1. The Process of doing the total of both side of Debit and Credit of an Account is called as ?
Ans. The process of doing total for both of the sides of an Account is called as Casting of an Account.
2. What is rule for Nominal Account ?
Ans. The rule for the Nominal account is “Debit all the expenses and losses and credit all the gains and income”.
3. Give an example of an intangible asset.
Ans. Patent Right.
4. Write any one of each external and internal users of the financial statements.
Ans. External Users : Investors Internal users : Management
5. What are the different types of Stocks?
Ans. Three basic type of Stocks are in Accounting terms
Stock of finished goods ready to be sold
Stock of Raw Materials which are under manufacturing process
Stock of work-in-progress means semi finished goods.
6. What do you mean by Balancing an Account?
Ans. When the total of the debit and credit columns are done and the lesser side of the total is subtracted from greater side of the total the balance comes in form of greater side only is called the Balancing of an Account.
7. What are the features of Trial Balance?
Ans. The main features of Trial Balance is Arithmetical Accuracy, Base of Financial Statement and Summarization of the statements.
8. What is Sales Return?
Ans. When a sullener gets back the whole delivery or part of sold goods to a customer back on some grounds is called or referred a Sales Return.
9. What do you understand by the term “Book Keeping”?
Ans. In nutshell the attending the Accounting Process is called or referred as Book Keeping in other plain words we may concern that the Book Keeping is the part of whole Accounting process in other words we can say that recording the financial transaction, then classification and summarizing all those financial transactions are concerned with Book Keeping. R.N. Carter describes the Booking Keeping as “Book Keeping is the science and art of recording corral in the books of account all those business transactions that result in the transfer of money or money’s worth.”
10. Explain the term “Trial Balance” and its needs for an organization.
Ans. A Trial Balance is a statement of summarization of the all the involved ledgers accounts at the end of the particular period or a date in other words the total balances of an individual accounts are written in a summarized statement which is called the Trial Balance.
An organization needs a Trial Balance in order to prepare its Final Financial statement which is Balance Sheets, Profit & Loss Account and a Trading Account etc.
11. What are the salient features of a Promissory Note?
Ans. a) A Promissory Note is made by the promiser who undertakes to pay the mentioned amount of Bill to the bearer of the Promissory Note.
b) Promissory Note is signed by a promiser.
c) A required stamp duty is levied on the Promissory Note.
d) The payment is done to the seller or person who is payee by the promiser.
12. Define the Management or Managerial Accounting System.
Ans. As the name suggest management or managerial accounting system refers to the Management of the firm or company, the most latest development in the field of Accounting is the Management Accounting, mainly it serves the Management of the company or organization, all the reports generated under Management Accounting system are purely usage of Management only. Manager can make much decision on basis of these prepared reports for future of the organization in order to yield most of profits.
13. What are the major advantages of the Single Entry System?
Ans. A Single Entry system is considered to be the most simplest method to record the financial transaction, only cash book is required no subsidiary books like purchase credit, Sales Credit, Bills Receivable, Bills Payable Book are required so this system proves to be cheaper than Book Entry System.
In order to do the book keeping under the single entry system, no special knowledge is required, only basic knowledge of the accounting is enough so no special technical executives are required to deploy for the accounting purpose. It saves the manpower and its cost for an organziaiton.
14. Explain the effects of the transactions on Accounting Equation under a Financial Accounting System.
Ans. Under the Double Entry System each of the financial transaction bring the dual effect on accounting system in form of Debit and Credit for example a company’s capital is Rs. 1 Lakh and it purchases of goods for Rs. 50000 and the same has not be sold yet so it will be considered as Stock and stock comes under Assets so this transaction will reduce the capital by Rs. 50000 and capital shall remain only Rs. 50000 and the Assts at other side will be 50000 so the capital reduces and Assets increases mean the dual aspect effects comes therein.
15. Write a short note on Sale of An Asset on account of Depreciation.
Ans. An asset can be sold anytime before or after its useful life estimated time, in case the asset is sold more than its existing written down value it will be a case of profit and opposite to it if the sale is less the existing book value of the asset than it will be case of purely loss, whiter there is loss or profit the both will be entered into the profit & Loss Account. In case of Profit the Profit & Loss Account will be credit and if loss is there then the Profit and Loss Account will be debited.
16. What is a Journal?
Ans. Journal is a Book of Original entry where all the transactions are recorded under chronological base.
17. If there is some increase in the following transaction which side for it will be recorded ?
1. Sales A/c
2. Purchase A/c
Ans. 1. Credit- Sales A/c
2. Debit – Purchase A/c
18. What do you mean by Purchase Return? Give an example.
Ans. Sometime the goods an organization orders are not up to the mark and they are not supposed to keep or accept so the same needs to be returned back to its supplier or vendor or seller, it can be whole of the goods or a part of the goods. For example a firm orders for 500 boxes of Pencil, on delivery it is found that the 100 boxes are broken, so all the 100 boxes will be returned back to the company, first the entry of whole 500 boxes will be recorded and then the returned 100 boxes will be recorded in the purchase return book and at the end of the month the total of Purchase Return it will be transferred to the Purchase Return Book.
19. How an HRD department work in order to preparing the Salaries of the staff?
Ans. An HRD, the Human Resources Department is the preliminary as well as the mid level action body or department which recruits the employees then prepare the preliminary data about the employees and prepare the salaries based on the all the input points relating to the concerned employs and supplies finally all the data to the HRD department. Accounts Department after receiving the salary charts from the HRD department which is based on department wise of as desired as per the nature of the organization, verifies the data and then finally distributes the salaries and wages to the employees and workers.
20. In a Not-for-Profit organization how the Specified funds are treated which relate to Income & Expenditure Account ?
Ans. A not-for-profit organization treats the received fund with a specific nature by putting them in the liabilities side of a Balance Sheet, the reason behind it is that these particular funds are not recurring natured. For Example if this organization gets a donation now this donation may fall in two category Specific or regular if it for a specific and particular purpose donation that it will be taken to the Balance Sheet at the beginning of the year towards the liabilities side, and if its not the specific nature that it will be treated as an income and it will be posted in the income side of the Income and Expenditure Account at the ending of the year.
21. Explain step by step the complete produce from sale to realization of payment in relation to a Bill of Exchange?
Ans. A seller sells the goods on cash and credit too, when he sells the goods on credit basis he is due to get his payment for goods sold to the buyer in whose name an Invoice is raised by the seller. When sale is on credit base a Bill is raised mentioned all the term and conditions about the payment, it bears the name of the drawee and the name of the payee who to the payment will be paid by the drawee of the Bill. This bill contains unconditional orders to pay the payment to the payee within the stipulated period or on the due date. Seller also adds three days which is called the Grade Period to the drawee in case of public holiday or so on. The last date of the Grace period is referred as Date of Maturity. A drawee can issue a Promissory Note to the seller undertaking the payment of the bill.
22. State the main reason because of which the differences between a Cash Book and Bank Passbook.
Ans. The difference can be stated as follows
a) Sometime cheque issued to party on time but they make a delay in depositing to their Bank for further realization in their account, while issuing the cheque reduces the Bank Balance in Cash Book’s Bank Column but in Bank Passbook the balance will change only when the issued cheque come arrive for collection.
b) Sometime some receipt entries credited by bank, which have been directly sent by parties but trader only come to know when it get his passbook updated.
c) Sometime few charges like Cheque collection charges, Folio Charges, Bank Interest is debited or credited by bank, but a trader come to know only after he gets the passbook updated.