Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Financial statements differ from management account because.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. They are mainly prepared for external users of financial information

  2. They are more complex and hard to prepare

  3. They are the summary of accounting data

  4. They are prepared on basis of actual concept

Show answer
Correct Option: A

Auditor has to give its opinion whether the financial statement depicts _______________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. True and correct view

  2. Fair and correct view

  3. True and fair view

  4. True and exact view

Show answer
Correct Option: C
Explanation:

The objective of an audit is to check the fairness of financial statements. Auditors accumulate evidence to reach conclusion about the fairness of financial statements. An auditor has  a duty to provide reasonable assurance that material misstatements will be deleted. 

Festival Advance to employees is ____________________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Capital Expenditure

  2. Revenue Expenditure

  3. Deferred Revenue Expenditure

  4. Prepaid Expenses

Show answer
Correct Option: D

Risk free rate is subtracted from expected market return is considered as _______.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. country risk

  2. diversifiable risk

  3. equity risk premium

  4. market risk premium

Show answer
Correct Option: C

Third step in calculating value of stock with non-constant growth rate is to find ___________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. PV of expected dividends

  2. FV of expected dividends

  3. PV of intrinsic rate

  4. FV of intrinsic rate

Show answer
Correct Option: A

Financial leverage is also known as ________________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Trading on equity

  2. Trading on debt

  3. Interest on equity

  4. Interest on debt

Show answer
Correct Option: A

State with reasons, whether the following statements are True of False.
Financial management is essential for all types of organisations.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

This statement is True. 
1) The business organisation irrespective of its type and nature needs finance for its formation, for carrying out day to day activities, for development and expansion, etc. 


2) Financial management is essential for all types of business organisation as it deals with procurement of funds and their efficient and effective utilization in the business. 

3) Financial management deals with planning, organizing. directive and controlling financial activities of business organisations. 

4) Generally all business activities are supported by the savings which comes from the society. Many a times these savings are not adequate to meet the financial requirement of the business. It is therefore necessary that available scarce fund must be utilized systematically and more efficiently. 

5) Financial management plays a very important role in making the best use of financial resources.

Final Account is also called as ________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. One Account

  2. Two Account

  3. Three Account

  4. Four Account

Show answer
Correct Option: C
Explanation:

Final account are represented by below three accounts:


Trading account
Profit & Loss account
balance Sheet

Which of the following is a time span in which the total life of a business is divided for the purpose of preparing financial statements?

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Fiscal year

  2. Calendar year

  3. Accounting period

  4. Accrual period

Show answer
Correct Option: C
Explanation:

According to the going concern concept, it is assume that the life of the business is indefinite. Once the business commenced, it will run forever. There will be no intend to close the business until it goes into liquidation.


As the life of the business is indefinite, the accounting records must be kept for a specific period of time to know the state of affairs of the business. This period is normally of 12 months and called as an accounting period. 

Retained earnings statement depicts _________________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Appropriation of profits

  2. Estimates of profits

  3. Estimates of costs

  4. None of these

Show answer
Correct Option: A
Explanation:

One of the components of financial statements, retained earnings statement depicts the changes in enterprises retained earnings over a period.

The items that form part of the retained earnings statement are the net income for the period and dividends declared during the period.