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The MCQs below are drawn from the Accountancy & Auditing subject category.
Showing 4121–4130
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4121
Which accounting record is primarily used to track and calculate the balance of cash drawings during an accounting period?
The cash book is a specialized journal that records all cash receipts and cash payments. Since drawings represent a withdrawal of cash by the owner for personal use, these transactions are recorded in the cash book, which allows for the tracking and balancing of all cash-related activities, including owner withdrawals.
4122
An orchestral society purchased new musical instruments for $10,000 via cheque. How should this transaction be recorded?
The purchase of a capital asset is a capital expenditure. It is recorded in the receipts and payments account as a cash outflow and in the balance sheet as an increase in non-current assets. It is not an expense in the income and expenditure account.
4123
Where should a cash purchase of goods worth Rs. 15,000 from Tarun be recorded?
In a cash book, all cash payments are recorded on the credit side. Since the purchase was made for cash, it represents an outflow of cash from the business. Therefore, the payment is entered on the credit side of the cash book to reflect the reduction in cash balance.
4124
In which section of the cash book should the purchase of office equipment for cash be recorded?
A cash book is divided into receipts (debit side) and payments (credit side). Since the purchase of office equipment involves an outflow of cash, it is classified as a payment and must be recorded on the payments side of the cash book.
4125
In which section of the cash book should the owner's drawings be recorded?
Drawings represent a withdrawal of cash or assets from the business by the owner for personal use. Since this results in an outflow of cash from the business, it is recorded on the credit side, which is the payments side of the cash book.
4126
Which specialized journal is used to record a business payment for rent?
The cash payments journal (also known as the cash disbursements journal) is specifically designed to record all cash outflows, including payments for expenses like rent, salaries, and utility bills, ensuring an organized record of all expenditures.
4127
Where should the disbursement of rent expenses be recorded within the cash book?
The cash book serves as a primary record for all cash-based transactions. Since the payment of rent constitutes an outflow of cash from the business, it must be recorded on the credit side, which is the payments side. This ensures that the cash book accurately reflects the reduction in liquid assets resulting from operational expenses.
4128
Which of the following parties is typically not considered a direct participant in a check-based transaction?
A check transaction involves three primary parties: the payer (drawer), the payee (drawee), and the bank (paying institution). While a seller is often the recipient of the check, the term 'seller' refers to the commercial role in the underlying transaction rather than a formal party to the negotiable instrument itself. Therefore, in the context of banking instruments, the seller is not a required party.
4129
In which specialized journal should cash receipts from debtors be recorded?
Cash receipts from debtors are recorded in the Cash Receipts Journal. This specialized journal is used exclusively to document all incoming cash transactions, including collections from customers, cash sales, and other sources of cash inflow. By segregating these entries, the business can maintain a clear and organized record of all cash received, facilitating easier reconciliation and reporting.
4130
What types of transactions are recorded in a cash book?
A cash book is a specialized subsidiary book designed to record all cash and bank-related transactions. It functions as both a journal and a ledger for cash, capturing all cash receipts on the debit side and all cash payments on the credit side in chronological order, ensuring a clear record of liquid assets.
