No verified paper has been uploaded for AJKPSC-PMS Paper Accountancy & Auditing 2008 MCQs yet.
The MCQs below are drawn from the Accountancy & Auditing subject category.
Showing 4091–4100
of 4621 MCQs
Page 410 / 463
4091
How is a current asset that can be converted into cash within three months formally classified?
A cash equivalent is a highly liquid, short-term investment that can be readily converted into a known amount of cash. These assets typically have a maturity period of three months or less from the date of acquisition. They are considered virtually risk-free regarding changes in value due to interest rate fluctuations, making them nearly identical to cash on the balance sheet.
4092
How should the recovery of a previously written-off bad debt of Rs. 2,000 from Mr. C be recorded?
When a previously written-off bad debt is recovered, cash is received by the business. Since this is a cash inflow, it must be recorded in the Cash Book. The entry involves debiting the Cash account and crediting the Bad Debts Recovered account.
4093
In which accounting record are cash-based transactions primarily documented?
The cash book is a specialized journal used to record all cash receipts and cash payments. It serves as both a book of original entry and a ledger account for cash and bank transactions, ensuring that all liquid asset movements are tracked systematically in one place.
4094
On which side of the cash book are owner withdrawals (drawings) typically recorded?
Drawings represent a reduction in the business's cash balance as funds are taken by the owner for personal use. In a cash book, any outflow of cash, including drawings, is recorded on the credit or payments side.
4095
What is the typical nature of the closing balance in a cash book?
A cash book represents an asset account. Assets normally have a debit balance, meaning cash on hand must be positive or zero. It is physically impossible to have a credit balance in a standard cash book because one cannot spend more cash than is available. Therefore, the closing balance is either a debit balance (positive cash) or zero (no cash).
4096
Which of the following books is considered an integral component of the double entry system?
A cash book serves as a book of original entry and a ledger account simultaneously. In a double entry system, it records both the debit and credit aspects of cash and bank transactions, effectively functioning as a ledger account for cash and bank balances.
4097
Which of the following statements accurately describes a key feature of the cash book?
The cash book is unique because it acts as a book of original entry (journal) where transactions are first recorded, and it also serves as the ledger account for cash and bank, eliminating the need for separate ledger accounts for these items.
4098
In which book should the receipt of cash from debtors for the settlement of credit sales be recorded?
The receipt of cash is a financial transaction that increases the cash balance of the business. According to standard accounting practices, all cash receipts, regardless of their source, must be recorded in the Cash Book. The Sales Book is reserved exclusively for credit sales, while the Cash Book captures the actual inflow of funds from debtors settling their accounts.
4099
From which book of original entry should a debit to accounts payable in the general ledger be posted?
Accounts payable represents money owed to suppliers. When a payment is made to a supplier, the liability (accounts payable) decreases. In the double-entry system, a decrease in a liability is recorded as a debit. Such payments are recorded in the cash disbursements journal (or cash payments book), which serves as the source for posting these debits to the general ledger.
4100
On which side of the cash book should the payment of rent be recorded?
A cash book is structured with receipts on the debit side and payments on the credit side. Since paying rent represents an outflow of cash, it must be recorded on the payments side of the cash book.
