Introduction to Book Keeping and Accounting Test 2

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Introduction to Book Keeping and Accounting Test 2

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following statements is not an objective of financial reporting?

A
Provide information that is useful in investment and credit decisions.

B
Provide information regarding policy of organisation

C
Provide information that is useful in assessing cash flow prospective

D
None of these

Solution

They depict not only profits and losses, but even assets and liabilities. Let's take a look at the objectives of financial statements along with their features. They even help readers of these statements know the accounting policies used in them. These statements also provide information relating to the company's cash flows .
Question 2
1 / -0

The word accounting can be classified into __________________.

A
Financial accounting and management accounting

B
Financial accounting and cost accounting

C
Financial accounting, management accounting and cost accounting

D
Cannot be classified

Solution

There are three main branches of accounting:

Financial Accounting : It is concerned with the recording and processing of all transactions.
Cost Accounting : It seeks to ascertain the cost of each product or job.
Management Accounting : It has the objective of collecting, systematically and regularly all such information as will help the management in decision making.
Question 3
1 / -0

Use of common unit of measurement and common format of reporting promotes________.

A
Comparability

B
Understandability

C
Relevance

D
Reliability

Solution

'Comparability' characteristic of accounting information requires the use of common units and common format of reporting. It is the most important quality of accounting information. Comparability means accounting information of a current year can be comparable with that of the previous years.
Question 4
1 / -0

Internal user is ________of the business entity.

A
Bank

B
Compititors

C
Customer

D
Management

Solution

Management and cost accountants are good examples of internal users. They are managers inside the organization who have knowledge about the inner workings of the company and can use this knowledge to improve the business' performance.
Question 5
1 / -0

Which qualitative characteristic of accounting information is reflected when accounting information is clearly presented ?

A
Understandability

B
Relevance

C
Comparability

D
Reliability

Solution

Understandability is the concept that financial information should be presented so that a reader can easily comprehend it.
Adherence to a reasonable level of understandability would prevent an organization from deliberately confusing financial information in order to mislead users of its financial statements.
Question 6
1 / -0

A_______ would most likely use an entity's financial report to determine whether or not the business entity is eligible for a loan.

A
Creditor

B
Emplyoee

C
Mangement

D
None of the Above

Solution

There are two types of creditors.

Short term creditors are those who are providing goods or services on credit by analyzing the short-term financial position of the company.

Long term creditors are basically lenders who are providing loans to the business for long term purposes. These creditors uses the financial statements and reports to determine the financial worth and see the repayment capabilities of the firm before lending any amount.
Question 7
1 / -0

To be comparable, accounting reports must belong to ________.

A
common period

B
use common unit of measurement

C
use common format of reporting.

D
all of the above
Solution
Comparability is one of the most important characteristic of financial information.
It states that accounting information must be capable of being compared between or among different entities.
Further accounting information is comparable only if the accounting policies and standards are consistently applied year after year or from one accounting period to another accounting period.
Also if there is any change in any accounting policy that change should also be reflected retrospectively and prospectively so as to deal with any changes in the amounts of transactions.
Question 8
1 / -0

______ users are groups outside the business entity, who uses the information to make decisions about the business entity.

A
Mangement

B
Emplyoee

C
Owner

D
External

Solution

There are various stakeholder in the business who want to know about the business performance of the organization. These are internal and external users.

Internal users are management, employees and accountants who wants to analyze the business performance based on various financial reports.

External users are lenders, creditors, investors which are more interested to know about the financial strength to take a decision about the business entity in terms of security of their money.
Question 9
1 / -0

Which of the following are general objectives of accounting?
I. Maintenance of Accounting Records
II. Providing Information
III. Ascertainment of Profit or Loss
IV. Depiction of Financial Position

A
I and II

B
III and IV

C
I and IV

D
I, II, III and IV
Solution
Accounting is the measurement,processing and communication of financial information about economic entities such as business and corporations. Accounting consists of various objectives. They are as follows:
1. Maintenance of Accounting records;
2. Providing information;
3. Ascertainment pf profit and loss;
4. Depiction of financial position.
5. With all these objectives one can carry out all the accounting process very effectively.
Question 10
1 / -0

Information is said to be relevant if it is _______.

A
Free from bias

B
Shows profit

C
Not consistent

D
All of the above

Solution

The information must be relevant to the needs of the users, which is the case when the information influences the economic decisions of users. This may involve reporting particularly relevant information, or information whose omission or misstatement could influence the economic decisions of users.

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Introduction to Book Keeping and Accounting Test 2

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Introduction to Book Keeping and Accounting Test 2

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Question 1

Provide information that is useful in investment and credit decisions.

Provide information regarding policy of organisation

Provide information that is useful in assessing cash flow prospective

None of these

Solution

Question 2

Financial accounting and management accounting

Financial accounting and cost accounting

Financial accounting, management accounting and cost accounting

Cannot be classified

Solution

Question 3

Comparability

Understandability

Relevance

Reliability

Solution

Question 4

Bank

Compititors

Customer

Management

Solution

Question 5

Understandability

Relevance

Comparability

Reliability

Solution

Question 6

Creditor

Emplyoee

Mangement

None of the Above

Solution

Question 7

common period

use common unit of measurement

use common format of reporting.

all of the above

Solution

Question 8

Mangement

Emplyoee

Owner

External

Solution

Question 9

I and II

III and IV

I and IV

I, II, III and IV

Solution

Question 10

Free from bias

Shows profit

Not consistent

All of the above

Solution

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