A-AS Level (CIE) Accounting Paper-1: Specimen Questions with Answers 2 - 3 of 93

Question 2

Question

MCQ▾

The balance of the Cash Column is:

Choices

Choice (4)

a.

Always Credit

b.

Always Debit

c.

Question does not provide sufficient data or is vague

d.

All of the above

Answer

b.

Explanation

Cash book is used to record all the transactions relating to cash receipts and cash payments. The number of cash transactions is quite large is quite large in a business and it is quite impracticable and inconvenient to record all cash transactions in the journal. It should be noted that the total of the debit side of the cash book always exceeds the credit side. It is because a businessman cannot pay more cash than what he has got. If the money is paid in borrowing from someone, it will be first recorded on the receipts side and only then it will be shown on the payment side. Hence, the cash book always shows a debit balance or at the most equal balance can never show a credit balance.

Question 3

Question

MCQ▾

Main object of preparing a Journal is:

Choices

Choice (4)

a.

To ascertain the financial position of the business.

b.

To make posting in the ledger

c.

To journalize the cash transactions

d.

To record the business transactions first.

Answer

d.

Explanation

Journal is a book of original entry in which the transactions are recorded first, as, and when they take place. According to Professor Carter, “The Journal as originally used, is a book of prime entry in which transactions are copied in order of date from a memorandum or waste book.” Thus, the Journal provides a record of all the transactions date-wise along with details of the debited and credited accounts including the amount of each transaction. Before recording the transactions in Journal, the transactions may also be recorded in a book roughly called “Waste book” or “Memorandum book” . Maintenance of waste book is not necessary but where the number of everyday transactions is so large that it is not possible for a businessman to remember all of them, the use of waste book may be helpful for businessman. Later, waste book is used for recording transactions in journal books.

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