Final Exam- Fundamantals Of Accounting
-
_______________ represent the amount invested by the owner into business.
-
Capital
-
Revenue
-
Asset
-
About This Quiz
This final exam tests fundamental accounting principles, covering balance sheets, economic events, asset categorization, and cost-related terms.
Quiz Preview
- 2.
Payment of monthly rent to the land is
-
Economic event
-
Non-economic event
-
None of these
Correct Answer
A. Economic eventExplanation
Payment of monthly rent to the land is considered an economic event because it involves a financial transaction where money is exchanged for the use of land. This transaction has an impact on the economy as it contributes to the income of the landowner and affects the financial position of the tenant. It is a part of the economic activities that occur within a market system, involving the production, distribution, and consumption of goods and services.Rate this question:
-
- 3.
A___________ transaction is one where in items are exchanged for other items
-
Cash
-
Credit
-
Barter
Correct Answer
A. BarterExplanation
A barter transaction is one where items are exchanged for other items without the use of cash or credit. In a barter system, individuals or businesses trade goods or services directly with each other, without the need for a medium of exchange like money. This type of transaction was commonly used in ancient times and is still practiced in some societies or in situations where currency is scarce.Rate this question:
-
- 4.
Source documents include
-
A. Vouchers
-
B. Receipts
-
C. Bill
-
D. All these
Correct Answer
A. D. All theseExplanation
The correct answer is d. All these. This means that source documents include vouchers, receipts, and bills. In accounting, source documents are the original records that provide evidence of a transaction. Vouchers are used to authorize and document expenses, receipts are used to record the receipt of cash or other assets, and bills are used to document amounts owed for goods or services. Therefore, all of these documents are considered source documents in accounting.Rate this question:
-
- 5.
Capital always have a __________balance ________
Correct Answer
CreditExplanation
The correct answer is "Credit" because capital represents the owner's investment in the business. It is considered a liability or credit to the business because the owner has provided funds to the business.Rate this question:
- 6.
In every business transaction at least ______parties are involved a. Two b. Three c. Four
-
a. Two
-
B. Three
-
C. Four
Correct Answer
A. a. TwoExplanation
In every business transaction, there are at least two parties involved. This means that there must be a minimum of two individuals or entities participating in the transaction. This could include a buyer and a seller, a borrower and a lender, or any other combination of parties involved in a business transaction.Rate this question:
-
- 7.
Capital expenditure are recorded in the __________
Correct Answer
Balance sheetExplanation
Capital expenditures are recorded in the balance sheet because they represent long-term investments made by a company to acquire or improve its fixed assets. These expenditures are not immediately expensed but are instead capitalized and recorded as assets on the balance sheet. By recording capital expenditures on the balance sheet, the company can track its investments in fixed assets over time and assess their impact on the overall financial position of the company.Rate this question:
- 8.
Bank account is a _________
-
A. Personal accounting
-
b. Real account
-
C. Nominal account
Correct Answer
A. A. Personal accountingExplanation
A bank account is considered as a personal accounting because it is a financial account that is held by an individual or a business entity. It is used for the purpose of depositing and withdrawing money, as well as keeping track of transactions and managing personal finances. Personal accounting involves recording and organizing financial activities related to an individual's personal assets, liabilities, income, and expenses, which aligns with the function and purpose of a bank account.Rate this question:
-
- 9.
___________denote goods brought for sale.
-
Sales
-
Purchase
-
Expenses
Correct Answer
A. PurchaseExplanation
The word "purchase" is used to describe the act of buying goods or acquiring them in exchange for money. In this context, "purchase" is the most appropriate term to denote goods that are brought for sale, as it implies that the goods have been acquired for the purpose of reselling them. The other options, "sales" and "expenses," do not accurately convey the concept of goods being acquired for sale.Rate this question:
-
- 10.
A debit in the asset means ________
Correct Answer
IncreaseExplanation
A debit in the asset means there has been an increase in the value of the asset. Debit is a term used in accounting to record an increase in assets, such as cash, inventory, or equipment. When an asset is debited, it indicates that there has been a positive change in the asset's value, typically due to an acquisition or an inflow of resources. This increase in the asset's value is reflected in the financial statements and helps provide a more accurate representation of the company's financial position.Rate this question:
- 11.
Financial statements are the part of _________
-
A. Book- keeping
-
B. Accounting
-
C. None of the above
Correct Answer
A. B. AccountingExplanation
Financial statements are an integral part of accounting. They provide a summary of a company's financial transactions and performance over a specific period of time. These statements include the income statement, balance sheet, cash flow statement, and statement of changes in equity. They are essential for evaluating the financial health of a business, making informed decisions, and meeting regulatory requirements. Therefore, the correct answer is b. Accounting.Rate this question:
-
- 12.
Is an example of a fixed asset
-
Receivable
-
Stock
-
Land & buildings
Correct Answer
A. Land & buildingsExplanation
Land and buildings are examples of fixed assets because they are long-term assets that are not easily converted into cash. Fixed assets are typically used in the production or supply of goods and services, rather than being held for sale. Land and buildings have a physical existence and provide long-term benefits to the company, such as office space or manufacturing facilities. They are not expected to be consumed or sold within the normal operating cycle of the business. Therefore, land and buildings meet the criteria of being fixed assets.Rate this question:
-
- 13.
A collection of all accounts is a ___________
Correct Answer
LedgerExplanation
A collection of all accounts is referred to as a ledger. A ledger is a book or a computerized record that contains a complete record of all financial transactions of a business. It serves as a central repository for organizing and summarizing the financial information of an organization. The ledger includes individual accounts for assets, liabilities, equity, revenue, and expenses, which are updated with every transaction. By maintaining a ledger, businesses can easily track and analyze their financial activities, prepare financial statements, and ensure accurate and reliable financial reporting.Rate this question:
- 14.
Sales return appearing in the trial balance are deducted from
Correct Answer
SalesExplanation
Sales return appearing in the trial balance are deducted from Sales because sales return represents the goods that were previously sold but have been returned by the customers due to various reasons such as defects, dissatisfaction, or incorrect delivery. These returns need to be subtracted from the total sales amount to accurately reflect the net sales figure, which represents the actual revenue earned by the company after deducting the returns. By deducting sales returns from sales, the trial balance ensures that the revenue and expense accounts are properly balanced and the financial statements present a true and accurate representation of the company's financial performance.Rate this question:
- 15.
___________ is not a tangible asset
-
Goodwill
-
Land
-
Closing stock
Correct Answer
A. GoodwillExplanation
Goodwill is not a tangible asset because it is an intangible asset that represents the reputation, customer base, brand value, and other non-physical assets of a company. It cannot be seen or touched like land or closing stock. Goodwill is typically acquired through business acquisitions or mergers and is recorded on the balance sheet as an intangible asset.Rate this question:
-
- 16.
Accounting is concerned with
-
Monetary
-
Non- monetary
-
Monetary & Nonmonetary
Correct Answer
A. MonetaryExplanation
Accounting is concerned with monetary aspects, which include financial transactions, assets, liabilities, income, and expenses that can be measured in terms of money. Non-monetary aspects refer to items that cannot be measured in monetary terms, such as goodwill, reputation, or employee satisfaction. However, accounting primarily focuses on the monetary aspects as they are quantifiable and can be recorded and analyzed to provide financial information for decision-making purposes.Rate this question:
-
- 17.
Closing stock is valued at ____________
-
A. Market price
-
B. Cost price
-
C. Cost price or market price whichever is less
Correct Answer
A. C. Cost price or market price whichever is lessExplanation
The closing stock is valued at cost price or market price, whichever is less. This means that the value of the closing stock will be determined by comparing its cost price to its market price, and the lower of the two will be used as the valuation. This approach ensures that the closing stock is not overvalued, as it takes into account any decrease in market value that may have occurred.Rate this question:
-
- 18.
Journal is a book of ______entry
-
A. Original
-
B. Secondary
-
C. None of these
Correct Answer
A. A. OriginalExplanation
A journal is a book where original entries are recorded. It is a personal record or diary where individuals document their thoughts, experiences, and observations. The word "original" implies that the entries in a journal are unique and not copied or derived from any other source. Therefore, option a. "Original" is the correct answer as it accurately describes the nature of a journal.Rate this question:
-
- 19.
Recording of transaction in the ledger is called as ________
Correct Answer
PostingExplanation
Recording of transaction in the ledger is called posting. This is the process of transferring the information from the journal to the appropriate accounts in the ledger. It involves entering the relevant details of the transaction, such as date, description, and amount, into the respective account in the ledger. Posting ensures that all transactions are properly recorded and organized in the ledger, allowing for accurate financial reporting and analysis.Rate this question:
- 20.
When salary paid by cheque ,____________account is credited ________
Correct Answer
BankExplanation
When salary is paid by cheque, the account that is credited is the bank account. This means that the money is being transferred from the company's account to the employee's bank account. The bank account is credited because it is receiving the funds.Rate this question:
- 21.
_____________is the original form of accounting
-
A. Financial accounting
-
B. Cost accounting
-
C. Management accounting
Correct Answer
A. A. Financial accountingExplanation
Financial accounting is the original form of accounting because it focuses on the recording, summarizing, and reporting of financial transactions and information for external stakeholders such as investors, creditors, and regulatory bodies. It involves the preparation of financial statements, such as the balance sheet, income statement, and cash flow statement, which provide a comprehensive view of a company's financial performance and position. Financial accounting is essential for making investment decisions, assessing the financial health of a company, and ensuring transparency and accountability in financial reporting.Rate this question:
-
- 22.
Capital expenditure are recorded in the __________
-
A. Balance sheet
-
B. Profit & loss account
-
C. Trading account
Correct Answer
A. A. Balance sheetExplanation
Capital expenditures are recorded in the balance sheet because they represent long-term investments in assets that will provide benefits to the company over multiple accounting periods. The balance sheet provides a snapshot of a company's financial position at a specific point in time, and it includes the value of the company's assets, liabilities, and shareholders' equity. Capital expenditures increase the value of the company's assets, and therefore, they are recorded on the balance sheet as an increase in the asset value. This allows stakeholders to see the company's investment in long-term assets and assess its financial health and ability to generate future returns.Rate this question:
-
- 23.
Cash book shows ___________balance when there is an O.D.
-
A. Debit
-
B. Credit
-
C. None of these
Correct Answer
A. B. CreditExplanation
When there is an overdraft (O.D.) in the cash book, it means that the cash balance has gone into negative. In accounting, a negative cash balance is represented as a credit balance. Therefore, the correct answer is b. Credit.Rate this question:
-
- 24.
Wages paid on for the erection of machinery is debited to
-
A. Machinery accounting
-
B. Wage accounting
-
C. Cash accounting
Correct Answer
A. A. Machinery accountingExplanation
Wages paid for the erection of machinery is debited to Machinery accounting because it is directly related to the cost of acquiring and installing the machinery. By debiting the wages to the Machinery accounting, it accurately reflects the total cost of the machinery, including the labor expenses incurred during its erection. This helps in properly tracking and recording the expenses associated with the machinery, ensuring accurate financial reporting.Rate this question:
-
- 25.
Income earned but not received to known as _______________ income
-
A. Accrued
-
B. Prepaid
-
C. Nominal
Correct Answer
A. A. AccruedExplanation
Accrued income refers to the income that has been earned but not yet received. This means that the revenue has been recognized in the accounting records, even though the payment has not been received. It is recorded as a current asset on the balance sheet and will be received in the future. This type of income is typically seen in situations where the payment is due at a later date, such as interest on investments or rent receivable.Rate this question:
-
- 26.
Old furniture sold should be credited to __________
Correct Answer
Furniture accountExplanation
When old furniture is sold, the amount received from the sale should be credited to the Furniture account. This is because the Furniture account is used to track the cost and value of furniture owned by a company. By crediting the Furniture account, we are reducing its value to reflect the fact that some furniture has been sold and is no longer owned by the company. This helps to accurately represent the financial position of the company and the value of its remaining furniture assets.Rate this question:
- 27.
Credit in the liability means ________
Correct Answer
IncreaseExplanation
Credit in the liability means an increase. In accounting, a credit entry is made when there is an increase in a liability account. Liabilities represent the amounts owed by a company to its creditors or other entities. When there is an increase in a liability, it is recorded as a credit entry in the accounting records. Therefore, the correct answer is "increase".Rate this question:
- 28.
is prepared at the end of the accounting period to show the financial position of business
-
Profit & low account
-
Balance sheet
-
Trail balance
Correct Answer
A. Balance sheetExplanation
A balance sheet is prepared at the end of the accounting period to show the financial position of a business. It provides a snapshot of the company's assets, liabilities, and shareholders' equity at a specific point in time. It helps stakeholders understand the company's financial health and its ability to meet its financial obligations. The balance sheet includes information such as cash, accounts receivable, inventory, property, and equipment on the asset side, as well as liabilities like accounts payable, loans, and accrued expenses. The shareholders' equity section shows the owners' investment in the business.Rate this question:
-
- 29.
Asset that can be converted into cash within a year are called _________asset
-
A. Current
-
B. Fixed asset
-
C. Wasting asset
Correct Answer
A. A. CurrentExplanation
Current assets are assets that can be converted into cash within a year. These assets include cash, cash equivalents, accounts receivable, inventory, and prepaid expenses. They are important for determining a company's liquidity and short-term financial health. Fixed assets, on the other hand, are long-term assets that are not easily converted into cash, such as buildings, machinery, and vehicles. Wasting assets refer to assets that have a limited useful life and depreciate over time, such as natural resources or patents. Therefore, the correct answer is a. Current.Rate this question:
-
- 30.
Withdrawing more amount from the bank than the deposit in the account is termed as____
-
A. Fixed deposit
-
B. Current deposit
-
C. overdraft
Correct Answer
A. C. overdraftExplanation
When a person withdraws more money from their bank account than the amount they have deposited, it creates a negative balance in their account. This negative balance is known as an overdraft. It is essentially borrowing money from the bank, allowing the account holder to spend more than what they have in their account. The bank charges interest on the overdraft amount until it is repaid. Overdrafts are typically used for short-term borrowing and can be a convenient way to cover unexpected expenses or temporary cash flow issues.Rate this question:
-
- 31.
Recording of transaction in the journal is called ________
Correct Answer
JournalizingExplanation
Journalizing refers to the process of recording transactions in the journal. The journal is a chronological record of all financial transactions that occur in a business. It is the first step in the accounting cycle and involves recording the date, description, and amount of each transaction in the journal. Journalizing helps to maintain a systematic and organized record of all business transactions, which is essential for accurate financial reporting and analysis.Rate this question:
- 32.
________________ is an example of wasting asset
-
Mines Land Closing stock
-
Land
-
Closing stock
Correct Answer
A. Mines Land Closing stockExplanation
Mines, land, and closing stock are all examples of wasting assets. A wasting asset is an asset that has a limited lifespan and decreases in value over time. Mines are finite resources that will eventually be depleted, land can lose value due to factors such as erosion or development, and closing stock refers to inventory that will eventually be sold or used up. Therefore, all three options listed (mines, land, and closing stock) are examples of wasting assets.Rate this question:
-
- 33.
______________ is the major source of revenue of any business
-
Purchase
-
Sale
-
Interest
-
Commission
Correct Answer
A. SaleExplanation
Sale is the major source of revenue for any business as it represents the income generated from selling products or services to customers. This revenue is crucial for covering expenses, making profits, and sustaining the business operations. Purchase, interest, and commission are also important components of a business, but they do not directly contribute to the primary source of revenue like sales do.Rate this question:
-
- 34.
A short description of every transaction made in the journal is called ________
Correct Answer
NarrationExplanation
A short description of every transaction made in the journal is called narration. Narration provides details about the nature and purpose of the transaction, including the parties involved, the date, and any additional relevant information. It helps in understanding and analyzing the entries in the journal, making it easier to track and review financial transactions.Rate this question:
- 35.
A person who owes money to the business is a __________
-
Debtor
-
Creditor
-
Investor
Correct Answer
A. CreditorExplanation
A person who owes money to the business is referred to as a creditor. This means that they have borrowed money from the business and are obligated to repay it.Rate this question:
-
- 36.
Which one do you like? A _________ is a person to whom the business owes money
-
Creditor
-
Debtor
-
Proprietor
Correct Answer
A. CreditorExplanation
A creditor is a person or entity to whom a business owes money. They have provided goods or services to the business on credit, and the business is obligated to repay the debt. The term "creditor" is commonly used in the context of financial transactions and refers to someone who has extended credit or loaned money to another party. In this case, the correct answer is "creditor" because it accurately describes the person or entity that a business owes money to.Rate this question:
-
- 37.
Asset acquired for a long period of time in the business is known as ___________
-
Fixed asset
-
Current asset
-
Fictitious asset
Correct Answer
A. Fixed assetExplanation
A fixed asset is an asset that is acquired for a long period of time in a business. It is a tangible or intangible asset that is expected to be used in the business for more than one accounting period. Examples of fixed assets include buildings, land, machinery, vehicles, and patents. These assets are not intended for immediate sale or conversion into cash and are used for the production or provision of goods and services.Rate this question:
-
- 38.
Excess of a current asset over current liabilities is known as _________ capital
-
Fixed
-
Working
-
Current
Correct Answer
A. WorkingExplanation
Working capital refers to the excess of current assets over current liabilities. It represents the amount of funds available to a business for its day-to-day operations. A positive working capital indicates that a company has enough assets to cover its short-term obligations, while a negative working capital suggests that the company may have difficulty meeting its short-term financial obligations. Therefore, the correct answer is "Working."Rate this question:
-
- 39.
If goods are destroyed by fire , the total value of loss is __________ to trading account.
-
A. Debited
-
B. Credited
-
C. Not taken
Correct Answer
A. B. CreditedExplanation
When goods are destroyed by fire, it results in a loss for the business. In accounting, losses are typically recorded by crediting the respective account. Therefore, in this case, the total value of loss due to the destruction of goods by fire would be credited to the trading account.Rate this question:
-
- 40.
The book that records small payment.
-
A. Single column
-
B. Double column
-
C. Petty cash book
Correct Answer
A. C. Petty cash bookExplanation
The book that records small payments is called a petty cash book. Petty cash is a small amount of money kept on hand for minor expenses, and the petty cash book is used to track and record these transactions. It typically has a simple format with columns for date, description of the expense, amount, and a column for the running balance. This book helps in maintaining an organized record of small payments and facilitates the reconciliation of petty cash at the end of a specific period.Rate this question:
-
- 41.
Ledger is a book of ___________entry
-
A. Original
-
B. Secondary
-
C. None of these
Correct Answer
A. B. SecondaryExplanation
A ledger is a book of secondary entry because it is used to record the summarized and classified information from the original source documents, such as the journal entries. The ledger provides a centralized record of all the transactions and their respective accounts, allowing for easy reference and analysis.Rate this question:
-
- 42.
Balance sheet is an ______________
-
A. Statement
-
B. Account
-
C. Both
Correct Answer
A. A. StatementExplanation
The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It presents the company's assets, liabilities, and shareholders' equity. It is called a statement because it presents information in a structured and organized format, following specific accounting principles and guidelines. The balance sheet is an important tool for investors, creditors, and other stakeholders to assess a company's financial health and make informed decisions.Rate this question:
-
- 43.
Trade discount is shown in the journal entry.
-
A. True
-
B. False
Correct Answer
A. B. FalseExplanation
Trade discount is not shown in the journal entry. Trade discount is a reduction in the selling price of goods or services offered by the seller to the buyer. It is not recorded in the accounting books or journals. Only the net amount after deducting the trade discount is recorded in the journal entry. Therefore, the statement is false.Rate this question:
-
- 44.
Bills receivable is a ___________________
Correct Answer
Current assetExplanation
Bills receivable is classified as a current asset because it represents the amount of money that a company expects to receive from its customers within a short period of time, typically within one year. Current assets are assets that are expected to be converted into cash or used up within one year or one operating cycle, whichever is longer. Since bills receivable are typically short-term financial instruments that are expected to be converted into cash within a year, they are considered as a current asset on a company's balance sheet.Rate this question:
- 45.
____________ expenditure is increased to maintain the business or to keep the assets in good working condition
-
Revenue
-
Capital
-
Both of there
Correct Answer
A. RevenueExplanation
Revenue expenditure is increased to maintain the business or to keep the assets in good working condition. This includes expenses such as repairs, maintenance, and operating costs that are necessary for the day-to-day operations of the business. Capital expenditure, on the other hand, refers to investments in long-term assets or projects that are expected to generate benefits over a longer period of time. Therefore, revenue expenditure is the correct answer as it specifically relates to expenses incurred to maintain the business or assets in good working condition.Rate this question:
-
- 46.
All those to whom the business owes to money are
-
A. Debtor
-
B. Creditor
-
C. Investor
Correct Answer
A. B. CreditorExplanation
A creditor is a person or entity to whom the business owes money. They have provided goods or services to the business on credit and are awaiting payment. In contrast, a debtor is someone who owes money to the business. An investor, on the other hand, is someone who provides funds or resources to the business in exchange for ownership or a share of profits, but they may not necessarily be owed money by the business.Rate this question:
-
- 47.
Trading account is a ____________account
-
A. Real
-
B. Nominal
-
C. Personal
Correct Answer
A. B. NominalExplanation
A trading account is a nominal account. Nominal accounts are used to record income, expenses, gains, and losses. A trading account specifically tracks the buying and selling of goods or services, and the resulting gains or losses from those transactions. It is considered a nominal account because it relates to revenue and expenses, which are temporary in nature and are closed at the end of an accounting period.Rate this question:
-
- 48.
When bank charge incurred, overdraft will be __________________________
-
A. increased
-
B. decreased
-
C. no charge
Correct Answer
A. A. increasedExplanation
When a bank charge is incurred, it means that the account holder has been charged a fee by the bank for a particular transaction or service. This charge will result in a decrease in the available balance in the account, leading to an increase in the overdraft amount. Therefore, the correct answer is "a. increased."Rate this question:
-
- 49.
If both the aspects of the same transaction appear in one account, it is called _______entry
-
A. Simple journal entry
-
B. Compound
-
C. Contra entry
Correct Answer
A. B. CompoundExplanation
If both the aspects of the same transaction appear in one account, it is called a compound entry. This means that both the debit and credit entries for a transaction are recorded in the same account, rather than being split between two different accounts. This is typically done when there are multiple components or elements to a single transaction that need to be recorded together.Rate this question:
-
Quiz Review Timeline (Updated): Mar 21, 2023 +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
-
Current Version
-
Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
May 01, 2020Quiz Created by
Quennie Cunanan
Back to top