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11 Accounts ch1 tp1

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49 views5 pages

11 Accounts ch1 tp1

Uploaded by

Vraj upadhyay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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& 10. myCBSEguide.com 4 Compete gid for CHSE tnd CBSE Test Paper 01 Ch-1 Introduction to accounting Confidence and trust that the reported information is a reasonable representation of the actual items and events, that have occurred, indicate which qualitative characteristic of accounting information. State whether a large order of supply of goods received by the firm be recorded in books. Appointment of a new managing director is not recorded in the books of accounts. why? What is a person to whom money is owed by a firm called? Mr Raj, an electronic goods dealer, gifted a microwave of value Rs. 30,000 to his friend Rohan and recorded it in books as drawing. Is he correct? Is accounting an art or a science? Accounting information refers to financial statements. The information provided by these statements can be categorised into various types. Briefly describe them. Distinguish between financial accounting, cost accounting, and management accounting. Distinguish between book-keeping, accounting, and accountancy. Basic objective of accounting is to provide useful information to various users. Besides these, there are many other objectives of accounting. Explain any four of them. Material downloaded from myCBSEguide.com. a5 & myCBSEguide.com 4 Compete gid for CHSE tnd CBSE Test Paper 01 Ch-1 Introduction to accounting Answer It indicates the qualitative characteristics of reliability. No, it is not a transaction. it cannot be recorded because it is impossible to measure it in monetary terms. The person to whom the firm owes money is called ‘Creditor’. Yes, Mr Raj is correct because personal expenses are treated as drawings and it will be recorded in the books. Accounting is both an art as well as a science. It can be seen in the following points : © Accounting as an Art : As an art it is the technique of achieving some pre- determined objectives. Accounting is an art of recording, classifying and summarising financial transactions of the business. It helps us in ascertaining the net profit and financial position of the business enterprise. © Accounting as Science: Science is an organised body of knowledge based on certain basic principles. Therefore, accounting is also a science as it is an organised body of knowledge based on certain accounting principles. Types of Accounting Information Accounting information refers to the information provided in financial statements of the business, generated through the process of book keeping and summarising. By using the accounting information, the users are in a position to take the correct decision. The financial statements so generated are the income statement ie., profit and loss account and the position statementi.e., balance sheet and a Cash Flow Statement. The information made available by these statements can be categorised into the following categories: i. Information Related to Profit or Loss during the year: Information about the profit earned or loss incurred by the business during an accounting period is made available through the income statement of the business ‘.e., the profit and loss account. Trading account provides information about gross profit or gross loss Material downloaded from myCBSEguide.com. 2/5 & myCBSEguide.com 4 Compete gid for CHSE tnd whereas the profit and loss account provides information about the net profit or net loss during the year. It also gives details of all the expenses and incomes during the year. ii, Information Related to Financial Position of the business : Information about the financial position of the enterprise is determined through its position statement i.e., the balance sheet. It provides information about the assets and liabilities of a business on a particular date. The difference between the two is represented by capital i.e., amount due to owners. In the case of not-for-profit organisation, difference between assets and liabilities is termed as general fund. iii, Information about Cash Flow during the year : Cash flow statement isa statement that shows inflow and outflow of cash during a specific period. It helps in making various decisions such as payment of liabilities, payment of dividend and expansion of business, etc., as all these are based on availability of cash. It gives a clear picture of the liquidity of the business. __| Financial “ ‘ Basis . Cost Accounting Management Accounting Accounting Financial accounting is a Cost accounting is an specialized . a ii Management accounting, accounting method that branch of saeeek also called managerial : aims to capture a accounting that - a accounting or cost company's costs o: keeps track of a - y . __., \aelcaiartltg Stns paces i roduction by assessin, company’s ae y 8 | ofanalyzing business costs lator the input costs of each ood and operations to prepare . step of production as transactions. Ca internal financial report, te well as fixed costs, such . ing 4 Ceapitay PeCords: and account to aid i: as depreciation of capital standardized

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