Quiz: Fundamentals of Accounting

Added to Salaries in the Profit and Loss Account and shown as an asset in the Balance Sheet. Shown only in the Balance Sheet as a liability. Shown only in the Profit and Loss Account as an expense. Deduct from Salaries in the Profit and Loss Account and shown as a liability in the Balance Sheet.

As revenue in the profit and loss account As an expense in the profit and loss account As an addition to capital in the balance sheet As a deduction from capital in the balance sheet

Accounting is a part of book-keeping. Book-keeping is used for creating financial statements, while accounting is not. There is no difference between the two. Accounting involves analyzing and interpreting information, while book-keeping involves recording transactions.

Materiality. Historical Cost. Prudence. Consistency.

To calculate taxes owed at the end of the year. To track inventory levels only. To determine employee salaries. To process financial transactions from the beginning to the end in a systematic manner.

Personal Accounts. Real Accounts. Nominal Accounts. None of the above.

To the trading account To the profit and loss account To the balance sheet To the cash flow statement

As a liability in the balance sheet As an appropriation of profit in the profit and loss account As an asset in the balance sheet As an expense in the profit and loss account

Error of omission. Error of original entry. Error of commission. Error of principle.

Machinery Account debited with INR 200,000 and Depreciation Account credited with INR 20,000 in the Balance Sheet. Machinery Account debited with INR 180,000 and Depreciation Account credited with INR 20,000. Depreciation Expense INR 20,000 in the Profit and Loss Account and Accumulated Depreciation INR 20,000 on the assets side of the Balance Sheet. Depreciation Account debited with INR 20,000 and Profit and Loss Account credited with INR 20,000.