Accounting - Study Mode
[#901] Postdated cheques are considered as
Correct Answer
(C) Accounts receivable
Explanation
Solution: Postdated cheques are considered as Accounts receivable. If the postdated check was received as payment on accounts receivable, the accounts receivable balance is not reduced until the date of the check.
[#902] Postage stamps on hand are considered as
Correct Answer
(B) Prepaid expenses
Explanation
Solution: Postage stamps on hand are considered as Prepaid expenses. Prepaids are any expense the business pays for in advance, such as rent, insurance, office supplies, postage, travel expense, or advances to employees.
[#903] Petty cash fund is supposed to be replenished
Correct Answer
(C) At the end of every accounting period
Explanation
Solution: Petty cash fund is supposed to be replenished at the end of every accounting period. Replenish means to return the amount of actual cash in the petty cash box back to the amount appearing in the general ledger account Petty Cash. This is done whenever the amount of actual cash in the petty cash box is low and at the end of each accounting period.
[#904] A credit balance in cash book indicates
Correct Answer
(C) Bank overdraft
Explanation
Solution: A credit balance in cash book indicates Bank overdraft. Overdrafts are where the bank account becomes negative and the businesses in effect have borrowed from the bank. This is shown in the cash book as a credit balance.
[#905] Favourable balance of cash book implies
Correct Answer
(B) Debit balance of cash book
Explanation
Solution: Favourable balance of cash book implies balance at Bank. The credit balance as per the cash book indicates bank overdraft.