Introduction to Book Keeping and Accounting Test 1

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Introduction to Book Keeping and Accounting Test 1

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Weekly Quiz Competition

Question 1
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

External Users of Financial statements are those people which are outside the affairs of the business but use accounting information.
Example: banks, shareholders, creditors, etc.
Question 2
1 / -0

Financial account records only __________.

A
Actual figures

B
Budgeted figures

C
Standard figures

D
Management figures

Solution

Financial accounting records only historical data. Accounting is done based on the actual amount of money incurred or spent.

For example, if business purchases a piece of land at a price of Rs.50000 of which market value is Rs.60000, accounting will be done only for Rs.50000 which is actually spent.
Question 3
1 / -0

The prime objective of accounting is to _________________.

A
To record economic data

B
Provide the information basis of action

C
Classifying and recording business transaction

D
Attainment of economic goal

Solution

Accounting is an art of recording, classifying, summarizing and interpreting the data in a significant manner of money's worth business transactions.

The prime function of accounting is to classify and record all such business transaction. It plays an important role in providing appropriate information to the business for decision making.
Question 4
1 / -0

____________ provides information for income determination.

A
Financial accounting

B
Cost accounting

C
Management accounting

D
None of these

Solution

Financial accounting results in the determination of net income at the bottom of the income statement. Assets, liabilities and equity accounts are reported on the balance sheet. The balance sheet utilizes financial accounting to report ownership of the company's future economic benefits.
Question 5
1 / -0

____________ is the oldest branch of accounting.

A
Financial Accounting

B
Cost Accounting

C
Management Accounting

D
None of these

Solution

Accounting has various branches. Such as:
1. Cost Accounting
2. Management Accounting
3. Financial Accounting.
Financial accounting is the oldest branch of accounting.
It has certain limitations too. To overcome these limitations, other branches i.e.cost accounting and management accounting are introduced.
Question 6
1 / -0

Financial accounting use ________.

A
Projected data

B
External data only

C
Historical data

D
Manager data only

Solution

Financial accounting consider only those transactions which are of historic nature, i.e. the transactions which have already taken place.
Question 7
1 / -0

Financial accounting is concerned with recording of _______________.

A
Business expenses and revenue

B
Costs of products and services

C
Day to day business transactions

D
None of the above

Solution

Accounting is the art of recording, classifying and summarizing all the transactions of monetary value in a significant manner to identify the end result.
In the recording step, day to day transactions is recorded in chronological order.
Firstly, the transactions are recorded in the journal. Journal is also known as the book of primary entry.
Question 8
1 / -0

The appropriate objective of an enterprise is _________.

A
To maintain sales at minimum level

B
Maximisation of business wealth

C
To maintain the profits at one level

D
None of the above

Solution

Looking at all the options, the most appropriate one is the Maximisation of business wealth.
Well, whenever someone starts a business a lot of time, money and hard work is invested by the owner. So, definitely in return, the owner wants to maximize the profits.
Question 9
1 / -0

Which of the following statements about differences between financial and managerial accounting is incorrect?

A
Managerial accounting information is prepared primarily for martial parties such as stockholders and creditors; financial accounting is directed at internal users

B
Financial accounting is aggregated; managerial accounting is focused on products and departments

C
Managerial accounting pertains to both past and future items; financial accounting focuses primarily on past transactions and events

D
Financial accounting is based on generally accepted accounting practices; managerial accounting faces no similar constraining factors

Solution

Managerial accounting is for internal users like the owner, directors
whereas
Financial accounting is for external users like shareholders, creditors, bank etc.
Therefore, Only Option A is incorrect and the remaining are correct.
Question 10
1 / -0

_____________ is a post mortem of past costs.

A
Financial accounting

B
Cost accounting

C
Both A and B

D
None of these

Solution

Financial Accounting also has its limitation. It records all the transaction on its historical cost and does not consider the changes happen in future.
Financial Accounting does not consider the effect of inflation and change in the price level.
Therefore, it is a post mortem of the cost recorded in books of account.

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Introduction to Book Keeping and Accounting Test 1

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Introduction to Book Keeping and Accounting Test 1

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Question 1

Board of Directors

Shareholders

Finance manager

Sales manager

Solution

Question 2

Actual figures

Budgeted figures

Standard figures

Management figures

Solution

Question 3

To record economic data

Provide the information basis of action

Classifying and recording business transaction

Attainment of economic goal

Solution

Question 4

Financial accounting

Cost accounting

Management accounting

None of these

Solution

Question 5

Financial Accounting

Cost Accounting

Management Accounting

None of these

Solution

Question 6

Projected data

External data only

Historical data

Manager data only

Solution

Question 7

Business expenses and revenue

Costs of products and services

Day to day business transactions

None of the above

Solution

Question 8

To maintain sales at minimum level

Maximisation of business wealth

To maintain the profits at one level

None of the above

Solution

Question 9

Managerial accounting information is prepared primarily for martial parties such as stockholders and creditors; financial accounting is directed at internal users

Financial accounting is aggregated; managerial accounting is focused on products and departments

Managerial accounting pertains to both past and future items; financial accounting focuses primarily on past transactions and events

Financial accounting is based on generally accepted accounting practices; managerial accounting faces no similar constraining factors

Solution

Question 10

Financial accounting

Cost accounting

Both A and B

None of these

Solution

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