Introduction to accounting Test

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Introduction to accounting Test - 22

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following is a cash transaction?

A
Sold goods

B
Sold goods to a customer

C
Sold goods to a customer on credit

D
None of above

Solution

This can be summarized as:
Sold Goods- It represent the sale of goods on cash as nothing is mentioned about customer name or sold on credit. Hence this is considered as cash sales.
Sold Goods to customer- Its a credit sale.
Sold goods to customer on credit- Its a credit sales.
Sold goods to customer on account- Its also a credit sales.
Question 2
1 / -0

The Double Entry System of accounting originated in _________.

A
America

B
Russia

C
Italy

D
England

Solution

Double entry accounting system first invented in Italy by a church father who's named Luca Bartolomes Pacioli. He was the mathematician and contemporary of Leonardo Da Vinci.
Question 3
1 / -0

When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristics of _______________.

A
Reliability

B
Consistency

C
Verifiability

D
Comparability

Solution

The chosen option is correct. Comparability concept says that financial statements of two different enterprises can be compared if both are presented in a similar manner using same accounting policies and conventions.This helps in analyzing the performance and position of an enterprise in the industry.
Question 4
1 / -0

Two primary qualitative characteristics of financial statements are _________.

A
Understandability and Materiality

B
Relevance and Reliability

C
Relevance and Understandability

D
Materiality and Reliability

Solution

The two primary qualitative characteristics of financial statements are relevance and reliability.
1. Relevance: It means information should be available in a timely manner, must help in prediction and feedback.
2. Reliability: It means that the information should be free from error and verifiable by independent parties.
Question 5
1 / -0

Which of the following are users of accounting information?

A
Creditors

B
Lenders

C
Customers

D
All of the above

Solution

There are various stake holders who want to know about the business. There are internal and external stakeholders.

Internal stakeholders are investor and management who wants to know about the business performance.

External stakeholders are creditors, lenders and customers. Customers want to know about the growth of the organization and various new products whereas creditors and lenders are more interested to know about the financial position of the organization in reference to the security of their money.
Question 6
1 / -0

On March 31, there is closing stock of Rs. $$10,000$$. This can be classified ________________.

A
An event

B
A transaction

C
A transaction as well as an event

D
Neither a transaction nor an event

Solution

Transactions are acts performed by the business organization. Transactions are recorded in the books of the accounts as they occur. whereas,
Economic Events are results of transactions that take place in the business organizations and which can be measured in monetary terms.
There Closing Stock of Rs. 10,000 is the result of the business transaction therefore, it is an event.
Question 7
1 / -0

Ram purchased goods of Rs. $$10,000$$. This can be classified as _________.

A
An Event

B
A Transaction

C
A transaction as well as an event

D
Neither a transaction nor an event

Solution

Any exchange of value for value (for money or money's worth) is called a transaction. Something having value is received, and something having value goes out. Selling or purchasing of goods or taking or granting any loan are examples of transactions.
Ram purchased goods of Rs.10,000 is a transaction.
Question 8
1 / -0

In order to enable retailer earn profit and still sell goods at the list price, the manufacturers frequently grant them substantial reduction from the list price. Such a reduction in price is called ____________.

A
Trade Discount

B
Cash Discount

C
Price Reduction

D
Subsidies

Solution

Trade discount is allowed to the customer to promote the sales. Trade discount is allowed on the list price. It reduces the price for the customer.
Trade discount is not recorded in the books of account. Only net value is recorded in books of account.
Question 9
1 / -0

Which of the following groups/ parties are interested in the accounting information of the business?

A
Proprietors or owners

B
Creditors

C
Tax authorities

D
All of these

Solution

There are various stakeholders in the business who want to know about the business progress and financial position of the business.
Owner of the business is interested to know the profitability and business growth.
Creditors are more interested to know the financial position of the concern. Whether the firm will be able to repay their debt on time.
Tax Authorities are interested to know that the concern is maintaining the books of account properly and due taxes are paid on time.
Question 10
1 / -0

Purchase include ______________.

A
Both cash and credit purchases

B
Purchase of such goods which are purchased for resale

C
Purchase of assets such a motor ans, furniture, plant and machinery

D
Both (a) and (b)

Solution

Purchases of goods done by the organization on credit and cash basis. If any goods is purchases for resale, it is accounted as purchases.
Accounting entry will be as under:

Purchases A/c Dr.
To Cash/ Sundry Creditors.

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Introduction to accounting Test - 22

Result

Introduction to accounting Test - 22

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SHARING IS CARING

Question 1

Sold goods

Sold goods to a customer

Sold goods to a customer on credit

None of above

Solution

Question 2

America

Russia

Italy

England

Solution

Question 3

Reliability

Consistency

Verifiability

Comparability

Solution

Question 4

Understandability and Materiality

Relevance and Reliability

Relevance and Understandability

Materiality and Reliability

Solution

Question 5

Creditors

Lenders

Customers

All of the above

Solution

Question 6

An event

A transaction

A transaction as well as an event

Neither a transaction nor an event

Solution

Question 7

An Event

A Transaction

A transaction as well as an event

Neither a transaction nor an event

Solution

Question 8

Trade Discount

Cash Discount

Price Reduction

Subsidies

Solution

Question 9

Proprietors or owners

Creditors

Tax authorities

All of these

Solution

Question 10

Both cash and credit purchases

Purchase of such goods which are purchased for resale

Purchase of assets such a motor ans, furniture, plant and machinery

Both (a) and (b)

Solution

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