Tag: meaning, need and objectives of accounting

Questions Related to meaning, need and objectives of accounting

_______ defined Accounting 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 a financial character, and interpreting the results thereafter.

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

  1. The American Institute of Certified Public Accounts

  2. Financial Accounting Standard Board

  3. Institute of Certified Accountants of Wales

  4. Institute of Chartered Accountants of India

Show answer
Correct Option: A
Explanation:

In 1941, The american institute of Certified Public Accounts (AICPA) had defined accounting as the art of recording, classifying and summerising 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. With greater economic development resulting in changing role of accounting its scope become broader.

________ is the last phase of Accounting process.

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

  1. Classification

  2. Summarizing

  3. Recording

  4. Communication

Show answer
Correct Option: D
Explanation:

Communication is concerned with the transmission of summarized, analysed and interpreted information to the end user to enable them to make rational decision. The accounting information after being meaningfully analysed and interpreted has to be communicated in a proper form and manner to the proper person. Hence, communicating is the last phase of Accounting process.

_______ is the first phase of accounting process.

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

  1. Classification

  2. Summarizing

  3. Recording

  4. Communicating

Show answer
Correct Option: C
Explanation:

Recording is the first phase of accounting process. It is essentially concerned with not only ensuring that all business transactions of financial character are, in fact recorded but also that they are recorded in an orderly manner.

Which of these statements is true about book keeping?

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

  1. It is a language of business

  2. It is a process concerned with recording of transactions

  3. It is end result of Accounting process

  4. It is concerned with summarizing of business transactions

Show answer
Correct Option: B
Explanation:

Book keeping is a process of recording an economic event of the business. Once the transaction is done, this has to be recorded immediately in the books of account to have a proper accounting. 

Which of these is not one of the function of accounting?

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

  1.  It help in comparison, evaluation and predicting financial results.

  2. Identifying weakness of the system and install appropriate control mechanism.

  3. It facilitate decision making process.

  4. It helps in tax evasion

Show answer
Correct Option: C
Explanation:

Financial accounting information is the accounting information concerned with the summary, analysis and reporting of financial transactions pertaining to a business. Financial statements help in comparison, evaluation and predicting financial results. Financial accounting  reports the results and position of business to government, creditors, investors, and external parties. It is useful for identifying weakness of the system and install appropriate control mechanism. 

Function(s) of Accounting is/are _______ .

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

  1. to help in decision making

  2. to help in measurement

  3. to help in forecasting

  4. all of the above

Show answer
Correct Option: D
Explanation:

Financial accounting information is the accounting information concerned with the summary, analysis and reporting of financial transactions pertaining to a business. This involves the preparation of financial statements available for public consumption. Stockholders, suppliers, banks, employees, governments agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes. 

State whether the following statement is 'True' or 'False':
In accounting, all business transactions are recorded as having dual aspect.

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: A
Explanation:

Double Entry System of Accounting is based on dual aspect. That means, for every business transaction, there are affects in books of account. For every debit entry, there will be a credit and vice versa. 


Accounting Equation can be defined as:

Owners Equity+Liabilities=Fixed Assets+ Current Assets

If Good worth Rs.10000 purchased on credit, it will affect two accounts i.e. Goods account and liability account. 

Now Accounting equation will be as under:

Owners Equity+Rs.10000 (Liability) = Fixed Assets+ Rs.10000 (Goods).

Which of these process is/are not the function of Book Keeping?

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

  1. Summarising

  2. Interpreting

  3. Communicating

  4. All the three

Show answer
Correct Option: D
Explanation:

Book keeping and accountancy are not to be considered as identical terms. Book keeping is defined as recording and classifying the transaction. Summarizing, interpreting and communicating the financial data is part of accounting.

Which of these processes are the function of book keeping?

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

  1. Summarising

  2. Interpreting

  3. Classifying

  4. Communicating

Show answer
Correct Option: C
Explanation:

Book keeping is an activity concerned with the recording and classification of financial data relating to business operations in significant and orderly manner. It is a process concerned with financial data recording. 

No profit should be anticipated but every possible loss should be provided for.

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: A
Explanation:

The given statement is true. The reason is that every business involves the element of risk.Business risks implies uncertainty in profits or danger of losses due to some unforeseen events.