Short Questions and Answers

Introduction to Accounting

Answer: Accounting is an information system that identifies, records, and

reports to interested users the economic activities of an organization.  
Question-02: What is called Accounting?
Answer: Accounting is called the language of business.  
Question-03: What is the main objective of accounting?
Answer: The main objective of accounting is to keep accounting records and
determine the financial results of the organization.
Question-04: What are the three functions of accounting?
Answer: The three functions of accounting are as follows:
 Identification,
 Classification, and
 Communication.  
Question-05: What does accounting encourage people to do?
Answer: Accounting encourages people to exercise regularity, honesty, and
accountability.  
Question-06: What was the scope of accounting in the past?
Answer: In the past, the scope of accounting is limited only to business.  
Question-07: What are the branches or types of accounting?
Answer: The major branches or types of accounting are as follows:
 Financial Accounting,
 Cost Accounting,
 Management Accounting,
 Tax Accounting,
 Forensic Accounting, etc.  
Question-08: What does Accounting create?
Answer: Accounting creates values and accountability.  
Question-09: What subjects are related to accounting?
Answer: Accounting is related to
 Economics
 Mathematics
 Computers
 Statistics
 Law
 Political Science
 Engineering
  Environmental Science, etc.  
Question-10: What kind of science is accounting?
Answer: Accounting is a Social science.  
Question-11: Is Accounting art or science?
Answer: Accounting is both art and science.  
Question-12: When does the journey of accounting begin?
Answer: The journey of accounting began when people lived in caves.  
Question-13: Who is the father of accounting?
Answer: Luca de Pacioli is called the father of accounting.  
Question-14: Who was Luca de Pacioli?
Answer: Luca de Pacioli was an Italian priest, philosopher, and
mathematician.
Question-15: What is the name of the famous book written by Luca de
Pacioli?
Answer: Summa de Arithmetica, Geometria, Proportioniet Proportionalite.  
Question-16: Which part of the book by Luca de Pacioli discusses the double-
entry accounting process?
Answer: Luca de Pacio discusses the double-entry accounting process in the
third part of the book.  
Question-17: Where is the origin of modern accounting?
Answer: In 1494, Venice, Italy.  
Question-18: When does the journey of modern accounting begin?
Answer:  The journey of modern accounting begin in the fifteenth century.  
Question-19: At what time is the noticeable change in the accounting
system?
Answer: In the modern era.  
Question-20: What makes an organization trustworthy to a third party and
plays the most important role in creating accountability?
Answer: Accounting.  
Question-21: On what basis is the transaction validated and the existence of
the property verified?
Answer: With the help of secured accounting books, financial statements,
and credentials.
Question-22: What are the main advantages of accounting?
Answer: The main advantages of accounting are as follows:
 Know the financial status,
 Identify the improvement area,
 Prevent fraud,
  Take proper decisions, etc.  
Question-23: What are the requirements of accounting for internal users?
Answer: Determine the profit or loss.  
Question-24: What’s needed to make a business successful?
Answer: Keeping track of business transactions properly.  
Question-25: What is the basis for different types of decision-making in the
management of the organization?
Answer: Accounting Information.  
Question-26: When does the transaction start in cash and on credit?
Answer: The circulation of currency.  
Question-27: What is the name of the most recent addition to accounting
improvement?
Answer: Computed or Mechanical Accounting.  
Question-28: How did people of primitive age keep an account of
themselves?
Answer: Cut the stains on the walls of the cave, and knots on the rope.
Question-29: Which way has the accounting improved considerably?
Answer: Accounting has improved considerably by improving trade and
commerce and by advancing science and technology.
Question-30: How’s the history of accounting?
Answer: The history of accounting is as old as the history of human
civilization.  
Question-31: The basis for the collection of income tax, value-added tax, and
excise duty is—
Answer: Maintain accurate accounting  
Question-32: What is bookkeeping?
Answer: Bookkeeping is a part of accounting that only involves the recording
of economic events.
Question-33: What is the main function of bookkeeping?
Answer: The main function of bookkeeping is to record transactions in the
book of accounts.  
Question-34: What is the part of accounting that only records economic
events?
Answer: Bookkeeping only records the economic events.  
Question-35: What is the purpose of bookkeeping in an organization?
Answer: Determine the financial status of an organization.  
Question-36: What is Accounting Information?
Answer: The consolidated statement of all financial information of an
organization is called Accounting Information.  
Question-37: How many users of accounting information are there?
Answer: There are two types of accounting information users. One is an
internal user and the other is an external user.  
Questions-38: Who are the internal users of accounting information?
Answer:  The internal users of accounting information are
 Owners
 Management authorities
 Internal auditors, and
 Accounting departments.
Questions-39: Who are the external users of accounting information?
Answer:  The external users of accounting information are
 Government
 Lenders
 Investors
 Consumers
 Researchers
 Business Associations
 People
 Creditors, and
 External auditors.  
Question-40: What are the sources of accounting information?
Answer: The sources of accounting information are as follows :
 Comprehensive Income Statement,
 Balance Sheet,
 Owner’s Equity Statement,
 Cash Flow Statement, and
 Notes & Explanation.  

Transaction

Question-1: What is a transaction?
Answer: Accounting is an information system that identifies, records, and
reports to interested users the economic activities of an organization.  
Question-02: What is called Accounting?
Answer: Accounting is called the language of business.  
Question-03: What is the main objective of accounting?
Answer: The main objective of accounting is to keep accounting records and
determine the financial results of the organization.
Question-04: What are the three functions of accounting?
Answer: The three functions of accounting are as follows:
 Identification,
 Classification, and
 Communication.  
Question-05: What does accounting encourage people to do?
Answer: Accounting encourages people to exercise regularity, honesty, and
accountability.  
Question-06: What was the scope of accounting in the past?
Answer: In the past, the scope of accounting is limited only to business.  
Question-07: What are the branches or types of accounting?
Answer: The major branches or types of accounting are as follows:
 Financial Accounting,
 Cost Accounting,
 Management Accounting,
 Tax Accounting,
 Forensic Accounting, etc.  
Question-08: What does Accounting create?
Answer: Accounting creates values and accountability.  
Question-09: What subjects are related to accounting?
Answer: Accounting is related to
 Economics
 Mathematics
 Computers
 Statistics
 Law
 Political Science
 Engineering
 Environmental Science, etc.  
Question-10: What kind of science is accounting?
Answer: Accounting is a Social science.  
Question-11: Is Accounting art or science?
Answer: Accounting is both art and science.  
Question-12: When does the journey of accounting begin?
Answer: The journey of accounting began when people lived in caves.  
Question-13: Who is the father of accounting?
Answer: Luca de Pacioli is called the father of accounting.  
Question-14: Who was Luca de Pacioli?
Answer: Luca de Pacioli was an Italian priest, philosopher, and
mathematician.
Question-15: What is the name of the famous book written by Luca de
Pacioli?
Answer: Summa de Arithmetica, Geometria, Proportioniet Proportionalite.  
Question-16: Which part of the book by Luca de Pacioli discusses the double-
entry accounting process?
Answer: Luca de Pacio discusses the double-entry accounting process in the
third part of the book.  
Question-17: Where is the origin of modern accounting?
Answer: In 1494, Venice, Italy.  
Question-18: When does the journey of modern accounting begin?
Answer:  The journey of modern accounting begin in the fifteenth century.  
Question-19: At what time is the noticeable change in the accounting
system?
Answer: In the modern era.  
Question-20: What makes an organization trustworthy to a third party and
plays the most important role in creating accountability?
Answer: Accounting.  
Question-21: On what basis is the transaction validated and the existence of
the property verified?
Answer: With the help of secured accounting books, financial statements,
and credentials.
Question-22: What are the main advantages of accounting?
Answer: The main advantages of accounting are as follows:
 Know the financial status,
 Identify the improvement area,
 Prevent fraud,
 Take proper decisions, etc.  
Question-23: What are the requirements of accounting for internal users?
Answer: Determine the profit or loss.  
Question-24: What’s needed to make a business successful?
Answer: Keeping track of business transactions properly.  
Question-25: What is the basis for different types of decision-making in the
management of the organization?
Answer: Accounting Information.  
Question-26: When does the transaction start in cash and on credit?
Answer: The circulation of currency.  
Question-27: What is the name of the most recent addition to accounting
improvement?
Answer: Computed or Mechanical Accounting.  
Question-28: How did people of primitive age keep an account of
themselves?
Answer: Cut the stains on the walls of the cave, and knots on the rope.
Question-29: Which way has the accounting improved considerably?
Answer: Accounting has improved considerably by improving trade and
commerce and by advancing science and technology.
Question-30: How’s the history of accounting?
Answer: The history of accounting is as old as the history of human
civilization.  
Question-31: The basis for the collection of income tax, value-added tax, and
excise duty is—
Answer: Maintain accurate accounting  
Question-32: What is bookkeeping?
Answer: Bookkeeping is a part of accounting that only involves the recording
of economic events.
Question-33: What is the main function of bookkeeping?
Answer: The main function of bookkeeping is to record transactions in the
book of accounts.  
Question-34: What is the part of accounting that only records economic
events?
Answer: Bookkeeping only records the economic events.  
Question-35: What is the purpose of bookkeeping in an organization?
Answer: Determine the financial status of an organization.  
Question-36: What is Accounting Information?
Answer: The consolidated statement of all financial information of an
organization is called Accounting Information.  
Question-37: How many users of accounting information are there?
Answer: There are two types of accounting information users. One is an
internal user and the other is an external user.  
Questions-38: Who are the internal users of accounting information?
Answer:  The internal users of accounting information are
 Owners
 Management authorities
  Internal auditors, and
 Accounting departments.
Questions-39: Who are the external users of accounting information?
Answer:  The external users of accounting information are
 Government
 Lenders
 Investors
 Consumers
 Researchers
 Business Associations
 People
 Creditors, and
 External auditors.  
Question-40: What are the sources of accounting information?
Answer: The sources of accounting information are as follows :
 Comprehensive Income Statement,
 Balance Sheet,
 Owner’s Equity Statement,
 Cash Flow Statement, and
 Notes & Explanation.  

ACCOUNT
Question-1: What’s an account?
Answer: An account is a statement or list of similar transactions.  
Question-2: What’s a personal account?
Answer: The account which is related to individuals or organizations is called
a personal account.
For Example, debtor account, Peter account, TB Corporation account, etc.  
Question-3: What’s an impersonal account?
Answer: Accounts outside of individuals or organizations are called
impersonal accounts.
For example, Building account, Sales Account, Salary Account, service
account, etc.  

Question-4: What’s a nominal account?

Answer: An account that relates to revenue and expenditure is referred to as
a nominal account.
For example, Sales account, Purchase account, Salary account, Interest
account, Commission account, etc.  
Question-5: What is a capital or ownership account?
Answer: The amount of the owner’s claim on the total assets of the
organization is called the capital or ownership account.  
Question-6: What is a Revenue account?
Answer: The account generated by classifying various forms of income is
called the revenue account.
For example, sales account, service revenue account, interest received
account, etc.

Question-7: What’s an expense account?

Answer: The account that is created by classifying different types of
expenses is called an expense account.
For example, Purchase account, salary account, commission account, etc.  

Question-8: What’s a withdrawal account?

Answer: The Account that is prepared to record the withdrawal of cash and
goods for the personal needs of the owner is called the withdrawal account.
Question-9:What’s the balance of the account?
Answer: The difference between the amount column of the debit and the
credit side of the account at the end of a certain period of time is called the
balance of the account.  
Question-10:  What is a debit balance?
Answer: If the sum of the debit side of an account is greater than the sum of
the credit side, it is called debit balance.    
Question-11: What is a credit balance?
Answer: If the sum of the credit side of an account is greater than the sum of
the debit side, it is called credit balance.  
Question-12: What’s the Debtor?
Answer: An account that receives value or benefit is referred to as a debtor
or Dr.  
Question-13: What’s the creditor?
Answer: An account that provides value or benefits is referred to as a
creditor or Cr.
Question-14: What is the importance of recording Accounts?
Answer: Permanent record, determining profit &loss and financial position,
documentary evidence, prevent fraud, etc.  
Question-15:What’s the asset account?
Answer: Accounts that are kept separately for the various types of assets of
the organization are called asset accounts.  
Question-16: What is a liability account?
Answer: Accounts that are kept separately for different types of liabilities of
the organization are called liability accounts.  
Question-17: Which accounts usually show the debit balance?
Answer: The accounts usually show the debit balance is as follows:
 Expense accounts and
 Assets accounts.  
Question-18: Which accounts usually show the credit balance?
Answer: The accounts usually show the credit balance are as follows:
 Revenue accounts
 Liability accounts, and
 Capital accounts.  
Question-19: What are the examples of tangible fixed assets?
Answer: The examples of tangible fixed assets are as follows:
 Land
 Building
 Machinery
 Office Equipment
 Leasehold Property, etc.  
Question-20: What are the examples of intangible fixed assets.
Answer: The examples of intangible fixed assets are as follows:
 Trademark
 Goodwill
 Copyright
 Patent
 Trade license, etc.  
Question-21:What are the examples of deferred expenses?
Answer: The examples of deferred expenses are as follows:
 Share Discount
 Preliminary Expenses
 Research and Development Expenses, etc.
Question-22: What is the commonly used account format?
Answer: The commonly used account format is the “T “format.  
Question-23: What is the modern format of accounts?
Answer: The modern format of the accounts is a “continuous balance
format.”  
Question-24: which account does not have a real existence?
Answer: Nominal accounts does not have a real existence.  
Question-25: What is the main book of the account?
Answer: Ledger is the main book of the account.
Question-26: What does Debit Voucher Include?
Answer: Debit voucher includes expense Account.  
Question-27: How many columns are there on each side of the format of the
account?
Answer: There are four columns on each side of the format of the account. 
Question-28: How many columns of account are there next to debit and
credit?
Answer: There are eight (8) columns in the account.
Question-29: What is the name of the left side of the account?
Answer: The name of the left side of the account is “Debit.” 
Question-30: What is the name of the right side of the account?
Answer: The name of the right side of the account is “Credit.” 
Question-31: Which category of a product purchase, sales account?
Answer: Income-expenditure account or nominal account.  
Question-32: What are the components of the format of the modern
account?
Answer: The components of the format of the modern accounts are as
follows:
 Date
 Title
 Debit
 Credit, and
 Balance 
Question-33: What kind of account is a deferred advertisement?
Answer: Deferred advertisement is an asset account.  
Question-34:  Why is the debtor’s account is called an asset account?
Answer: Since a debtor is an artificial person, so the debtor’s account is
called an asset account.
Question-35:  What kind of account is the value-added tax account?
Answer: The value-added tax account is a nominal account.  
Question-36: What’s the other name of the asset account?
Answer: The other name of the asset account is a real account.  
Question-37: What do asset and nominal accounts mean together?
Answer: Impersonal account.  
Question-38: What kind of account is the “general reserve”?
Answer: General reserve is an owner’s equity account.  
Question-39: How many types of traditional methods of accounts are there?
Answer: There are two types of traditional methods of accounts.
Question-40: What are the components of the accounting equation?
Answer: The components of the accounting equation are as follows:

ACCOUNTING CYCLE

Question-1: What is the accounting cycle?

Answer: The continuous cycle of keeping accounts is known as the
accounting cycle.
Question-2: What is the main purpose of the accounting cycle?
Answer: The main purpose of the accounting cycle is to establish links
between different accounting periods of business.
Question-3: How many steps are there in the accounting cycle?
Answer: There are ten (10) steps in the accounting cycle.
Question-4: What are the accounting cycle’s 10 steps?
Answer: The accounting cycle’s 10 steps are as follows:
 Identifying Transactions.
 Analyzing Transactions.
 Journalizing.
 Transfer to Ledger.
 Preparing Trial Balance.
 Adjusting Entries.
 Prepare Worksheet.
 Preparation of Financial Statement.
 Closing Entry, and
 Post-closing Trial Balance or Opening Journal.
Question-5: Which task is called summarization in the accounting cycle?
Answer: The summarization phase in the accounting cycle is the preparation
of the trial balance.
Question-6: Which is the first step of the modern accounting cycle?
Answer: The first step of the modern accounting cycle is identifying
transactions.
Question-7: Which step of the modern calculation cycle is used to verify the
mathematical accuracy of the calculation?
Answer: The fifth step (Preparing Trial Balance) is used to verify the
mathematical accuracy of the calculation.
Question-8: Which entry is prepared to close the revenue-expenditure
account?
Answer: Closing Entry is prepared to close the revenue-expenditure account.
Question-9: Which entry is made for an accounting of arrears and advance
income and expenditure?
Answer: Adjusting entry is made for an accounting of arrears and advance
income and expenditure
Question-10: What is Worksheet?
Answer: Worksheet is an optional multi-column statement.
Question-11: Which trial balance is made in the worksheet?
Answer: Adjusted Trial Balance.
Question-12: Who maintains continuity between previous and next year’s
transactions?
Answer: The accounting cycle maintains continuity between previous and
next year’s transactions.
Question-13: Which is the last and optional step of the modern accounting
cycle?
Answer: Opening Journal is the last and optional step of the modern
accounting cycle.
Question-14: Which task is called summarization in the accounting cycle?
Answer: Trial Balance.
Question-15: What is known through the ledger?
Answer: Balance of various accounts are known through the ledger.
Question-16: Through which the financial status is known?
Answer: Balance sheet or financial statements.
Question-17: What is called “transfer” in the accounting cycle?
Answer: Prepare the ledger.
Question-18: When will the account be completed?
Answer: When transactions are recorded chronologically as debit and credit.
Question 19: What is the name of the book in which the transactions are
initially recorded with a brief explanation of the debit and credit analysis?
Answer: Journal.
Question-20: Which is the list of debit and credit balances of the ledger
account?
Answer: Trial Balance.
Question-21: What is the objective of preparing a financial statement?
Answer: Determine the amount of profit & loss, total assets, and total
liabilities, and owner’s equity of the business.
Question-22:  What are the basic requirements for analyzing financial
statements?
Answer:  Providing various information to the concerned party.
Question-23: Where are the nominal accounts transferred and the balance
closed?
Answer:  Income statement, expense statement.
Question-24: Which account needs to be closed at the end of the year?
Answer: Revenue Income, Revenue Expense, and Drawings account.
Question-25: Next accounting period starts with-
Answer: The remaining balance of assets, liability, and owner’s equity
account.

Double Entry Systems

Question-1: What is a double-entry system?

Answer: The system of recording two aspects of a transaction is known as a double-
entry system.

Question-2: What are the benefits of the double-entry system?

Answer: The benefits of the double-entry system are as follows:
 Complete account
 Provide arithmetical accuracy
 Determine profit and loss
 Determine the financial position
 Helpful for future planning
 International recognition, etc.

Question-3: What are the demerits of the double-entry system?
Answer: The demerits of the double-entry system are as follows:
 The complexity of the accounting system,
 Need an experienced person,
  Increase the volume of work,
 Limited application, etc.

Question-4: What are the principles of the double-entry system?
Answer: The principles of double-entry system are as follows:
 Dual aspect
 Giver and receiver
 A scientific system of accounting
 Justify arithmetical accuracy, etc.

Question -5: What is “Debit”?
Answer: The left side of an account is called Debit.

Question-6: What is “Credit”?
Answer: The right side of an account is called Credit.

Question-7: What types of books are maintained under a double entry system?

Answer: The books are maintained under the double-entry system is as follows:
 Purchase book
 Sales book
 Purchase return book
 sales return book
 Note receivable book
 Note payable book
 General Journal
 Cash book
 Ledger, Etc.

Question-8: What is a complete and scientific method of accounting?
Answer: Double Entry System.

Question-9: Why is the double-entry system called the scientific method?

Answer: The double entry system is called the scientific method because it verifies the
mathematical accuracy of the calculation.

Question-10: In a double-entry system, which book transactions are recorded first?

Answer: The Journal is the first book where transactions are recorded.

Question-11: What is the name of the account that benefits from the double-entry
system?
Answer: The name of the account that benefits from the double-entry system
are Debtor.

Question-12: In the double-entry system, what is the account that provides benefits?
Answer: The account that provides benefits is Creditor.

Question-13: What does “Debit” mean?

Answer: Debit means:
 Increases in assets, expenses and
 Decreases in liabilities, owners’ equity & income.

Question-14: What does “Credit” mean?

Answer: Credit means:
 Decreases in assets, expenses and
 Increases in liabilities, Owners equity & income.

Question-15: What is the final result of the double-entry system?
Answer: The double entry system’s final result is that total asset equal total liabilities.

Question-16: For each transaction, what does a double-entry accounting system

produce?
Answer: a double-entry accounting system produces two retrograde outcomes of equal
value.

Question-17: which is affected by each transaction in the double-entry accounting

system?
Answer: Accounting Equation is affected by each transaction in the double-entry
accounting system.

Question-18: What is the modern method used to determine the debit-credit of various

accounts?
Answer: Accounting equation method.

Question-19: How is the dual aspect of the transaction analyzed?

Answer: One party will receive and the other party will provide.

Question-20: What is the expanded accounting equation?

Answer: A=L+C+R-E-D

Question-21: What is the meaning of A, L, C, R, E, and D in an expanded accounting

equation?
Answer: the meaning of A, L, C, R, E, and D in the expanded accounting equation is
as follows:
  A=Assets
 L=Liabilities
 C=Capital
 R=Revenue
 E=Expenses and
 D= drawing.
Question-22: What is considered in the case of a double-entry accounting system?
Answer: Receiver’s account debit and provider’s account credit.    
    
Question-23: What type of transaction affects the accounting equation?
Answer: Business transactions always affect the accounting equation.

Question-24: Which system does not follow any specific method of accounting?

Answer: Single entry accounting system does not follow any specific method of
accounting.

Question-25: What is a Single Entry system?

Answer: Single entry system is a method of accounting in which only cash and
personal accounts are recorded or stored.

LEDGER

Question-01: What is Ledger?
Answer: The book in which a trader’s transactions are recorded in a
classified permanent form is called the ledger.
Question-02: What is the feature of the ledger?
Answer: The main feature of Ledger is as follows:
 Each account is given a heading.
 “T” table and Moving Balance table are followed to prepare ledger.
 Record the date, the amount of money, and the journal folio no.
 The balance of each of the accounts is identified individually.
 Verify the arithmetic accuracy of accounting activities.
Question-03: What is the importance or necessity of Ledger?
Answer: The importance of ledger is as follows:
 Permanent records of transactions
 Summarizing and classifying the transactions
 Providing the arithmetical accuracy
 Provide information about financial conditions.
  Preventing misappropriation and fraud.
Question-04: Why ledger is called the king of all the books?
Answer: Ledger is called the king of all the books because it
 Keeps records permanently.
 Classify the accounts
 Provides the financial picture of the organization
 Helps to prepare final accounts of the organization.
 Justify arithmetical accuracy.
Question-05: From which word does the word “Ledger” come?
Answer: The word “Ledger” comes from the word “Ledge”
Question-06: What does the word “ledge” mean?
Answer: The word “ledge” means Shelf.
Question-07: What is the permanent book of accounts?
Answer: The permanent book of accounts is Ledger.
Question-08: What is the basement of the ledger?
Answer: the basement of the ledger is Journal.
Question-09: Why is Ledger called “Shelf”?
Answer: The ledge is called a shelf due to the arrangement of the
transactions.
Question-10: How many types of personal ledgers and what are they?
Answer: There are 2 types of personal ledger which are as follows:
 Debtors Ledger and
 Creditors Ledger.
Question-11: How many types of impersonal ledgers and what are they?
Answer: There are 2 types of impersonal ledgers which are as follows:
 Assets & Liabilities related Ledger and
 Nominal Ledger.
Question-12: Which is the most commonly used “Ledger format” in modern
times?
Answer: The most commonly used “Ledger format” in modern times is
“Moving Balance Format”.
Question-13: How many money columns are there in Ledger’s Moving
Balance format?
Answer: There are Four (4) columns in Ledger’s Moving Balance format.
Question-14: What is Balance?
Answer: The difference between the posted amount on the debit and credit
side of the accounts is known as balance.
Question-15: What is the balancing of accounts?
Answer: The act of equalizing the two sides of the account is called the
balancing of accounts.
Question-16: What is the meaning of C/D, B/D, C/F, B/F, B/O, and C/O?
Answer: The meaning of C/D, B/D, C/F, B/F, B/O, and C/O are as follows:
 C/D-Carried Down
 B/D-Brought Down
 C/F-Carried Forward
 B/F-Brought Forward
 B/O- Brought Over
 C/O- Carried Over
Question-17: Which one is prepared on the basis of ledger accounts
balance?
Answer: Trial balance is prepared on the basis of ledger accounts balance.
Question-18: Which balance indicates all types of assets and expenses?
Answer: All types of assets and expenses express “debit balance”.
Question-19: Which balance indicates all types of liabilities and incomes?
Answer: All types of liabilities and incomes express “credit balance.”
Question-20: What is to be written at the time of writing the closing balance
of the ledger?
Answer: Balance C/D or C/F.
Question-21: What is to be written at the time of writing the opening balance
of the ledger?
Answer: Balance B/D or B/F
Question-22: On the basis of what information is the right decision taken to
run a business?
Answer: Based on the information obtained from the ledger.
Question-23: What is the main advantage of the “Moving balance table”?
Answer: The balance of each account is always available.
Question-24: How many columns have a “traditional ledger table”?
Answer: Eight (8) columns.
Question-25: What is the main purpose of preparing a ledger account?
Answer: The main purpose of preparing a ledger account is to determine the
balance of the account.

TRIAL BALANCE
Question-01: What is a Trial Balance?
Answer: A trial balance is a list of debit and credit balances extracted from
the ledger, including the balance of cash and bank columns of the cash book
on a given date.
Question-02: What is the objective of the trial balance?
Answer: The objectives of preparing the trial balance are as follows:
 Verification of accurate posting of journal and ledger entries.
 Facilitate the preparation of a statement of comprehensive income
and a statement of financial position.
 Find out the mistakes and correct the mistakes.
Question- 03: What is the main objective of trial balance?
Answer: The main objective of the trial balance is to test the arithmetical
accuracy of the accounts.
Question-04: Which ledger balances are written on the debit side of the trial
balance?
Answer: The ledger balances are written on the debit side of the trial balance
is as follows
 Assets,
 Expenses,
 Expenses paid in advance,
 Accrued incomes, and etc.
Question-05: Which ledger balances are written on the credit side of the trial
balance?
Answer: The ledger balances are written on the credit side of the trial
balance is as follows:
 Liabilities,
 Incomes,
 Outstanding Expenses,
 Unearned Incomes,
 Reserves, etc.
Question-06: What kinds of errors are not detected by the trial balance?
Answer: The types of errors that are not detected by trial balance are as
follows:
 Errors of omission
 Errors of writing
 Compensating Errors
 Errors of miss-posting
 Errors of Principle.
Questions-07: What kinds of errors are detected by the trial balance?
Answer: The types of errors detected by the trial balance are as follows:
 Posting Errors
 Listing Errors
 Costing and balancing errors
Question-08: Is it mandatory to prepare a trial balance?
Answer: It is not mandatory to prepare a trial balance.
Question-09: Suspense Account is basically what kind of account?
Answer: Suspense Account is a temporary account.
Question-10: When is the trial balance prepared?
Answer: The trial balance is prepared at the end of the specified accounting
period.
Question-11: What is an error of omission?
Answer: If a transaction is not recorded in the journal or is not transferred
from the journal to the ledger, it is called an error of omission.
Question-12: What is an error of commission?
Answer: If you debit and credit more or less than the amount of money that
has been transacted, or if you have recorded more or less amount of money
as both sides in the ledger, it is called an error of commission.
Question-13: What is a compensating Error?
Answer: If an error is unknowingly corrected by another error, it is called a
compensating error.
Question-14: What is an error of principle?
Answer: A mistake made in the absence of accounting ethics is called the
error of principle.
Question-15: What is an error of miss-posting?
Answer: If the sum of money is written on the same side of another account
instead of one account, the mistake that is made is called an error of miss-
posting.
Question-16: What does the suspense account express in the trial balance?
Answer: suspense account expresses the difference between the debit
column and the credit column.
Question-17: What kind of error would it be to write the revenue
expenditure as the capital expenditure and the capital account as the
revenue account?
Answer: Error of principle
Question-18: What do you have to do before preparing the financial
statement correctly?
Answer: You have to prepare a trial balance before preparing the financial
statement correctly.
Question-19: What is used to prepare the trial balance?
Answer: Ledger balances are used to prepare the trial balance.
Question-20: Which accounts do not include in the trial balance?
Answer: Closing stock, Opening cash in hand, and opening bank deposits.
Question-21: What is the main limitation of the trial balance?
Answer:  The main limitation of the trial balance is it sometimes can not
identify the errors, even if both sides of the trial balance match.
Question-22: When is the closing stock included in the trial balance?
Answer: When the trial balance includes adjusted purchases and gross
profits.
Question-23: What is the formula for the calculation of the adjusted
purchase?
Answer: Adjusted Purchase = Opening stock + Purchase + Purchase related
all expenses – Closing stock
Question-24: What is the sales ledger balance?
Answer: Sales ledger balances are considered as sundry debtors and put on
the debit side of the trial balance.
Question-25: What is the purchase ledger balance?
Answer:  Purchase ledger balances are considered as sundry creditors and
put on the credit side of the trial balance.
JOURNAL

Question-01: What is a journal?
Answer: The book in which the detail of the transactions is recorded first
analyzing the debit and credit side of a transaction and is written
chronologically with an explanation is called a journal.
Question-02: What is the origin of the word “journal”?
Answer: The word “journal” originates from the French word “Jour”.
Question-03: What is the 3rd step of the accounting cycle?
Answer: The 3rd step of the accounting cycle is Journal.
Question-04: What is Journal called?
Answer: A journal is called the
 Primary books,
 Daily books, and
 Subsidiary books of accounts.
Question -05: What is the feature of the journal?
Answer: The features of the journal are as follows:
 Primary/Daily/Subsidiary books of accounts.
 Analysis into the dual aspect.
 Provide necessary narration.
 Recording in equal amounts.
 A reference to the litigation of disputes, etc.
Question-06: What are the benefits of a journal?
Answer: The benefits of the journal are as follows:
 A permanent record of transactions.
 Determination of heads of accounts.
 A storehouse of information.
 Future reference.
 Maintenance of continuity of transactions.
 Aid to maintain the cleanliness of the ledger.
 Aid to litigate disputes, etc.
Question-07: Why is Journal called the book of basic accounts?
Answer: Journal is called the book of basic accounts because if any doubt
arises, it can be examined in the journal.
Question-08: Which accounts can be easily separated through the journal?
Answer: The accounts that can be easily separated through the journal are
as follows:
 Nominal accounts,
 Personal accounts, and
  Asset accounts.
Question-09: What is the main purpose of the journal?
Answer: The main purpose of the journal is initial accounting.
Question-10: For accounting purposes, how many categories are there in a
journal?
Answer: There are eight (8) categories in a journal.
Question-11: Journal makes it easy to prepare which account?
Answer: Ledger Account.
Question-12: What is the total number of columns in the journal table?
Answer: The total number of columns in the journal table is five (5).
Question-13: What is a simple journal?
Answer: Simple journal is a journal that has one debit account and one credit
account.
Question-14: What is a mixed journal?
Answer: Mixed journal is a journal that has multiple debit accounts and
multiple credit accounts.
Question-15: Special journals can be divided into how many parts? What are
their names?
Answer: Journals can be divided into two (2) parts which are as follows:
 Special Journal and
 Proper Journal.
Question-16: What is a Special journal?
Answer: Special journal is a journal entry that is made for recording almost
all the transactions that take place in business.
Question-17: Special journals can be divided into how many parts? What are
their Names?
Answer: Special journals can be divided into six (6) parts which are as
follows:
 Purchase Journal
 Sales Journal
 Purchase Return Journal
 Sales Return Journal
 Cash Receipt Journal and
 Cash Payment Journal.
Question- 18: What is the purchase Journal?
Answer: Purchase journal is a journal entry that is made for recording all the
credit goods purchased of a business.
Question-19: What is a sales journal?
Answer: Sales journal is a journal entry that is made for recording all the
credit goods sales of a business.
Question-20: What is Purchase return Journal?
Answer: Purchase return journal is a journal entry that is made for recording
goods purchased on credit but returned.
Question-21: What is the sales return journal?
Answer: Sales return journal is a journal entry that is made for recording
goods sold on credit but returned.
Question-22: What is the cash receipt Journal?
Answer: A cash receipt journal is a journal entry that is made for all cash
receipts transactions.
Question-23: What is Cash Payment Journal?
Answer: A cash payment journal is a journal entry that is made for all cash
payment transactions.
Question-24: What is Proper Journal?
Answer: Proper Journal is a journal entry that is made for transactions that
are not included in a special journal.
Question-25: The Proper journal can be divided into how many parts? What
are their names?
Answer: The Proper journal can be divided into four (4) parts which are as
follows:
 Rectification Journal
 Adjusting Journal
 Closing Journal and
 Opening Journal.
Question-26: What is Rectification Journal?
Answer: Rectification Journal is the entry that is given for the correction of
errors on recording transactions.
Question-27: What is the adjusting Journal?
Answer: The adjusting Journal is the entry that is made for the unrecorded
and unadjusted items.
Question-28: What is a closing Journal?
Answer: Closing Journal is the entry that is made for the closing of nominal
accounts (income and expenditure accounts).
Question-29: What is an opening Journal?
Answer: The entry which is given for carrying out the last year’s assets,
liabilities, and owner’s equity to the beginning of the next year is known as
opening Journal.
Question-30: what is known from the journal?
Answer: Total number of transactions, the total number of money, and the
reason for transactions are easily known from the journal.