Tag: elements of accounts

Questions Related to elements of accounts

State True or False.
The main objective of Book keeping is to keep permanent records of business transactions.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  1. True

  2. False

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Correct Option: A
Explanation:

Book keeping is the process of the daily record keeping of all of a company's financial transactions. Book keepers record the sales, expenses and 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. 

Double accounting system owes its origin to ________.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  1. Luca Pacioli

  2. Karl Marx

  3. Pickless

  4. Adam Smith

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Correct Option: A
Explanation:

Luca Pacioli, in venice (1494) is considered as the first book on double entry book-keeping. A portion of this book contains knowledge of business and book-keeping.

The language of a business is ________.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  1. accounting

  2. book-keeping

  3. golden rule of debit and credit

  4. journal entry

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Correct Option: A
Explanation:

A business itself can not depict anything until is has an accounting base. Any analysis is possible for the business only when it has proper accounting of the business. Hence accounting is always considered a back bone of any business. All interpretations are based on the accounting. 

______ is the summarizing phase of accounting system.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  1. Book keeping

  2. Ledger posting

  3. Balancing

  4. Accounting

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Correct Option: D
Explanation:

Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business, and it also refers to the process of summarizing, analyzing and reporting these transactions to oversight agencies and tax collection entities. 

Accounting in modern age is regarded as ___________.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  1. the art of recording, classifying and summarizing the business transactions in monetary units

  2. the languages of business

  3. the source of business information

  4. all of the above

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Correct Option: D
Explanation:

Accounting is an art of recording, classifying and summarizing the monetary business transactions. Accounting provides detailed information to the respective stake holders. Interested stake holders are creditors, lenders, customers, present and potential investors. Accounting is a language of business. Financial Statements provides the necessary business information to the management and other stake holders. 

Accounting is "the are of recording, classifying and summarizing in  a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof". This definition is given by ______________.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  1. The Institute of Chartered Accountant of India (ICAI)

  2. The Institute of Chartered Accountant of England

  3. American Institute of Certified Public Accountants

  4. The Institute of Chartered Accountant of Pakistan

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Correct Option: C

In annuity method interest is calculated ______________.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  1. on the value of the asset at the time of purchase

  2. on the value of the asset at the beginning of each year

  3. on the value of asset as expected at the end value of asset

  4. Both a & b

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Correct Option: B
Explanation:

Concept of Annuity Method of Depreciation:
The interest at this fixed rate on the opening balance of asset is debited to asset account each year and then the cost of asset together with interest thereon is written off equally over the life of the asset.

Accounting makes _____________________.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  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

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Correct Option: D

_________ is an art of recording, classifying, summarising transactions and events which are of financial character in terms of money and interpreting the result thereof.

elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

  1. Accountancy

  2. Accounting

  3. Book-Keeping

  4. None of these

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Correct Option: B
Explanation:

Accounting is defined by the American Institute of Certified Public Accountants(AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."

Absorption means __________.

elements of accounts accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

  1. charging overheads to cost centres

  2. charging of overheads to cost units

  3. charging of overheads to cost centres or cost units

  4. allotment of overheads to different departments

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Correct Option: B
Explanation:

According to Terminology of Cost Accountancy overhead absorption is defined as “the charging overheads to cost units by means of rates separately calculated for each cost centre. In most cases the rates are pre-determined”.