1. The Process of doing the total of both side of Debit and Credit of an Account is called as?

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1 1. The Process of doing the total of both side of Debit and Credit of an Account is called as? Ans. The process of doing total for both of the sides of an Account is called as Casting of an Account. 2. What is rule for Nominal Account? Ans. The Rule of the Nominal Account is Debit all the Expenses and Loses and Credit all the gains and incomes. 3. Employees and Workers of a company are the external or internal users of the financial statement? Ans. Internal users 4. What is a financial transaction? Ans. Financial transaction mean a transaction which can be measured in terms of money. 5. Define a Voucher. Ans. A voucher is a documentary evidence on base of which a financial transaction is recorded. 6. Define the Revenue & Turnover. Ans. Revenue mean an Income for an organization while Turnover means Sales figure. 7. What do you understand by A Bank Reconciliation Statement? Ans. A statement which is prepared to reconcile the differences between Balances of Bank in Cash Book and Bank Book is referred as Bank Reconciliation Statement. 8. Explain main features of Single Entry System. Ans. Only Partnership firm or proprietorship based firm can adopt the Single Entry System for their Accounting purpose while a large company may it be Limited or Private Limited cannot adopt this system due to complicit of law. Usually personal account are mentioned under this Single Entry System.

2 9. What are the main sub division of a Journal Book? Ans. A Journal Book can have following Sub Divisions a) Cash Book b) Sales Book c) Purchase Book d) Sale Return e) Purchase Return f) Bills Payable & Receivable Books 10. What is the main object of the Journal? Ans. The main object of journal is to record the financial transaction at the first stage that s why this journal is also referred as Book of Original Entry. 11. Define the following items:- a) Sale of Fixed Assets b) Sale of Sports Materials Ans. Sale of Fixed Assets: Due to non usage of certain fixed assets for the organization, its sold out of organization, since its not recurring or regular nature, so it cannot be taken as income its always treated as Capital receipt. Sale of Sports Materials: An organization sales the used sports material like used rackets, badmintons, cricket accessories or even the old gym equipments, since it s a recurring natured item like it is done on regular basis by an organization so it is treated as the income and its shown under the income in the Income and Expenditure Account. 12. What would be the suitable classification for the following Accounts? A) Salaries paid to workers B) Electricity Exp. For Factory

3 Ans. A) Nominal Accounts B) Nominal Accounts 13. What would be the appropriate Depreciation treatment in case the Assets have been purchased during the financial year. Ans. When Assets are purchased during the financial year and it is decided that the depreciation will be charged on 10% PA it mean the depreciation will be charged from the date of purchase of the concerned assets not for the full of financial year. And if depreciation is 10% not the Per Annum than irrelevant to the date of purchase of Furniture it will be charged for the full of the financial year. 14. Explain how the Credit Purchase calculation accounted in Single Entry System. Ans. Under the Single Entry System original bill from suppliers are kept in records and at the end of the year they are counted and added up manually to know and determine the total credit purchase throughout the year. 15. Which are the three main branches of Accounting? Ans. Three branches of Accounting are Financial Accounting Cost Accounting Managerial Accounting 16. What would be the suitable classification for the following Accounts? A) Purchase A/c B) Bad Debts Ans. A) Nominal A/c B) Nominal Accounts

4 17. Who is a Payee in respect of a Bill of Exchange? Ans. In respect of a Bill of Exchange a Payee is a person who is supposed to receive the payment mentioned in Bill of Exchange, which was raised by Drawer in name of Drawee instructing him to release the payment to the payee. Eventually payee will pay the amount to Drawer after receiving from the drawee of the Bill of Exchange 18. What are the Errors of Principle? Ans. An error which is committed ignoring the Principals of Account is referred as Errors of Principle for example in the books of a manufacturer there was an expense of Rs. 500 towards the electricity consummated at Factory for the production but that expenses was shown as Electrical expenses as indirect expenses and was charged against the profit and Loss account instead of Trading Account so this entry will not make any difference in the Trial Balance or any posting of ledger but by Principle it will produce the wrong results. 19. Explain the procedure to prepare a Trial Balance. Ans. Majorly two main methods can be considered to prepare a Trial Balance Net Balance Method and Total Method. Net Balance Method: The net balance of every individual account head is taken and posted in either debit or credit side as per their balance at the end of the period for which Trial Balance is being prepared. Total method: The total of debit and total of credit Colum is taken posted as it in the debit and credit side of the Trial Balance. 20. Explain the Accounting term Ledger its relevancy in details. Ans. After having recorded all the journal entries in the Journal Book, next step in a financial accounting book keeping system the accountant is suppose to classify the recorded entries, classification known as Posting of the transaction in their respective Ledger Accounts. So we can say that a ledger or Account is comes in picture when classification is done for some transactions, as we know the procedure of the accounting is that first of all a financial transaction should be recorded in the Journal Book, then it will be posted in ledger to its concerned or related Accounting Head for example, if there is an expense of Rs. 200 for purchasing misc Stationary items for Office, then the Rs. 200 will be debited to Expense Head Printing & Stationary and same amount will be credit to Cash Account.

5 First column of a Ledger is relating to Date, it mean the date of Entry, Second Column describe the narration part, third one is JF Journal Folio where the Page Number of Journal Book from where that posting has been done is stated, next column is Amount Debit and next one is Credit, the amount needs to be write to the relevant column whether its Debit or Credit. It will fetch the accurate results. And final column is the Balance, it shows the Balance which is payable or receivable to the particular ledger or account. A Trial balance is made by these Balancing Figures of each ledger only.

Answer to MTP_Foundation_Syllabus 2012_Jun2017_Set 1 Paper 2- Fundamentals of Accounting

Answer to MTP_Foundation_Syllabus 2012_Jun2017_Set 1 Paper 2- Fundamentals of Accounting Paper 2- Fundamentals of Accounting Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1 Paper 2- Fundamentals of Accounting Full Marks :