Note – Please take our quiz ‘Quiz 1 – Accounting Fundamentals – Beginner‘ on this page before going through the below answers. Only the top 3% of our audience score 10/10 in all of them.
- Name – Quiz 1 – Accounting Fundamentals – Beginner
- Topic – Accounting Fundamentals
- Answers with Explanation
Q1. Income statement, _____ and balance sheet are the three main financial statements.
Ans. Income statement, cash flow and balance sheet are the three main financial statements. A business prepares these financial statements in every accounting period.
Q2. Depreciation is not charged on land because its _____ can not be determined.
Ans. Depreciation is not charged on land because its useful life can not be determined. Land is assumed to have an unlimited/indefinite useful life.
Q3. Outstanding Expense is a _____.
Ans. Outstanding Expense is a current liability for the business. An outstanding expense is an expense that is due but has not been paid. For e.g. outstanding salary, outstanding rent, outstanding subscription, etc.
Q4. _____ is not shown in the trial balance as it is included in purchases.
Ans. Closing stock is not shown in the trial balance as it is included in purchases. It is the balance of unsold goods from purchases for the year and total purchases are already included in the trial balance. If the closing stock is included in the trial balance, the effect will be doubled.
Q5. Amortization is Charged on?
Ans. Amortization is charged on intangible assets. It is a process by which the cost of such assets is incrementally expensed or written off over a period of time. For e.g. patents, goodwill, trademarks, etc.
Q6. _____ may be a contingent liability.
Ans. Court Case may be a contingent liability. A court case may result in payment of fines (potential loss) that may occur in the future depending on the judgment by the court (the outcome of a specific event).
Q7. _____ is sent to the buyer by the seller when goods are returned.
Ans. A credit note is sent to the buyer by the seller when goods are returned. A credit note acts as a source document for the sales return journal. It is evidence of the reduction in sales.
Q8. A contra entry is posted on both sides of a _____.
Ans. A contra entry is posted on both sides of a cashbook. When cash is deposited in bank/withdrawn, such transactions will be recorded on both sides of the cash book.
Q9. _____ have a debit balance.
Ans. Assets have a debit balance. This means positive values for assets are debited and negative balances are credited. For e.g. upon the receipt of 1,000 cash, a journal entry would include a debit of 1,000 to the cash account as per the modern rules of accounting.
Q10. _____ account is used temporarily to carry doubtful receipts and disbursements.
Ans. A suspense account is used temporarily to carry doubtful receipts and disbursements. For e.g. it can be a repository for monetary transactions entered with invalid account numbers. The account specified may be absent/deleted/closed.