Principles of Accountancy (Short Q & A) I.Com Part 1

Write two assumptions of the quantity theory of money

Write two assumptions of the quantity theory of money   There are no credit sales in the market Money is only a medium of exchange

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Define accrued expenses

Define accrued expenses An expense incurred but not yet paid. A firm incurs certain expenses such as wages, interest, and taxes that are paid only periodically. From the time expenses are incurred until the date they are paid, expenses accrue in a firm’s balance sheet. Or An expense that has occurred but the transaction has not been entered in the …

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Name the main types of cheque

Name the main types of cheque 1. Bearer Cheque When the words “or bearer” appearing on the face of the cheque are not cancelled, the cheque is called a bearer cheque. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment. However, such cheques are risky; this …

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Define special journal

Define special journal Journals other than the general journal. Special or specialized journals include the cash receipts journal, the cash disbursements journal, the purchases journal, and the sales journal. Source: http://www.accountingcoach.com/terms/S/special-journals.html Or SPECIAL JOURNAL contains records of original entry other than the general journal that are designed for recording specific types of transactions of similar nature, e.g. Sales Journal, Purchase …

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Differentiate between cash book and pass book

Differentiate between cash book and pass book Cash book is written by depositor and pass book is written by the bank. All transactions related to bank are recorded in the bank column of the cash book and these transactions are also recorded in the pass book by the bank. Following are the main points of difference between cash book and …

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Define acceptance of bill of exchange

Define acceptance of bill of exchange Process by which a buyer (called a ‘drawee’) accepts the seller’s bill of exchange by signing under the words ‘accepted’ on face of the bill. By this act, the drawee becomes the acceptor and converts the bill into a post-dated check an unconditional obligation to pay it on or before its maturity date. Source:http://www.businessdictionary.com/definition/acceptance-of-a-bill-of-exchange.html#ixzz2XVqqGhI2

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Define imprest system

Define imprest system The Imprest system is a form of financial accounting system. The most common imprest system is the petty cash system. Or The Imprest system is a kind of financial accounting system, and is most commonly used for petty cash. It consists of a cash balance which is replenished at the end of the period or when circumstances …

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Define un-credited cheque

Define un-credited cheque An uncredited check is either a check that was not cashed or submitted for payment by the person to whom the check as given or a check that was not paid due to certain reasons pertaining to the rules of check clearance.

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Define promissory note

Define promissory note A signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand Or A promissory note is simply a “promise to pay.” It contains a maker (the payor) and a lender (the payee). An unsecured promissory note is not attached to anything, the …

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Why journal is called the day book

Why journal is called the day book The word “journal” has been derived from the French word “jour”. Jour means day. So journal means daily. Transactions are recorded daily in journal and hence it has been named so. It is a book of original entry to record chronologically (i.e. in order of date) and in detail the various transactions of …

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