Introduction to accounting Test

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Introduction to accounting Test - 18

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Question 1
1 / -0

_______ is concerned with establishment of relationship between items of profit and loss a/c and Balance-sheet and to provide base for interpretation of information.

A
Summarizing

B
Analysis

C
Classifying

D
Interpreting

Solution

Analysis is concerned with establishment of relationship between items of profit and loss a/c and balance-sheet and to provide base for interpretation of information. The recorded financial data is analysed and interpreted in a manner that the end-user can make a meaningful judgement about the financial condition and profitability of the business operations.
Question 2
1 / -0

_______ is concerned with the transmission of summarized, analysed and interpreted information to the end users to enable them to make rational decision.

A
Summarizing

B
Analysis

C
Classifying

D
Communicating

Solution

Communication is concerned with the transmission of summarized, analysed and interpreted information to the end-user to enable them to make a 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.
Question 3
1 / -0

The correct sequence of accounting process is _________ .

A
Identifying, classifying and recording

B
Identifying, recording and communicating

C
Analysis, recording and summarizing

D
Communicating, recording and interpreting

Solution

Accounting can be defined 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. The correct sequence of accounting process is identifying, recording and communicating.
Question 4
1 / -0

_______ is the process of grouping transactions or entries of same nature at one place.

A
Recording

B
Classification

C
Analysing

D
Summarizing

Solution

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.
Question 5
1 / -0

_______ 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.

A
The American Institute of Certified Public Accounts

B
Financial Accounting Standard Board

C
Institute of Certified Accountants of Wales

D
Institute of Chartered Accountants of India

Solution

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.
Question 6
1 / -0

________ can be considered as the last stage of accounting process.

A
Summarizing

B
Analysis

C
Classifying

D
Interpreting

Solution

Interpretation of accounting data is considered as the last leg of process, on the basis of which owner, investors and government authorities may proceed to take a course of action. Owner may decide to shut down a line of business activity if it is not generating profits, investors may suggest the management to initiate the other line of activity are the examples.
Question 7
1 / -0

________ is the last phase of Accounting process.

A
Classification

B
Summarizing

C
Recording

D
Communication

Solution

After completing the recording, classifying, summarising and interpretation of the financial transactions, all the relevant information is communicated to users of the financial statement.
There are mainly two types of users of the financial statements
1. Internal Users i.e., owner,
2. External Users: i.e., the investor and authorities.
Hence, Communication is considered the last phase of the accounting process.
Question 8
1 / -0

Accounting is an art of recording, ________ and ______ in terms of money, transactions and events of a financial character and interpreting the result thereof.

A
Classifying, Summarizing

B
Tabulating, Classifying

C
Highlighting, Formulating

D
Formulating, Tabulating

Solution

In 1941, The American institute of Certified Public Accounts (AICPA) had defined accounting as the art of recording, classifying and summarizing significantly and in terms of, money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.
Question 9
1 / -0

________ is used to mean a happening as a consequence of transaction(s).

A
Event

B
Transaction

C
Dealing

D
Operations

Solution

A transaction cannot be completed if it is not performed by the two different parties. Any business transaction is considered as business event once it is dealt by the two different parties. Once the transaction is complete, it is converted in to an event.
Question 10
1 / -0

Financial statements are used by _______ .

A
owners

B
creditors

C
investors

D
all the three

Solution

The users of accounting are mainly classified into two categories
1. Internal Users: Internal users are inside the business of the entity.
Example: managers, owners, directors, CEO, CFO etc.

2. External Users: These are outside the affairs of the entity.
Example: Creditors. Government, Shareholders etc.
So, accounting is useful for all these users and not just for owners.

User

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Introduction to accounting Test - 18

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Introduction to accounting Test - 18

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SHARING IS CARING

Question 1

Summarizing

Analysis

Classifying

Interpreting

Solution

Question 2

Summarizing

Analysis

Classifying

Communicating

Solution

Question 3

Identifying, classifying and recording

Identifying, recording and communicating

Analysis, recording and summarizing

Communicating, recording and interpreting

Solution

Question 4

Recording

Classification

Analysing

Summarizing

Solution

Question 5

The American Institute of Certified Public Accounts

Financial Accounting Standard Board

Institute of Certified Accountants of Wales

Institute of Chartered Accountants of India

Solution

Question 6

Summarizing

Analysis

Classifying

Interpreting

Solution

Question 7

Classification

Summarizing

Recording

Communication

Solution

Question 8

Classifying, Summarizing

Tabulating, Classifying

Highlighting, Formulating

Formulating, Tabulating

Solution

Question 9

Event

Transaction

Dealing

Operations

Solution

Question 10

owners

creditors

investors

all the three

Solution

User

Question Analysis

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