MCQ 3 on Basic Accounting for Beginner or Students 

Fixed Asset is something that is kept in business for more than a year to increase the profitability.

Strike by employees is a physical event that cannot be recorded in financial accounting.

Cash withdrawn from personal bank account for personal use cannot be termed as business transaction as the same has no connection with business. This should not be recorded in the books of accounts.

Creditors are short term liability as this liability is normally settled within 12 months. Long term loan are taken for more than 12 months.

Revenue earned against main business operations are considered for Gross Profit Calculation. Such receipts are considered as Revenue receipts from business operations.

Amount invested by owners are credited towards Capital in the books of accounts.

Purchase Account is debited for ‘Core activities’ purchase so that Gross Profit can be arrived at. Goods purchased for resale is the primary activity and hence appropriated to the calculation of Gross Profit.

Short Term liability is a liability that becomes due within an year and hence appropriate liquidity must be maintained by business entity.

For Financial enterprises, Interest earned is the key business operation and hence it becomes the revenue from operations.

For non-financial entity, Sales of goods/services is the key business operation, hence this becomes the item of revenue from operations.