Basic Accounts Quiz: Trivia Exam!

The correct answer is profit because when revenues are greater than expenses, the result is a positive value, indicating that the company has made a profit. Profit is the amount of money that remains after deducting all expenses from the total revenue.

Debit is the term associated with the left side in accounting. In double-entry bookkeeping, debits are used to record increases in assets and expenses, as well as decreases in liabilities and equity. It represents the money that is being taken out or spent. On the other hand, credits are associated with the right side and are used to record decreases in assets and expenses, as well as increases in liabilities and equity.

Accounting entries involve a minimum of two accounts because every transaction in accounting affects at least two accounts. One account is debited to record the increase in an asset, expense, or loss, while another account is credited to record the decrease in a liability, equity, revenue, or gain. This double-entry system ensures that the accounting equation (Assets = Liabilities + Equity) remains balanced.

Debiting an asset in a journal entry will usually cause the asset to increase. Debiting an asset means recording an increase in its value or adding to its balance. This could occur when an asset is purchased, received, or when there is an increase in its value. By debiting the asset, it is being recognized as a positive addition to the company's resources.

The term "subtracted from" indicates that the value of "drawings" is being deducted or taken away from the capital invested. This suggests that the drawings represent a reduction in the overall capital, possibly due to the withdrawal of funds or assets from the business.

Assets are items or resources owned by a company that have monetary value. Goodwill is an intangible asset that represents the reputation and customer base of a business, so it is not included in the list of assets. Bills Receivable refers to the money owed to a company by its customers, which is an asset. Bills Payable, on the other hand, represents the money that a company owes to its creditors, so it is not considered an asset. Cash at Bank is a tangible asset that represents the money held by a company in its bank accounts. Therefore, the correct answer is Bills Payable, as it is not included in the list of assets.

When cash is received, it is considered as an increase in the cash balance. According to the rules of accounting, an increase in an asset account is recorded by debiting the account. Therefore, when cash is received, the Cash A/c will be debited.

Expenses and losses are debited under the Nominal Account. Nominal accounts are used to record income, expenses, gains, and losses. Expenses and losses are considered as nominal accounts because they are temporary in nature and are closed at the end of the accounting period. Debiting these accounts helps in increasing their balance and reflects the outflow of resources from the company. Therefore, the correct answer is Nominal Account.

A debtor is someone who owes money to another person or entity. In accounting, a debtor is considered as an asset because it represents an amount of money that is expected to be received in the future. It is an economic resource that has the potential to generate future economic benefits for the individual or organization. Therefore, a debtor is classified as an asset in financial statements.

When an expense is incurred, it means that the company has paid for a certain expense. In accounting, expenses are recorded by debiting the Expense A/c. Debiting an account increases its balance, so by debiting the Expense A/c, it reflects that the company has incurred an expense and the balance of the account increases. Therefore, the correct answer is "Debited".

The correct entry for starting a business with cash and machinery is option I. In this entry, the Cash account and the Machinery account are both debited, indicating an increase in these assets. The Capital account is credited, representing the owner's investment in the business. This entry correctly reflects the increase in assets and the corresponding increase in the owner's equity. Option II is incorrect because it debits the Capital account instead of the Cash account. Option III is also incorrect because it does not properly account for the increase in the Machinery account.

When the liability account Accounts Payable is credited, it means that a company has received goods or services on credit from a supplier. This increases the amount owed by the company to the supplier, thus increasing the balance in the Accounts Payable account. Therefore, the correct answer is Credit.

Fixed assets are assets that are acquired by a company for long-term use and are not intended for resale. These assets are typically used in the production or operation of the business and are expected to provide economic benefits over a period of time. Examples of fixed assets include buildings, machinery, vehicles, and land. Unlike inventory or other assets that are held for resale, fixed assets are held for their productive use within the business and are not intended to be sold as part of the company's regular operations.

Carriage Outwards refers to the transportation expenses incurred by a business while delivering goods to customers. These expenses are considered as indirect expenses and are therefore recorded in the Profit & Loss Account. The Profit & Loss Account is used to calculate the net profit or loss of a business by deducting all expenses, including Carriage Outwards, from the total revenue. Therefore, the correct answer is Profit & Loss Account.

Assets are usually reported on the balance sheet at their cost. This means that the value at which the asset was initially purchased or acquired is recorded on the balance sheet. The cost represents the historical value of the asset and is used for accounting and financial reporting purposes. It provides a reliable and consistent measure of the asset's value, regardless of any changes in the current market value or expected selling price.

Closing stock is not shown in the Trial Balance. The Trial Balance is a statement that lists all the debit and credit balances of various accounts in the ledger. It is prepared to ensure that the total debits equal the total credits and to identify any errors in recording transactions. Closing stock, which represents the value of unsold goods at the end of an accounting period, is an asset and is therefore shown in the Balance Sheet. It is also taken into account while calculating the cost of goods sold in the Trading Account.

Provision for Doubtful Debts is created to account for potential bad debts or non-payment from customers. It is an estimated amount that is set aside to cover any potential losses due to non-payment. Since it is an expense and reduces the profit of the business, it is recorded on the debit side of the Profit & Loss Account.

The income statement is the correct answer because it is the financial statement that reports the revenues and expenses for a specific period of time, such as a year or a month. It provides information on the company's profitability by showing the net income or loss generated during that period. The balance sheet, on the other hand, reports the company's assets, liabilities, and shareholders' equity at a specific point in time, while the cash flow statement shows the inflows and outflows of cash during a period.

Managerial accounting is a branch of accounting that focuses on providing information to managers to aid in decision making, planning, and control of an organization. The goal of managerial accounting is to assist managers in making informed decisions and effectively managing the organization's resources. Review, on the other hand, is not a primary objective of managerial accounting. While managers may review financial information and performance reports, it is not the primary purpose of managerial accounting to provide information for review purposes.

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