Under the double-entry system, a decrease in an asset is recorded by: MCQ with Answer and Explanation

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Under the double-entry system, a decrease in an asset is recorded by:

A. Debiting the asset account

B. Crediting the capital account

C. Crediting the asset account

D. Debiting a liability account

Answer: Option C

Solution (By JKSSB Mock Tests)

Assets have normal debit balances. A decrease is recorded by crediting the account.

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

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Question #1

The 'Consistency' concept means that:

A. Only cash basis should be used

B. Different methods can be used arbitrarily

C. Accounting policies should be changed every year

D. Same accounting policies should be applied from one period to another

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Correct Answer: Option D

Explanation:
Consistency ensures comparability; accounting policies should be consistently applied over time, changes only for valid reasons.

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

Question #2

If a debtor becomes insolvent and only 60 paise in a rupee is recovered from his debt of Rs 5,000, the Bad Debts account is debited by:

A. Rs 8,000

B. Rs 2,000

C. Rs 5,000

D. Rs 3,000

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Correct Answer: Option B

Explanation:
Amount recovered = 60% of 5,000 = Rs 3,000. The irrecoverable amount (Bad Debt) is 40% of 5,000 = Rs 2,000.

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Question #3

For real accounts, the rule is:

A. Debit expenses and losses, Credit incomes and gains

B. Debit what comes in, Credit what goes out

C. Debit the receiver, Credit the giver

D. None of these

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Correct Answer: Option B

Explanation:
Real accounts (assets) follow: Debit what comes in, credit what goes out.

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

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