Journal Entry Trivia Questions: Quiz!

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Journal Entry Trivia Questions: Quiz! - Quiz


Questions and Answers
  • 1. 

    Sunset Tours has an Rs.3,500 account receivable from Mohan. On January 20, Mohan 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 cash received account of Rs.2,100.

    • B.

      A credit to the Accounts receivable account of Rs.2,100.

    • C.

      A debit to the cash account of Rs.1,400.

    • D.

      A debit to the Accounts receivable account of Rs. 1,400.

    Correct Answer
    B. A credit to the Accounts receivable account of Rs.2,100.
    Explanation
    The journal entry made on January 20 by Sunset Tours to record Mohan's partial payment of Rs.2100 includes a credit to the Accounts receivable account of Rs.2,100. This credit is made to reduce the outstanding balance of the accounts receivable from Mohan. By crediting the accounts receivable account, Sunset Tours is acknowledging the reduction in the amount owed by Mohan.

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  • 2. 

    In Double Entry System of Book-keeping,' every business transaction affects:

    • A.

      Two accounts.

    • B.

      Two sides of the same account.

    • C.

      The same account on two different dates.

    • D.

      All of the above.

    Correct Answer
    A. Two accounts.
    Explanation
    In the Double Entry System of Book-keeping, every business transaction affects two accounts. This means that for every transaction, there will be a debit entry in one account and a corresponding credit entry in another account. This ensures that the accounting equation (assets = liabilities + equity) remains balanced. By recording the transaction in two accounts, it provides a complete and accurate representation of the financial impact of the transaction on the business.

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  • 3. 

    The debts written off as bad, if recovered subsequently are:

    • A.

      Credited to Bad Debts Recovered Account

    • B.

      Credited to Debtors Account.

    • C.

      Debited to Profit and Loss Account

    • D.

      None of the above

    Correct Answer
    A. Credited to Bad Debts Recovered Account
    Explanation
    When debts that were previously written off as bad are recovered, they are credited to the Bad Debts Recovered Account. This account is used to record the recovery of previously written off bad debts. By crediting the Bad Debts Recovered Account, it increases the balance in this account, indicating that the bad debts have been recovered. This allows for proper tracking and reporting of the recovered amounts.

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  • 4. 

    A withdrawal of cash from business by the proprietor should be credited to:

    • A.

      Drawings Account

    • B.

      Capital Account

    • C.

      Cash Account

    • D.

      None of the above

    Correct Answer
    C. Cash Account
    Explanation
    When a proprietor withdraws cash from their business, it should be credited to the Cash Account. This is because the Cash Account represents the amount of cash available in the business, and a withdrawal by the proprietor reduces the cash balance. By crediting the Cash Account, it reflects the decrease in cash due to the withdrawal. The Drawings Account is used to record withdrawals by the proprietor, but it would be debited, not credited. The Capital Account represents the owner's investment in the business and is not affected by withdrawals. Therefore, the correct answer is Cash Account.

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  • 5. 

    If two or more transactions of the same nature are journalized together having either the debit or the credit account common is known as:

    • A.

      Compound journal entry

    • B.

      Separate journal entry

    • C.

      Posting

    • D.

      None of the above

    Correct Answer
    A. Compound journal entry
    Explanation
    When two or more transactions of the same nature are journalized together and have either the debit or the credit account common, it is known as a compound journal entry. This means that multiple transactions are combined into a single entry, simplifying the recording process. Instead of creating separate journal entries for each transaction, they are consolidated into one entry, making it easier to track and analyze the financial information.

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  • 6. 

    Drawings account is in the nature of:

    • A.

      Personal account

    • B.

      Real account

    • C.

      Nominal account

    • D.

      None of the above

    Correct Answer
    A. Personal account
    Explanation
    The correct answer is personal account. Drawings account is a personal account because it represents the owner's withdrawals from the business for personal use. Personal accounts are used to record transactions related to individuals or entities other than the business itself. Real accounts represent tangible assets, liabilities, or equity, while nominal accounts represent revenues, expenses, and gains or losses.

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  • 7. 

    Income tax paid by the sole-proprietor from a business bank account is debited to:

    • A.

      Income tax account

    • B.

      Bank account

    • C.

      Capital account

    • D.

      Not to be shown in the business books

    Correct Answer
    C. Capital account
    Explanation
    When a sole-proprietor pays income tax from their business bank account, it is debited to the Capital account. This is because the Capital account represents the owner's equity in the business, and income tax is considered a personal expense for the owner. By debiting the Capital account, it reflects a decrease in the owner's equity and shows that the owner has taken money out of the business to pay their personal income tax liability.

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  • 8. 

    Recording of a transaction in a journal is called:

    • A.

      Posting

    • B.

      Entry

    • C.

      Transfer

    • D.

      Ruling

    Correct Answer
    B. Entry
    Explanation
    Recording of a transaction in a journal is referred to as an entry. A journal is a book of original entry where all financial transactions are initially recorded in chronological order. Each transaction is recorded as a separate entry in the journal, providing a detailed record of the transaction including the date, accounts involved, and the amount. This allows for accurate and organized record-keeping, making it easier to track and analyze financial transactions.

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  • 9. 

    Narrations are given at the end of:

    • A.

      Final accounts

    • B.

      Trial balance

    • C.

      Each ledger account

    • D.

      Each journal entry

    Correct Answer
    D. Each journal entry
    Explanation
    Each journal entry includes a narration at the end. This is because a narration provides a brief description or explanation of the transaction or event that is being recorded in the journal entry. The narration helps to provide clarity and context to the entry, making it easier for anyone reviewing the journal to understand the purpose and details of the transaction. Including a narration also helps in future reference and auditing purposes, as it provides a record of the transaction and its significance.

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  • 10. 

    The concerned account debited in the journal should be:

    • A.

      Debited in the ledger but reference should be of the respective credit account.

    • B.

      Credited in the ledger but reference should be of the respective debit account.

    • C.

      Credited in the ledger and reference should also be of the respective credit account.

    • D.

      Debited in the ledger and reference should also be of the respective debit account.

    Correct Answer
    A. Debited in the ledger but reference should be of the respective credit account.
    Explanation
    When a transaction is recorded in a journal, the concerned account is debited. However, the reference in the ledger should be of the respective credit account. This means that the entry in the ledger should show the account that is being credited in the transaction. This is important for maintaining accurate records and ensuring that the double-entry bookkeeping system is followed correctly.

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  • 11. 

    In journal, transactions are recorded on  ___________.  

    • A.

      Chronological order

    • B.

      Ascending order of amount

    • C.

      Descending order of amount

    • D.

      None of the above

    Correct Answer
    A. Chronological order
    Explanation
    In a journal, transactions are recorded in chronological order, meaning they are recorded in the order in which they occur. This allows for a clear and organized record of all transactions, making it easier to track and analyze financial information. Recording transactions in chronological order also helps in identifying any errors or discrepancies that may occur.

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  • 12. 

    Payment of personal expenses of the owners of the business need to be recorded as:

    • A.

      Drawings

    • B.

      Liabilities

    • C.

      Expenses

    • D.

      None of the three

    Correct Answer
    A. Drawings
    Explanation
    When the owners of a business use the company's funds to pay for their personal expenses, it is recorded as "Drawings". Drawings are withdrawals made by the owners from the business for their personal use. It is important to record these transactions separately from business expenses to maintain accurate financial records and to distinguish between personal and business expenses. Liabilities are debts owed by the business, and expenses are costs incurred in the normal course of business operations. Therefore, neither liabilities nor expenses are appropriate categories for recording personal expenses of the owners.

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  • 13. 

    Outstanding salary account is:

    • A.

      Real account

    • B.

      Personal account

    • C.

      Nominal account

    • D.

      None of the above

    Correct Answer
    B. Personal account
    Explanation
    Outstanding salary account is classified as a personal account. Personal accounts are those that represent individuals, firms, or organizations with whom a business has financial transactions. In this case, outstanding salary refers to the amount of money owed to employees for work done but not yet paid. Since it involves specific individuals, it falls under the category of personal accounts.

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  • 14. 

    Real accounts relate to assets of the firm and not:

    • A.

      Machinery

    • B.

      Debt

    • C.

      Receivables

    • D.

      None of the three

    Correct Answer
    B. Debt
    Explanation
    Real accounts are those accounts that relate to the assets of the firm. Assets are the resources owned by the company, such as machinery and receivables. Debt, on the other hand, is a liability of the company and not considered as an asset. Therefore, debt does not fall under the category of real accounts.

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  • 15. 

    Vikas & Co, the account is a:

    • A.

      Personal account

    • B.

      Real account

    • C.

      Nominal account

    • D.

      None of the above

    Correct Answer
    A. Personal account
    Explanation
    A personal account is a type of account that represents individuals or entities with whom the business has a direct relationship. It includes accounts of individuals, firms, companies, etc. Since Vikas & Co is mentioned, it implies that it is a specific entity or individual, making it a personal account.

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  • 16. 

    The cash discount allowed to a debtor should be credited to:

    • A.

      Discount account.

    • B.

      Customer's account.

    • C.

      Sales account.

    • D.

      None of the above.

    Correct Answer
    B. Customer's account.
    Explanation
    When a cash discount is allowed to a debtor, it is a reduction in the amount owed by the customer. This reduction should be recorded in the customer's account to accurately reflect the reduced amount that they owe. By crediting the customer's account, it shows that their liability has decreased due to the cash discount. The discount account is not the correct choice because it is used to record discounts given to customers, not discounts received by customers. The sales account is also not the correct choice because it is used to record the total amount of sales made, not the specific discount given to a customer.

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  • 17. 

    Accounts receivable normally has ______________ balance.

    • A.

      Debit.

    • B.

      Credit.

    • C.

      Unfavourable.

    • D.

      None of the above.

    Correct Answer
    A. Debit.
    Explanation
    Accounts receivable normally has a debit balance because it represents the amount of money owed to a company by its customers for goods or services that have been delivered but not yet paid for. As a current asset, accounts receivable is recorded on the balance sheet as a debit, indicating that it is an asset with a positive value. When customers make payments, the accounts receivable balance decreases, and the corresponding amount is credited to cash or another appropriate account.

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  • 18. 

    Journal entry for Rs. 6,000 stolen from the safe of the firm will be:

    • A.

      Dr. P& L a/c and Cr. Cash embezzlement a/c Rs. 6,000.

    • B.

      Dr. Cash embezzlement a/c and Cr. Cash a/c Rs: 6,000.

    • C.

      Dr. Cash a/c and Cr. P& L a/c Rs. 6,000

    • D.

      None of the above.

    Correct Answer
    B. Dr. Cash embezzlement a/c and Cr. Cash a/c Rs: 6,000.
    Explanation
    The correct answer is "Dr. Cash embezzlement a/c and Cr. Cash a/c Rs: 6,000." This journal entry reflects the fact that Rs. 6,000 was stolen from the safe of the firm. The debit to the Cash embezzlement account represents the increase in the embezzlement amount, while the credit to the Cash account represents the decrease in the actual cash balance. This entry ensures that the books accurately reflect the loss of cash due to the theft.

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  • 19. 

    Bank account is __________.

    • A.

      Personal account

    • B.

      Intangible real account

    • C.

      Nominal account

    • D.

      Both (b) and (c)

    Correct Answer
    A. Personal account
    Explanation
    A bank account is considered a personal account because it represents an individual's or a business's financial relationship with the bank. Personal accounts are used to record transactions related to individuals, such as deposits, withdrawals, and transfers. On the other hand, intangible real accounts represent assets that do not have a physical existence, like patents or trademarks, while nominal accounts are used to record expenses, revenues, and gains. Therefore, the correct answer is "Personal account" as it accurately describes the nature of a bank account.

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  • 20. 

    Mohan Stationers will debit purchase of stationery in ________________.     

    • A.

      Stationery account

    • B.

      General expenses account

    • C.

      Purchases account

    • D.

      None of the three

    Correct Answer
    C. Purchases account
    Explanation
    Mohan Stationers will debit purchase of stationery in the Purchases account. This is because the Purchases account is used to record the cost of goods purchased for resale or for use in the business. Since stationery is being purchased for use in the business, it would be recorded as an expense in the Purchases account.

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  • 21. 

    Mohan paid Rs. 500 towards a debt of Rs. 2,500, which was written off as bad debt in the previous year. Mohan's account will be credited with

    • A.

      Rs. 2,500

    • B.

      Rs. 2,000

    • C.

      Rs. 500

    • D.

      None of the three

    Correct Answer
    D. None of the three
    Explanation
    The question states that Mohan paid Rs. 500 towards a debt of Rs. 2,500, which was written off as bad debt in the previous year. Since the debt was already written off as bad debt, Mohan's account will not be credited with any amount. Therefore, the correct answer is "None of the three".

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  • 22. 

    Income tax liability of the proprietor Rs. 1200 was paid out of petty cash. Journal entry will be  _____________.    

    • A.

      Dr. drawings and Cr. Cash A/c Rs. 1200

    • B.

      Dr. drawings and Cr. Petty Cash Rs. 1200

    • C.

      Dr. Income tax and Cr Cash A/c Rs. 1200

    • D.

      None of the above

    Correct Answer
    B. Dr. drawings and Cr. Petty Cash Rs. 1200
    Explanation
    The correct answer is Dr. drawings and Cr. Petty Cash Rs. 1200. This is because the income tax liability of the proprietor was paid out of petty cash, which means that the proprietor's drawings account should be debited to reflect the decrease in the proprietor's equity, and the petty cash account should be credited to show the decrease in cash.

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  • 23. 

    Capital brought in by the proprietor is an example of _____________.        

    • A.

      Increase in asset and increase in liability

    • B.

      Increase in liability and decrease in asset

    • C.

      Increase in asset and decrease in liability

    • D.

      Increase in one asset and decrease in another asset

    Correct Answer
    A. Increase in asset and increase in liability
    Explanation
    When the proprietor brings in capital, it increases the assets of the business because the capital is considered an investment in the company. At the same time, it also increases the liabilities because the business now owes the proprietor the amount of capital brought in. Therefore, capital brought in by the proprietor is an example of an increase in both assets and liabilities.

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  • 24. 

    Salary Rs. 2000 payable to clerk is credited to _____________.

    • A.

      Salary account

    • B.

      Cash account

    • C.

      Clerks Account

    • D.

      None of the above

    Correct Answer
    C. Clerks Account
    Explanation
    The salary of Rs. 2000 payable to the clerk is credited to the "Clerks Account". This means that the amount is being recorded as a credit in the account of the clerk. By crediting the amount to the clerk's account, it is being recognized as a liability that the company owes to the clerk. This entry helps in keeping track of the amount owed to the clerk and will be used to make the necessary payment in the future.

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  • 25. 

    Journal entry for wages paid Rs. 20000 for installation of machinery  will be  ______________.           

    • A.

      Dr. wages A/c and Cr. Cash A/c Rs. 20000

    • B.

      Dr. Machinery A/c and Cr. Cash A/c Rs. 20000

    • C.

      Dr. machinery repairs A/c and Cr. Cash A/c Rs. 20000

    • D.

      None of the above

    Correct Answer
    B. Dr. Machinery A/c and Cr. Cash A/c Rs. 20000
    Explanation
    The correct answer is Dr. Machinery A/c and Cr. Cash A/c Rs. 20000. This journal entry is appropriate because when wages are paid for the installation of machinery, it is considered as a part of the cost of the machinery. Therefore, the machinery account is debited to increase its value, and the cash account is credited as the payment is made in cash.

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  • 26. 

    Reserve for doubtful debts account is a 

    • A.

      Real account

    • B.

      Personal account

    • C.

      Nominal account

    • D.

      None of the above

    Correct Answer
    A. Real account
    Explanation
    The reserve for doubtful debts account is a real account because it represents an asset that is set aside to cover potential losses from customers who may not be able to pay their debts. Real accounts are used to track tangible assets, such as cash, inventory, or accounts receivable, and the reserve for doubtful debts account falls under this category as it represents a potential loss on accounts receivable.

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  • 27. 

    Unexpired insurance is

    • A.

      Real A/c

    • B.

      Personal A/c

    • C.

      Nominal A/c

    • D.

      None of the three

    Correct Answer
    B. Personal A/c
    Explanation
    Unexpired insurance refers to the portion of an insurance policy that has not yet expired and is still in effect. It is considered as a personal account because it represents an asset owned by the business, specifically the prepaid insurance expense. It is not classified as a real account, as real accounts represent tangible assets like property or equipment. It is also not a nominal account, as nominal accounts are used to record revenues, expenses, gains, and losses. Therefore, the correct answer is Personal A/c.

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  • 28. 

    Sundry creditors for goods amounting to Rs. 50,000 are not responding during the last five years and payment for the same may not be made by the concern. Journal entry will be

    • A.

      Sundry Creditors A/c Dr. 50,000 ToP&LA/c 50,000

    • B.

      P&L A/c Dr. 50,000 To Sundry Creditors 50,000

    • C.

      Sundry Creditors A/c Dr. 50,000 To Cash A/c 50,000

    • D.

      None of the three

    Correct Answer
    A. Sundry Creditors A/c Dr. 50,000 ToP&LA/c 50,000
    Explanation
    The correct journal entry in this situation would be to debit the Sundry Creditors account for Rs. 50,000 and credit the Profit and Loss account for the same amount. This entry is made to recognize the loss incurred due to the non-payment of the creditors. By debiting the Sundry Creditors account, it reflects that the amount is no longer expected to be received. By crediting the Profit and Loss account, it reflects the expense or loss incurred by the company.

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  • 29. 

    Net salary paid to employees Rs. 45,000 in cash after deducting income tax Rs. 1000, professional tax Rs. 200 employees provident fund Rs. 2000, staff welfare fund Rs. 100 and recovery of loan Rs. 1700. Salary A/c will be debited with -  

    • A.

      Rs.50,000

    • B.

      Rs.45,000

    • C.

      Rs.48,000

    • D.

      None of the three

    Correct Answer
    A. Rs.50,000
  • 30. 

    Dividend received (net) Rs. 9200 for which tax deducted at source is Rs. 800. Dividend A/c will be credited with

    • A.

      Rs. 10,000

    • B.

      Rs.9,200

    • C.

      Rs 9,000

    • D.

      None of the three

    Correct Answer
    A. Rs. 10,000
    Explanation
    Since the net dividend received is Rs. 9200 and tax deducted at source is Rs. 800, the total dividend before tax deduction would be Rs. 10,000. Therefore, the Dividend A/c will be credited with Rs. 10,000.

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  • 31. 

    A running business was purchased by Ram with following assets and liabilities Cash in hand 1000 Cash at Bank 5000 Stock                            20000 Land and building   100000 Plant and machinery   50000 Owing from Mr. X        12500 Prepaid Insurance         500 Owing to Z Ltd.               3750 Interest received in advance 250 Ram's capital will be

    • A.

      185000

    • B.

      180000

    • C.

      175000

    • D.

      None of the above

    Correct Answer
    A. 185000
    Explanation
    Ram's capital will be 185000. This is because Ram purchased the running business with the given assets and liabilities. The assets include cash in hand, cash at bank, stock, land and building, plant and machinery, owing from Mr. X, prepaid insurance, and interest received in advance. The liabilities include owing to Z Ltd. Therefore, Ram's capital will be the total value of these assets minus the total value of these liabilities, which is 185000.

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  • 32. 

    Stock worth Rs. 10,000 (cost price Rs. 7,500) taken by Mohan office 23 clerk. Amount to be deducted from his salary in the subsequent month. Journal entry will be

    • A.

      Dr Salary and Cr Purchases A/c Rs. 10,000

    • B.

      Dr Mohan and Cr purchases Rs. 10,000

    • C.

      Dr Salary and Cr Purchases Rs. 7500

    • D.

      None of the above

    Correct Answer
    C. Dr Salary and Cr Purchases Rs. 7500
    Explanation
    The correct answer is "Dr Salary and Cr Purchases Rs. 7500". This is because the stock worth Rs. 10,000 was taken by Mohan for office use, so it should be recorded as an expense (Salary) and not as a purchase. Since the cost price of the stock was Rs. 7,500, only that amount should be deducted from his salary.

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  • 33. 

    Goods worth Rs. 500 given as charity should be credited to

    • A.

      Sales account

    • B.

      Purchases account

    • C.

      Charity account

    • D.

      None of the three

    Correct Answer
    B. Purchases account
    Explanation
    When goods worth Rs. 500 are given as charity, they are no longer available for sale or purchase. Therefore, they should be credited to the Purchases account to reflect the decrease in inventory. This ensures that the value of the goods is properly accounted for and does not affect the sales or charity accounts.

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  • 34. 

    As old machinery appearing in the books at Rs. 5,000 is to be exchanged for a new machinery of Rs. 5,000. The old machinery has been valued at Rs. 800 for exchange purpose. Loss on exchange will be____________.          

    • A.

      Rs. 4,666

    • B.

      Rs. 4,200

    • C.

      Rs 4,500

    • D.

      NIL

    Correct Answer
    B. Rs. 4,200
    Explanation
    The loss on exchange will be Rs. 4,200. This is calculated by subtracting the value of the old machinery (Rs. 800) from the cost of the new machinery (Rs. 5,000). The difference is the loss incurred in the exchange.

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  • 35. 

    As old machinery appearing in  the books at Rs. 5000 is to be exchanged for a new machinery of Rs. 5,000. The old machinery has been valued at Rs. 800 for exchange purpose. Loss on exchange will be

    • A.

      Rs. 4,000

    • B.

      Rs. 4,200

    • C.

      Rs 4,500

    • D.

      NIL

    Correct Answer
    B. Rs. 4,200
    Explanation
    The loss on exchange will be Rs. 4,200. This can be calculated by subtracting the value of the old machinery (Rs. 800) from the cost of the new machinery (Rs. 5,000). Therefore, the loss on exchange is Rs. 4,200.

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  • 36. 

    Bills payable is ___________.           

    • A.

      Real A/c

    • B.

      Nominal A/c

    • C.

      Personal A/c

    • D.

      Both (a) and (b)

    Correct Answer
    C. Personal A/c
    Explanation
    Bills payable is classified as a personal account. Personal accounts are used to record transactions related to individuals or entities, such as customers, suppliers, or creditors. Since bills payable represents amounts owed by a company to its creditors, it falls under the category of personal accounts. Real accounts are used to record transactions related to assets, liabilities, or owner's equity, while nominal accounts are used to record expenses, revenues, and gains or losses. Therefore, the correct answer is personal account.

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  • 37. 

    Commission received in advance is a

    • A.

      Personal account

    • B.

      Nominal account

    • C.

      Real account

    • D.

      None of the three.

    Correct Answer
    A. Personal account
    Explanation
    Commission received in advance is classified as a personal account. Personal accounts represent individuals, firms, or organizations with whom a business has financial transactions. In this case, commission received in advance represents an amount of money that a business has received from a customer for a service that has not yet been provided. As a personal account, it is a record of the business's liability to the customer until the service is rendered.

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  • 38. 

    Interest earned but not received, adjustment entry will be

    • A.

      Accrued Interest Dr. To Customer

    • B.

      Accrued interest Dr. To Interest

    • C.

      Cash a/c Dr. To Interest

    • D.

      None of the three

    Correct Answer
    B. Accrued interest Dr. To Interest
    Explanation
    The correct answer is "Accrued interest Dr. To Interest". This is because when interest is earned but not yet received, it is considered as an accrued interest. To record this, we need to debit the accrued interest account and credit the interest account. This entry recognizes the interest that has been earned but not yet received, and ensures that it is properly accounted for in the financial statements.

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  • 39. 

    Which of the following is nominal account

    • A.

      Debtors account

    • B.

      Loan account

    • C.

      Provision for Bad debts

    • D.

      Bank overdraft

    Correct Answer
    C. Provision for Bad debts
    Explanation
    Provision for Bad debts is a nominal account because it is used to record an estimated loss due to bad debts. It is an expense account that represents the amount set aside by a company to cover potential losses from customers who are unable to pay their debts. This account is used to reduce the value of accounts receivable on the balance sheet and reflects the company's anticipation of future losses.

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  • 40. 

    Journal is a book of

    • A.

      Original Entry

    • B.

      All cash transactions

    • C.

      Secondary Entry

    • D.

      All non-cash transactions

    Correct Answer
    A. Original Entry
    Explanation
    The correct answer is "Original Entry". A journal is a book used to record all cash transactions. It serves as a chronological record of financial transactions, including details such as the date, description, and amount of each transaction. This allows for accurate and organized record-keeping, making it easier to track and analyze financial activities.

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  • 41. 

    Normally, the following accounts are balanced

    • A.

      Real A/c and Nominal A/c

    • B.

      Personal A/c and Real A/c

    • C.

      Only Nominal A/c

    • D.

      All accounts

    Correct Answer
    B. Personal A/c and Real A/c
    Explanation
    Personal accounts represent individuals or entities with whom a business has a direct relationship, such as customers, suppliers, or employees. Real accounts represent tangible assets, liabilities, or equity, such as cash, inventory, or buildings. Balancing personal accounts and real accounts ensures that the transactions recorded accurately reflect the financial position of the business. This is because personal accounts involve interactions with real accounts, such as sales or purchases, which impact the overall balance of the accounts. Therefore, balancing personal accounts and real accounts is necessary for accurate financial reporting.

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  • 42. 

    Patents Accounts are

    • A.

      Secured Loan Account

    • B.

      Nominal Account

    • C.

      Real Account

    • D.

      Debtors Account

    Correct Answer
    C. Real Account
    Explanation
    Patents Accounts are categorized as Real Accounts. Real Accounts are accounts that represent tangible assets, such as property, plant, and equipment, or intangible assets, such as patents, copyrights, and trademarks. These accounts record the value of these assets and are not affected by personal or business transactions. Patents are considered intangible assets, and therefore, the Patents Account falls under the category of Real Accounts.

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  • 43. 

    Sales Tax Payable is a

    • A.

      Current Assets

    • B.

      Personal A/c

    • C.

      Nominal A/c

    • D.

      Real A/c

    Correct Answer
    B. Personal A/c
    Explanation
    Sales Tax Payable is classified as a Personal Account. Personal accounts are accounts that represent individuals, firms, or organizations with whom the business has transactions. Sales Tax Payable is a liability account that represents the amount of sales tax collected from customers but not yet remitted to the tax authorities. Since it represents an amount owed to a specific entity (the tax authorities), it falls under the category of Personal Accounts.

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  • 44. 

    Sale of office furniture should be credited to

    • A.

      Furniture A/c

    • B.

      Sales A/c

    • C.

      Cash A/c

    • D.

      Purchase A/c

    Correct Answer
    A. Furniture A/c
    Explanation
    The sale of office furniture should be credited to the Furniture A/c because it represents the account that tracks the value of the furniture owned by the company. By crediting this account, we are reducing the value of the furniture as it is being sold. This transaction does not involve any cash or purchases, so those accounts are not relevant in this context.

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  • 45. 

    Bad debts recovered account will be transferred to

    • A.

      Provision for doubtful debt A/c

    • B.

      P & L A/c

    • C.

      Bad debt A/c

    • D.

      Debtors A/c

    Correct Answer
    B. P & L A/c
    Explanation
    When bad debts are recovered, they are considered as income for the company. This income is reflected in the profit and loss account (P&L A/c) as it represents the overall financial performance of the company. Therefore, the correct answer is P&L A/c.

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  • 46. 

    Goods distributed as free samples is debited to

    • A.

      Advertisement A/c

    • B.

      Charity A/c

    • C.

      Purchases A/c

    • D.

      Goods A/c

    Correct Answer
    A. Advertisement A/c
    Explanation
    When goods are distributed as free samples, it is considered a promotional activity to advertise the product. Therefore, the cost of these samples is debited to the Advertisement Account. This helps to track and account for the expenses incurred in promoting the product through the distribution of free samples.

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  • 47. 

    Account receivable is

    • A.

      A liability

    • B.

      An asset

    • C.

      An expense

    • D.

      A revenue

    Correct Answer
    B. An asset
    Explanation
    Account receivable is classified as an asset because it represents the amount of money that a company is entitled to receive from its customers for goods or services that have been provided on credit. It is an asset because it has future economic benefits and can be converted into cash. The company expects to receive payment for the accounts receivable within a specified period, making it an asset that contributes to the company's overall value.

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  • 48. 

    If total assets of the firm are Rs.2,00,000; outside liabilities is Rs.1,60,000, then capital contributed by the owner will be

    • A.

      Rs.60,000

    • B.

      Rs.40,000

    • C.

      Rs.3,60,000

    • D.

      None of the above

    Correct Answer
    B. Rs.40,000
    Explanation
    The capital contributed by the owner can be calculated by subtracting the outside liabilities from the total assets. In this case, Rs.1,60,000 is subtracted from Rs.2,00,000, resulting in Rs.40,000. Therefore, the correct answer is Rs.40,000.

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  • 49. 

    Bills receivable is_______________

    • A.

      Personal A/c

    • B.

      Real A/c

    • C.

      Nominal A/c

    • D.

      Both (a) and (b)

    Correct Answer
    A. Personal A/c
    Explanation
    Bills receivable is classified as a Personal Account. Personal accounts are accounts that represent individuals or entities with whom a business has financial transactions. Bills receivable represents the amount of money owed to a business by its customers or debtors. It is a personal account because it involves the relationship between the business and its customers, and records the amount owed by them.

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  • 50. 

    Prepaid insurance is 

    • A.

      Nominal A/c

    • B.

      Real A/c

    • C.

      Personal A/c

    • D.

      None of the above

    Correct Answer
    C. Personal A/c
    Explanation
    Prepaid insurance is considered a personal account because it represents an amount paid in advance for insurance coverage. Personal accounts are used to track individuals, organizations, or entities that have a direct relationship with the company. In this case, prepaid insurance represents an asset that the company has paid for but has not yet received the benefits of. Therefore, it is classified as a personal account.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 02, 2011
    Quiz Created by
    Sweetsalman123
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