Tag: basic accounting terms

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Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Characteristic feature NOT found in a company is _______.

  1. Legal entity

  2. Common seal

  3. Affected by insolvency of an individual member

  4. Association of individual members
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A company is a separate legal entity with perpetual succession, meaning it is not affected by the death or insolvency of its members. The other options (legal entity, common seal, association of members) are all standard characteristics of a company.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Fixed assets are recorded at _______.

  1. current cost

  2. original cost

  3. depreciated cost

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

Fixed assets are those which gives the benefits to the organization on a long term basis. Fixed Assets are recorded in the books of account on the original cost irrespective of their market value as per the cost concept in accounting.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

On 1.1.2019, CS N. S. Zad paid rent of Rs. 25,000 for Zads Professional Academy. This can be classified as _________.

  1. an event

  2. a transaction

  3. a transaction as well as an event

  4. neither a transaction nor an event
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Monetary concept of accounting defines that only those transactions are recorded in the books of account which are measured in terms of money. 

Rent of Rs.25000 paid is monetary transaction hence to be recorded in books of account. 
Accounting entry will be as under:

Rent A/c                           Dr.
        To Cash/Bank

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Which of the following statements is correct?

  1. Accounting profit is the difference between cash receipts and cash paid in a period.

  2. Accounting profit is the total of cash sales in the year less the expenses for the period.

  3. Accounting profit is the difference between revenue income and expenses for the period.

  4. Accounting profit is the difference between revenue income and cash payments for the period.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Profit & Loss account is prepared for a business for a particular period. Profit & Loss account is having two sides i.e. Income and expenses side or debit or credit side. All incomes/revenues are recorded in credit side and expenses are debited. 

Excess of Income over expenditure is treated as profit and excess of expenditure over income is a loss. 

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Which of the following statements is correct in relation to a trial balance?

  1. It shows the financial position of a business.

  2. All the balances in the trial balance will be summarized on the business balance sheet.

  3. It is a list of balances and forms the starting point for the preparation of the business accounts.

  4. None of the above.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A trial balance is a statement showing the debit and credit balances of all ledger accounts. It is not a financial statement itself, but rather a tool used to check the arithmetic accuracy of the ledger before preparing final accounts.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

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

  1. conventions of conservatism

  2. conventions of materiality

  3. conventions of disclosure

  4. conventions of horizontal consistency
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Consistency is the basic assumption and it is assumed that the various Policies/Methods adopted by the concern while preparing the accounts are consistent from one period to another. This convention plays its role particularly when there are some different methods available. However, consistency does not implies that there is no way for the introduction of new policies. 

If there is a change in the policy which results in inflating or deflating the figures of profits as compared to the previous year, a note to that should be given with the financial statements. 

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Business is treated as a separate entity accounts for __________.

  1. role trader

  2. partnership

  3. company

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

Separate entity concept defines that the owner and business are having a separate legal entity in the eye of law. Any amount contributed by the owner is considered as liability to the business. 

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

The business form(s) in which the owners is (are) personally liable is (are) _________.

  1. Partnership only

  2. Proprietorship only

  3. Corporation only

  4. Partnership and Proprietorship
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a sole proprietorship and a partnership, the owners have unlimited personal liability for the debts of the business. In contrast, a corporation is a separate legal entity where shareholders generally have limited liability.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Co-operative society __________.

  1. has a separate legal identity

  2. has no separate legal identity

  3. owners have the ultimate authority

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A co-operative society is registered under the Co-operative Societies Act, which grants it a separate legal identity distinct from its members. This allows it to own property and enter into contracts in its own name.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

A vacant position that arises because of the resignation of the director can only be filed in __________.

  1. Annual general meeting

  2. Board meeting

  3. Board meeting but expired at the general meeting

  4. Both a & b
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When a director resigns, the board of directors can fill the vacancy in a board meeting, but this appointment is temporary and must be approved or regularized by the shareholders at the next general meeting.