Balbharati solutions, for, Book-keeping, and, Accountancy, 11th Standard, fyjc, Maharashtra State Board, Chapter 2, Meaning and Fundamentals of Double Entry Book-Keeping,

07 Nov 2020 4:35 pm

State whether the following statement is True or False with reasons

1.Outstanding expense is a nominal account.

Options
  • True
  • False

SOLUTION

This statement is False.

The amount payable to a person is known as an outstanding expense in the business. As a person is involved, the outstanding expense is nothing but a personal account.

2.Capital account is a real account.

Options
  • True
  • False

SOLUTION

This statement is False.

The amount invested by the owner in the form of goods, cash, or assets is known as capital. As the owner is involved in a transaction, the capital account is a personal account.

3.Every debit has equal and corresponding credit.

Options
  • True
  • False

SOLUTION

This statement is True.

As per the Dual aspect concept, every business transaction has a debit effect with equal and corresponding credit effect which is a base for the double-entry system.

4.Discount received is a nominal account.

Options

  • True
  • False

SOLUTION

This statement is True.

Discount received is an income for the business therefore discount received is a nominal account.

5.Drawings account is a nominal account.

Options
  • True
  • False

SOLUTION

This statement is False.

Drawings mean amount withdrawn by the owner from business and the owner’s account is a personal account. Therefore, we can say that the drawings account is a personal account.

6.Outstanding salary is a nominal account.

Options
  • True
  • False

SOLUTION

This statement is False.

Salary payable to an employee means an outstanding salary. As an employee (person) is involved, an outstanding salary is nothing but a personal account.

7.Loan account is personal account.

Options
  • True
  • False

SOLUTION

This statement is True.

Amount received or paid for a temporary period from or to a person is known as loan account. Here, the person is involved, therefore loan account is a personal account.

8.Goodwill account is a real account.

Options
  • True
  • False

SOLUTION

This statement is True.

Goodwill is an intangible asset for the business, and every asset account is a real account.

9.Trade discount account is a nominal account.

Options
  • True
  • False

SOLUTION

This statement is False.

When a discount is allowed on catalogue price or list price, it is known as a Trade discount, which is a general discount to be allowed to every customer. From the accounting view point, it is not to be recorded in the books. So, we can say that the trade discount itself is not an account.

10.Personal transactions of proprietor are recorded in the books of account of the business.

Options
  • True
  • False

SOLUTION

This statement is False.

As per the Business entity concept, business is a separate and distinct unit from the owner/s. So, personal transactions of proprietor are not to be recorded in the books of account of the business.

11.Motor car account is a Real Account.

Options
  • True
  • False

SOLUTION

This statement is True.

Motor car is an asset for the business and asset account is real account.

12.The rule of Nominal Account in Debit the receiver and Credit the giver.

Options
  • True
  • False

SOLUTION

This statement is False.

The rule of the nominal account is to Debit all expenses and losses and credit all incomes and gains.

13.Bank loan account is a Nominal account.

Options
  • True
  • False

SOLUTION

This statement is False.

Amount of loan given by the bank is known as a bank loan. Here, the bank is a legal entity, therefore we can say that a bank loan account is a. personal account.

14.Assets = Capital + Liabilities

Options
  • True
  • False

SOLUTION

This statement is True.

Capital amount of a proprietor is a liability of the business and asset of the proprietor. Therefore, the total liabilities of the business are capital plus other liabilities. The accounting equation signifies that the assets of a business are always equal to the total of its liabilities and capital. Therefore, the equation is expressed as Assets = Liabilities + Capital.

15.Trademark account is a personal account.

Options
  • True
  • False

SOLUTION

This statement is False.

Trademark is an invisible asset for the business and every asset account is a real account Therefore, the Trademark account is a real account.

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