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) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

An account used for carrying temporarily doubtful receipts or disbursements and discrepancies is ____________.

  1. Suspense account

  2. Debit balance

  3. Bank overdraft

  4. Adjustment account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As such there should not be any suspense account but some time there are few items which are doubtful or accountant needs some clarity in these items. Hence, till than all such receipts and payments are parked in a temporary account called "Suspense" A/c. 

Balance is suspense account has to be zero before finalization of financial statement of the organization.  

Multiple choice commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

The rule 'every transaction affects two or more ledger accounts' is based or the concept of ___________.

  1. Going concern

  2. Double entry system of book-keeping

  3. Money measurement

  4. Periodicity
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Double entry system is based 'on scientific principles therefore, it is used by most of the business houses. This system recognizes the fact that every transaction has two aspects and records both aspects of each and every transaction. For every debit there will be a credit and vice a versa.


For example, goods worth Rs.10000 purchased on cash. It affects two account i.e. goods and cash. Following the rule of real account, the below entry will be passed:

Purchase/Goods A/c                     Dr.
                To Cash A/c 

Multiple choice commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

Which of the following is correct about 'Accounting Concept'.

  1. Accounting concepts are based on accounting conventions.

  2. Accounting concepts are established by common accounting practices.

  3. Accounting concepts are methods or procedures accepted by general agreement.

  4. Personal judgement has no role in the adoption of accounting concepts.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting Concepts are the necessary assumptions, conditions or postulates upon which the accounting is based. They are developed to help in the preparation of accounting statements so that the financial information provided to all the readers is such that all readers interpret the statements in the same meaning and context. Example entity concept, dual entry concept etc.
In brief we can say that personal judgement has no role in the adoption of accounting concepts.

Multiple choice commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

The basic objective of the book-keeping is _______________.

  1. to maintain systematic records of financial transactions

  2. to ascertain financial performance

  3. to ascertain financial position

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

Book keeping is a part of accounting. The process of recording financial transaction in a systematic manner and classifying them into ledgers is termed as book keeping.

Basic objective of book keeping is to keep records of financial transaction in the books of prime entry in chronological order for future reference.

Multiple choice commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

Book-keeping covers which of the following activities?

  1. Identifying, Recording and Classifying.

  2. Recording, Classifying. Summarising and Analysing.

  3. Summarising, Analysing and lnterpreting.

  4. Identifying, Measuring and Communication.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

'Book keeping' takes into consideration the recording of financial transactions whereas 'accounting' deals with summarizing, analyzing and interpreting the said information in a proper manner using various accounting standards, policies and principles.

Multiple choice commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

Which of the following is not a sub-field/Branch of Accounting?

  1. Cost Accounting.

  2. Management Accounting.

  3. Social Responsibility Accounting.

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

The process of recording financial transactions in a systematic manner and classifying them into ledgers is termed as book keeping. It is a part of accounting. It is the basis for accounting. Whereas, information relating to the cost have specialized branch named as cost accounting and the information relating to the funds and its cost and profit have a branch called management accounting. A new dimension to accounting is the social responsibility accounting which looks after the entity's responsibility towards the society. Automated accounting is no branch or field to accounting.

Multiple choice commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

Book-keeping is mainly concerned with ___________________.

  1. Recording of financial data

  2. Designing the systems in recording, classifying and summarising the recorded data.

  3. Interpreting the data for internal and external users.

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

Book keeping is an art of 'recording' the financial data whereas 'Accountancy' deals with classification. interpretation, reporting of the financial data.

Multiple choice commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

Book-keeping is mainly related to _________.

  1. recording of financial data

  2. designing the systems in recording, classifying and summarizing the recorded data

  3. interpreting the data for internal and external users

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

Book keeping is that branch of knowledge which tells us how to keep a record of financial transactions. The need for recording such transactions arises because it is difficult to remember the various financial transactions. 

Book  Keeping is mainly related to recording of financial data.

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

The process of accounting starts with _______ and ends with_______.

  1. Classifying, Recording

  2. Identifying the transaction, Communicating the information

  3. Financial account, Journal

  4. Recording, Classifying
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It is clear from the definition that accounting is not only concerned with recording, classifying or summarizing the transactions but it is also plays an important role in providing appropriate information to the business for decision making. 

Hence, the process of accounting starts with identification of transaction  and ends with communication of information.

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

Balancing of account means ______________.

  1. Cash credit

  2. Total credit

  3. Difference in credit and debit

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

For all business transactions, a ledger account is opened in the ledger to have a summary of each account. Balancing has to be done after a particular period for each of the account to know the final position of account. 


Hence, balancing is the difference between the debit and credit. If credit side exceeds the debit side, the balance is called as credit balance and vice versa.