• Modern approach of rules of accounts - class-XI
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Modern approach of rules of accounts - class-XI

Description: modern approach of rules of accounts
Number of Questions: 28
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Tags: elements of accounts double entry book keeping system accountancy economics accounting equation and business transactions book-keeping - ledger journal and ledger meaning and fundamentals of double entry book-keeping commercial studies book keeping and accountancy business studies accounting procedures - rules of debit and credit accounting in business original entry: journal and subsidiary books meaning, objectives and terminology of accounting
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Model which states decline in extra time needed to produce last unit, every time for cumulative quantity of doubled units produced is classified as _____________________.

book keeping and accountancy accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. incremental unit average model

  2. incremental cost learning model

  3. incremental unit time learning model

  4. incremental price learning model

Show answer
Correct Option: C

Single entry system is known as incomplete system of recording accounting information.

book keeping and accountancy accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: A

When a buyer returns damaged goods to the seller, the buyer receives ______________.

book keeping and accountancy accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. credit note.

  2. pro forma invoice.

  3. debit note.

  4. consignment note.

Show answer
Correct Option: A

Double Entry System of Book-keeping is the most ______________ system of recording business transaction.

book keeping and accountancy accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. perfect

  2. scientific

  3. complete

  4. all of the above

Show answer
Correct Option: D

'Munimji' is a nation wide popular word for' Accountant'.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: A

Conventional system of accounting is recognised by law.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: B

Single entry system is suitable to _________ firms.

book keeping and accountancy accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. small

  2. big

  3. medium

  4. all of these

Show answer
Correct Option: A

Only cash book and personal accounts are maintained under which system of recording accounting information?

book keeping and accountancy accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Mahajani system

  2. Single entry system

  3. Double entry system

  4. All of the above

Show answer
Correct Option: B

What is the assumption of Double entry system of recording accounting information?

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Every transaction has one effect.

  2. Every transaction has two effect.

  3. Every transaction has multiple effect.

  4. None of the above.

Show answer
Correct Option: B

Accounts other than the impersonal account is _________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Personal account

  2. Real account

  3. Nominal account

  4. Both B and C

Show answer
Correct Option: A
Explanation:

IMPERSONAL ACCOUNT:In the accounts of the nominal ledger, we have different types of expenses for different purposes like rent, insurance, telephone and others. As these expenses are related NOT to the person to whom the money is paid and more concerned towards the reason for payment these are known as IMPERSONAL accounts.


Impersonal accounts are all accounts other than the personal accounts. They can further be categorized into Real Accounts and Nominal Accounts.

The accounts of expenses and losses is _________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Real

  2. Personal

  3. Nominal

  4. None of the above

Show answer
Correct Option: C
Explanation:

Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts. 

The dictionary meaning of the word "nominal" is "existing in name only" and the meaning remains absolutely true in accounting sense too, because nominal accounts do not really exist in physical form, but behind every nominal account money is involved.
E.g. Purchase A/c, Salary A/c, Sales A/c, Commission Received A/c, etc.

Loan account is personal account.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts are debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.

Personal accounts are classified into three subcategories: Artificial, Natural, and Representative.
Representative accounts represent a certain person or group directly or indirectly.
Loan account is a representative personal account, as it represents the person from whom the loan is obtained or to whom the loan is given. Hence, it is classified as a personal account.

Outstanding Wages A/c is Nominal A/c.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

Accounts which are related to expenses, losses, incomes and gains are called nominal accounts. Examples of nominal accounts are Purchase A/c, Sales A.c, Salary A/c etc.

The final result of all nominal accounts is either profit or loss which is the transferred to the capital account. The golden rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.

Outstanding wages is classified as a personal account and not a nominal account. This account represents the accounts of all those persons to whom wages have not been paid and hence, are outstanding. Therefore, it is termed as  "Representative Personal Account" or simply personal account.

Nominal A/c is debited when business incurs expenses.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts. The dictionary meaning of the word "nominal" is "existing in name only" and the meaning remains absolutely true in accounting sense too, because nominal accounts do not really exist in physical form, but behind every nominal accounts money is involved. E.g. Purchase A/c, Salary A/c, Sales A/C. Commission Received A/c, etc.

The final result of all nominal accounts is either profit or loss which is then transferred to the capital account. 
The golden rule for nominal account is : Debit all expenses and losses; Credit all incomes and gains.

Commission received is Nominal Account.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Nominal accounts are the temporary accounts, such as the income statement accounts. In other words, nominal accounts are the accounts that report revenues, expenses, gains, and losses. 

Nominal or temporary accounts are closed at the end of each accounting year. This means that their account balances are transferred to a permanent account. This closing process allows the nominal accounts to start the next accounting year with zero balances.
Nominal accounts consist of the following types of accounts:
a. Insurance account
b. Wages account
c. Interest paid or received account
d. Commission paid or received account
e. Telephone expense account
f. Salary account.
Hence, commission received is a nominal account.

Conventional system of accounting cannot give a complete picture of all transactions.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Under conventional system of Accounting  :-

  • Since only one cash book is kept, personal and business transactions will be recorded together.
  • Real and Nominal accounts will be ignored by this system.
  • Profit or Loss can be ascertained but we cannot represent the financial position of the organization
  • No trial balance is prepared, so arithmetical accuracy of accounts cannot be verified
  • So, conventional or single entry system of accounting cannot give a complete picture of all transactions. 

Drawing account is real account.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

Drawings account is a personal account. 

Personal accounts are classified as :-
a) Natural person, 
b) Artificial person 
c) Representative personal accounts.
 A representative personal account represents a person/persons.

Drawings account is a representative personal account. 
Some examples of representative personal accounts are capital, outstanding wages, prepaid salaries. 

The rule of personal account states that Debit the receiver and Credit the giver.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.

Natural personal accounts are the simplest to understand out of all and includes all God's creations who have ability to deal, who, in  most cases, are people. E.g. Kumar's A/c, Adam's A/c, etc.
Artificial personal accounts are created artificially by law, such as corporate bodies and institutions, are called Artificial personal accounts.
Representative personal accounts represent a certain person or group directly or indirectly.
The golden rule for personal accounts: Debit the receiver; Credit the giver.

Examples of real account.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Creditor account

  2. Goodwill account

  3. Capital account

  4. Salary account

Show answer
Correct Option: B
Explanation:

All assets of a firm, which are tangible or intangible, fall under the category "Real Accounts".

Tangible real accounts are related to things that can be touched and felt physically. Few examples of tangible real accounts are building, machinery, stock, land, etc.
Intangible real accounts are related to things that can't be touched and felt physically. Few examples of such real accounts are goodwill, patents, trademarks, etc.
Golden rule for real accounts are: Debit what comes in; Credit what goes out.
Hence, of all the options above, goodwill account is a real account.

Which one of the following statements is correct?

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Capital of the firm is reduced by borrowing

  2. Nominal accounts refer to false transactions

  3. When there is no change In proprietors capital, it is an indication of loss in business.

  4. Real accounts relate to the assets of a business

Show answer
Correct Option: D
Explanation:

Real account is an record of an asset. An asset can be current asset such as cash, a fixed asset such as building and intangible asset such as goodwill. Real account relate to the assets & liabilities of a business.

M/s Ram & Sons Ltd's Account is ________________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Natural Personal Account

  2. Artificial Personal Account

  3. Representative Personal Account

  4. None of these

Show answer
Correct Option: B

Ram's Capital Account is _______________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Natural Personal Account

  2. Artificial Personal Account

  3. Representative Personal Account

  4. None of these

Show answer
Correct Option: C

Advance Salary to Shyam Account is _______________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Natural Personal Account

  2. Artificial Personal Account

  3. Representative Personal Account

  4. None of these

Show answer
Correct Option: C

Interest receivable from Mohan, a Borrower Account is ______________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Natural Personal Account

  2. Artificial Personal Account

  3. Representative Personal Account

  4. None of these

Show answer
Correct Option: C

Salary Payable to Shyam Account is _____________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Natural Personal Account

  2. Artificial Personal Account

  3. Representative Personal Account

  4. None of these

Show answer
Correct Option: C

Interest received in advance from Mohan, a borrower Account is ________________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Natural Personal Account

  2. Artificial Personal Account

  3. Representative Personal Account

  4. None of these

Show answer
Correct Option: C

Ram's Drawings Account is _________________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. Natural Personal Account

  2. Artificial Personal Account

  3. Representative Personal Account

  4. None of these

Show answer
Correct Option: C
Explanation:

Drawings account is a representative personal account. A representative personal account represents a person/persons. Some examples of representative personal account are capital, outstanding wages, prepaid salaries.

Purposes of an accounting system includes all of the following except _____________.

commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

  1. interpret and record the effect of business transactions

  2. classify the effects of transactions to facilitate the preparation of reports

  3. summarize and communicate information to decision makers

  4. deciding the line of business for an entity

Show answer
Correct Option: D
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