INTRODUCTION TO ACCOUNTING
Question 1.
The art of recording all business transactions in a systematic manner in a set of books is called-
(a) Accounting
(b) Book – keeping
(c) Ledger
(d) None of these.
Question 2.
The process of recording, classifying and summarizing all business transactions in order to know
the financial result is called –
(a) Book – keeping
(b)Accounting
(c) Journalizing
(d) None of these.
Question 3.
Cash, goods or assets invested by the proprietor in the business for earning profit is called-
(a) Profit
(b) Capital
(c) Fixed assets
(d) None of these.
Question 4.
The person, firm or institution who does not pay the price in cash for the goods purchased or the
services received is called-
(a) Creditor
(b) Proprietor
(c) Debtor
(d)None of these.
Question 5.
Book – keeping is-
(a) An art
(b) A science
(c) An art and science both
(d) None of these.
Question 6.
Which of the following is not a business transaction?
(a) Bought furniture of Rs. 10,000 for business
(b) Paid for salaries of employees Rs. 5,000
(c) Paid sons fees from her personal bank account Rs. 20,000
(d) Paid sons fees from the business Rs. 2,000
Question 7.
Deepti wants to buy a building for her business today. Which of the following is the relevant data
for his decision?
(a) Similar business acquired the required building in 2000 for Rs. 10,00,000
(b) Building cost details of 2003
(c) Building cost details of 1998
(d) Similar building cost in August, 2005 Rs. 25,00,000
Question 8.
Which is the last step of accounting as a process of information?
(a) Recording of data in the books of accounts
(b) Preparation of summaries in the form of financial statements
(c) Communication of information
(d) Analysis and interpretation of information
Question 9.
Which qualitative characteristics of accounting information is reflected when accounting
information is clearly presented?
(a) Understandability
(b) Relevance
(c) Comparability
(d) Reliability
Question 10.
Use of common unit of measurement and common format of reporting promotes
(a) Comparability
(b) Understandability
(c) Relevance
(d) Reliability
Fill in the blanks:-
Question 1.
Information in financial reports’is based on ……………. transactions.
Question 2.
Internal users are the ……………… of the business entity.
Question 3.
A ………………. would most likely use an entities financial report to determine whether or not
the business entity is eligible for a loan.
Question 4.
The Internet has assisted in decreasing the ………………… in issuing financial reports to users.
Question 5.
………………….. users are groups outside the business entity, who uses the information to
make decisions about the business entity.
Question 6.
Information is said to be relevant if it is ……………….
Question 7.
The process of accounting starts with …………….. and ends with ……………….
Question 8.
Accounting measures the business transactions in terms of ……………….. units.
Question 9.
Identified and measured economic events should be recording in ……………….. order.
Question 10.
The document certifying the purchase or sale of goods or any monetary transaction is called
…………….
Question 11.
The thing which is purchased and sold in the business is called …………….
Question 12.
The things or properties which helps in smooth functioning of the business and which are owned
by the business are called ……………. of the business.
Question 13.
The unsold goods left at the end of the year is called ……………..
Question 14.
…………… represents the excess of assets over liabilities.
State True or False:-
Question 1.
Trade discount is given on credit transactions only.
Question 2.
Furniture purchased by a Trader dealing in Furniture will be treated as ‘purchases’ for him.
Question 3.
Cash is a Fixed Asset of a Business.
Question 4.
The goods invested at the commencement of the business is called closing stock.
Match the Following:-
Column A Column B
1. Building (a) Debit
2. Salary (b) Credit
3. Left side (c) Asset
4. Right side (d) Expense
5. Vouchers (e) Written document.
Answer in one word/sentence:
Question 1.
Any legal activity performed for earning profit is called.
Question 2.
The head under which transactions pertaining to a person, institution, firm, expenses, assets etc.
is recorded is called.
Question 3.
The system in which only one aspect of the transaction is recorded is called.
Question 4.
The concession given on cash transactions is called.
Fill in the blanks:-
1. Bookkeeping is ______.
(a) An art
(b) A science
(c) Both an art as well as science
(d) None of these
2. ___________ is the last step of accounting as a process of information.
(a) Recording of data in the books of accounts
(b) Preparations of summaries in the form of financial statement
(c) Communication of information
(d) Analysis and interpretation of information
3. The person, firm, or institution who does not pay the price in cash for the goods purchased or
the services received is called ______.
(a) Creditor
(b) Proprietor
(c) Debtor
(d) None of these
4. Use of a common unit of measurement and common format of reporting promotes _____.
(a) Comparability
(b) Understandability
(c) Relevance
(d) Reliability
5. Cash, goods, or assets invested by the proprietor in the business for earning profit is called
______.
(a) Profit
(b) Capital
(c) Fixed assets
(d) None of these
6. Which qualitative characteristics of accounting information are reflected when accounting
information is clearly presented?
(a) Comparability
(b) Understandability
(c) Relevance
(d) Reliability
7. The process of recording, classifying, and summarising all business transactions in order to
know the financial result is called ______.
(a) Bookkeeping
(b) Accounting
(c) Journalising
(d) None of these
8. Which of the following is not a business transaction?
(a) Bought furniture of Rs. 10,000 for business
(b) Paid for salaries of employees Rs. 5,000
(c) Paid son’s fees from her personal bank account Rs. 20,000
(d) Paid son’s fees from the business Rs. 2,000
9. The art of recording all business transactions in a systematic manner in a set of books is called
_____.
(a) Accounting
(b) Bookkeeping
(c) Ledger
(d) None of these
10. XYZ wants to buy a building for her new business today. Which of the following is the
relevant data for her decision?
(a) Similar business acquired the required building in 2000 for Rs. 10,00,000
(b) Building cost details of 2003
(c) Building cost details of 1998
(d) Similar building cost in August 2005 for Rs. 25,00,000.
Answer the following questions:
1. What is accountancy?
2. What do you mean by accounting?
3. Differentiate between book-keeping, accountancy and accounting?
4. Enumerate main objectives of accounting.
5. Who are the users of accounting information.
6. State the nature of accounting information required by long-term lenders.
7. Who are the external users of information?
8. Enumerate information needs of management.
9. Give any three examples of revenues.
10. Distinguish between debtors and creditors; profit and gain
11. ‘Accounting information should be comparable’. Do you agree with this statement. Give
two reasons.
12. If the accounting information is not clearly presented, which of the qualitative
characteristic of the accounting information is violated?
13. “The role of accounting has changed over the period of time”- Do you agree? Explain.
14. Giving examples, explain each of the following accounting terms :
• Fixed assets
• Revenue
• Expenses
• Short-term liability
• Capital
15. Define revenues and expenses?
16. What is the primary reason for the business students and others to familiarize themselves
with the accounting discipline?
17. What is accounting? Define its objectives.
18. Explain the factors which necessitated systematic accounting.
19. Describe the informational needs of external users.
20. What do you mean by an asset and what are different types of assets?
21. Explain the meaning of gain and profit. Distinguish between these two terms.
22. Explain the qualitative characteristics of accounting information.
23. Describe the role of accounting in the modern world.
