Tag: generally accepted accounting principles (gaap)

Questions Related to generally accepted accounting principles (gaap)

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".

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

  1. art

  2. science

  3. method

  4. None of these

Show answer
Correct Option: A
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.

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

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

  1. 1 only

  2. 2 only

  3. Partly 1 and Partly 2

  4. 2 but not 1

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Correct Option: C

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.

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

  1. True

  2. False

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Correct Option: A

Accounting involves _________.

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

  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

Show answer
Correct Option: D
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. 

Most appropriate way of defining accounting will be ___________.

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

  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

Show answer
Correct Option: D
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. 

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 ___________.

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

  1. management consulting

  2. review

  3. accounting

  4. auditing

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Correct Option: C
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. 

Accounting is BEST described as__________.

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

  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

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Correct Option: D

A chronological record of transaction may be found in _______.

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

  1. Balance Sheet

  2. Trial Balance

  3. Ledger

  4. Journal

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Correct Option: D
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.

Casual vacancy occurs only when ________.

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

  1. Direction dies

  2. Declared incompetent

  3. Resigns

  4. All of the above

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Correct Option: D

Business is treated as a separate entity accounts for ______________.

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

  1. Limited Liability Partnership

  2. Partnership

  3. Company

  4. All of the above

Show answer
Correct Option: D
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.