Introduction to accounting Test

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Introduction to accounting Test - 14

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Question 1
1 / -0

Financial accounting is concerned with recording of _______________.

A
Business expenses and revenue

B
Costs of products and services

C
Day to day business transactions

D
None of the above

Solution

Accounting is the art of recording, classifying and summarizing all the transactions of monetary value in a significant manner to identify the end result.
In the recording step, day to day transactions is recorded in chronological order.
Firstly, the transactions are recorded in the journal. Journal is also known as the book of primary entry.
Question 2
1 / -0

The appropriate objective of an enterprise is _________.

A
To maintain sales at minimum level

B
Maximisation of business wealth

C
To maintain the profits at one level

D
None of the above

Solution

Looking at all the options, the most appropriate one is the Maximisation of business wealth.
Well, whenever someone starts a business a lot of time, money and hard work is invested by the owner. So, definitely in return, the owner wants to maximize the profits.
Question 3
1 / -0

Financial accounting use ________.

A
Projected data

B
External data only

C
Historical data

D
Manager data only

Solution

Financial accounting consider only those transactions which are of historic nature, i.e. the transactions which have already taken place.
Question 4
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All those to whom business owes money are ______________.

A
Debtors

B
Investors

C
Creditors

D
Shareholders

Solution

Creditors are those who supplies goods or provide services to the organization. Business owes money to the creditors.
Creditors are considered as short term or current liability and shown in the balance sheet.
Question 5
1 / -0

Stock should include _________.

A
Goods held as security.

B
Goods held by the business as consignee.

C
Goods with customers for approval on sale or return basis.

D
Goods sold but not yet delivered.

Solution

Goods sold on approval on sale or return basis is a stock that might get returned if it is not approved by the customer. Till the time the sale is confirmed by the customer, the ownership of stock is with the business.
Hence, while calculating the inventory of the company, physical stock available with the company and stock with the customer on sale or approval will be considered.
Question 6
1 / -0

Accounting is _______________.

A
an 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 thereof

B
a systematic and regular record of events affecting a firm with a view to obtaining a clear financial picture

C
preparation of various financial statements over a period of time of a firm to measure its performance in monetary terms

D
nothing but book-keeping

Solution

The American Institute of Certified Public Accountants (AICPA) defines accountancy 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. ”

Hence, A is the correct option.
Question 7
1 / -0

The word accounting can be classified into __________________.

A
Financial accounting and management accounting

B
Financial accounting and cost accounting

C
Financial accounting, management accounting and cost accounting

D
Cannot be classified

Solution

There are three main branches of accounting:

Financial Accounting : It is concerned with the recording and processing of all transactions.
Cost Accounting : It seeks to ascertain the cost of each product or job.
Management Accounting : It has the objective of collecting, systematically and regularly all such information as will help the management in decision making.
Question 8
1 / -0

Financial account records only __________.

A
Actual figures

B
Budgeted figures

C
Standard figures

D
Management figures

Solution

Financial accounting records only historical data. Accounting is done based on the actual amount of money incurred or spent.

For example, if business purchases a piece of land at a price of Rs.50000 of which market value is Rs.60000, accounting will be done only for Rs.50000 which is actually spent.
Question 9
1 / -0

Commodities bought for resale are treated as _________.

A
Expenses

B
Stock

C
Goods

D
Assets

Solution

Goods means those commodities which are bought for resale.
The amount receives by selling goods is known as Sales.
Purchase of goods is termed as Purchases. If goods remain unsold at the end of the financial year then it termed as Closing Stock.
Question 10
1 / -0

Accounting is ____________.

A
the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are, in part at best financial in character, and interpreting there of

B
a systematic and regular record of events affecting a firm with a view to obtaining a clear financial picture

C
preparation of various financial statements over a period of time of a firm to measure its performance in monetary terms

D
nothing but book-keeping

Solution

The main objective of accounting is to ascertain the results of the business activities, whether profit has been earned or loss has been suffered, during a year and to show the financial position of the business as on a particular day.

Therefore , "accounting is 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 thereof."

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Introduction to accounting Test - 14

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Introduction to accounting Test - 14

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Question 1

Business expenses and revenue

Costs of products and services

Day to day business transactions

None of the above

Solution

Question 2

To maintain sales at minimum level

Maximisation of business wealth

To maintain the profits at one level

None of the above

Solution

Question 3

Projected data

External data only

Historical data

Manager data only

Solution

Question 4

Debtors

Investors

Creditors

Shareholders

Solution

Question 5

Goods held as security.

Goods held by the business as consignee.

Goods with customers for approval on sale or return basis.

Goods sold but not yet delivered.

Solution

Question 6

an 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 thereof

a systematic and regular record of events affecting a firm with a view to obtaining a clear financial picture

preparation of various financial statements over a period of time of a firm to measure its performance in monetary terms

nothing but book-keeping

Solution

Question 7

Financial accounting and management accounting

Financial accounting and cost accounting

Financial accounting, management accounting and cost accounting

Cannot be classified

Solution

Question 8

Actual figures

Budgeted figures

Standard figures

Management figures

Solution

Question 9

Expenses

Stock

Goods

Assets

Solution

Question 10

the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are, in part at best financial in character, and interpreting there of

a systematic and regular record of events affecting a firm with a view to obtaining a clear financial picture

preparation of various financial statements over a period of time of a firm to measure its performance in monetary terms

nothing but book-keeping

Solution

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