25 Important Account Questions and Answers [With PDF]

The 3rd chapter of our Accounting learning course is “Account”. In this article, we’ll learn the 25 most important account questions and their answers.

It will help you understand the important account terms and their explanations quickly.

You can read the first two chapters of our accounting learning course here if you missed them.

By reading this post, you may quickly prepare for accounting courses and for any competitive tests such as school and college exams, vivas, job interviews, and so on.

So let’s get started…

Account Questions and Answers

The 25 important account questions and answers are as follows:

Question 01: What is an Account?

Answer: An account is a classified and summarized statement of transaction.

An account is created when transactions occur within an organization and the parties involved are permanently recorded under the appropriate title.

Question 02: What is the Example of an Account?

Answer: The example of account is as follows:

Salary a/c, cash a/c, Paul a/c, Drawings a/c, capital a/c, furniture a/c, sales a/c, purchase a/c, debtor a/c, creditor a/c, bank a/c, outstanding wages a/c, etc.

Question 03: What are the Features of Accounts?

Answer: The key features of accounts are as follows:

There will be an account title.
There is a specific table or structure for all the accounts of the organization.
Whatever the account structure, there will be two columns named Debit and Credit.
The parties involved in the transaction are accounted for by date as each.
Each account contains a reference column.
At the end of a certain time each account balance is calculated.
The account is closed for a certain period of time by drawing a line.

Question 04: What is Account Format?

Answer: Account format refers to the format used to record transactions by summarizing the same type of transaction under the appropriate heading.

Question 05: How many Types of Accounts Format are used in Accounting?

Answer: Two types of accounts format are used in accounting, which are as follows:

“T” Format
“Moving Balance” Format

Question 06: What are the Characteristics of a “T” Format?

Answer: The following are the key characteristics of a “T” format:

There will be an account title.
The table will be split into two sections: debit and credit.
There are four columns on each side, for a total of eight columns.
The balance of accounts (the difference between total debit and total credit) should be calculated after a specific time interval.
Each account should have a unique code number.

Question 07: What are the Characteristics of a Moving Balance Format?

Answer: The following are the key characteristics of a moving balance format:

There will be an account title.
Each account should have a unique code number.
One column for each of the following: date, description, and journal folio (J.F.)
There are a total of four columns for the amount (USD)
The debit and credit columns are located next to each other.
The balance of accounts is calculated after each transaction is posted.

Question 08: What is the Classification of Accounts?

Answer: The classification of accounts are as follows:

Based on Traditional Method:

Personal Accounts:

Debtor Account
Creditor Account

2. Impersonal Accounts:

Real or Property Account
Nominal Account

Based on Accounting Equation:

Asset Account
Liability Account
Owners’ Equity Account
Income Account
Expense Account

Question 09: What are the Two Types of Classification of Account?

Answer: The two types of classification of account is as follows:

Traditional and
Modern

Question 10: What is the Objective of Classification of Account?

Answer: The objective of classification of account is as follows:

Determine accurate financial results and the financial status of the organization.
Determine the sector-wise results.
Provide comparative analysis and information.
Cost control.
Application of double-entry accounting system

Question 11: What Are the Benefits of Account Classification?

Answer: The three most significant benefits of account classification are as follows:

After account classification, it is simple to determine the debit and credit aspects of transactions.
The accounting unit’s financial results (i.e. income and expenditure or trading and profit and loss account) are easily determined.
After account classification, the number of assets, liabilities, income, and expenses can be easily determined.

Question 12: What is the Basis of Identification and Classification of Account?

Answer: The basis of identification and classification of account is as follows:

The basis of the name
The basis of the assets and liabilities
The basis of the Incomes and expenditures

Question 13: What is Personal Account?

Answer: A personal account is one that is related to a specific person or institution. Businesses create a ledger account for each person or institution with whom they do business.

For example, Paul A/c, Citi bank a/c, ABC & co, a/c, etc.

Question 14: What is Creditor Account?

Answer: Creditor accounts are personal accounts to whom money is to be paid by the company or accounting unit.

For example, the $4,000 worth of goods purchased from ABC & Co. on credit. Here, ABC & Co. A/c will be regarded as a creditor account to the business.

Question 15: What is Debtor Account?

Answer: The personal accounts from which the company or accounting unit has the right to receive money are referred to as debtor accounts.

For example, the $5,000 worth of goods were sold on credit to Harry. In this case, Harry a/c will be regarded as a debtor a/c to the business.

Question 16: What is an Impersonal Account?

Answer: An impersonal account is one that does not relate to any person or institution, but rather to a property, income, or expenditure. Businesses create a ledger account for each item of property, income, and expense.

For example, Machinery a/c, salary a/c, wages a/c, discount a/c, etc.

Question 17: What is a Real or Property Account?

Answer: A real or property account is one that deals with Property. Businesses create a separate account in their ledger for each item of movable and immovable property.

For example, Buildings a/c, Machinery a/c, Land a/c, etc.

Question 18: What is a Nominal Account?

Answer: A nominal account is one that is related to an income or expenditure. Businesses create a separate account in their ledger for each item of income and expense.

For example, Salary a/c, Commission a/c, purchase a/c, etc.

Question 19: What is Owners Equity Account?

Answer: An account that has a direct impact on the owner’s claim or rights to the organization’s assets is called an owners’ equity account.

For example, Capital a/c, General reserve a/c, Un-distributed Profit a/c, etc.

Question 20: What is an Asset Account?

Answer: The asset account is the account used to classify transactions in which assets increase or decrease.

For example, cash a/c, bank a/c, furniture a/c, machinery a/c, etc.

Question 21: What is a Liability Account?

Answer: The account that keeps track of which transactions cause liability to increase or decrease is known as the liability account.

For example, Accounts payable a/c, loan a/c, bills payable, etc.

Question 22: What is Income Account?

Answer: Income accounts are the accounts kept under various headings that properly classify the transactions relating to income.

Example of Income A/c: Sales a/c, Discount received a/c, dividend received a/c, Service fee a/c, etc.

Question 23: What is an Expense Account?

Answer: Expense accounts are the accounts kept under various headings that classify the various expenses of a business or institution.

Example of expense A/c: Purchase a/c, Wages a/c, Salary a/c, Transportation a/c, Depreciation a/c, etc.

Question 24: What is the example of a Revenue Account?

Answer: The examples of revenue account are as follows:

Sales Revenue Account
Service Revenue Account
Discount Received Account
Sub Rent Account
Commission received Account
Purchase Discount Account
Recovery of Bad Debts Account
Other Incomes Account

Question 25: What is the Example of an Expense Account?

Answer: the examples of expenses account are as follows:

Purchase Account
Salary and Wages Account
Rent Account
Discount paid Account
Packing Expenses Account
Marketing Expenses Account
Duty Account
Insurance Premium Account

I hope that by the end of this post, you have a good understanding of the “Account” chapter.

You will gain a better understanding of the “Account” chapter if you read these 25 important account questions and answers on a regular basis.

If you have any doubts or questions, don’t hesitate to contact us or leave a comment so that we can respond soon.

You can also read:

Account Questions and Answers

Leave a Comment Cancel reply