Quiz: Accounting Equation and Rule of Debit and Credit

Which of the following equations is correct?

Which of the following is correct?

Assets          –        Liabilities       =             Capital

(a) 7,85,000 – Rs. 1,25,000      =          Rs.   6,60,000

(b) 8,20,000 + Rs. 2,80,000     =          Rs. 11,00,000

(c) 9,55,000 – Rs. 1,15,000      =          Rs.   8,20,000

(d) 5,42,000 – Rs. 6,54,000     =          Rs.   1,12,000

Select the correct alternative:

The liabilities of a firm are Rs. 3,000; the capital of the proprietor is Rs. 7,000. The total assets are:

The assets of a business on 31st March, 2012 are Rs. 50,000 and its capital is Rs. 35,000. Its liabilities on that date shall be Rs.

If income exceeds expenditure, the business makes a ____________.

If expenditure exceeds income, the business makes a ____________.

Capital is

Profit earned in a period means

Debit means

Credit means

Sale of goods to Ram for cash is debited to

Withdrawal of cash from business by the proprietor is credited to

Study the following statements which may be true or false. You are to choose the correct option:

(i) Debit means an increase in liability and decrease in an asset.

(ii) Credit means an increase in asset and decrease in liability.

(iii) A sale of old furniture to Paresh for cash should be debited to Paresh’s Account.

(iv) Salary payable is a Nominal Account.

Study the following statements which may be true or false. You are to choose the correct option:

 (i) Increases in assets are debits and decreases in assets are credits.

(ii) Discount allowed to customer is an expense for business.

(iii) Jaspal’s Drawings is an Impersonal Account.

(iv) Increases in capital are credits and decreases in capital are debits.

1. Study the following statements, which may be true or false. You are to choose the correct option:

(i) Debit the giver and credit the receiver is the rule of Personal Account.

(ii) Some of the transactions may have only one account.

(iii) For every debit, there is a corresponding credit of equal amount.

(iv) Increases in incomes or profits are credits and decreases in incomes or profits are debits.

1. Study the following statements, which may be true or false. You are to choose the correct option:

 (i) The left hand side of an account is called the debit side.

(ii) Commission Receivable Account is a Nominal Account.

(iii) Excess of income over expenditure is called profit.

(iv) The meaning of ‘Debit’ in Account is ‘Debtor’.

Cash withdrawal by the owner would cause—

Purchase of Assets for cash would cause

Both total assets and owners capital are increased by

Both total assets and owners capital are reduced by

Purchase of RBI bonds for cash would lead to

Loss of stock by fire would lead to

The difference between assets and liabilities is

Money owed to an outsider is a/an

1. If total assets of a business are Rs. 180,000 and net worth is Rs. 50,000, the outside liability will be

If the owner’s equity is Rs. 80,000 and external liability Rs. 40,000, Cash in hand Rs. 20,000, the total assets of the firm will be

If total assets of a business are Rs. 180,000 and total outside liabilities are Rs. 50,000, the net worth of the firm will be

Net worth is the difference between

Unexpired Discount is a

Rent receivable is a

Which one is an Artificial Personal A/c

Which one is an Artificial Personal A/c

Wages outstanding is a

Which one is a Nominal A/c

Which one is a Real A/c?

Bills Payable is

Retained earnings is classified as

Subscription received is classified as

Stock/Inventories is classified as

Accounts Payable is classified as

Proprietor’s A/c is

Prepaid/Advance Salary A/c is classified as

Trade Mark is a/an