A-AS Level (CIE) Accounting Paper-1: Specimen Questions with Answers 5 - 5 of 93

Question 5

Question

MCQ▾

Personal accounts are related to:

Choices

Choice (4)

a.

Assets and Liabilities

b.

losses and incomes

c.

Expenses

d.

Debtors, Creditors etc.

Answer

d.

Explanation

  • The accounts which relate to an individual, firm, company or an institution are called personal accounts. Account of X, Account of A, B and C, Account of D. C. M. Limited, Account of London University, Bank Account, Capital Account of the proprietor, Drawings Account of the proprietor etc. are examples of Personal Accounts.
  • Rule: Rule for recording a transaction in personal accounts in simple words is ‘Debit the receiver and credit the giver’ . In other words, “That person՚s account is debited to Personal Prepaid Account who is receiving some amount from the business and credit that person՚s account who in return provides something to the business.”
  • Object of preparing a personal account is to ascertain as to how much amount a personal account owes to the business, i.e.. , how much amount is due to be received from him and how much amount is owed to a personal account from the business, i.e.. , how much amount is payable to him.

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