If you want to do well in accounting, practice these 40 short questions and their answers on a regular basis.

For theory please read this article Concept of accounts

Short Questions and Answers-Account

Question-1: What’s an account?

Answer: An account is a statement or list of similar transactions.  

Question-2: What’s a personal account?

Answer: The account which is related to individuals or organizations is called a personal account.

For Example, debtor account, Peter account, TB Corporation account, etc.  

Question-3: What’s an impersonal account?

Answer: Accounts outside of individuals or organizations are called impersonal accounts.

For example, Building account, Sales Account, Salary Account, service account, etc.  

Question-4: What’s a nominal account?

Answer: An account that relates to revenue and expenditure is referred to as a nominal account.

For example, Sales account, Purchase account, Salary account, Interest account, Commission account, etc.  

Question-5: What is a capital or ownership account?

Answer: The amount of the owner’s claim on the total assets of the organization is called the capital or ownership account.  

Question-6: What is a Revenue account?

Answer: The account generated by classifying various forms of income is called the revenue account.

For example, sales account, service revenue account, interest received account, etc.

Question-7: What’s an expense account?

Answer: The account that is created by classifying different types of expenses is called an expense account.

For example, Purchase account, salary account, commission account, etc.  

Question-8: What’s a withdrawal account?

Answer: The Account that is prepared to record the withdrawal of cash and goods for the personal needs of the owner is called the withdrawal account.

Question-9:What’s the balance of the account?

Answer: The difference between the amount column of the debit and the credit side of the account at the end of a certain period of time is called the balance of the account.  

Question-10:  What is a debit balance?

Answer: If the sum of the debit side of an account is greater than the sum of the credit side, it is called debit balance.    

Question-11: What is a credit balance?

Answer: If the sum of the credit side of an account is greater than the sum of the debit side, it is called credit balance.  

Question-12: What’s the Debtor?

Answer: An account that receives value or benefit is referred to as a debtor or Dr.  

Question-13: What’s the creditor?

Answer: An account that provides value or benefits is referred to as a creditor or Cr.

Question-14: What is the importance of recording Accounts?

Answer: Permanent record, determining profit &loss and financial position, documentary evidence, prevent fraud, etc.  

Question-15:What’s the asset account?

Answer: Accounts that are kept separately for the various types of assets of the organization are called asset accounts.  

Question-16: What is a liability account?

Answer: Accounts that are kept separately for different types of liabilities of the organization are called liability accounts.  

Question-17: Which accounts usually show the debit balance?

Answer: The accounts usually show the debit balance is as follows:

• Expense accounts and
• Assets accounts.  

Question-18: Which accounts usually show the credit balance?

Answer: The accounts usually show the credit balance are as follows:

• Revenue accounts
• Liability accounts, and
• Capital accounts.  

Question-19: What are the examples of tangible fixed assets?

Answer: The examples of tangible fixed assets are as follows:

• Land
• Building
• Machinery
• Office Equipment
• Leasehold Property, etc.  

Question-20: What are the examples of intangible fixed assets.

Answer: The examples of intangible fixed assets are as follows:

• Trademark
• Goodwill
• Copyright
• Patent
• Trade license, etc.  

Question-21:What are the examples of deferred expenses?

Answer: The examples of deferred expenses are as follows:

• Share Discount
• Preliminary Expenses
• Research and Development Expenses, etc.

Question-22: What is the commonly used account format?

Answer: The commonly used account format is the “T “format.  

Question-23: What is the modern format of accounts?

Answer: The modern format of the accounts is a “continuous balance format.”  

Question-24: which account does not have a real existence?

Answer: Nominal accounts does not have a real existence.  

Question-25: What is the main book of the account?

Answer: Ledger is the main book of the account.

Question-26: What does Debit Voucher Include?

Answer: Debit voucher includes expense Account.  

Question-27: How many columns are there on each side of the format of the account?

Answer: There are four columns on each side of the format of the account. 

Question-28: How many columns of account are there next to debit and credit?

Answer: There are eight (8) columns in the account.

Question-29: What is the name of the left side of the account?

Answer: The name of the left side of the account is “Debit.” 

Question-30: What is the name of the right side of the account?

Answer: The name of the right side of the account is “Credit.” 

Question-31: Which category of a product purchase, sales account?

Answer: Income-expenditure account or nominal account.  

Question-32: What are the components of the format of the modern account?

Answer: The components of the format of the modern accounts are as follows:

• Date
• Title
• Debit
• Credit, and
• Balance 

Question-33: What kind of account is a deferred advertisement?

Answer: Deferred advertisement is an asset account.  

Question-34:  Why is the debtor’s account is called an asset account?

Answer: Since a debtor is an artificial person, so the debtor’s account is called an asset account.

Question-35:  What kind of account is the value-added tax account?

Answer: The value-added tax account is a nominal account.  

Question-36: What’s the other name of the asset account?

Answer: The other name of the asset account is a real account.  

Question-37: What do asset and nominal accounts mean together?

Answer: Impersonal account.  

Question-38: What kind of account is the “general reserve”?

Answer: General reserve is an owner’s equity account.  

Question-39: How many types of traditional methods of accounts are there?

Answer: There are two types of traditional methods of accounts.

Question-40: What are the components of the accounting equation?

Answer: The components of the accounting equation are as follows:

• Assets
• Liability and
• Owner’s Equity.  

I hope, you’ve understood “40 Short Questions and Answers-Account.” If you want to know more about “Short Questions and Answers-Account” you can give us a message.

You may also read:

Short Questions and Answers:

1. Introduction to Accounting
2. Transaction
3. Double Entry System
4. Accounting Cycle
5. Journal
6. Ledger
7. Cash Book
8. Bank Reconciliation Statement
9. Trial Balance
10. Financial Statements
11. Receivables
12. Accounting Principles
13. Plant Assets and Depreciation

The post 40 Short Questions and Answers-Account [With PDF] appeared first on Everything about Accounting.

What is an Account?

An account is a ledger record that summarizes all of the transactions that have occurred with a specific person or object.

Everyone wants to know the financial condition and the financial results of the organization at a certain time. In order to know these financial results, all transactions must be recorded in a disciplined and proper manner.

The summary and a brief statement of these transactions are called the Account.

The English word “Account” originated from the old French word “Accounter,” which means to count or calculate. In a hierarchical sense, the account is the statement of deposits and expenditure.

According to the accounting language, the account is a brief statement of homogeneous transactions.

For example, Furniture purchased as cash $8,000. Here are two accounts that are involved.  Furniture Account and Cash Account.

Purchase A/c, Sales A/c, Capital A/c, Debtors A/c, Creditors A/c, Salary A/c, Land A/c, etc. are the example of accounts.

6 Important Features or Characteristics of Account

The 6 important features or characteristics of the account are as follows:

1. Each account has a specific heading. For example, Salary a/c, Debtor a/c, Sales a/c, Creditor a/c.
2. Each account has a specific format.
3. Transactions occurring in the organization are classified according to their nature and recorded under a specific heading.
4. There is a reflection of the dual entity.
5. Each account has a reference to when a transaction takes place.
6. The account balance must be calculated immediately after each transaction is recorded in a modern format.

9 Important Purposes or Objectives of Account

The 9 important purposes or objectives of the account are as follows:

1. keep track of transactions on a long-term basis.
2. Assist to determine the profitability of the business.
3. Help to prevent fraud and falsity in the organization.
4. Help to reduce costs of organizations by reducing unnecessary expenses.
5. The account book serves as a proof document to ensure that each transaction is clear and properly recorded.
6. Help accurately assess the financial results of the organization.
7. Assist in the preparation of financial statements of the organization.
8. Help in determining the amount of income, expenses, debt, and assets of the organization.
9. Assist management in planning for the organization.

Classification of Account

There are two methods of classification of account:

1. Traditional Method
2. Modern Method

1.Traditional Method:

The table below shows the classification of accounts in the traditional method.

i. Personal Accounts:

Personal accounts are accounts that are associated with individuals or organizations. For example, Bank account, Harry account, Stephen College account, etc.

Personal accounts can be divided into two categories.

1. Debtor Accounts
2. Creditor Accounts

1.Debtor Accounts

Debtor accounts are personal accounts from which the company or accounting unit is entitled to collect credit.

For example, if the organization sells goods on credit to William, William is the organization’s debtor.

2. Creditor Accounts:

Creditor accounts are personal accounts to whom money must be paid by the organization or accounting unit.

For example, if the organization purchased goods from Allen on credit, Allen is the organization’s creditor.

ii. Impersonal Accounts:

Impersonal accounts are any accounts that aren’t associated with a particular person or business.

There are two types of impersonal accounts:

1. Real or Property Accounts and
2. Nominal Account or Income-Expenditure Account

1.Real or Property Account:

An account relating to the property is called a real or property account. For Example, Building A/c, Furniture A/c, Machinery A/c, etc.

2. Nominal Account

A nominal account refers to the business’s profit-loss account, income-expenditure account, etc.

For example, wage account, salary account, advertising account, etc.

Nominal accounts have no real existence, they are nominal. In modern times these are known as ownership accounts because they cause a decrease or increase in ownership.

There are two types of nominal accounts.

i. Revenue-Related Account:

A revenue-related account refers to the transaction from which the organization’s revenue grows.

For example, Sales Revenue a/c, Commission received a/c, interest received a/c, etc.

ii. Expenditure-Related Account:

An expenditure-related account refers to the transaction from which the organization’s expenditure grows.

For example, salary a/c, Rent a/c, wages a/c, etc.

Personal accounts are divided into three categories by nature:

1. Nominal Personal Accounts
2. Legal or Artificial Personal accounts
3. Representative Personal Accounts

1.Normal Personal Accounts:

The normal personal account means the account of a person made of normal blood and flesh.

For example, Alisha account, Matt account, etc.

2. Legal or Artificial Personal Accounts:

The person or organization created by law is called an artificial personal account.

For example, XYZ Limited, Citi bank, etc.

3. Representative Personal Accounts:

Accounts representing the name of a person or organization are called representative personal accounts.

For example, advance salary account, arrears of wages account, etc.

2. Modern or Accounting Equation Method

According to the Accounting Equation method, accounts can be classified as follows:

1. Asset Account: Land A/c, Furniture A/c, Building A/c, Investment A/c, Debtors A/c
2. Liability Account: Bank overdraft A/c, Creditors A/c, Note Payable A/c
3. Capital Account: Owner’s Capital A/c
4. Revenue Account: Sales A/c, Service Revenue A/c, Interest Income A/c
5. Expense Account: Salary A/c, Rent A/c, Interest A/c
6. Drawings Account:   Owner’s Drawing A/c

You can also read 

• What is a Transaction? Features of Transaction
• What is Accounting? Father of Accounting. Evolution of Accounting

Format of Accounts

The specific format that is used to maintain a good and proper account is called the Account format.

There are usually two types of formats.

1. T-Format or Common Format

Features of “T Format”:

1. Each account will have a title.
2. There are two parts: debit and credit.
3. There will be a total of 4 columns, including four in the Debit section and four in the Credit section.
4. The balance is calculated at the end of the period.
5. The account will have a code number. 

2. Modern Format or Running Format

Features of Modern Format:

1. Each account will have a title.
2. The number of columns will be Five (5)
3. The account balance is to be extracted immediately after each transaction is recorded.
4. Debit and credit amount columns stand side by side.
5. Each account has a code number.

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• Short Questions and Answers-Account
• Accrual vs Cash Basis Accounting

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