2427 + Interview Questions in Accounts in Class 11 Page 2 InterviewSolution

51.	Why 'Dividend EqualisationRerserve' istermedas Reserve and not aprovision ?
Answer» SOLUTION :DIVIDEND Equilisation RESERVE is notdebited to Profitand LOSS Account. Itscreation does notreducethe net profits.It isappropriationof profitand isdebited to Profitand Loss AppropriationAccount.

Discussion

52.	Why do only one account is posted to the Ledger from the Cash Book ?
Answer» Solution :CASH Book is both a book of ORIGINAL entry and a Ledger for Cash A/c and BANK A/c . HENCE, each transaction in the Cash Book is posted only once to another ACCOUNT in the Ledger .

Discussion

53.	Why Cash Book is called a book of original entry ?
Answer» Solution :Since all cash TRANSACTIONS are recorded for the first time in the cash book , it is THEREFORE called a book of original ENTRY . When a cash book is maintained , transactions of Cashand BANK are not recorded in journal .

Discussion

54.	Why contra entry in two column cash Book is not posted in to ledger?
Answer» SOLUTION :When TOW COLUMN cash book is maintained ,cash and bank accouts are not maintained in the ledger.Therefore , such entries are not posted in to ledger.

Discussion

55.	Why closing stock is valued at cost price or realisable value whichever is less?
Answer» SOLUTION :Closing stock is VALUED at lower of cost PRICE ro realisable VALUE according to the Convention or prudence.

Discussion

56.	Why contra entries in the Cash Book are not posted into Ledger ?
Answer» Solution :Contra ENTRIES are not posted to LEDGER as their DOUBLE entry is complete in the CASH Book itself . Cash book SERVES as the Cash Account and Bank Account .

Discussion

57.	Why are the rules of debit and credit same for liability and capital ?
Answer» SOLUTION :Rules of debit and credit for liability and CAPITAL are same because of BUSINESS Entity Concept . According to the concept , business is a separate and DISTINCT entity from its owner .

Discussion

58.	Why balance in GST Accounts is shown in the Balance Sheet ?
Answer» Solution :The BALANCE is GST Accounts means either GST recoverable, if it has a DEBIT balance or GST Payable, if it has a CREDIT balance. Thus, it is neither revenue nor expense. Therefore, it is SHOWN in the Balance SHEET

Discussion

59.	Why are therules of debit and credit same for both liability and capital?
Answer» SOLUTION :Because ACCORDING to business ENTITY CONCEPT capital is also TREATED as liability of the business.

Discussion

60.	Why assets are classified into current and non-current?
Answer» SOLUTION :Classification of assets into CURRENT and non-current HELPS in ascertaining the liquidity position of the business entity. Non-Current Assets are held forcontinued use in the business whereas current assets are expected to be converted into cash within one year.

Discussion

61.	Why are Prepaid Expenses segregated from current year's expenses and taken to Balance Sheet as a current asset?
Answer» SOLUTION :Prepaid Expanses are SEGREGATED from current YEAR's expanses and taken to Balance SHEET as a current asset because such expenses relate to next year, which have been paid in advance.

Discussion

62.	Why are accounting standards required?
Answer» Solution :To improve reliability and bring UNIFORMITY in ACCOUNTING practices.

Discussion

63.	Why a Cash Book always shows a debit balance ?
Answer» SOLUTION :Because a BUSINESSMAN cannot PAY more CASH than what he has GOT.

Discussion

64.	Who is a Debtor ?
Answer» Solution :Debtor is a PERSON who OWES amount to the business on account of CREDIT sales of goods and/or services in the normal COURSE of business.

Discussion

65.	Who is a Creditor ?
Answer» SOLUTION :Creditor is the person to whom an amount is owed on account of credit purchases of GOODS and/or SERVICES in the normal COURSE of business

Discussion

66.	Who are the internal users of accounting information?
Answer» Solution :Internal users are the person who are directly INVOLVED in managing and operating the business enterprise such as DIRECTORS or the partners, MANAGERS and OFFICERS.

Discussion

67.	While starting with Pass Book overdraft bank interst credited in the Pass Book is to be written in minus column.
Answer» ANSWER :1

Discussion

68.	While preparing the accounts of company, following issues are faced:(i) ProductionManager is interested in rccording good industrial relations in the accounts.(ii) Long - term succes of the company is doubtful due to market competition. (iii) Although sales have not yet taken place , few reliable customers of the company have placed large orders from which huge profit is expected.(iv)One of the shareholders of the company has invested his savings in shares of another company. (v) At the end of the accounting period , factory of the company is outstanding for Rs.10 ,000.(vi) At present , market price of the fixed assets of the company is very high as compared to the bookvalue and directors are intersted to show the fixed assets in accounts attheir currennt market price.(vii) During the year , the company purchased pencils of Rs.50 . These had all been issued from stock and were srill in use at the end of the year.(viii)Directors are interested to adopt Written Down Value (WDV) Method of charging depreciation in place of Straight Line Method (SLM) in the current accounting period to show higher profit. (ix)A debtor who owesan amount to the company is likely to be declared insolvent. You are required to (a) state which accounting concept you would following in dealing with eachof the above problems and (b) Explain briefly what each concept means.
Answer» Solution :(i) Money Measurement Concept : Transactions and events that can be measured in money or in money orin money terms are recorded in the books of account . Since , GOOD INDUSTRIAL relations cannot be measured in money terms , they will not be reflected in the accounts. (ii)Going Concept : The business will continue for an indefinite period and there is no intention to close the business or downsize its operations significantly . The doubt of success does not lead to the inference that business will not continue for indefinite period and also to the intention that the business will be downsized significantly. (iii) Realisation Consept : Revenue is recognised when sale has been made or service has been rendered . Therefore , the revenue will be recognised when sale has been affected and not when not when the order is placed. (iv) Business Entity Concept : Business is treated as a separate and distinct entity from its owners . The investment in another company ' s shares is by a shareholder who is distinct from the business . (V) Accrual Concept : This concept recognises revenues andexpenses as they are earned or incurred respectively ignoring the date of receipt or payment . Since, the factory rent of the company is outstanding , it will be recorded in the books of account. (vi)Historical Cost Concept : According to the Historical Cost Concept , the asset must be shown at cost price , which is the cost of acquisition less depreciation .As a good accounting practice, they should be continued to be shown at cost. (vii)Materiality Concept : An item is recorded in the books of account on the basis of materially. Purchased STATIONARY (pencil) is in use but , the amount and nature is not material . Therefore, it is debited to Stationery Account. (viii)Consistency Assumption or Concept : All accounting principles and methods shoulds be applied in a similar way from one period to the next so that data reportedin financial statement can be compared for one period with that of another period . Method may be changed by the but company but it should be disclosed along with its impact on profit or loss. (ix) CONSERVATISM Convention or Concept : The concept is stated as " Anticipate no profit , but provide for all possible losses ". Thus , provision for doubtful debts should be made against the amount of debtors.

Discussion

69.	While preparing Bank Reconciliation Statement from the debit balance of the Pass Book indicate whether the following items will be witten in Plus of Minus Column. (I) Insrurance preminum paid by the bank. II. Interset and dividend collwcted by the bank. III. Payment of 'Bills Payable' by the bank on behalf of the customer. IV. Interest allowed by the bank. V. Cheques deposited into the bank but not yet cleared.
Answer» Answer :[Items No. (II) and (IV) will be WRITTEN in MINUS Clumn and Item No. (I) (III) and (V) will be written in Plus COLUMN.]

Discussion

70.	While preparing Cash A/c of the Current Year, the balance of the previous year is shown as 'To Balance b/d'.
Answer» ANSWER :1

Discussion

71.	While preparing Capital A/c of the Current Year, the balance of the previous year is shown as 'By Balance b/d'.
Answer» ANSWER :1

Discussion

72.	While preparing Bank Reconciliation Statement from the debit balance of the Pass Book indicate whether the following items will be witten in Plus of Minus Column. (I) Cheques issued but not yet presented for payment. II. Cheques paid into the bank not yet cleared. III. Dividend collected by the bank on customer's incestments. IV. Payment of club fee by the bank according to the standing instructions. V. Direct payment into the bank by a customer. VI. Any wrong entry on the debit side of the Pass Book. VII. Disonour of the cheques deposited into the bank.
Answer» Answer :[I. PLUS II. Minus III. Plus IV. Minus V. Plus VI. Minus VII. Minus.]

Discussion

73.	While posting in personal accounts from the purchases book, posting is done :
Answer» on DEBIT side On CREDIT side On Debit or Credit side None of the above Answer :B

Discussion

74.	While calculating operating profit, the following are not taken into account.
Answer» Normal transactions Abnormal items Expenses of a PURELY FINANCIAL NATURE (II) & (iii)

Discussion

75.	Which value is most important for good accounting ?
Answer» Solution :A good accounting is the ONE who is honest and shrewd. He must ensure that all transactions are RECORDED in the books of accounts and there should be no hiding of facts. Sometimes, pressure MAY be put on him to hide certain facts in accounts to evade tax or any other purpose. But he should BEHAVE in a honest and shrewd MANNER.

Discussion

76.	Which transactions will : I. Decrease the Assets andDecrease the Capital. II. Increase the Assets andIncrease the Liabilities. III. Increase the Assets andDecrease another Asset. IV. Decrease the Assets andDecrease the Liabilities.
Answer» Solution :(I) Drawings or EXPENSES, (II) Purchase ofan ASSET on Credit, (III) Purchase or Sale of an asset in CASH, (IV) PAYMENT of a liability.]

Discussion

77.	Which type of accounting information shows profit earned or loss incurred?
Answer» Solution :Profit and LOSS ACCOUNT (in CASE of firms) and STATEMENT of Profit and Loss (in case of Companies) shows profit earnedor loss incurred during the accounting period.

Discussion

78.	Which type of expenses are shown in Trading Account ?
Answer» DIRECT EXPENSES INDIRECT Expenses Opening Expenses Direct and Indirect Expenses Solution :Direct Expenses

Discussion

79.	Which transaction decreases one asset and increaaca another asset?
Answer» SOLUTION :AMOUNT RECEIVED from a DEBTOR.

Discussion

80.	Which statement shows financial position of the business ?
Answer» TRADING Account Profit and LOSS Account BALANCE SHEET Trial Balance Solution :Balance Sheet

Discussion

81.	Which qualitative characteristics of accounting information requires the use of common unit and common format of reporting ?
Answer» SOLUTION :Camparability

Discussion

82.	Which qualitative characteristic of accounting information is reflected when accounting information is clearly presented?
Answer» Reliability Relevance Comparability UNDERSTANDABILITY Solution :Understandability

Discussion

83.	Which principle states that the financial statements should disclose all significant informations?
Answer» SOLUTION :CONVENTION of FULL DISCLOSURE.

Discussion

84.	Which out of the following are (a) Capital Expenditure, (b) Revenue Expenditure and (c) Deferred Revenue Expenditure ? (i) Rs 1,200 spent on the repairs of machines (ii) Rs 2,500 spent on the overhaul of machines purchased second -hand (iii) Whitewash expenses. (iv) Paper purchased for use as stationery (v) Advertising campaign to launch a new product. (vi) Renovation of a cinema hall. (vii) Brokerage paid in connection with purchase of land (viii) Expenses incurred to get the manager's office air-conditioned (ix) Loss on investments (x) Expenses to move the stock of goods from one place to another
Answer» ANSWER :Capital Expenditure - (ii); (VII); (viii); REVENUE Expenditure- (i); (III); (iv); (ix); (x) and Deferred Revenue Expenditure - (v) ; (vi)

Discussion

85.	Which one is the advantage of accounting ?
Answer» REPLACEMENT of MEMORY Shows the present value of the business Accounting does not record price LEVEL changes Accounting is not FULLY exact Solution :Replacement of memory

Discussion

86.	Which of these errors would be disclosed by the Trial Balance and why:
Answer» CHEQUE of Rs. 9,500 from Vikas entered in Vikas's Account as Rs. 5,900, Selling EXPENSES have been debited to Sales Account, Credit sales of Rs. 3,000 entered in both the ACCOUNTS as Rs. 300, A purchase of Rs. 2,500 was omitted ENTIRELY from the books? Solution :(i) Because wrong amount has been entered although in the correct account.

Discussion

87.	Which of these is not a fundamental accounting assumption?
Answer» GOING concern Concept CONSISTENCY Accural MATERIALITY ANSWER :D

Discussion

88.	Which of these accounts has debit balance?
Answer» INCOME RECEIVED in advance Bank loan Prepaid INSURANCE premium Creditors for goods Answer :C

Discussion

89.	Which of the following will not required adjustment in the Cash Book balance ?
Answer» Error in PASS BOOK CHEQUE issued but not presented for payment Cheque deposited but not cleared All of the above. Solution :Error in Pass Book

Discussion

90.	Which of the following will not be recorded in the books of account?
Answer» SALES of goods Payment of salary QUALITY of STAFF Purchase of Goods Solution :Quality of staff

Discussion

91.	Which of the following will not be recorded in the books of account ?
Answer» Purchased a LED TV for PERSONAL use, AMOUNT paid from personal account Purchased machinery of â‚¹ 1,00,000 Purchased GOODS for â‚¹ 25,000 Paid Salaries and Wages Solution :Purchased a LED TV for personal use, amount paid from personal account

Discussion

92.	Which of the one following is nota long-term liability ?
Answer» CREDITORS term-loan Debentures Capital Solution :Creditors

Discussion

93.	Which of the following will not be considered while preparing an Ameded Cash Book ?
Answer» CHEQUES issued but not presented for payment Cheques DEPOSITED but not credited by BANK Any wrong entry in the PASS Book All of the above Answer :D

Discussion

94.	Which of the following will be treated as drawings :
Answer» Withdrawing money for PAYMENT of SALARY to employees Withdrawing money for payment to CREDITORS Withdrawing from business for PRIVATE expenses Withdrawingmoney for purchase of asset Answer :C

Discussion

95.	Which of the followingtransactions will not be recorded in the books of account?
Answer» Purchased a LCD for personal use, PAYING the amount from personal bank account. Purchased machinery for manufacture. Purchased machinery for resale. Paid SALARIES and wages. Solution :Purchased a LCD for personal use, paying the amount from personal bank account.

Discussion

96.	Which of the followingwill be recorded as Contra-entry :
Answer» Cashdirectly deposited into bank by a CUSTOMER Payment made to creditor by CHEQUE CASH depositd into bank Cash SALES Answer :C

Discussion

97.	Which of the following transactions will result in higher balance in the bankcolumn of Cash Book in comparison to Pass Book ?
Answer» CHEQUES issued but not presented for payment INTEREST ALLOWED by BANK Bank charges entered TWICE in Cash Book. Cheques paind into bank for collection but not yet credited Answer :D

Discussion

98.	Which of the following transactions are of financial character and will be recorded in the books ? (i) Credit purchase of goods. (ii) Strike by employes. (iii) Goods worth Rs 20,000 taken form the business and given by the proprietor to his friend as gift. (iv) Withdrawing of money by proprietor form business for personal use. (v) Interviewing the candidates for employement. (vi) Sale of household furniture for Rs 10,000. (vii) Payment of school fess of proprietor's son form propritor's personal bank account. (viii) Make promise to send the goods. (ix) Receiving on order to send the goods. (x) Loss of goods by fire. (xi) Value of human resources.
Answer»

Discussion

99.	Which of the following transactions is of afinancial character and will be recorded in the business?
Answer» Good taken from the BUSINESS by the proprietor for her personal USE INTERVIEWING the candidates for employment Sale of houseland furniture for Rs. 5,000 Received an order for sale of goods Answer :A

Discussion

100.	Which of the following transactions is not financial character?
Answer» PURCHASE of ASSET on credit Purchase of asset for cash Withdrawing of MONEY by PROPRIETOR from business Strike by Employees Answer :D

Discussion

Explore topic-wise InterviewSolutions in .

Why 'Dividend EqualisationRerserve' istermedas Reserve and not aprovision ?

Why do only one account is posted to the Ledger from the Cash Book ?

Why Cash Book is called a book of original entry ?

Why contra entry in two column cash Book is not posted in to ledger?

Why closing stock is valued at cost price or realisable value whichever is less?

Why contra entries in the Cash Book are not posted into Ledger ?

Why are the rules of debit and credit same for liability and capital ?

Why balance in GST Accounts is shown in the Balance Sheet ?

Why are therules of debit and credit same for both liability and capital?

Why assets are classified into current and non-current?

Why are Prepaid Expenses segregated from current year's expenses and taken to Balance Sheet as a current asset?

Why are accounting standards required?

Why a Cash Book always shows a debit balance ?

Who is a Debtor ?

Who is a Creditor ?

Who are the internal users of accounting information?

While starting with Pass Book overdraft bank interst credited in the Pass Book is to be written in minus column.

While preparing Cash A/c of the Current Year, the balance of the previous year is shown as 'To Balance b/d'.

While preparing Capital A/c of the Current Year, the balance of the previous year is shown as 'By Balance b/d'.

While posting in personal accounts from the purchases book, posting is done :

While calculating operating profit, the following are not taken into account.

Which value is most important for good accounting ?

Which transactions will : I. Decrease the Assets andDecrease the Capital. II. Increase the Assets andIncrease the Liabilities. III. Increase the Assets andDecrease another Asset. IV. Decrease the Assets andDecrease the Liabilities.

Which type of accounting information shows profit earned or loss incurred?

Which type of expenses are shown in Trading Account ?

Which transaction decreases one asset and increaaca another asset?

Which statement shows financial position of the business ?

Which qualitative characteristics of accounting information requires the use of common unit and common format of reporting ?

Which qualitative characteristic of accounting information is reflected when accounting information is clearly presented?

Which principle states that the financial statements should disclose all significant informations?

Which one is the advantage of accounting ?

Which of these errors would be disclosed by the Trial Balance and why:

Which of these is not a fundamental accounting assumption?

Which of these accounts has debit balance?

Which of the following will not required adjustment in the Cash Book balance ?

Which of the following will not be recorded in the books of account?

Which of the following will not be recorded in the books of account ?

Which of the one following is nota long-term liability ?

Which of the following will not be considered while preparing an Ameded Cash Book ?

Which of the following will be treated as drawings :

Which of the followingtransactions will not be recorded in the books of account?

Which of the followingwill be recorded as Contra-entry :

Which of the following transactions will result in higher balance in the bankcolumn of Cash Book in comparison to Pass Book ?

Which of the following transactions is of afinancial character and will be recorded in the business?

Which of the following transactions is not financial character?