit salesrevenue, and debit cash andcreditaccounts receivable in which the amount owed will be paid at a later date.


Correct Option:
C
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