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Introduction to accounting Test - 17

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Introduction to accounting Test - 17
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Weekly Quiz Competition
  • Question 1
    1 / -0
    The work of accounting depends upon________. 
    Solution
    Bookkeeping is the process of daily record-keeping financial transactions. 
    In Bookkeeping sales, expenses, cash and bank transactions are recorded of the business in a general ledger. 
    With these ledgers, final accounts are prepared.
    So the work of accounting depends upon bookkeeping.
  • Question 2
    1 / -0
    Amount received after selling of goods or services is known as _________.
    Solution
    Revenue is a receipt normally received against the sale of goods or services. 
    It is not necessary that amount is received immediately at the time of sale of goods or services. Revenue is recognized once the legal title of goods is transferred. The amount may be received later on.
  • Question 3
    1 / -0
    The work of book-keeping is of __________ nature. 
    Solution
    There are two parts of Accountancy
    1. Bookkeeping - It is concerned with recording, classifying financial data. Therefore, the work of bookkeeping is of a Primary/ basic nature.
    2. Accounting - It is concerned with summarizing, analyzing, interpreting and communicating financial data.
  • Question 4
    1 / -0
    Amount withdrawn by the owner for his personal expenses is called______. 
    Solution
    The amount withdrawn by the owner/proprietor of the business for his personal use is called Drawings. It is not expense, but a reduction in the owner's capital in the business. 
  • Question 5
    1 / -0
    Total amount of goods and services withdrawn by the proprietor for self use is known as ____________ .
    Solution
    Withdrawal of money and/or goods by the owner from the business for personal use is known as drawings. Drawings reduces the investment of the owners. It is maintained to track money withdrawn from a business. A drawing account is used primarily for businesses that are taxed as sole proprietorship's or partnerships. Owner withdrawals from businesses  that are taxed as separate entities must generally be accounted for as either compensation or dividends.
  • Question 6
    1 / -0
    A commodity in which a trader deals is known as ______.
    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 7
    1 / -0
    Commodity purchased or produced for sale is known as ____________ .
    Solution
    Goods refer to the products in which the business units is dealing, i.e in terms of which it is buying and selling or producing and selling. The items that are purchased for use in the business are not called goods. For example, for a furniture dealer purchase of chairs and tables is termed as goods, while for other it is furniture and is treated as an asset. Similarly, for stationary merchant, stationary is goods, whereas for others it is an item of expense (not purchases).
  • Question 8
    1 / -0
    Excess of revenue over its cost _______________.
    Solution
    At the end of a specified period normally a year, every business prepare a statement i.e. profit & loss account to know about the profitability of the organization.

    There are two sides of profit & loss account. One side the revenue are recorded and on another side costs are recorded. Excess of revenue over the cost is called profit and vice versa. 
  • Question 9
    1 / -0
    __________ is concerned with the preparation and presentation of the classified data in a manner useful to the internal and external users of financial statements.
    Solution
    After preparing the accounting data in a classified manner, it is summarized to help the Management and External Users in making meaningful and informed decisions.
    This process of summarizing leads to the presentation of the following statements:
    1) Trial balance
    2) Income statement/Profit and Loss Statement
    3) Balance sheet/Positional Statement
  • Question 10
    1 / -0
    _______ is the first phase of accounting process.
    Solution
    In accountancy, firstly all the transaction which are of financial nature and related to the business are identified and recorded in the books of accounting.
    The transactions are recorded in a chronological manner in the primary books.
    After that, they are classified in the ledger books, then summarised, interpreted and communicated to the users of the financial statement.
    There are mainly two types of users of the financial statement i.e.,  internal users and external users.
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