Question 1

Under ______ system , the buyer gets ownership of goods immediately

Accepted Answer

In the installment system, the buyer gets immediate ownership of the goods, while in hire purchase (HP), ownership is transferred only after the final payment.

Question 2

When an asset is acquired on hire purchase system, the asset account is debited with _______ of the assets in the books of the hire purchaser.

Accepted Answer

When an asset is acquired on hire purchase, the asset account is debited with the cash price of the asset in the books of the hire purchaser. This is because the cash price represents the actual cost of the asset to the purchaser, excluding interest and other charges included in the installment payments.

Question 3

In order to deal with the re possession the hire vendor operates an account called _______

Accepted Answer

The correct answer is "Goods repossessed account." This account is used by the hire vendor to record the value of goods that have been repossessed from the hire purchaser due to non-payment or breach of the hire purchase agreement.

Question 4

Under _____ system , the hire vendor has a right to take back the goods

Accepted Answer

Under a Hire Purchase (HP) system, the hire vendor retains the ownership of the goods until the final payment is made and has the right to take back the goods if the buyer defaults on payments.

Question 5

Single entry system of accounts is maintained by ______

Accepted Answer

The single entry system of accounts is most commonly used by sole traders due to its simplicity and the lower volume of transactions, as it does not require the maintenance of all the double-entry bookkeeping records.

Question 6

The statement of profit or loss is prepared according to _______ method to calculate profit or loss under single entry system

Accepted Answer

The statement of profit or loss under the single entry system is typically prepared using the Statement of Affairs method, which helps in estimating the profit or loss by comparing the net worth at the beginning and end of the period.

Question 7

Under single entry system , drawings is _____ to know gross profit

Accepted Answer

Drawings are deducted from the gross profit to arrive at the net profit under the single entry system.

Question 8

Receipts and payment account is a summary of ______

Accepted Answer

Receipts and Payment Account is essentially a summary of the cashbook, showing cash transactions (receipts and payments) over a period, typically for a non-profit organization. It does not adjust for accruals, prepayments, or capital and revenue items, making it distinct from income and expenditure accounts, profit and loss accounts, or balance sheets.

Question 9

Excess of income over expenditure of non trading concern is called _______

Accepted Answer

Non-trading concerns, such as charities or clubs, refer to their excess of income over expenditure as a surplus, not profit, because their primary aim is not to make a profit but to provide services or meet their organizational goals.

Question 10

Income and expenditure account is a type of ______

Accepted Answer

An income and expenditure account is essentially a type of profit and loss account used by non-profit organizations to ascertain their net surplus or deficit during a period, reflecting their financial performance.

Question 11

The amount of money owed by a business to outsider is called _____

Accepted Answer

Liabilities refer to the amount of money that a business owes to outsiders, which can include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.

Question 12

The properties and possession of a business are termed as ________

Accepted Answer

Assets are the properties and possessions owned by a business, which can include things like cash, inventory, buildings, and equipment.

Question 13

Prepaid expenses appearing in trial balance will appear in _____

Accepted Answer

Prepaid expenses are considered current assets because they represent goods or services that have been paid for by the company but not yet consumed or used. These are recorded on the asset side of the balance sheet as they provide future economic benefits to the company.

Question 14

Net profit / loss is transferred to the ______ account

Accepted Answer

Net profit or loss is transferred to the Capital account, as it affects the owner's equity. Profits increase the capital, while losses decrease it.

Question 15

All ________ expenses are recorded in the trading account

Accepted Answer

The answer of All ________ expenses are recorded in the...

Question 16

________ expenses are shown in the profit and loss account

Accepted Answer

The answer of ________ expenses are shown in the profit...

Question 17

Which English alphabet is similar to the shape of an account?

Accepted Answer

The answer of Which English alphabet is similar to the...

Question 18

Gross Profit is the difference between

Accepted Answer

Gross Profit is calculated by subtracting the Cost of Goods Sold (COGS) from Net Sales, which represents the revenue from selling goods minus the cost to produce or purchase those goods.

Question 19

The basic concepts related to Balance Sheet are

Accepted Answer

The Balance Sheet is fundamentally influenced by the Cost Concept, which states that assets are recorded at their purchase price, and the Business Entity Concept, which treats the business as separate from its owners for accounting purposes. These concepts are essential for preparing and understanding balance sheets.

Question 20

The basic concepts related to P & L Account are

Accepted Answer

The Realization Concept and Matching Concept are both fundamental to understanding and preparing a Profit & Loss Account. The Realization Concept pertains to recognizing revenue when it is earned, regardless of when the cash is received, while the Matching Concept involves matching expenses with the revenues they help to generate within the same accounting period, ensuring that the P & L Account accurately reflects the financial performance of the business.

Quiz 28: Accounting Concepts and Systems