Tag: meaning, need and objectives of accounting

Questions Related to meaning, need and objectives of accounting

The work of accounting depends upon________. 

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

  1. Book keeping

  2. Cash book

  3. Subsidiary books

  4. Ledger

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Correct Option: A
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. 

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

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

  1. True

  2. False

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Correct Option: A
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.  

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

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

  1. conventions

  2. principles

  3. concepts

  4. procedure

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Correct Option: A
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. 

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

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

  1. True

  2. False

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Correct Option: B
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. 

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

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

  1. True

  2. False

Show answer
Correct Option: B
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. 

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

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

  1. insolvent

  2. solvent

  3. well to do

  4. poor

Show answer
Correct Option: A
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. 

The work of book-keeping is of __________ nature. 

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

  1. competitive

  2. primary/basic

  3. secondary

  4. none of these

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Correct Option: B
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. 

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

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

  1. True

  2. False

Show answer
Correct Option: B
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. 

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

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

  1. True

  2. False

Show answer
Correct Option: B
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. 

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

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

  1. Summarizing

  2. Analysis

  3. Classifying

  4. Interpreting

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Correct Option: C
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.