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Journal Entries

Description: This test is based on accountancy topic journal entries.
Number of Questions: 12
Created by:
Tags: JOURNAL ENTRIES Accountancy
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What will be the correct entry for commission received of Rs. 500?

  1. Debit Cash account and credit bank account

  2. Debit bank account and credit cash account

  3. Debit Commission account and credit cash account

  4. Debit cash account and credit sales account

  5. Debit Cash account and credit commission received account with Rs. 500

Show answer
Correct Option: E
Explanation:

Cash comes in, so cash account is credited. Commission is an item of income, so it will be credited.

What is the first step of accounting process?

  1. Preparing the source document

  2. Post the transactions

  3. Recording the transactions

  4. Identifying the transactions

  5. None of these

Show answer
Correct Option: D
Explanation:

This is the first step of accounting process.

Which of the following is another name for journal?

  1. Ledger

  2. Daybook

  3. Cash book

  4. Trial balance

  5. Balance sheet

Show answer
Correct Option: B
Explanation:

Daybook is another name of journal as transactions are entered on daily basis. It is also called as original book of entry.

Discount allowed is deduction from which of the following?

  1. Discount account

  2. Cash account

  3. Account receivable

  4. Account payable

  5. None of these

Show answer
Correct Option: C
Explanation:

Discount allowed is discount given to buyer that will be deducted from Account Receivable. A credit sale will increase Accounts Receivable, but the collection of the amount will decrease Accounts Receivable.

Which of the following can be called as evidence of transaction that has taken place?

  1. Journals

  2. Bonds

  3. Ledger

  4. Source document

  5. None of these

Show answer
Correct Option: D
Explanation:

Source document is used to make journal entries, and they are evidence of transaction that has taken place.

Whenever two or more accounts are debited or credited in a journal entry, it will be referred to as which of the following?

  1. Compound entry

  2. Multi entry

  3. Additional entry

  4. Journal entry

  5. None of these

Show answer
Correct Option: A
Explanation:

A compound journal entry in accounting is in which there is more than one debit, more than one credit.

According to accounting process, which of the following sequences is best justified?

  1. Transaction, source document, journal entry, ledger, trial balance

  2. Transaction, source document, journal entry, trial balance, ledger

  3. Source document Transaction, journal entry, trial balance, ledger

  4. Source document, Transaction, journal entry, ledger, trial balance

  5. Source document, Transaction, ledger journal entry, trial balance

Show answer
Correct Option: A
Explanation:

Transactions occurs, then the source documents are reduced to debit and credit in form of journal entry, then posted to ledger and from ledger trial balance is prepared.

Which of the following entries appear in 'Journal Proper'?

  1. Opening entries

  2. Closing entries

  3. Transfer entries

  4. Adjustment entries

  5. All of the above

Show answer
Correct Option: E
Explanation:

As all of the above answers are correct, hence this is the correct answer.

What will be the journal entry if credit sales of Rs. 15400 of X Ltd. have been entered in sales day book as Rs. 14500. Which of the following entries will correct this error?

  1. Debit X Ltd. account and credit sales account with Rs. 15400

  2. Debit X Ltd. account and credit sales account with Rs. 900

  3. Debit sales account and credit X Ltd. account with Rs. 900

  4. Debit cash account and credit sales account with Rs. 900

  5. None of these

Show answer
Correct Option: B
Explanation:

Both sales and X Ltd. accounts are understated by Rs. 900. Entries are required to increase the amount due from X Ltd. and increase sales by crediting the sales account.

An incorrect journal entry is made by posting amount paid for servicing vehicle to motor vehicle account. Which of the following entries can be made to correct the previous entry?

  1. Debit motor vehicle account and credit vehicle maintenance account

  2. Debit vehicle maintenance account and credit cash account

  3. Debit cash account and credit motor vehicle account

  4. Debit vehicle maintenance account and credit motor vehicle account

  5. Entry cannot be corrected

Show answer
Correct Option: D
Explanation:

Motor vehicle entry needs to be reduced by making credit entry and debit the vehicle maintenance account.

How many times is the process of recording journal entry done in a year?

  1. Twice a year

  2. Once in a year

  3. At the end of accounting period

  4. Frequently during the entire accounting period

  5. Only at the time of large amount of expenditures

Show answer
Correct Option: D
Explanation:

This is the correct answer as journal entries are made throughout the year.

A sale of Rs. 7800 to Sohanlal has been posted to Mohanlal. Which of the following journal entries will correct this error?

  1. Debit Mohanlal's account and credit Sohanlal's account with Rs. 15600

  2. Debit Sohanlal's account and credit sales account with Rs. 7800

  3. Debit Sohanlal's account and credit Mohanlal's account with Rs. 7800

  4. Debit sales account and credit Mohanlal's account with Rs. 7800

  5. None of the above entries will correct the error.

Show answer
Correct Option: C
Explanation:

This is error of ommission and transfer needs to be made between both the accounts. This journal entry is required to be transferred so that their is no unauthorized transfer between two accounts.

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