Tag: elements of accounts

Questions Related to elements of accounts

Trade associations may analyse the financial statements for the purpose of providing service and protection to the _________.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. owners

  2. shareholders

  3. managers

  4. members

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Correct Option: D
Explanation:

A financial statement is a collection of data organised according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm.

One of the importance of financial statement is it aids trade associations in helping their members as Trade associations may analyse the financial statements for the purpose of providing service and protection to their members. They may develop standard ratios and design uniform system of accounts.

Financial statements contain only _________ information but not ___________ information.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. monetary, quantitative

  2. qualitative, quantitative

  3. monetary, qualitative

  4. qualitative, monetary

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Correct Option: C
Explanation:

Financial statements are written records of a business's financial situation. They include standard reports like the balance sheet, income or profit and loss statements, and cash flow statement.

Though utmost care is taken in the preparation of the financial statements and provide detailed information to the users. Shareholders of companies are interested in knowing the status, safety and return on their investment. They may also need information to take decision about continuation or discontinuation of their investment in the business.

But financial statements contain only monetary information but not qualitative information like industrial relations, industrial climate, labour relations, quality of work, etc.

___________ of the companies are interested in knowing the status, safety and return on their investment.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. Owners

  2. Managers

  3. Shareholders

  4. Directors

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Correct Option: C
Explanation:

The users of financial statements include management, investors, shareholders, creditors, government, bankers, employees and public at large.

Shareholders of companies are interested in knowing the status, safety and return on their investment. They may also need information to take decision about continuation or discontinuation of their investment in the business. Financial statements provide information to the shareholders in taking such important decisions.

The investors include both ________ and _________ investors under basis for prospective investors.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. long-term, short-term

  2. short-term, medium-term

  3. medium-term, long-term

  4. none of the above

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Correct Option: A
Explanation:

The investors include both short-term and long-term investors. Their prime considerations in their investment decisions are security and liquidity of their investment with reasonable profitability. Financial statements help the investors to assess long-term and short-term solvency as well as the profitability of the concern.

An equipment was purchased on 1st January, 2012 for Rs. 25,000 and is to be depreciated at 30% based on reducing balance method. If the company closes its books of account on 31st March every year, what would be the net book value-of the equipment as at 31 * December, 2013 ______________.

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. Rs. 12,250

  2. Rs. 17,750

  3. Rs. 10,000

  4. Rs. 12,545.

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Correct Option: A
Explanation:

Value of Equipment as on 1st Jan $2012=  Rs. 25,000$
Less: Depreciation for the year  $2012   = 7,500$
Total                                                     $ = 17,500$
Less: Depreciation for the year 2013(17,500 x 30%) $= 5,250$
Net Book value of the Equipment $ = Rs. 12,250$

A person who is indebted to the company for which amount cannot be appointed to set as an auditor of a company?

elements of accounts introduction of financial statement of company general instructions for preparation of balance sheet tools of financial statements uses, importance, and limitation of financial statements

  1. As may be prescribed

  2. $1,000$

  3. $3,000$

  4. $5,000$

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Correct Option: A
Explanation:

Section $141(3)$, of the companies act, $2013$ defines disqualification of the auditor. As per this section a person who is indebted to the company for an amount exceeding one thousand rupees, or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees is disqualified to be appointed as auditor.

A bill given to a creditor is called bills payable.

elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

  1. True

  2. False

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Correct Option: A

The total of Bill Payable Book will always show ____________ balance.

elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

  1. Debit

  2. Credit

  3. Nil

  4. None

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Correct Option: B

_______________ is real account in nature and also an asset and will always show debit balance.

elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

  1. Bill Receivable

  2. Bill payable

  3. Debtor

  4. Creditor

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Correct Option: A

Bills Payable book is to keep a record of ____________.

elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

  1. Bills Payable to Creditors

  2. Bills Received From Supplier

  3. Credit Purchases

  4. Credit Sales

Show answer
Correct Option: A
Explanation:

There are various subsidiary journals maintained to record various transactions. This includes sales day book, purchase day book, bills receivable book, bills payable book etc. 

Bills payable book is a subsidiary book which is used to records all bills payable to creditors.