Accounting - Study Mode
[#1146] A promissory note is drawn by ______ in favor of _____
Correct Answer
(B) Maker, Payee
Explanation
Solution: A promissory note is drawn by Maker in favor of Payee. Maker or Drawer is the person who makes or draws the promissory note. He is also called the promisor. Drawee or Payee is the person in whose favour the promissory note is drawn.
[#1147] ____ principle requires that the same accounting method should be used from one accounting period to the next
Correct Answer
(B) Consistency
Explanation
Solution: Consistency principle requires that the same accounting method should be used from one accounting period to the next.
[#1148] The left side of an account is known as ___ and the right side as ____
Correct Answer
(A) Debit, Credit
Explanation
Solution: The left side of an account is known as Debit and the right side as Credit. Asset accounts such as Cash, Accounts Receivable, Inventory, and Equipment should have debit balances. Liabilities are on the right side of the accounting equation.
[#1149] The cost of a small calculator is treated as an expense and not shown as an asset in a financial statement of a business entity due to
Correct Answer
(A) Materiality concept
Explanation
Solution: The cost of a small calculator is treated as an expense and not shown as an asset in a financial statement of a business entity due to Materiality concept. The materiality concept refers to a situation where the financial information of a company is considered to be material from the point of view of the preparation of the financial statements if it has the potential to alter the view or opinion of a reasonable person.
[#1150] A minimum quantity of stock always held as precaution against out of stock situation is called
Correct Answer
(C) Base stock
Explanation
Solution: A minimum quantity of stock always held as precaution against out of stock situation is called Base stock.