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This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 401. |
What entry (debit or credit ) would you make to (a) increase in revenue (b) decrease in expense, (c ) record drawings, (d)record thefresh capital introduced by the owner. |
| Answer» SOLUTION :`{:((a),"INCREASE in Revenue",:,"Credit"),((b),"Decrease in Expense",:,"Credit"),((C),"Drawings",:,"Debit in Capital Account"),((d),"Freash Capital",:,"Credit in Capital Account"):}` | |
| 402. |
What does the Balance of Suspense Account indicate? How is the balance of Suspense Account treated? |
| Answer» SOLUTION :BALANCE of Suspense Account shows the net effect of errors whichare STILL to be located and rectified. It will be shown on assets SIDE (in case or DEBIT balance) or on the liabilities side (in case of credit balance) of the Balance Sheet. | |
| 403. |
What does debitin an Expense Accounts signify ? |
| Answer» Solution :A DEBIT in an Expense ACCOUNT MEANS the amount of expense INCURRED by the firm under that HEAD of account . | |
| 404. |
What does debit in an Asset Account signify ? |
| Answer» SOLUTION :A DEBIT in an Asset Account MEANS further assets PURCHASED by the firm . | |
| 405. |
What does debit balance of a Nominal Account indicates ? |
| Answer» SOLUTION :It INDICATES LOSS or EXPENSE. | |
| 406. |
What does debit balance of a Personal Account indicates? |
| Answer» Solution :In indicdates the amount which is OWING to the FIRM by a PERSON. In other words, he is the DEBTOR of the firm. | |
| 407. |
What does 'Debit' balance asper the Cash Bookmean ? |
| Answer» Solution :Debit BALANCE as per CASH BOOK means amount lying deposited in bank. | |
| 408. |
What does credit in an Asset Account signify ? |
| Answer» Solution :A CREDIT in an Asset ACCOUNT MEANS the assets sold or discarded by the FIRM. | |
| 409. |
What does credit in an Income Account signify ? |
| Answer» Solution :A credit in an INCOME ACCOUNT MEANS the AMOUNT of income earned by the firm under that head of account . | |
| 410. |
What does credit balance in a Capital Account signify ? |
| Answer» Solution :A credit BALANCE in a Capital Account SIGNIFIES the amount invested by the PROPRIETOR as on date. | |
| 411. |
What does 'Credit' balance as per the Cash Book mean ? |
| Answer» Solution :Credit balance as per CASH BOOK means AMOUNT OVERDRAWN from the bank | |
| 412. |
What does Credit b alances as per the Bank Pass Book mean? |
| Answer» SOLUTION :CREDIT BALANCE as PER Cash Book means amountlying deposted in the bank | |
| 413. |
whatdo youunderstandbyTailor - Madesoftware ? |
| Answer» | |
| 414. |
whatdo youunderstand byreadymadeoroff the shelf software ? |
| Answer» | |
| 415. |
What do you understand by Operating Profit? How is it calculated ? Or What is meant by Operating Profit ? |
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Answer» Solution :OPERATING Profit is the excess of GROUP profit over operating expenses Operating Profit = Net Sales - Operating Cost Or = Net Profit + NON - operating Expenses -Non - operating INCOMES |
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| 416. |
whatdo youunderstandby GroupingofAccounts ? |
| Answer» | |
| 417. |
What do you understand by Fixed Assets? |
| Answer» Solution :FIXED Assets are those assets which are acquired for use in business to increase the EARNING CAPACITY | |
| 418. |
What do you understand by Current Assets ? |
| Answer» Solution :Current Assets are those assets of BUSINESS which are kept TEMPORARILY for resale or for CONVERTING into CASH. | |
| 419. |
whatdo youunderstandbyCustomisedsoftware? |
| Answer» | |
| 420. |
What do you understand by Contingent Liability ? |
| Answer» Solution :CONTINGENT Liability is that liability which BECOMES payable on the happening of an event. For EXAMPLE, a suit for claim is filed against that BUSINESS which the business does not acknowledge. It is a contingent liability and will become payable if the court decides against it | |
| 421. |
What do you understand by Cash Basis of Accounting ? |
| Answer» Solution :Cash Basis of Accounting means that the ENTRY is recorded on receipt or payment of cash. The SYSTEM does not distinguish between capital and REVENUE items. It also does not recognise prepaid EXPENSES and outstanding expenses. | |
| 422. |
What do you understand by Accrual Basis of Accounting ? |
| Answer» Solution :Accrual Basis of Accounting means the transaction is recorded at the time when it is entered into and not when the settlement takes PLACE. In other WORDS. Under Accrual Basis of Accounting, accounting entries are recorded when incomes are EARNED and EXPENSES are incurred IRRESPECTIVE of cash received or paid. | |
| 423. |
What do you understand by Accounting Concepts ? |
| Answer» Solution :ACCOUNTING concepts are the basic assumptions or fundamental PROPOSITIONS within which accounting FUNCTION is carried out. | |
| 424. |
What do you mean by Suspense Account? |
| Answer» Solution :Suspense Account is an account in which the difference of TRIAL BALANCE is placed TEMPORARILY till the errors are located and rectified. | |
| 425. |
What do you mean by Voucher? |
| Answer» Solution :The DOCUMENTS PREPARED for the purpose of RECORDING BUSINESS TRANSACTIONS in the books of account are known as Vouchers. | |
| 426. |
whatdo youmeanby acomputer ? |
| Answer» | |
| 427. |
What deos Debit balance as per the Bank Pass Book mean? |
| Answer» Solution :Debit balance as perPass BOOK means AMOUNT overderaw from bank and THUS, payable to bank | |
| 428. |
whatconsiderationsshouldbe bornein mindforDesigingAccountingReports ? |
| Answer» | |
| 429. |
What are the types of Vouchers? |
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Answer» SOLUTION :(i) Cash VOUCHERS and Non-Cash Vouchers (II) DEBIT Vouchers and Credit Vouchers |
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| 430. |
What are the two sides of an Account called ? |
| Answer» Solution :The TWO sides of an ACCOUNT are DEBIT and Credit . | |
| 431. |
What are the two bases of accounting ? |
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Answer» Solution :There are TWO BASES of accounting : (i) Cash BASIS and (II) Accrual Basis. |
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| 432. |
What are the two basic objectives of having Accounting Standards? |
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Answer» Solution :(i) To ENSURE uniformity in accounting PRACTICES. (ii) To ensure transparency, CONSISTENCY and comparability. |
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| 433. |
What are the two accounting systems to record financial transactions in the books of account? |
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Answer» Solution :The TWO accounting systems are: (i) Double Entry SYSTEM, and (ii) Accounts from INCOMPLETE RECORDS or SINGLE Entry System. |
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| 434. |
What are the special purpose books ? |
| Answer» SOLUTION :Specialpurpose books are the subsidiary books where transactions are recoded first and each subsidiary BOOK is MEANT for recording all the transactions a similar nature . | |
| 435. |
What are the steps involved in the process of accounting? |
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Answer» SOLUTION :The steps involved in the process of accounting are: (i) Identifying financial TRANSACTIONS and events, (ii) Recording in the books of account, (III) Classifying the recorded entries, (IV) Preparation of Trial Balance, (v) Preparation of Final Accounts, (vi) Analysis and Interpretation of Financial Statements, and (vii) Communicating to the USERS. |
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| 436. |
What are the possible reasons for keeping incomplete records? |
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Answer» |
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| 437. |
What are the objectives of providing Depreciation? (Any two) |
| Answer» Solution :(1) To ASCERTAIN correct profit or loss. (ii) To SHOW the ASSETS at their proper VALUE. | |
| 438. |
What are the methods of recording Depreciation ? |
| Answer» SOLUTION :Methods of recording DEPRECIATION are :(i) Depreciation being CREDITED to respective Asset Account, and(ii) Depreciation credited to PROVISION for Depreciation Account. | |
| 439. |
What are the objectives of preparing financial statements ? |
| Answer» SOLUTION :N/a | |
| 440. |
What are the merits of Written Down Value Method? (Any two) |
| Answer» Solution :Merits of WRITTEN Down VALUE Method are: (i) It takes into consideration repairs and MAINTENANCE cost in the later years.(ii) It is accepted by the Income TAX Act. | |
| 441. |
What are the main classes of Liabilities ? |
| Answer» SOLUTION :Non-CURRENT LIABILITIES and Current Liabilities | |
| 442. |
What are the limitations of Accounting ?(Any Two) |
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Answer» Solution :The LIMITATIONS of Accounting are: (i) Non-financial informations are not recorded, and (II) It IGNORES PRICE level changes. |
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| 443. |
What are the merits of Straight Line Method? (Any two) |
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Answer» SOLUTION :Merits of STRAIGHT Line Method are: (i) It is a simple method of PROVIDING DEPRECIATION: (ii) Assets can be depreciated up to the ESTIMATED residual value. |
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| 444. |
What are the disadvantages of Cash Basis of Accounting ? (Two points ) |
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Answer» Solution :Disadvantages of CASH Basis of Accounting are : (i) It does not GIVE a true and fair view of profit or loss and the FINANCIALPOSITION. (ii) It does not follow the Matching PRINCIPLE. |
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| 445. |
What are the factors involved in providing Depreciation? |
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Answer» Solution :Factors involved in providing depreciation are: (i) HISTORICAL cost of the ASSET. (ii) ESTIMATED residual value of the asset at the end of its USEFUL LIFE, and (iii) Estimated effective life of the asset. |
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| 446. |
What are the informational needs of management ? |
| Answer» Solution :Management needs TIMELY information REGARDING sales, costs, profitability ETC. for planning, controlling and decision MAKING. | |
| 447. |
What are the disadvantages of Accrual Basis of Accounting? (Two points) |
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Answer» Solution :DISADVANTAGES of Accrual BASIS of Accouting are : (i) The accounting process is more ELABORATE. (ii) It is more complicated than CASH Basis of Accounting and requires adequate SKILLS. |
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| 448. |
whatare thedifferent kindsof software ? |
| Answer» | |
| 449. |
whatare the differentelements of acomputer system? |
| Answer» | |
| 450. |
What are the demerits of Written Down Value Method? (Any two) |
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Answer» SOLUTION :Demerits of Written Down Value Method are:(i) It is difficult,to ASCERTAIN the CORRECT rate of depreciation. (ii) Under this method, value of asset cannot be zero. |
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