Essential Book Keeping - Qp3

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| By Jackson Matthews
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Jackson Matthews
Community Contributor
Quizzes Created: 588 | Total Attempts: 682,892
Questions: 6 | Attempts: 136

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Essential Book Keeping - Qp3 - Quiz

Questions and Answers
  • 1. 

    It is much easier to have a lot of accounts with relatively few transactions in each.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    Having a lot of accounts with relatively few transactions in each makes it easier to manage and keep track of financial transactions. With fewer transactions in each account, it becomes simpler to reconcile and balance the accounts, reducing the chances of errors or discrepancies. Additionally, having multiple accounts allows for better organization and categorization of expenses, making it easier to analyze and budget effectively.

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  • 2. 

    If we limit the transactions in an account to a particular customer, the balance on the account also represents the balance on that customer’s account.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    If transactions in an account are limited to a particular customer, it means that only that customer can make transactions on the account. Therefore, the balance on the account would accurately reflect the balance on that customer's account since no other transactions from other customers would affect it. Hence, the statement is true.

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  • 3. 

    In order to make sure that the accounts do not contain any erroneous transactions, it is important to balance the accounts on a yearly basis.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    Balancing the accounts on a yearly basis is not necessary to ensure that the accounts do not contain any erroneous transactions. While it is good practice to regularly review and reconcile accounts, the frequency at which this is done may vary depending on the organization's needs and the volume of transactions. Some businesses may choose to balance their accounts on a monthly or quarterly basis instead. Therefore, the statement is false.

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  • 4. 

    The capital of a business represents the money that the investors and banks have put in.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    The capital of a business does not solely represent the money that the investors and banks have put in. It also includes retained earnings, which are the profits that the business has earned and reinvested back into the company. Additionally, capital can also include assets such as equipment, property, and inventory. Therefore, the statement is false as it oversimplifies the concept of business capital.

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  • 5. 

    The basic accounting equation is: Capital = Assets + Liabilities

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    The given statement is false. The correct accounting equation is:

    Assets = Liabilities + Equity

    This equation represents the fundamental principle of double-entry bookkeeping, where every transaction has an equal impact on both sides of the equation. Assets represent what a company owns, liabilities represent what it owes to others, and equity represents the owner's investment in the business. By rearranging the equation, we can see that the correct relationship is Assets = Liabilities + Equity.

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  • Current Version
  • Mar 19, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • May 30, 2014
    Quiz Created by
    Jackson Matthews
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