Rent paid in advance is considered a(n): MCQ with Answer and Explanation

Question
Rent paid in advance is considered a(n):
A. Asset
B. Expense
C. Income
D. Liability
Answer: Option A
Solution (By JKSSB Mock Tests)
Prepaid expenses are considered assets because they provide future economic benefits to the business.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Practice More Accountancy and Book Keeping Questions

Question #1
Under single entry system, opening capital is ascertained by preparing:
A. Income and expenditure account
B. Profit and loss account
C. Statement of affairs
D. Trading account
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Correct Answer: Option C

Explanation:
In single entry, a statement of affairs (similar to balance sheet) is prepared to ascertain opening and closing capital.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
Which of the following is not a capital receipt?
A. Sale of goods
B. Sale of old machinery
C. Loan from bank
D. Issue of shares
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Correct Answer: Option A

Explanation:
Sale of goods is revenue from operations, a revenue receipt.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
In a voucher system, which voucher is used to record credit sales?
A. Debit voucher
B. Cash voucher
C. Credit voucher
D. Journal voucher
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Correct Answer: Option D

Explanation:
Credit sales involve no immediate cash, so a journal voucher (non-cash voucher) is used to record the transaction.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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