A debit balance in a personal account of a creditor indicates: MCQ with Answer and Explanation

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A debit balance in a personal account of a creditor indicates:

A. Amount payable to him

B. Amount receivable from him

C. Both B and C

D. He has become debtor

Answer: Option C

Solution (By JKExamLibrary)

A creditor account with debit balance means the firm has paid excess or he owes money, so he is a debtor.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1 Report Error

The main difference between a partnership and a company is:

A. Company cannot own assets

B. Partnership has limited liability

C. Partnership pays corporate tax

D. Company has separate legal entity, partnership does not

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Correct Answer: Option D

Explanation:
A company is a separate legal entity, while a partnership (except LLP) is not.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2 Report Error

Which of the following is not a function of cost accounting?

A. Assisting in decision making

B. Ascertaining cost

C. Preparation of financial statements

D. Cost control

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Correct Answer: Option C

Explanation:
Preparation of financial statements is the function of financial accounting, not cost accounting.

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Question #3 Report Error

A 'Narration' in a journal entry is:

A. The amount

B. The date of transaction

C. The ledger folio

D. A brief description of the transaction

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Correct Answer: Option D

Explanation:
Narration provides a short explanation of the transaction recorded.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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