Introduction to Book Keeping and Accounting Test 3

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Introduction to Book Keeping and Accounting Test 3

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Weekly Quiz Competition

Question 1
1 / -0

To be reliable, accounting information must _________________.

A
Be available in time

B
Help in prediction and feedback

C
Influence the decisions of users

D
All of the above

Solution

Reliability means that the end users must be able to depend/rely on the information presented.
A piece of accounting information is reliable if it is
1. Available in time
2. Help in prediction and feedback
3. Influence the decisions of users
Question 2
1 / -0

Financial statements are used by _______ .

A
owners

B
creditors

C
investors

D
all the three

Solution

The users of accounting are mainly classified into two categories
1. Internal Users: Internal users are inside the business of the entity.
Example: managers, owners, directors, CEO, CFO etc.

2. External Users: These are outside the affairs of the entity.
Example: Creditors. Government, Shareholders etc.
So, accounting is useful for all these users and not just for owners.
Question 3
1 / -0

_______ is/are sub-field(s) of Accounting.

A
Management Accounting

B
Cost Accounting

C
Financial Accounting

D
All of the above

Solution

The economic development and technological improvements have resulted in an increase in the scale of operations and the advent of the company form of business organisation. This has made the management function more and more complex and increased the importance of accounting information. This gave rise to special branches of accounting: Financial accounting, cost accounting, management accounting.
Question 4
1 / -0

Which branch of Accounting is concerned with ascertainment and control of cost of business activities?

A
Cost Accounting

B
Management Accounting

C
Human Resource Accounting

D
Financial Accounting

Solution

Cost accounting is a branch of accounting. This tool is basically used by the business to find out the cost of any product or service. It also have various methods to find out the cost of any product. Cost accounting is a mechanism through which any business can control the cost. It has various tools and scientific method to have such control.
Question 5
1 / -0

Which branch of Accounting caters to information requirement of external users of financial statements?

A
Cost Accounting

B
Management Accounting

C
Human Resource Accounting

D
Financial Accounting

Solution

Financial accounting is the original form of accounting. It is mainly confined to the preparation of financial statements for the use of outsiders like shareholders, debenture holders, creditors, banks and financial institutions. The field of accounting that serves external users of financial statements in decision making process is known as financial accounting.
Question 6
1 / -0

When information about two different enterprises have been prepared presented in a similar manner, the information exhibits the characteristics of______________.

A
Verifiability

B
Relevance

C
Reliability

D
None of these

Solution

When information about two different enterprises have been prepared presented in a similar manner, the information exhibits the characteristics of comparability.
It means that the books of accounts should be prepared in such a way that they facilitate easy comparison, intra firm or inter firm.
Question 7
1 / -0

The primary qualities that make accounting information useful for decision making are_________.

A
Relevance and freedom from bias

B
Reliability and Relevance

C
Comparability and consistency

D
None of these

Solution

The primary qualities that make accounting information useful for decision making are reliability and comparability. Reliability means that the statement of accounts/accounting information is reliable for the users of the financial statements.
Comparability means that the accounting information should be presented in such a way that it is comparable and it facilitates inter and intra-firm comparison.
Question 8
1 / -0

_______ is/are sub-field of Accounting.

A
Social Re-engineering

B
Human Resource Accounting

C
Social Responsibility Accounting

D
Management Accounting

Solution

There are mainly three branches of accounting
1. Financial Accounting
2. Cost Accounting
3. Management Accounting,
Question 9
1 / -0

If presentation of financial information/statement or accounting policy is designed with a pre-designed motive to influence the decision-making or judgement or achieve a pre-determined result or object, the financial statement are not said to have satisfied the criteria of ___________.

A
Relevance

B
Materiality

C
Neutrality

D
Substance over form

Solution

Financial report should present true and fair view, which means that financial statements must be free from errors or from other missions. Financial statements cannot be prepared with the purpose to influence certain decisions, i.e. they might be neutral.
Question 10
1 / -0

Which of these would be considered as external user of the financial statements?

A
Board of directors

B
Shareholders

C
Finance manager

D
Production manager

Solution

Financial statement of the business are prepared on a periodic basis to check the health of the business. This is a statutory requirement also. There are internal and external users to view and refer the financial statement. Banks, financial institutions and investors are considered as external users. Investors are always look for a better returns from the business where they have invested the amount for which they have a tool i.e. financial statement.

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Introduction to Book Keeping and Accounting Test 3

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Introduction to Book Keeping and Accounting Test 3

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SHARING IS CARING

Question 1

Be available in time

Help in prediction and feedback

Influence the decisions of users

All of the above

Solution

Question 2

owners

creditors

investors

all the three

Solution

Question 3

Management Accounting

Cost Accounting

Financial Accounting

All of the above

Solution

Question 4

Cost Accounting

Management Accounting

Human Resource Accounting

Financial Accounting

Solution

Question 5

Cost Accounting

Management Accounting

Human Resource Accounting

Financial Accounting

Solution

Question 6

Verifiability

Relevance

Reliability

None of these

Solution

Question 7

Relevance and freedom from bias

Reliability and Relevance

Comparability and consistency

None of these

Solution

Question 8

Social Re-engineering

Human Resource Accounting

Social Responsibility Accounting

Management Accounting

Solution

Question 9

Relevance

Materiality

Neutrality

Substance over form

Solution

Question 10

Board of directors

Shareholders

Finance manager

Production manager

Solution

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