51. Which of the following statements is/are true?
(i) Drawings
Account is a Nominal Account
(ii) Capital
Account is a Real Account
(iii) Sales Account
is a Nominal Account
(iv) Outstanding salaries account is a Nominal Account
(v) Patents Account is a Personal Account
(a)
Only (i) above
(b)
Only (iii)
above
(c) Both (ii) and (iii)
above
(d) Both (ii) ,(iv)
and (v)above
[Hints: (b)
Sales Account is a Nominal Account is the
correct statement and
alternative (b) is
the
correct answer.
The
alternative (a) is
incorrect because
drawing
is not a Nominal Account and it is a Personal Account of the owner which
indicates the value of money or goods withdrawn by him for personal consumption.
The alternative (c) is incorrect because
the combinations of wrong statements
(ii) Capital Account is a Personal Account and not a Real Account with (iii) correct statement. The
alternative (d) is incorrect
because
the statement
(iv) is incorrect
as outstanding salaries is
a representative Personal
Account
and not
a
Nominal
Account and the statement (v) is
incorrect as Patents Account is a Real Account and
not
Personal Account and the combination of
(ii) , (iv) and
(v) is not correct
answer.
Thus the correct
answer is (b).]
52. The entry to record the collection
of cash from Sundry Debtors
would involve a
(i) Debit to
Sundry
Debtors
(ii) Debit to
Cash Account
(iii) Credit to
Sundry
Debtors
(iv) Credit to
Cash Account
(a)
Only (i) above
(b)
Only (iii)
above
(c) Both (ii) and (iii)
above
(d) Both (i)
and (iv)
above
[Hints: (c)
The
entry to record the collection of
cash from sundry
debtors
will
be
Cash A/c..............................Dr.
To Sundry Debtors
A/c
The entry is stated in the alternative (c) which is the combination of statement (ii)
and (iii). The other alternatives
(a) and (b) involves
only one aspect
of the transaction and not
the correct answers. The
alternative (d) the combination of two
incorrect
treatments
is not the correct
answer. Thus,
(c) is the correct answer.]
53. ABC Ltd. makes payments to its Sundry Creditors through cheques and the Cash
Discount received on
these payments is recorded in the Triple-columnar Cash
Book.
In the event of dishonour of any such cheques, the discount so received should be written back through
(i) A debit
to discount column of the Cash Book (ii) A credit to
discount column of the Cash
Book (iii) A credit to
bank column of the Cash Book
(iv) A debit
to Discount Account through Journal Proper
(v) A credit to Creditor's Account through Journal Proper
(a)
Only (i) above
(b)
Only (ii) above
(c) Both (i)
and (iii) above
(d) Both (iv)
and (v) above
[Hints: (d)
The amount of cash
discount received on the payments made to Sundry Creditors through cheques by the business will be recorded in the Cash
Book, and if the previously issued cheque is dishonoured, the discount should be
written back
through (iv) A debit to Discount Account through Journal Proper and (v) A credit
to Creditor's Account
through Journal Proper
(d) the combinations of these two
statements is the
correct
answer.
Discount Received and Discount Allowed Accounts separately maintained are
not netted as such the
discount received which got
to be written back because of return of previously issued cheque cannot be debited to discount column of the Cash Book (a)
is the incorrect answer. Since
it is reversal of
already credited discount account again a credit to discount column of the cash
book
cannot be given and (b) is the incorrect answer. The combination of the
incorrect statements in (i) and (iii) i.e., (c) is not the correct answer. Thus, (d)
is the correct
answer.]
54. R Ltd. makes purchases on credit. If the purchases are not as per the specifications, the company returns
them to the suppliers. The book, that is used to record such returns
is
(a) Returns
Inward Book
(b) Returns
Outward Book
(c) Cash Book
(d)
Journal Proper [Hints: (b) The book, that
is used to record the goods purchased
on cash that are sent back to the suppliers on
account of non-confirmation to the
specifications, is the Returns Outward Book also known as Purchases Returns Book
(b) is
the
correct answer.
Returns inward book
(a) is not the correct answer
because; the sales returns are recorded in the Returns Inward Book. Cash book (c) is not the correct answer
because, the transactions involving either the receipt or payment of cash is recorded in the cash book. Journal Proper (d) is not the correct
answer because the Journal Proper is meant to record the transactions which do
not find place in any other subsidiary
book. Thus, (b) is the correct answer.]
55. If Office Equipment
is purchased for cash, what effect will this
transaction
have
on the financial position
of the company?
(a)
There is no
change in the Assets, Liabilities and Owners' Equity
(b)
There is a decrease in Assets, increase in Liabilities and no change in Owners' Equity
(c)
There is a decrease
in Assets, no change in Liabilities and a decrease in Owners'
Equity
(d)
There is an increase in Assets, decrease in Liabilities and no change in Owners'
Equity
[Hints: (a) When Office
Equipment is purchased for cash, there
is no change
in the assets, liabilities and
owner's equity. Thus, the alternative (a)
is the correct answer. The cash on hand is used for purchase of furniture and it is only a change in the
composition
of the assets.
The
other alternatives
(b) , (c) and (d), which indicate a change either an increase or a decrease in assets/
liabilities/owners
equity are
not the correct
answers. Hence (a) is the correct answer.]
56. The periodical total of discount column on receipts side of a
Triple Column Cash
Book is recorded to
the
(a)
Credit
side
of Discount Account
(b)
Credit
side
of provision for Discount Account
(c) Debit side of Discount Account
(d)
Credit
side
of Debtor's Account
[Hints: (c) The periodical total of discount column on receipts side of a Triple Column Cash Book is recorded to the debit side of Discount
Account. Receipts side
of a
Triple Column Cash Book
indicates the
debit side and the debit
in case
of a Nominal Account is an expenditure and the discount entered on the receipt side of
Triple Column Cash Book indicates the discount allowed and posted to the debit side
of the Discount Account in the
ledger. Thus, (c)
is the correct
answer. Since
it is not an income it is not credited to Discount Account and alternative (a)
is not the correct answer.
It
is not
the
discount
to
be credited
to
provision
for
Discount
Account on debtors (b) and
it is
not the correct answer. The periodical total is not credited to Debtor's Account as only the individual amount of discount is credited to respective Debtor's Account
and
not the periodical total is credited to Debtor's
Account and alternative (d) is not the correct answer.
Thus,
alternative
(c) is the correct
answer.]
57. Which of the following statements is false?
(a)
Credit
side
total of Discount
column of Cash Book is an income
(b)
Credit
balance of Bank Pass
Book
is an overdraft
(c) Debit balance of Bank column of Cash Book
is an Asset
(d) Debit balance of Cash
column of Cash Book
is an Asset
[Hints: (b) Credit balance of Bank Pass book is an overdraft (b) is a false statement because credit balance as per Pass book indicates the favourable balance and it is an asset. Credit balance of discount column of Cash Book is an income (a) is true. Debit balance of bank column of Cash Book is an asset (c). Debit balance of cash
column of Cash Book is an asset (d) is the true statement and the alternatives are not the correct
answers. Thus,
(b) is the correct answer.]
58. Purchase
of
Fixed Assets on credit
is originally recorded in
(a) Purchases Book
(b) Ledger
(c) Cash Book
(d) Journal
[Hints: (d)
Purchase of fixed assets on credit is entered in journal proper and
subsequently posted into the ledger. It is not recorded in Purchases Book as only purchase of goods will be recorded in Purchases Book. In Cash Book, only cash transactions will
be
recorded. As the fixed assets were purchased on credit, this
transaction will
not
be recorded in the Cash Book.]