VS Introduction Of Accounts
ONE WORD TO ONE SENTENCE QUESTIONS
Q . 1. What is Accounting?
Ans. Accounting is the process of recording, classifying, summarizing and interpreting the business transitions and events.
Q. 2. Give any two objectives of accounting.
Ans. 1. Two maintain records of business.
2. Calculation of Profit or loss.
Q. 3. Name the important branches of Accounting .
Ans. (a) financial accounting (b) cost accounting © management account.
Q.4. Who is the father of Accounting ?
Ans. Luca Pacioli.
Q.5. name the branch of commence which keeps a record of monetary transactions in a set of books.
Ans. Bookkeeping
Q.6. Explain two characteristics of Book-keeping ?
Ans 1. Book-keeping is a systematic method of recording
2. It is both science and art.
Q.7. give one point if there is a difference between Book-keeping and Accountancy.
Ans. The work of Book-keeping is routine and clerical in nature whereas the work of Accounting is more technical in nature.
Q.8. Mention two advantages of accounting.
Ans. (i) Complete and Systematic record.
(ii) Determination of selling price .
Q,9, Mention two limitations of accounting.
Ans. (i) Financial Accounting is not absolutely exact.
(ii) Financial Accounting does not show the true worth of business.
Q.10. Give one difference between an event and transactions ?
Ans. In an event there is only one party involved but in a transaction there are more than one party involved.
Q.11. Name any two users of accounting information
Ans. (i) Management (ii) Creditors.
Q.12. Who are the internal users of accounting information's /
Ans. Internal users are the persons who are directly involved in managing and operating the business enterprise such as management and shareholders.
Q.13. Name any two external users of accounting information ?
Ans. Any two of these ; Creditor, Properties of business Investors, Bankers and Financial Institutions Government Researchers citizens.
Q.14. What is a real account ?
Ans. The account which is related with the properties of business is called real account.
Q.15. What nominal account ?
Ans. The account which is related with expenses, losses incomes and gains knowns as nominal account.
Q.16. What do you mean by accounting cycle ?
Ans. Accounting cycle is a process which starts with recording of transactions and ends with preparation of final account.
Q.17. Give the classification of personal accounts /
Ans. (a) Natural Personal Account (b) Artificial Personal Account © Representative Personal Account.
Q.18. Is accounting a science or an art ?
Ans. Accounting is both science as well as an art.
Q.19. Explain the important types of assets ?
Ans. (a) Fixed Assets (b) Current Assets © Fictitious Assets.
Q.20 Give the classification of Personal Account ?
Ans. (a) Natural Personal Account (b) Artificial Personal Accounts © Representative Personal Account.
Q.21. What do you mean by capital ?
Ans. The amount in the shape of money or money’s worth invested by the proprietor in the business enterprise is known as capital
Q.22. What do you mean by drawings ?
Ans. Cash or goods withdrawn by the proprietor or any partners of a firm for his personal use are termed as drawings
Q.23. What do you mean by capital receipts ?
Ans. The amount received by a business entity from proprietor or partners as capital or money received by way of issue of share capital/debentures or by raising loan is a capital receipts.
Q.24. What do you mean by revenue receipts ?
Ans. Revenue Receipts refers to the amount received or receivable by the business entity on recurring basis from the operation of its business.
Q.25. What do you mean by expenditure /
Ans. Expenditure refers to the disbursement of cash transfer of property or incurring a liability for acquiring assets, goods or services.
Q.26. What do you mean by capital Expenditure ?
Ans. The amount incurred for acquiring or improving some assets which would give benefit for more than one accounting year.
Q.27. What do you mean by revenue expenditure /
Ans. The amount incurred on maintaining the earring capacity of the business benefit of which is direct and would be available in the same accounting year.
Q.28. What do you mean by Income ?
Ans. It is an increase in economic benefit during an accounting period which may be in form of either an increase in assets or increase in ownership funds.
Q.29. What do you mean by profit ?
Ans. Excess of revenue over expenses during an accounting year from the normal course of business activities is known as profit.
Q.30. What do you mean by gain ?
Ans. Gain is generation of income through sale of assets. Gain increases the owner’s equity.
Q.31. What do you mean by Discount ?
Ans.; Discount is a reduction in list price for obtaining payment before it becomes due for payment.
Q.32. What is a Cash Discount ?
Ans. It is an allowance or concession given by the supplier to the buyer on the amount due from him.
Q.33. What is a trade discount?
Ans. It is an allowance or concession given by the supplier to the buyer on the invoice price of the goods.
FILL IN THE BLANKS :
There are at least ________parties involved in every transaction.
The assets which can be seen or touched are known as __________.
Excess of revenue over expenses is termed as _________.
Capital +___________= Assets.
_______liabilitiy may or may not become payable in future.
Left hand side of the account is called the debit side and the right hand side is called________.
Ans. 1. Two 2. Tangible assets 3. Profit 4. Liabilities 5. Contingent 6. Credit side
TRUE OR FALSE STATEMENTS :
Accounting starts where bookkeeping ends
Accounting deals with only recording of business transactions.
Accounting is an art not science.
Amount payable by the entity to the outsiders is termed as liability.
Machinery is a current asset.
Accountancy is the language of business.
Accounting is not accepted as evidence in legal matters.
Accounting is a service function.
Accounting is helpful in raising loans.
Accounting makes a record of qualitative aspects of business.
Ans. 1. Ture 2. False 3. False 4. Ture 5. False 6. Ture 7. False 8. Ture 9. Ture 10. False.
MULTIPLE CHOICE QUESTIONS :
Calculate Gross profit when opening stock == Rs. 18,000. Purchase = Rs. 78,000, COGS = Rs. 1,06,000, Sales = Rs. 1,49,000.
Rs. 14,000
43,000
Rs. 17,000 (Loss)
Rs. 53,000 (Loss)
2. Which of the following is an intangible asset?
a. Land and Building
b. Debtors
c. Goodwill
d. Plant
3. Bills Payable comes under which type of liability ?
Fixed Liability
Current Liability
Fictitious Liability
None of these
4. What will be the amount of COGS If ;
Operating Stock = Rs. 10,000, Net Purchase = Rs. 30,000, Wages = Rs. 2,500, Carriage inwards = Rs. 500, Closing Stock = rs. 15,000.
Rs. 28,000
Rs. 34,000
Rs. 30,000
Rs. 26,000
5. Prepaid commission comes under which type of asset ?
Fixed Assets
Current Assets
Fictitious Assets
None of these
6. Internal users of accounting information are :
Potential Investors
Creditors
Management
Employees
7. External users of accounting information are
Researchers
Govermmnet
Prospective Investors
All of the above
8. External users of accounting information are not
Lenders
Officers
Employees
Public
9. Book-keeping is mainly concerned with
Recording of financial data
Designing the systems of summarizing the recorded data
Interpreting the data for internal and external users
Preparation of financial statement of the business enterprise
10. Which of the following is not a subfield of accounting ?
Financial accounting
Bookkeeping
Management accounting
Cost Accounting
Ans. 1. B 2. C 3. B 4. A 5. B 6. C 7. D 8. C 9. A 10. B .