Single Entry Quiz

TC

Single Entry Accounting Quiz Q21–Q30

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Questions

Q21. Under single entry system in net worth method drawings is added in :

Answer: Closing Capital

Solution: Under the net worth (statement of affairs) method, drawings are added back to the closing capital when reconstructing the closing capital figure to compute profit or loss. This adjustment restores the capital to what it would have been without withdrawals.

Q22. Credit Sale can be obtained by preparing:

Answer: Debtors Account

Solution: Credit sales create receivables; the Debtors (Accounts Receivable) account records credit sales and subsequent collections, so preparing debtors' records helps determine total credit sales.

Q23. In single entry system generally which accounts are maintained:

Answer: Personal Accounts

Solution: A pure single entry system typically maintains personal accounts (debtors and creditors) and a cash record. Many real and nominal accounts are not systematically recorded, so personal accounts are the most consistently maintained.

Q24. In single entry system profit is calculated:

Answer: Closing Capital + Drawings – Fresh Capital – Opening Capital

Solution: The net worth (statement of affairs) formula for profit is: Profit = Closing Capital + Drawings − Fresh Capital − Opening Capital. This adjusts closing capital for withdrawals and new capital to isolate profit.

Q25. Net Worth of an organisation means excess of Assets over:

Answer: Liabilities

Solution: Net worth (owner's equity) equals Assets minus Liabilities. It represents the residual interest in the assets after settling obligations.

Q26. Rs. 2000 paid for installation of Machine should be debited to:

Answer: Machinery Account

Solution: Installation costs are capital expenditures directly attributable to bringing the asset into working condition; they are capitalized as part of the Machinery (asset) account, not expensed in P&L.

Q27. Old furniture purchased and Rs. 1000 spent on its repair before use, Rs. 1000 should be debited to:

Answer: Furniture Account

Solution: Repair costs incurred to make an asset usable before putting it into service are capitalized as part of the asset's cost (Furniture), not treated as a revenue repair expense.

Q28. Goods of Rs. 500 given as charity should be credited to:

Answer: Purchase Account

Solution: When goods are given away, stock reduces. In many practical treatments, goods given as charity are treated as an appropriation of goods and reduce purchases or are recorded by debiting a charity/drawing account and crediting purchases/stock. Here the credit side is Purchase/Stock.

Q29. In cash book favourable balances indicates :

Answer: Debit Balance

Solution: A favourable cash or bank balance means the business has funds with the bank or in hand — an asset — shown as a debit balance in the cash book. An overdraft would be an unfavourable (credit) balance.

Q30. In bank statement, cash deposit by company is known as:

Answer: Credit

Solution: On a bank statement, the bank records deposits to the customer's account as credits (from the bank's ledger perspective). Therefore a deposit appears as a credit entry on the statement.

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