General Ledger Questions! Trivia Quiz

The left side of an account is known as debit and the right side as credit. This is a fundamental concept in accounting known as the double-entry system. Debit represents an increase in assets or expenses and a decrease in liabilities or equity, while credit represents an increase in liabilities or equity and a decrease in assets or expenses. By using the debit and credit system, accountants can ensure that each transaction is recorded accurately and that the accounting equation (Assets = Liabilities + Equity) remains balanced.

The cash received from debtors during the year can be calculated by subtracting the outstanding debtors at the end of the year from the total sales during the year. In this case, the outstanding debtors at the end of the year is Rs. 25,000. Therefore, the cash received from debtors during the year will be Rs. 70,000 - Rs. 25,000 = Rs. 45,000. However, the question specifies that the cash sales during the year were Rs. 10,000. Therefore, the cash received from debtors during the year will be Rs. 45,000 - Rs. 10,000 = Rs. 35,000.

The correct answer is "Credit" because accounts payable represents the amount of money that a company owes to its suppliers or vendors. A credit balance in accounts payable means that the company has received goods or services on credit and has not yet paid for them. This is a liability for the company as it has an obligation to make the payment in the future. Therefore, a credit balance in accounts payable is the correct answer.

Posting refers to the process of recording transactions from the journal to the ledger. It involves transferring the information from the journal entries to the respective accounts in the ledger. This step ensures that all transactions are properly recorded and organized in the accounts, allowing for easy reference and analysis.

Credit balances in the ledger can represent either revenue or liability. Revenue is the income generated by a business through its operations, and it is recorded as a credit in the ledger. On the other hand, liabilities are the debts or obligations that a business owes to external parties, and they are also recorded as credits in the ledger. Therefore, credit balances in the ledger can indicate either the revenue earned by the business or the liabilities it has accumulated.

General ledger adjustment accounts are opened in both the debtors ledger and the creditors ledger. These accounts are used to record any necessary adjustments or corrections to the balances in these ledgers. By having separate adjustment accounts in both the debtors and creditors ledgers, it allows for accurate tracking and reporting of any adjustments made to the accounts receivable and accounts payable balances.

An account is a formal record of changes items of similar nature. This means that the items recorded in an account should be related or similar in terms of their characteristics or purpose. For example, revenue accounts record all the income or earnings generated by a business, while expense accounts record all the costs or expenditures incurred by the business. Similarly, debit accounts record all the assets or expenses, while similar accounts group together items that have similar attributes or functions.

Bank overdraft is a facility provided by the bank to its customers where they can withdraw more money from their account than what they actually have. This creates a negative balance in the account, indicating that the customer owes money to the bank. However, the given answer states that a bank overdraft has a "credit balance," which is incorrect. A credit balance would imply that the customer has extra funds in their account, which contradicts the concept of overdraft.

Wages outstanding account is the only account that does not have a debit balance. Wages outstanding is a liability account that represents the amount of wages owed to employees but not yet paid. Since it is a liability, it has a credit balance. On the other hand, loan to contractor, debtors account, and goodwill are all asset accounts, which typically have debit balances.

When office equipment is purchased on credit, it means that the company is acquiring assets without immediately paying for them. This transaction increases the company's assets because the office equipment is now owned by the company. The company's liabilities will also increase because it now owes money to the creditor from whom it purchased the equipment. However, there is no direct impact on the company's capital. Therefore, the correct answer is "Increase in Assets."

A debit balance in prepaid commission means that the amount of commission paid in advance is recorded as an asset on the balance sheet. This indicates that the company has paid more commission than it has earned, resulting in a debit balance. It represents an amount owed to the company and is considered a prepaid expense.

When goods are purchased on credit, it means that the payment for those goods will be made at a later date. This transaction increases the liability of the buyer because they now owe money to the seller. At the same time, it also increases the assets of the buyer because they now have the goods in their possession, which have value. Therefore, the correct answer is both (a) and (c) - purchases of goods on credit increase liability and increase assets.

The total sales can be calculated by adding the cash sales and the cash collected from debtors. In this case, the cash sales are given as Rs. 50,000 and the cash collected from debtors is given as Rs. 1,30,000. Therefore, the total sales will be Rs. 50,000 + Rs. 1,30,000 = Rs. 1,80,000.

The debtors at the end can be calculated by subtracting the cash received from debtors, bad debts, return inward, and bills received from customers from the opening debtors. In this case, the opening debtors are 20,000 and the cash received from debtors, bad debts, return inward, and bills received from customers amount to 20,000 + 3,000 + 1,000 + 10,000 = 34,000. Therefore, the debtors at the end will be 20,000 - 34,000 = 56,000.

When the total of all debits of a ledger account is more than the total of all credits of the same account, it indicates that there is an excess of debits over credits. To balance the account, the balancing figure is placed on the credit side of the ledger account. This is done to ensure that the debits and credits are equal, as per the principles of double-entry bookkeeping.

Drawings will generally show a debit balance because it represents the amount of money that the owner of a business withdraws for personal use. Since drawings are considered a reduction in the owner's equity, they are recorded as a debit entry in the accounting system. This means that the balance of the drawings account will normally be a debit balance, indicating the total amount of money that the owner has taken out of the business.

The correct answer is Debt balance; Credit balance. A trial balance is a statement that shows the balances of all the accounts in a company. The debt balance represents the total amount owed to the company by its debtors, while the credit balance represents the total amount owed by the company to its creditors.

Outstanding wages will have a credit balance because it represents the amount owed by the company to its employees for work already performed. In accounting, a credit balance indicates a liability or an amount owed. Therefore, outstanding wages will be recorded on the credit side of the ledger to reflect the company's obligation to pay its employees.

In the case of a debit balance, the words "To balance b/d" are written on the debit side. This indicates that the balance is being carried forward from the previous period and needs to be balanced on the debit side of the account. The abbreviation "b/d" stands for "brought down", indicating that the balance is being brought down from the previous period.

To calculate the total sales, we need to consider both credit sales and cash sales. Credit sales are determined by the change in debtors' balances. The formula for total sales is:

Total Sales=Credit Sales+Cash SalesTotal Sales=Credit Sales+Cash Sales

First, calculate credit sales:

Credit Sales=Opening Debtors+Cash Received from Debtors−Returns Inwards−Bad Debts−Debtors at EndCredit Sales=Opening Debtors+Cash Received from Debtors−Returns Inwards−Bad Debts−Debtors at End

Credit Sales=10,200+30,400−2,700−1,200−13,800Credit Sales=10,200+30,400−2,700−1,200−13,800

Credit Sales=22,900Credit Sales=22,900

Now, add cash sales:

Total Sales=Credit Sales+Cash Sales (As per Cash Book)Total Sales=Credit Sales+Cash Sales (As per Cash Book)

Total Sales=22,900+28,400Total Sales=22,900+28,400

Total Sales=51,300Total Sales=51,300

Therefore, the total sales amount to Rs. 51,300.

Debentures A/c will have a credit balance because it is a liability account. In accounting, a credit balance in a liability account indicates that the company owes money to its creditors. Debentures are long-term loans taken by a company from the public or financial institutions, and they are considered as a liability for the company. Therefore, any transactions related to debentures, such as issuing or paying off debentures, will result in a credit entry in the Debentures A/c, leading to a credit balance.

When purchases are made for cash, there is no change in the total assets. This is because assets are not affected by the method of payment. The purchase itself may involve a decrease in cash (as it is used for the payment) and an increase in liabilities (if the purchase was made on credit), but the total assets remain the same. Therefore, the correct answer is "No change in the total assets."

1. Calculate the original amount due on June 30, 2006:

Suraj paid Rs. 1,800 after a 10% discount, meaning this amount represents 90% of the original amount due.

Original amount due = Rs. 1,800 / 0.9 = Rs. 2,000

2. Calculate the original amount due on September 30, 2006:

Suraj paid Rs. 2,850 after a 5% discount, meaning this amount represents 95% of the original amount due.

Original amount due = Rs. 2,850 / 0.95 = Rs. 3,000

3. Calculate the total amount paid:

Total paid = Rs. 1,800 + Rs. 2,850 = Rs. 4,650

4. Calculate the total original amount due:

Total original amount = Rs. 2,000 + Rs. 3,000 = Rs. 5,000

5. Calculate the remaining amount due:

Total amount owed - total amount paid = remaining amount due

Rs. 7,000 - Rs. 4,650 = Rs. 2,350

A decrease in the number of creditors would result in a decrease in cash. This is because creditors are individuals or entities to whom a company owes money, and when the number of creditors decreases, it means that the company has paid off some of its debts. As a result, the company's cash balance would decrease as it uses its cash to repay its creditors.

The correct answer is 8. In a ledger, there are typically eight columns. These columns include the date, account name, reference number, description, debit amount, credit amount, balance, and a column for any additional notes or remarks. These columns are used to record and track financial transactions in an organized manner.

The statement "In case of debt becoming bad the amount should be credited to bad debts A/c" is not true because when a debt becomes bad, it should be debited to the bad debts account to reflect the loss in value. This is because bad debts are considered as an expense for the company.

The excess payment will be Rs 2000 because Ramesh withdrew goods worth Rs 7000 but their cost price was only Rs 6000. This means Ramesh received an extra benefit of Rs 1000. Additionally, Ramesh received a salary of Rs 6000, which means he received a total of Rs 7000 in excess of his original salary of Rs 10000. Therefore, the excess payment is Rs 2000.

A debit balance indicates that the account has more debits than credits. In the case of a loan to a contractor, the account would typically have a debit balance because it represents an asset (the loan) owed to the business. The business would record the loan as a debit entry, increasing the loan amount, and any subsequent payments received from the contractor would be recorded as credits, reducing the loan balance. Therefore, the loan to contractor account will have a debit balance.

The purchase of a building from a bank does not have any effect on the total assets. This is because the purchase is simply a transfer of one asset (cash) to another asset (building). The total assets remain the same before and after the purchase.

In accounting, a credit balance signifies that the credit side of an account exceeds the debit side. When carrying this balance forward to the next accounting period, the phrase "By balance c/d" is used. "c/d" stands for "carried down," indicating the transfer of the credit balance to the beginning of the new period. This notation ensures continuity and accuracy in tracking account balances over time.