Introduction to accounting Test

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Introduction to accounting Test - 25

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Weekly Quiz Competition

Question 1
1 / -0

Select the odd on in relation to users of accounting information.

A
Officers

B
Managers

C
Debtors

D
Board of directors

Solution

Officers, Mangers and Board of directors are the team of employees and board.

Debtors are those to whom company has sold goods on credit. These are part of current assets.
Question 2
1 / -0

Which of the following are internal users of accounting information?

A
Board of directors

B
Partners

C
Managers

D
All of the above

Solution

There are various agencies or stake holders interested to know about the accounting information. These stakeholders may be internal and external.
Accounts are prepared by the organization by following the compliance of various acts. Various agencies are interested to know about the accounts to ensure that organization is following the various laws applicable.

Board of directors, Partners and Mangers are considered as internal users.
Question 3
1 / -0

Which of the following is/are the advantages of accounting?

A
Decision making relating to financial aspect

B
Evidence in legal matters relating to accounting

C
Provides information to interested parties

D
All of the above

Solution

Accounting plays an important and useful role for the businessman. Following are the points which shows the advantages of accounting:

1) It helps in decision making relating to financial aspect
2) It is helpful in comparison
3) It provides information regarding costs
4) It provides information to interested parties
5) It provides the evidence in the court of law
6) It provides the value of the business.
Question 4
1 / -0

Which of the following is/are external users of accounting information?

A
Shareholders/investors

B
Creditors

C
Government agencies

D
All of the above

Solution

There are various agencies or stake holders interested to know about the accounting information. These stakeholders may be internal and external.
Accounts are prepared by the organization by following the compliance of various acts.
Shareholders, creditors and government agencies are considered as the external agencies which are interested to know about the accounting information.
Various agencies are interested to know about the accounts to ensure that organization is following the various laws applicable.
These regulatory agencies may includes Income Tax Authorities, Company Law Board, Registrar of Companies, SEBI, RBI etc.
Question 5
1 / -0

Which of the following is characteristic of accounting information?
P. Relevance
Q. Reliability
R. Comparability
Select the correct answer from the options given below ______________.

A
P

B
Q

C
R

D
All of the above

Solution

There are mainly 4 characteristics of the accounting information
1. Understandability:
2. Relevance
3. Reliability
4. Comparability
Question 6
1 / -0

Which of the following would be considered as external users of accounting information's?

A
Board of Directors

B
Shareholders

C
Finance manager

D
Sales manager

Solution

There are number of users who are interested in the accounting information relating to the business. These users may be classified as internal and external users.
1) Owner
2) Management
3) Creditors
4) Employees
5) Investors/Shareholders
6) Government
7) Researchers
Shareholders since not related to the management of business operations are considered as external users.
Question 7
1 / -0

Salary can be classified as _________.

A
Revenue

B
Expense

C
Asset

D
Liability

Solution

Expense covers all those transactions which result in the outflow of cash.
Salary is an indirect expense and to be debited to profit & loss account to arrive at the profit of the business.
Salary is indirect because it is not directly related to the operations of the business.
Question 8
1 / -0

What are the gross decreases in economic benefits for the business?

A
Expenses

B
Obligations

C
Creditors

D
Income or gain

Solution

Expenses are debited to profit & loss account which in turn reduces the profits of the business. All profit are belongs to the owner which are added to the capital. Hence, if expenses are debited, this will reduce the profit which in turn reduces the capital.
Question 9
1 / -0

On 1.1.2019, CS N. S. Zad paid rent of Rs. 25,000 for Zads Professional Academy. 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

Monetary concept of accounting defines that only those transactions are recorded in the books of account which are measured in terms of money.
Rent of Rs.25000 paid is monetary transaction hence to be recorded in books of account.
Accounting entry will be as under:

Rent A/c Dr.
To Cash/Bank
Question 10
1 / -0

Accounting gives the true picture of the organization's financial position.

A
True

B
False

C
Irrelevant

D
Partiality false

Solution

A True and fair view in accounting means that a financial statement is free from material misstatements and faithfully represents the financial performance and positioning of an entity.
As the change in the value of money due to inflation is not reflected in the book of accounts, the accounting data does not reflect the true and fair view of the affairs of an enterprise.

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Introduction to accounting Test - 25

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Introduction to accounting Test - 25

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SHARING IS CARING

Question 1

Officers

Managers

Debtors

Board of directors

Solution

Question 2

Board of directors

Partners

Managers

All of the above

Solution

Question 3

Decision making relating to financial aspect

Evidence in legal matters relating to accounting

Provides information to interested parties

All of the above

Solution

Question 4

Shareholders/investors

Creditors

Government agencies

All of the above

Solution

Question 5

P

Q

R

All of the above

Solution

Question 6

Board of Directors

Shareholders

Finance manager

Sales manager

Solution

Question 7

Revenue

Expense

Asset

Liability

Solution

Question 8

Expenses

Obligations

Creditors

Income or gain

Solution

Question 9

an event

a transaction

a transaction as well as an event

neither a transaction nor an event

Solution

Question 10

True

False

Irrelevant

Partiality false

Solution

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