accounts ch 7

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    Created by @parimalik

    What is the Double Entry System of Book-Keeping?

    Every transaction affects at least two accounts.

    What are Personal Accounts?

    Accounts related to individuals or entities.

    What are Real Accounts?

    Accounts for items with measurable monetary value.

    What are Nominal Accounts?

    Accounts for expenses and incomes.

    What is the rule for recording transactions in Personal Accounts?

    Debit the receiver and credit the giver.

    What is the rule for recording transactions in Real Accounts?

    Debit what comes in and credit what goes out.

    What is the rule for recording transactions in Nominal Accounts?

    Debit expenses and losses, credit incomes and gains.

    How do Natural Personal Accounts differ from Artificial Personal Accounts?

    Natural accounts belong to individuals; artificial accounts represent entities.

    What is a Representative Personal Account?

    An account representing a specific person or group.

    What is a key advantage of the Double Entry System?

    It provides a complete record of every transaction.

    How does the Double Entry System help in fraud detection?

    Records transactions in two accounts, making manipulation easier to spot.

    What is a disadvantage of the Double Entry System?

    It requires extensive record-keeping, making it expensive.

    What happens if a transaction is omitted in the Double Entry System?

    It leads to errors of omission, affecting accuracy.

    What does the Double Entry System allow for in terms of financial reporting?

    Preparation of a Balance Sheet showing financial position.

    What is the significance of preparing a Trial Balance?

    It ensures that debits equal credits, confirming accuracy.

    How does the Double Entry System assist in decision-making?

    It provides reliable information for management.

    What defines a Personal Account?

    Includes accounts for individuals or entities.

    What is a Real Account?

    Represents tangible assets or properties.

    What distinguishes a Nominal Account?

    Records income, expenses, and losses.

    How do Personal Accounts differ from Real Accounts?

    Personal accounts relate to people or entities, while real accounts relate to assets.

    What happens if a company has Outstanding Salary?

    It indicates unpaid wages owed to employees.

    What is the implication of Bad Debts?

    Represents amounts that are unlikely to be collected.

    What defines Good Will in accounting?

    Represents the value of a company's brand and customer relationships.

    What is Prepaid Insurance?

    Insurance paid in advance for future coverage.

    How does Interest Received affect accounts?

    It increases income and affects profit calculations.

    What is the role of Debtors in accounting?

    They represent amounts owed to the business by customers.

    What distinguishes Accrued Commission from Commission Received?

    Accrued commission is earned but not yet paid.

    What is the significance of Commission Received in Advance?

    It indicates income received before the service is performed.

    What type of account is Tata Steel Company classified as?

    An Artificial Personal Account.

    What type of account is Capital classified as?

    A Natural Personal Account.

    What type of account is Haryana Education of Commerce?

    An Artificial Personal Account.

    What type of account is Outstanding Expenses Account?

    A Representative Personal Account.