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Let’s check and correct answers and explanation.
#1. All revenue income are credited to which accounting summary account?
Profit and loss account
Revenue Receipts increases the owner’s equity.
Assets = Liabilities Owner’s Equity
#2. Trading account is what type of account?
Nominal account
With the help of Trading Account, Profit & Loss Account and Balance Sheet is prepared.
#3. Interest earned is what type of account?
Real account
Assets, Liabilities and Shareholder’s equity account are Real Account as their account balances in one period gets carried forward to the next accounting period.
#4. Investment account is what type of account?
Real account
Investments represents assets and hence it is considered as Real Account.
#5. Profit and loss account starts with ?
Gross Profit
Gross Profit is a figure that remains from Income revenue after subtracting Cost of goods sold (excl. indirect costs or overheads).
#6. Debit the receiver, credit the giver is rule for?
Personal account
Golden Rule for accounting of Personal Accounts. Real Person who takes goods delivery on credit is debited and the person who is giving goods on credit is credited.
#7. Which of the following is related to scientific system of maintaining accounts?
Double entry
Double Entry system ensures balanced journal entry creation i.e. every financial transaction has equal and opposite effects (Debit and Credit) in at least two different accounts.
#8. What is the main objective of financial accounting?
Both P & L account and Balance Sheet
Financial Accounting summarizes the transactions and present a complete view of business at the end of accounting period through Balance Sheet.
#9. According to which accounting concept, the business owners are considered to be different from the business?
Basic Entity Concept
Promoters, Partners, Owners or shareholders are separate under Basic Entity Concept. Hence, in case business is doing any transaction with any of these, it must be recorded in the books of accounts
#10. Which of the following defines outstanding salary account?
Representative Personal Account
Outstanding expense represents an amount which is due to a person against the services that were already provided. Such expenses when clubbed together and shown under single account, that is considered as representative personal account.