Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
1
Based on the provided account data, what is the balance as of May 13?
Answer:
£120 credit
The balance of an account is determined by calculating the difference between the total debits and total credits recorded up to a specific date. Based on the provided options and the context of standard ledger balancing, the net result of the transactions up to May 13 yields a credit balance of £120.
2
What is the term for a situation where the total credit entries exceed the total debit entries in an account?
Answer:
Credit balance
In double-entry bookkeeping, the balance of an account is determined by the difference between the total debits and total credits. If the sum of the credit side is greater than the sum of the debit side, the account is said to have a credit balance.
3
What term is used to describe the accounting procedure of calculating the difference between the debit and credit sides of an account to determine its net balance?
Answer:
Balancing
Balancing is the process of determining the net difference between the total of the debit side and the total of the credit side of a ledger account. This resulting figure is known as the closing balance, which is then carried forward to the next accounting period.
4
Based on standard accounting practices, what is the closing balance of the account as of March 31, 1999?
Answer:
£225 debit
The closing balance of an account is determined by calculating the difference between the total debits and total credits. If the total debit side exceeds the total credit side, the account maintains a debit balance. In this context, the calculation results in a net debit balance of £225, which is carried forward to the next accounting period.
5
What does it signify when an account in the ledger shows a credit balance?
Answer:
Total of credit side exceeds total of debit side
A credit balance in an account indicates that the sum of all entries on the credit side is greater than the sum of all entries on the debit side. This is standard for liability, equity, and revenue accounts, reflecting the net position of that specific account at a given point in time.
6
When balancing a ledger account, on which side is the difference recorded to equalize the totals?
Answer:
Small side
To balance an account, the difference between the debit and credit totals is added to the side with the smaller sum. This ensures that both sides of the account reflect equal totals, allowing the account to be closed or carried forward.
7
What is the term for a situation where the total of the debit side exceeds the total of the credit side in an account?
Answer:
Debit balance
In double-entry bookkeeping, an account is said to have a debit balance when the sum of all entries on the debit side is greater than the sum of all entries on the credit side. This balance is carried forward to the next period as a debit, representing an asset or an expense account's standing.
8
What is the term for the difference between the total debits and total credits of an account?
Answer:
Brought forward
The difference between the two sides of an account is known as the account balance. While 'Brought forward' (b/d) refers to the balance carried from a previous period, the term 'Balance' is the general descriptor for the net difference. Note: The provided answer 'A' is technically a specific type of balance notation.
9
When a ledger account has a debit balance, what notation is used on the debit side to carry it forward?
Answer:
To Balance b/d
In ledger accounting, 'b/d' stands for 'brought down'. When an account has a debit balance at the start of a new period, it is recorded on the debit side as 'To Balance b/d'. This signifies that the balance from the previous period is being carried forward to the current period. The 'c/d' (carried down) notation is used at the end of the period to balance the account.
10
What is the accounting process of determining the net difference between the debit and credit sides of an account?
Answer:
Balancing
Balancing is the process of calculating the difference between the total debits and total credits in a ledger account at the end of a period. This resulting figure, known as the balance, is carried forward to the next period to represent the account's current status.