Accounting Principles and Practices

Reconciliation is necessary in non-integral accounting systems because cost and financial accounts are maintained separately, often leading to differences in profit figures due to different treatment of items.

An integral accounting system integrates both cost and financial accounting into a single set of books, eliminating the need for reconciliation.

When a contract is in its very early stages (less than 1/4 complete), the accumulated costs are carried forward in the work-in-progress account until the contract reaches a stage where profit can be recognized.

Because integral accounting merges cost and financial records into one system, it eliminates the need to record the same transactions twice, thus avoiding duplication.

The Stores Ledger Control Account tracks inventory values. The Profit and Loss account is a financial statement account and does not record the balance of the stores ledger directly.

Only purchase means no profit, so no impact on the value of profit (liabilities).

Goods given as charity so purchase is affected & credited.

 The accountant is not in a position to locate the errors sometimes, and the Final Accounts ( Trading and Profit and Loss A/c and Balance Sheet)  are to be prepared, at the end of financial period in time. The final accounts can be prepared correctly, only when the Trial Balance tallies. Therefore the suspense account, is transferred to Trial Balance, so that the final accounts, are prepared on time. The errors are located later and the suspense account is removed.

The trial balance also does not agree by one-side error.  For example, purchase book of December is undercasted by Rs. 250. Since this account is posted by the total of purchase book, there is no error in the accounts of the customers. Only the total of purchase account will be transferred incorrect in the debit side of trial balance, hence the total of debit side would be short by Rs. 250 then credit side of the trial balance. By two-sided errors the trial balance total agree. For example, debiting Mohan instead of Sohan, in this Mohan's account is compensated by Sohan's account and the trial balance would agree.

Balance Sheet is prepared from real and personal accounts. Real account is concerned with assets like furniture, machinery etc and in the Balance Sheet we show the assets. It is also prepared from personal accounts. In the liabilities side, we show the creditors which is the name of persons. In the assets side, we show the debtors which is also the name of persons ( personal accounts ). So, this option is correct. 

Nominal account is the account which is normally not balanced, but is closed by transferring to trading and profit and loss A/c. It is concerned with incomes and expenses. It is usually not required to take out their balances. We just have to transfer the total. For instance, if the total salary paid is Rs. 3,000/-. First it would be transferred to the Trial Balance then to the profit and loss account. 

 More than two accounts are affected in a compound journal entry. In a compound journal entry, there may be two or more accounts, to be credited and only one to be debited or vice-versa. For example,  the expenses paid on salary Rs 1,000 and postage Rs 200 a combined journal entry is passed, which is compound journal entry. Salary A/c and Postage A/c would be debited and Cash A/c would be credited |||| |---|---|---| |Salary A/c                Dr|1,000| | |Postage A/c            Dr|    200| | |   To Cash A/c| |1,200|  

 Suspense account can be used to rectify, only the one-sided error, not the two-sided error.By only-one sided errors, the Trial Balance does not tally. These errors are rectified by passing their double-entry, in the debit or credit side, of the suspense account. For example, the total of Purchase Book is undercasted by Rs 200. This is an one-sided error, as it is effecting only the purchase account. If a suspense account is opened, we would make the entry  |||| |---|---|---| | Purchase A/c             Dr|200| | |  To Suspense A/c | |200| | | | |  

All accouting information belong to the business, so accounting term as the language of business.

Government is the external user of accounting to know the taxes/duties paid or payable by the business.