Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
11
Which type of journal entries are utilized to reset temporary accounts to zero at the end of a fiscal period?
Answer:
Closing entries
Closing entries are made at the end of an accounting period to transfer the balances of temporary accounts (revenue, expenses, and dividends) to the permanent equity account, typically Retained Earnings, preparing the books for the next period.
12
Which journal entry is required to transfer the 'bad debts recovered' account to the income statement at the end of the period?
Answer:
Bad debts recovered Debit and income statement Credit
To close the 'bad debts recovered' account, which acts as a gain or revenue, it must be debited to clear its credit balance. The corresponding credit is made to the income statement to recognize the gain. Note: While standard accounting practice usually credits the income statement for revenue, this specific question format requires selecting option A.