Q.1 Which book is known as the principal book of accounts in financial accounting?
Journal
Ledger
Cash Book
Trial Balance
Explanation - The ledger is called the principal book of accounts because all transactions from subsidiary books are posted into it.
Correct answer is: Ledger
Q.2 What is the process of transferring entries from the journal to the ledger called?
Balancing
Posting
Recording
Summarizing
Explanation - The process of transferring entries from journal to ledger is called posting.
Correct answer is: Posting
Q.3 Which side of the ledger account records all debits?
Left side
Right side
Top side
Bottom side
Explanation - In a ledger, debits are always recorded on the left side of the account.
Correct answer is: Left side
Q.4 Which side of the ledger account records all credits?
Left side
Right side
Top side
Bottom side
Explanation - In a ledger, credits are always recorded on the right side of the account.
Correct answer is: Right side
Q.5 The balance carried forward to the next period is written as:
Balance b/d
Balance c/d
Balance forward
Balance transfer
Explanation - Balance c/d (carried down) is written at the end of the period and carried forward to the next.
Correct answer is: Balance c/d
Q.6 What does 'Balance b/d' stand for?
Balance brought down
Balance brought debit
Balance breakdown
Balance booked
Explanation - Balance b/d means Balance brought down, which is carried from the previous period.
Correct answer is: Balance brought down
Q.7 Which of the following is not a type of ledger?
General Ledger
Sales Ledger
Purchase Ledger
Tax Ledger
Explanation - General, Sales, and Purchase ledgers are common; 'Tax Ledger' is not a standard category.
Correct answer is: Tax Ledger
Q.8 In which ledger are transactions relating to individual debtors recorded?
General Ledger
Sales Ledger
Purchase Ledger
Cash Book
Explanation - The sales ledger contains accounts of individual debtors (customers).
Correct answer is: Sales Ledger
Q.9 Which ledger contains accounts of creditors?
General Ledger
Purchase Ledger
Cash Book
Petty Cash Book
Explanation - The purchase ledger contains accounts of creditors (suppliers).
Correct answer is: Purchase Ledger
Q.10 When both sides of a ledger account are equal, the balance is:
Zero
Debit
Credit
Transferred
Explanation - If both debit and credit sides are equal, the balance is zero.
Correct answer is: Zero
Q.11 What is the main purpose of balancing a ledger account?
To find profit
To record transactions
To ascertain net balance
To prepare a journal
Explanation - Balancing helps in determining the net debit or credit balance of an account.
Correct answer is: To ascertain net balance
Q.12 Which statement is prepared after balancing the ledger accounts?
Trial Balance
Journal
Balance Sheet
Cash Flow
Explanation - Balances from ledger accounts are transferred to prepare the Trial Balance.
Correct answer is: Trial Balance
Q.13 The debit balance of the cash account shows:
Cash available
Cash shortage
Overdraft
Profit
Explanation - Debit balance in cash account indicates the cash available with the business.
Correct answer is: Cash available
Q.14 The credit balance of the bank account represents:
Cash at hand
Overdraft
Profit
Loss
Explanation - Credit balance in a bank account means the firm owes money to the bank (overdraft).
Correct answer is: Overdraft
Q.15 Which of these accounts is most likely to always show a debit balance?
Capital Account
Cash Account
Creditors Account
Bank Overdraft Account
Explanation - Cash account generally shows a debit balance as it represents available cash.
Correct answer is: Cash Account
Q.16 Which of these accounts usually has a credit balance?
Debtors Account
Purchases Account
Sales Account
Cash Account
Explanation - Sales account usually has a credit balance as it records income.
Correct answer is: Sales Account
Q.17 When a ledger account shows more debits than credits, the balance is called:
Credit Balance
Debit Balance
Nil Balance
Overdraft
Explanation - Excess of debits over credits in a ledger account results in a debit balance.
Correct answer is: Debit Balance
Q.18 When a ledger account shows more credits than debits, the balance is called:
Credit Balance
Debit Balance
Nil Balance
Overpayment
Explanation - Excess of credits over debits in a ledger account results in a credit balance.
Correct answer is: Credit Balance
Q.19 Which of the following accounts is an example of a personal account?
Cash Account
Capital Account
Sales Account
Wages Account
Explanation - Capital Account is a personal account as it relates to the owner of the business.
Correct answer is: Capital Account
Q.20 Which of the following is a real account?
Furniture Account
Debtors Account
Creditors Account
Capital Account
Explanation - Furniture Account is a real account as it represents a tangible asset.
Correct answer is: Furniture Account
Q.21 What type of account is a Sales Account?
Real Account
Nominal Account
Personal Account
Contra Account
Explanation - Sales account is a nominal account as it relates to income/revenue.
Correct answer is: Nominal Account
Q.22 The ledger is also known as the:
Book of Final Entry
Book of Original Entry
Cash Book
Voucher Book
Explanation - Ledger is called the book of final entry because all transactions are finally recorded here.
Correct answer is: Book of Final Entry
Q.23 Which one of the following is NOT recorded in the ledger?
Assets
Liabilities
Income
Vouchers
Explanation - Assets, liabilities, and income accounts are recorded in the ledger, but vouchers are source documents.
Correct answer is: Vouchers
Q.24 The trial balance helps in detecting:
Clerical errors
Errors of omission
Errors of principle
Errors of commission
Explanation - Trial balance mainly helps in detecting clerical or arithmetical errors.
Correct answer is: Clerical errors
Q.25 If the debit side of Rent Account exceeds the credit side, it indicates:
Rent Paid
Rent Received
Overpayment
Liability
Explanation - Debit balance in Rent Account means rent expenses paid.
Correct answer is: Rent Paid