Introduction to accounting Test

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Introduction to accounting Test - 28

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Question 1
1 / -0

Sale of goods to Ram for cash $$Rs.1000$$ is a ______________.

A
Cash Transaction

B
Credit Transaction

C
Barter System

D
Internal Event

Solution

The transaction which involves immediate payment of cash is known as cash transaction. For e.g., Sale of goods to Ram for cash Rs. 1,000. In this transaction, goods are sold to Ram when he paid Rs. 1,000 cash.
Question 2
1 / -0

An economic event that involves transfer of money or money's worth is a/are _______________.

A
Financial Transactions

B
Barter System

C
Settlements

D
Receipts/Payments

Solution

Any event which involves transfer of money or money's worth is known as financial transaction. It is an agreement, or communication, carried out between a buyer and a seller to exchange an asset for payment. It is still a transaction if the goods are exchanged at one time, and the money at other.
Question 3
1 / -0

Accounting covers only the following octillion __________________.

A
Rewriting and Classifying.

B
Recording, Classifying and Analysing.

C
Analysing, Recording and Interpreting.

D
Identifying, Classifying, Recording, Summarising and Communicating.

Solution

Accounting starts with the golden rules of accounting after that it identifies which type of accounts are affected in the transaction and accordingly we have to record the transactions by passing journal entry.
Further, it measures the profit and loss and determines the financial position of the company. This is finally communicated to the users by way of financial reports.
Question 4
1 / -0

Which of the following is not characteristic of accounting information?

A
Understandability

B
Relevance

C
Future transactions

D
Completeness

Solution

There are mainly 4 characteristics of the accounting information
1. Understandability: Information should be simple so, that users interpret it in the same sense.
2. Reliability: It means that information should be Verifiable, neutral and faithful.
3. Relevance: It includes timelines, Feedback value and dedicative.
4. Comparability: It includes that information should be of common period and use the common unit of measurement and format of reporting.
Question 5
1 / -0

Which of the following is/are characteristics of accounting information?

A
Understandability

B
Timeliness

C
Completeness

D
All of the above

Solution

There are mainly 4 characteristics of the accounting information
1. Understandability: Information should be simple so, that users interpret it in the same sense.
2. Reliability: It means that information should be Verifiable, neutral and faithful.
3. Relevance: It includes timelines, Feedback value and dedicative.
4. Comparability: It includes that information should be of common period and use common unit of measurement and format of reporting.
Question 6
1 / -0

The basic objective of accounting is ________________.

A
To maintain systematic records of financial transactions

B
To ascertain financial performance

C
To ascertain financial position

D
All of Above

Solution

Basic objective of accounting is -
1. To record financial transactions and events.
2. To determine profit or loss.
3. To determine financial position.
4. Communicating accounting information to users.
Question 7
1 / -0

Users of accounting information include _____________.

A
Creditors

B
Lenders

C
Customers

D
All of the above

Solution

Accounting information is used by all the options given in the question, since they use information to make economic decisions and they are stakeholders of the business who deserve to know it all as well.
Question 8
1 / -0

Ram paid rent 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

'Transaction' involves money or money's worth, and hence, has a financial impact in the books of accounts.
Event may or may not have a financial impact in the books of accounts.
Example: Change of Operations Manager of the company.
In the given example amount paid as rent involves a financial element as amount is paid by one person to another.
Therefore, it is a transaction and not an event.
Question 9
1 / -0

Sale of goods to Ram for Rs. 1,000 with a credit term of 5 days is a/an ____________.

A
Cash Transaction

B
Credit Transaction

C
Barter System

D
Internal Event

Solution

The transaction in which there is no immediate payment of cash is known as credit transaction. For e.g., sale of goods to Ram for Rs. 1,000. In this transaction goods worth Rs. 1,000 sold to Ram on 5 days credit is a credit transaction as the payment is not made immediately for the goods.
Question 10
1 / -0

Drawings represent _______________.

A
Cash withdrawn for office use

B
Cash withdrawn for personal use

C
Goods withdrawn for personal use

D
B & C

Solution

Drawing means when the owner withdraws something from business for personal use.
Capital is the amount that is invested by the owner in the business.
Thus, cash is withdrawn for office use then is not drawings.
Drawing results in a decrease in the capital of the firm.

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Introduction to accounting Test - 28

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Introduction to accounting Test - 28

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SHARING IS CARING

Question 1

Cash Transaction

Credit Transaction

Barter System

Internal Event

Solution

Question 2

Financial Transactions

Barter System

Settlements

Receipts/Payments

Solution

Question 3

Rewriting and Classifying.

Recording, Classifying and Analysing.

Analysing, Recording and Interpreting.

Identifying, Classifying, Recording, Summarising and Communicating.

Solution

Question 4

Understandability

Relevance

Future transactions

Completeness

Solution

Question 5

Understandability

Timeliness

Completeness

All of the above

Solution

Question 6

To maintain systematic records of financial transactions

To ascertain financial performance

To ascertain financial position

All of Above

Solution

Question 7

Creditors

Lenders

Customers

All of the above

Solution

Question 8

An event

A transaction

A transaction as well as an event.

Neither a transaction nor an event.

Solution

Question 9

Cash Transaction

Credit Transaction

Barter System

Internal Event

Solution

Question 10

Cash withdrawn for office use

Cash withdrawn for personal use

Goods withdrawn for personal use

B & C

Solution

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