Tag: accounting equation and business transactions

Questions Related to accounting equation and business transactions

The gross decreases in economic benefits for the business are what?

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Expenses

  2. Obligations

  3. Creditors

  4. Income or gain

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Correct Option: A

When a consistency is found between financial statements of one entity from period to period.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Conventions of conservatism

  2. Conventions of materiality

  3. Conventions of disclosure

  4. Conventions of horizontal consistency

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Correct Option: D

Financial statements differ from management account because.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. They are mainly prepared for external users of financial information

  2. They are more complex and hard to prepare

  3. They are the summary of accounting data

  4. They are prepared on basis of actual concept

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Correct Option: A

Auditor has to give its opinion whether the financial statement depicts _______________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. True and correct view

  2. Fair and correct view

  3. True and fair view

  4. True and exact view

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Correct Option: C
Explanation:

The objective of an audit is to check the fairness of financial statements. Auditors accumulate evidence to reach conclusion about the fairness of financial statements. An auditor has  a duty to provide reasonable assurance that material misstatements will be deleted. 

Festival Advance to employees is ____________________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Capital Expenditure

  2. Revenue Expenditure

  3. Deferred Revenue Expenditure

  4. Prepaid Expenses

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Correct Option: D

Risk free rate is subtracted from expected market return is considered as _______.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. country risk

  2. diversifiable risk

  3. equity risk premium

  4. market risk premium

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Correct Option: C

Third step in calculating value of stock with non-constant growth rate is to find ___________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. PV of expected dividends

  2. FV of expected dividends

  3. PV of intrinsic rate

  4. FV of intrinsic rate

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Correct Option: A

Financial leverage is also known as ________________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Trading on equity

  2. Trading on debt

  3. Interest on equity

  4. Interest on debt

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Correct Option: A

State with reasons, whether the following statements are True of False.
Financial management is essential for all types of organisations.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. True

  2. False

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Correct Option: A
Explanation:

This statement is True. 
1) The business organisation irrespective of its type and nature needs finance for its formation, for carrying out day to day activities, for development and expansion, etc. 


2) Financial management is essential for all types of business organisation as it deals with procurement of funds and their efficient and effective utilization in the business. 

3) Financial management deals with planning, organizing. directive and controlling financial activities of business organisations. 

4) Generally all business activities are supported by the savings which comes from the society. Many a times these savings are not adequate to meet the financial requirement of the business. It is therefore necessary that available scarce fund must be utilized systematically and more efficiently. 

5) Financial management plays a very important role in making the best use of financial resources.

Final Account is also called as ________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. One Account

  2. Two Account

  3. Three Account

  4. Four Account

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Correct Option: C
Explanation:

Final account are represented by below three accounts:


Trading account
Profit & Loss account
balance Sheet