Accounting - Study Mode
[#1651] X draws a bill on Y. X endorsed the bill to Z. ____ will be the payee of the bill.
Correct Answer
(C) Z
Explanation
Solution: X draws a bill on Y. X endorsed the bill to Z. Z will be the payee of the bill.
[#1652] Interest on drawings is ___ for the business
Correct Answer
(C) Gain
Explanation
Solution: Interest on drawings is gain for the business. Interest on drawings is an income to the firm, and hence it is credited to the profit and loss appropriation account. On the other hand, interest on drawings is an expense to the partners, and hence it is debited to their capital accounts.
[#1653] Narrations are given at the end of
Correct Answer
(D) Each journal entry
Explanation
Solution: Narrations are given at the end of each journal entry. Each journal entry includes the date, the amount of the debit and credit, the titles of the accounts being debited and credited (with the title of the credited account being indented), and also a short narration of why the journal entry is being recorded.
[#1654] The basic consideration(s) in distinction between capital and revenue expenditure is/are
Correct Answer
(D) All of the above
Explanation
Solution: The basic considerations in distinction between capital and revenue expenditure are Nature of business, Effect on revenue generating capacity of the business and Purpose of expenses.
[#1655] "Treating a revenue expenditure as a capital expenditure" is an example of
Correct Answer
(B) Error of principle
Explanation
Solution: "Treating a revenue expenditure as a capital expenditure" is an example of Error of principle. An error of principle is an accounting mistake in which an entry is recorded in the incorrect account, violating the fundamental principles of accounting. An error of principle is a procedural error, meaning that the value recorded was the correct value but placed incorrectly.