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Accounts Notes- Best Class Guide

Accounts Notes- Best Class Guide

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Published by: Anup Kumar Patnaik on Sep 14, 2011
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From: www.bestclassguide.


Basic Accounting Questions
1. What is Book-Keeping? Ans: “Book-Keeping is the art of recording business transactions in a systematic manner”. 2. What is accounting? Ans: Accounting is the process of identifying, classifying and summarizing, in a significant manner and in terms of money, transactions and events which are in partat least, of financial character and interpreting the results thereof. 3. What is Accountancy? Ans: Accountancy is theory and practice of accounting. 4. Who are the various parties interested in accounting information? Ans: The various parties who are interested in accounting information are A: Owners or shareholders. B: Investors. C: Debentures holders, D: Banks, E: Creditors F: Customers, G: Management, H: Employees, I: Government, J: Stock Exchanges 5. What are Transactions? Ans: Every financial change which occurs in your business is a transaction. It should be in monetary terms. 6. What are Drawings? Ans: It refer to cash, goods or any other asset withdrawn (taken away) by the owner/proprietor from his business for his personal, private or domestic use. 7. What is Entity? Ans: The term Entity means something having a separate existence. In business enterprise having a separate entity or existence from that of owners of that enterprise. 8. What are the different types of accounting concept? Ans: The different types of accounting concept are: 1. Money measurement concept. 2. Separate entity concept. 3. Going concern concept. 4. Cost concept. 5. Dual aspect concept. 6. Accounting Period concept. 7. Objective evidence concept. 8. Realization concept. 9. Accrual concept. 10. Matching concept.

9. What is the Accounting equation? Ans: Assets =Liabilities +Capital, or Assets-Liabilities = Capital or AssetsCapital=Liabilities.


From: www. Real account. E. 5. 15. wages. Convention of feasilbity. 4. Cash. and incomes and gains which a concern earns in the course of its business. Nominal account. 14.: Ram acc. What is Nominal account? It is an accounts of the expenses and losses which a concern incurs. 16. Convention of consientency 3. What is Narration? Ans: It is a note given below the journal entry where the brief explanation about the transactions will be written. 13. goodwill etc. What is Personal account? Ans.com Basic Accounting Questions 10. 17.g.: Machinery acc. What is Real account? Ans: It is an account of properties. These accounts are called nominal accounts because they don’t really exist and they cannot be seen or touched. 2. E. printing. artificial personal accounts or Representative personal accounts. Personal accounts are the accounts of persons with whom a concern carries on business. It can be classified into accounts of tangible and accounts of intangible assets. Convention of conservatism. Vijay bank acc.g. 12. It may be Natural personal accounts. What is Journal? Ans: It is day book or a daily record. E.: Salaries. It is a book of original entry in which all the transactions are first recorded in the occurrences (order of dates) from the source of documents. What are the different kinds of accounts? Ans: The different types of accounts can be classified as: 1. Personal account. 11. 3. Convention of materiality.bestclassguide. postage etc.g. 2. What is Double entry system? Ans: The system of making two or double entries of equal value in two different accounts in opposite sides in the books of each of the contracting parties is known as the double-entry system of accounting. 2|Page . assets or things owned by a concern and in and with which the business is carried on. Outstanding Expenses. What are the different types of accounting conventions? Ans: The different types of accounting conventions are 1. Convention of disclosure.

Cash book 6. 2. 21. 2. Sales book 3.bestclassguide.e. sundry expense. 3. Bills payable book 8.Sales return book.From: www. 22. Three column cash book. 23. Imprest system petty cash book. Purchase return book 4. 19. (Cash. small) payments.com Basic Accounting Questions 18. which is used for recording petty (i. 20. What are Subsidiary books? Ans: It a book of original entry maintained under the modern system of accounting for recording first the various business transactions as and when take place. Journal Proper. What is Ledger? Ans: It is a book where transactions of the same nature are classified and grouped together in one place in the form of an account. 23. 5. Simple petty cash book. What is Bank reconciliation statement? Ans: It is a statement prepared to reconcile the bank balance as per the cash book and balance as per pass book. Bank & Discount columns). In other words “The book in which a traders all transactions are recorded in a classified permanent form is called ledger”. What are the different types of cash book? Ans: The different types of cash book are 1. Simple cash book or Single column cash book. 22. 3|Page . such as postage and telegrams. What are the different types of Subsidiary books? Ans: The different types of subsidiary books are 1. cartage and carriage. Bills receivable book 7. coolly. Two column cash book. What is Cash book? Ans: It is a book of original entry wherein all cash transactions are recorded as and when it takes place. (Cash & Discount columns). Analytical petty cash book. Purchase book 2. What are the different types of Petty cash book? Ans: The different types of petty cash book are 1. What is Petty cash book? Ans: It is an additional cash book. 3.

2. Adjusting entries. Transfer entries. 4|Page . 2. 4. Where do show the above balances in Trial balance? 1. 2. Closing entries. Cheques issued and presented in the cash book but not presented for payment. 28. 28. 4.bestclassguide. 2. 4. 29. What are the different types of Errors? Ans: The different types of errors. Errors of Commission. Interest on investment recorded in pass book only. all incomes and outstanding expenses= Credit side. 1. Compensating Errors. 25. 3. Errors of Principle. 3. Opening entries. Rectifying entries. All liabilities. 26. What is Rectification of errors? Ans: Rectification of errors means the removal and correction of the errors or the mistakes found in the books of accounts. All Assets. 3. Bank charges recorded in the pass book only. Cheques issued and cashed but not recorded for payment. Errors of omission.From: www. 5. 27. 5. Write any four reasons for the causes for disagreement between pass book balance and cash book balance? Ans: The four reasons for the disagreements are 1. 3. What is Errors in accounting? Ans: It is an unintentional mistakes committed by the book-Keepers in the books of accounts. What is Journal proper? Ans: It is used for recording only those transactions which cannot be recorded in any other subsidiary book or special journal. Sales and Purchase returns or Return outwards= Credit side. all expense and prepaid items= Debit side.com Basic Accounting Questions 24. It is generally used for recording the following types of transactions: 1. What is Trial balance? Ans: Trial balance is a statement prepared with the debit and credit balances of all the ledger accounts to test the arithmetical accuracy of the books. Purchase and Sales return or Return Inwards= Debit side.

Bank A/c Dr 10000 To Cash A/c 10000. What is Balance sheet? Ans: It is a list of all assets and liabilities of a business. 31. 37. Cash A/c Dr 5000 To Bank A/c5000. containing an unconditional order. E. What is Profit and loss account? Ans: It is an account which shows the net profit or net loss of a business for a particular trading period.Payee.From: www. Who are the parties in Bills of exchange? Ans: The parties who are involved in the bills of exchange are. a certain sum of money only. 32. What are Bills of exchange? Ans: An instrument in writing. directing a certain person. 33. Cash deposited in the bank Rs10000. 2. 34. signed by the maker. to or to the order of a certain person or the bearer of the instrument. Drawer 2. 1.Drawee 3. What is Contra entry? Ans: All journals having cash effects in the bank account is termed as Contra entry. What are Final accounts? Ans: It is a summary of ledger accounts organized in such manner as to show the profit or loss of the business for the accounting year and to know the financial position of the business at the end of the accounting of year. 36. What is Suspense account? Ans: It is an account which is opened when the trial balance does not tally and in which the difference in the trial balance is entered to tally the trial balance.g. 35.bestclassguide. Cash withdrawn from bank Rs 5000. =1. to pay on demand or at a fixed or determinable future. 5|Page . What is Trading account? Ans: The Trading account is an account which shows merely the result of trading (buying & selling of goods) called as Gross Profit or Gross Loss.com Basic Accounting Questions 30. Or it is a statement of assets and liabilities prepared on the last date of the trading period is known as the “Balance sheet”.

41. It can be further classifies into long term liability and short term liability. A debtor is a current asset.g. 44. What is debit note? Ans: Whenever goods are returned by a trader to supplier. He owes money to the business because he has received some benefit from the business. 6|Page . then it is known as compound entry. B & C amounted to Rs5000. Rs 2000 & Rs3000. This statement is called as credit note. What is posting? Ans: It is the act of transferring the transactions or entries from the journal or subsidiaries books to ledger. This statement is called as Debit note.bestclassguide. 43. What is credit note? Ans: Whenever goods are taken back from a customer or an allowance is granted to a customer.com Basic Accounting Questions 38. 42. 40. What is an Asset? Ans: Assets refer to properties or things and rights of value owned by a business and also amount due to the business from others. Who is creditor? Ans: A creditor is a person to whom the business owes money. a statement is prepared to inform the customer that is account has been credited for the goods returned. 45. A A/c Dr 5000 B A/c Dr 2000 C A/c Dr 3000 To Sales A/c10000. A creditor is a current liability. = Goods sold to A. Who is debtor? Ans: A debtor is a person who owes money to the business. The business owes money to him because he has given some benefit to the business. What is Liability? Ans: Liabilities refers to amount owed by a business to others. What is Compound entry? Ans: If we have more the one debit/credit in one single transaction. E. 39.From: www. a statement is prepared to inform supplier that his account has been debited for the goods returned.

bestclassguide. Classifications of the various accounts that is Personal. Real and Nominal.From: www.com Basic Accounting Questions 1. Personal accounts Capital acc Prepaid Insurance acc Deposit acc Mysore Trading stores acc Bank Over Draft acc Provision for bad debts & doubtful acc Outstanding wages acc Bank acc Raju acc Drawings acc Bangalore sports club acc Book debts acc Provision for discount on debtors acc Commission received in advance acc Debtors acc Loan acc National trading co acc National bank acc International Traders acc National college acc Provision for discount on creditors acc Trust acc Rotary club acc Real accounts Machinery acc Land & Building acc Goodwill acc Trademark acc Loose tools acc Motor car acc Provision for depreciation acc Furniture acc Cash acc Patents acc Stock acc Motors van acc Bills receivable acc Creditors acc Fixtures acc Plant Copyright acc Investment acc Motor vehicle acc Bills payable acc Nominal accounts Bad debts acc Stationery acc Depreciation acc Rent acc Travelling expense acc Printing acc Electricity charges acc Salaries acc Discount acc Postage acc Interest acc Carriage Outwards Sundry expenses acc Income tax Wages acc Loss of goods by fire acc Charity acc Commission acc Freight acc Telephone charges acc Insurance premium 7|Page .

From: www.com Basic Accounting Questions 8|Page .bestclassguide.

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