Podcast
Questions and Answers
What is the primary item displayed in a trial balance?
What is the primary item displayed in a trial balance?
- Total Revenue
- Expenses Incurred
- Assets and Liabilities
- List of Account Balances (correct)
Which of the following indicates a reason why paying house rent from business funds is a business transaction?
Which of the following indicates a reason why paying house rent from business funds is a business transaction?
- It is a loan from a bank.
- It is an expense incurred for business operations. (correct)
- It increases personal equity.
- It has no impact on financial records.
Which statement regarding outstanding expenses in cash basis accounting is correct?
Which statement regarding outstanding expenses in cash basis accounting is correct?
- They are shown in the trial balance.
- They are not recorded. (correct)
- They affect the cash flow statement.
- They are recorded as liabilities.
What best describes a contingent liability?
What best describes a contingent liability?
In a scenario where cash sales are 1.5 times credit sales, if credit sales are ₹1,20,000, what does this imply about cash sales?
In a scenario where cash sales are 1.5 times credit sales, if credit sales are ₹1,20,000, what does this imply about cash sales?
Flashcards
What is a trial balance?
What is a trial balance?
A list of all account balances, showing the debit and credit balances for each account.
What is a business transaction?
What is a business transaction?
A business transaction is an event that affects the financial position of a business. It must involve an exchange of goods or services and have a financial impact on the business.
What's the difference between cash and accrual basis accounting?
What's the difference between cash and accrual basis accounting?
Cash basis accounting records transactions only when cash is received or paid out. Accrual basis accounting records transactions when they occur, regardless of when cash is exchanged.
What is a contingent liability?
What is a contingent liability?
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Why are outstanding expenses not recorded in cash basis accounting?
Why are outstanding expenses not recorded in cash basis accounting?
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Study Notes
General Instructions
- The question paper contains 32 questions.
- All questions are compulsory.
- Marks are given against each question.
- Show calculations and working clearly, if needed.
Question 1
- The correct answer is "All the above". Trail balances include journal folio, list of account balances, and the data of recording transactions..
Question 2
- Mukesh paying rent from business funds is a business transaction.
- Paying rent from business funds is considered a business expense.
Question 3
- Two differences between cash and accrual accounting methods are required.
Question 4
- Cash sales are 1.5 times credit sales.
- Credit sales are ₹1,20,000.
- Purchases are ₹1,40,000.
- Gross profit rate is 25%.
- Calculate the value of closing stock.
Question 5
- Outstanding expenses are not recorded in cash basis accounting. This is True.
Question 6
- If there is current probability of outflow of uncertain funds for settlement and an obligation, "Contingent Liability". is recognized.
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Description
Test your understanding of fundamental accounting principles with this quiz. Covering topics from cash and accrual accounting to business transactions, this quiz will challenge your knowledge and application of these concepts.
