Journal Entry Trivia Questions: Quiz!

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

The correct answer is "All of the above" because income includes all three categories mentioned: income earned, income received, and income receivable. Income earned refers to the money that has been earned through various sources, income received refers to the actual money that has been received by an individual or organization, and income receivable refers to the money that is yet to be received but is expected in the future. Therefore, all three categories are encompassed within the concept of income.

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.

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.

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.

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.

The material costing Rs.4,000 and labour charges Rs.3,000 paid for the erection of the building should be debited to the Building A/c because it represents the cost incurred in constructing the building. By debiting the Building A/c, it accurately reflects the expenses associated with the construction process and helps in determining the total cost of the building.

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.

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.

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.

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.

Cash Account is classified as a Real Account. Real Accounts are those accounts that represent tangible assets, properties, or financial resources owned by a business. Cash is a tangible asset that a business possesses, and therefore, it falls under the category of Real Accounts.

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.

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.

Income tax in case of a sole trader is treated as personal expenses because as a sole trader, the business and personal finances are not legally separate. This means that any income tax paid by the sole trader is considered a personal expense and not a business expense. The sole trader is personally liable for the taxes owed and they are typically deducted from their personal income. Therefore, the correct answer is personal expenses.

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.

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.

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.

The journal has 5 columns.

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.

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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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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.