Tag: meaning, need and objectives of accounting

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

The work of accounting depends upon________. 

  1. Book keeping

  2. Cash book

  3. Subsidiary books

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

Book- keeping is the process of the daily record - keeping of all of a company financial transactions. Book- keepers record the sales, expenses, cash and bank transactions of the business in a general ledger. The first thing you need to do when you start a business is realizing that this ledger and its accuracy are central to your company finances. So the work of accounting depends upon book keeping as the book keeping is the base of recording all the transactions. 

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

Book - keeping is an art and science of recording transactions.

  1. True

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

Book keeping is both art and science. It is art as it requires creative and judgment and skills in order to perform accounting functions well discipline and training is required. It is also considered as science because it is a body of knowledge.  

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

Customs and traditions which guide the accounts to prepare accounting statements are called ______________. 

  1. conventions

  2. principles

  3. concepts

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

Conventions are the guidelines that arise from the practical application of accounting principles. It is not legally binding practice rather, it is a generally accepted convention based on customs and designed to help accountants  overcome practical problems that arise out of the preparation of financial statements. 

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

State true of false :
In Book - keeping & accountancy non- monetary transactions are also recorded. 

  1. True

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

Book-keeping &  accountancy both only record the transaction which are related with money and money 's worth.  It record transactions which are the agreements between a buyer and a seller to exchange goods and services for money. 

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

Book- keeping and accounting are one and the same thing. 

  1. True

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

Book - keeping and accounting are not the same thing although they both involve the process of recording the financial transactions  of a business. Book -  keeping  are two different  terms. 

            Book -  keeping is the process of recording in chronological order, the daily  transactions of a  business entity. On the other hand accounting is an information system includes the process of recording, classifying, summarizing, reporting and interpreting the financial condition and performance of a business. Book keeping forms the part of accounting. 

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

A person who is unable to pay his debts, is called_______. 

  1. insolvent

  2. solvent

  3. well to do

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

A person or firm whose liabilities exceed the value of owned assets is termed as insolvent. It is the inabilities of the company or person to pay liabilities as they become due. 

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

The work of book-keeping is of __________ nature. 

  1. competitive

  2. primary/basic

  3. secondary

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Book-keeping is primary/basic in nature as it is a part of accounting itself. Literally, it means the activity of keeping financial books i. e recording financial transactions and events. 

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

State True or False.
Writing of account does not include specific skill and knowledge. 

  1. True

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

Writing of accounts require specific knowledge and  skills to perform various tasks such as knowledge of accounting, knowledge of auditing, knowledge of finance, knowledge of tax and regulations etc so it requires high level of quality to perform the task. 

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

State true of false :
Accounting is useful only to the owner. 

  1. True

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

Accounting is useful for various interested parties. These include business managers, owners, creditors, governmental  units and even employees. In one way or another, these users of accounting information tend to be concerned about their own interests in the entity not only for the owners. 

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

________ is concerned with the systematic analysis of the recorded data with a view to group transactions or entries of one nature at one place.

  1. Summarizing

  2. Analysis

  3. Classifying

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

Classification is concerned with the systematic analysis of the recorded data with a view to group transactions or entries of one nature at one place. The work of classification is done in the book called "ledger". This book contains on different pages individual account heads under which all financial transactions of similar nature are collected.