Tag: generally accepted accounting principles (gaap)

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Questions Related to generally accepted accounting principles (gaap)

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Accounting is defined as "the __________ of recording, classifying and summarizing in terms of money transactions and events of a financial character and interpreting the results thereof".

  1. art

  2. science

  3. method

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Definition of accounting is:

" Accounting is an art of recording, classifying and summarizing in terms of money transactions and events of a financial character and interpreting the results thereof" 

Accounting definition specifically defines that only monetary transactions should be recorded in the books of account.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Accounting is :
1. An art
2. A science
Select the correct answer from the options given below ___________.

  1. 1 only

  2. 2 only

  3. Partly 1 and Partly 2

  4. 2 but not 1
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Accounting is considered an art because it requires skill and judgment to record and interpret data, and a science because it follows a systematic body of rules and principles.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

State with reasons whether the following statement is true or false.
Accounting can be viewed as an information system which has its input processing methods and output.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Accounting functions as an information system by taking raw financial data (input), processing it through bookkeeping and analysis, and generating reports (output) for users.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Accounting involves _________.

  1. decision making for the management easy as financial results can be compared.

  2. the records being put is a systematic pattern so that any point of time they can be used.

  3. the financial information being stored in a meaningful way for taxation purpose

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting plays an important and useful role for the business owner. Main advantages are :

To record all the business transactions in a systematic way so that information can be used as and when required.
Financial statements are prepared on the basis of information recorded in the books of account, so that management can take a decision by comparing the results.
Accounting plays a vital role in giving the information to the taxation authorities to know whether business is following all the rules and laws and paying the tax in timely manner. 

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Most appropriate way of defining accounting will be ___________.

  1. communicating the revenues

  2. communicating the losses of the organization

  3. collection of all the financial data

  4. communicating the financial position of an organization
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The basic function of accounting is to record all the business transactions and classify, summarize and interpret in such a way that financial statements will give the true and fair view of the financial position of the company. 

Financial statements i.e. profit & loss account and balance sheet is the way of communicating the financial position of the organization to all the stake holders. 

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Amit is recording sales transactions in the accounting system so that they can be summarized in a logical manner for the purpose of providing financial information for decision-making. Amit is doing ___________.

  1. management consulting

  2. review

  3. accounting

  4. auditing
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

To review is to check the work already done/performed.

Management consulting refers to the  providing suggestions/ recommendations to the management to perform the business more effectively.
Auditing is examining.
Amit is doing none of the three but a simple accounting exercise. 

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Accounting is BEST described as__________.

  1. The use of financial data

  2. The collection of financial data

  3. The collection and use of financial data

  4. The collection and use of financial and non- financial data
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Modern accounting includes both financial data (monetary transactions) and non-financial data (quantitative and qualitative information). Contemporary accounting practices encompass sustainability reporting, ESG metrics, corporate social responsibility data, key performance indicators, and other non-financial information essential for comprehensive business evaluation.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

A chronological record of transaction may be found in _______.

  1. Balance Sheet

  2. Trial Balance

  3. Ledger

  4. Journal
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In accounting, a first recording of financial transactions as they occur in time, and  in accounting and bookkeeping called a journal is a record of financial transactions in order by date. A journal is often defined as the book of original entry. Manual systems usually had a variety of journals such as a sales journal, purchases journal, cash receipts journal, cash disbursements journal, and a general journal.so that they can then be used for future reconciling and transfer to other official accounting records such as the general ledger is a journal.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Business is treated as a separate entity accounts for ______________.

  1. Limited Liability Partnership

  2. Partnership

  3. Company

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting is based on certain basic concepts. One of the concept is "Separate Entity Concept". This defines that, for all accounting purposes, the business is considered to be a separate entity distinct from its owners. The transactions of business are recorded in the books of the business and the position of owner in his business will be like other creditors. 

This concept applies to all the forms of businesses.