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| MGT101 Midterm Paper 2019 - Important Short Questions 2019 |
Question: What
is Balance B/F and Balance B/D?
Answer:
Balance B/F means balance brought forward and Balance B/D
means balance brought down both represents the opening balance. This balance is
actually the closing balance of previous period which is transferred to the
current accounting period at the start of period.
Question: What
is Balance C/F and Balance C/D?
Answer:
Balance C/F means balance carried forward and Balance C/D
means balance carried down both represents the closing balance. This is the
differential amount of debit and credit side amounts at the end of period.
Question: What
is debit balance?
Answer:
If all amounts of debit side of an account > all amounts
of credit side of an account then the differential amount is called debit
balance.
Question: What
is credit balance?
Answer:
If all amounts of debit side of an account < all amounts
of credit side of an account then the differential amount is called credit
balance.
Question: EXPLAIN
DEFERRED EXPENSES?
Answer:
Deferred Expenses are revenue expenses that provide benefit
for more than one year. These are initially shown in balance sheet.
Subsequently, these are charged to profit and loss account over the period in
which benefit is derived from them.
Question: WHAT
IS THE MAIN DIFFERENCE BETWEEN PROFIT & LOSS A/C AND BALANCE SHEET?
Answer:
Profit and loss account is prepared to know the performance
of the business for a particular period of time. At the end of accounting
period, a business prepares profit and loss account to ascertain the profit or
loss of the business. All ledger accounts of revenue nature are summarized in
profit and loss account.
Balance Sheet is prepared to know the financial position of
a business at a particular point of time. It contained the assets, liabilities
and capital.
Question: HOW
CAN WE DEFINE JOURNAL?
Answer:
The word "Journal "has been derived from the
French word "Jour". Jour means day. So, Journal means daily.
Transactions are recorded daily in Journal. As soon as a transaction takes
place its debit and credit aspects are analyzed and first of all recorded
chronologically in a book together with its short description. This book is
known as Journal. The most important function of Journal is to show the
relationship between the two accounts connected with the transaction. Journal
is also called the "Book of Original Entry" or "Day Book"
because it keeps day-to-day record of transactions.
Question: WHAT
IS THE DIFFERENCE BETWEEN MERCHANDISES AND ASSETS?
Answer:
Merchandises are the goods/things which are purchased for
the purpose of sale. The things which are sold out are considered as expenses
as cost of goods sold while the things which are unsold during the accounting
period are treated as current asset.
Asset is the broader term means anything which is owned by
the business which provide the economic benefit to the business like cash in
hand, stock, furniture and machinery etc.
Question: WHAT
IS THE DIFFERENCE BETWEEN LONG TERM ASSETS AND FIXED ASSETS?
Answer:
Long Term Assets are those assets which provide benefit to
the business for long time. For example, if we invest some money in any scheme
(like saving scheme “saving certificates”) for three years, it will be our Long
Term Asset.
Fixed assets are those assets, which are subject to
depreciation. These assets provide benefit for longer period of time but these
assets are depreciated with the passage of time. For example furniture,
machinery and building etc.
Question: WHY
DO WE PREPARE PROFIT AND LOSS A/C?
Answer:
Profit and loss account is prepared to know the performance
of the business. At the end of accounting period, a business prepares profit
and loss account to ascertain the profit or loss of the business. All ledger
accounts of revenue nature are summarized in profit and loss account.
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