A trade discount is: MCQ with Answer and Explanation

A trade discount is:

A. Recorded separately in the books of accounts

B. Given for prompt payment

C. Deducted from the list price and not recorded in the books

D. Treated as a non-operating expense

Answer: Option C

Trade discount is a reduction from the catalogue price given for bulk purchases and is not recorded in the accounting books.

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

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Question #1 Report Error

The 'Accounting Cycle' begins with:

A. Posting to ledger

B. Identification and recording of transactions in journal

C. Preparation of financial statements

D. Preparation of trial balance

Correct Answer: Option B

Explanation:
The cycle starts with journalizing (recording) transactions.

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

Question #2 Report Error

The 'Voucher' approach in accounting helps to:

A. Compute tax

B. Simplify journal entries

C. Prepare trial balance

D. Ensure documentation and authorisation of transactions

Correct Answer: Option D

Explanation:
Voucher system ensures that every transaction is supported by documentary evidence and approval.

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

Question #3 Report Error

A contra entry is passed in the:

A. Trial Balance

B. Ledger

C. Journal Proper

D. Cash Book

Correct Answer: Option D

Explanation:
Contra entries involve transactions between cash and bank columns and are recorded exclusively in the triple-column cash book.

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