Introduction to Book Keeping and Accounting Test 4

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Introduction to Book Keeping and Accounting Test 4

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Question 1
1 / -0

Accounts that are prepared in order to comply with statutory requirement and to cater the information requirement of external users are known as

A
Management Accounts

B
Financial Accounts

C
Management information systems

D
Cost accounts

Solution

Accounts that are prepared in order to comply with statutory requirement and to cater for the information requirement of external users are known as Financial Accounts.
Management accounts are prepared for the internal purpose it is not distributed to people from the outer world.
Question 2
1 / -0

The users of financial statements include _______ .

A
shareholders

B
government

C
lenders

D
all of the above

Solution

The users of financial statement may be classified into internal external users. Internal users refers to mangers who use accounting information in making decisions related to the company's operations. External users, on the other hand, are not involved in the operations of the company but hold some financial interest.
Question 3
1 / -0

Two primary qualitative characteristics of financial statements are _________.

A
Understandability and Materiality

B
Relevance and Reliability

C
Relevance and Understandability

D
Materiality and Reliability

Solution

The two primary qualitative characteristics of financial statements are relevance and reliability.
1. Relevance: It means information should be available in a timely manner, must help in prediction and feedback.
2. Reliability: It means that the information should be free from error and verifiable by independent parties.
Question 4
1 / -0

_____________ is/are not characteristics of Financial Statement.

A
Compatibility

B
Relevance

C
Understandability

D
Reliability

Solution

There are mainly 4 characteristics of the accounting information
1. Understandability
2. Reliability
3. Relevance
4. Comparability
Question 5
1 / -0

____________ are important characteristics of Financial Statement.

A
Understandability

B
Comparability

C
Reliability

D
All of the above

Solution

Financial accounting is the field of accounting concerned with the summary, analysis and reporting of financial transactions pertaining to a business. Financial accounting reports the results and position of business to government, creditors, investors, and external parties. Understanding, comparability, and reliability is important characteristics of financial accounting.
Question 6
1 / -0

Which of the following are users of accounting information?

A
Creditors

B
Lenders

C
Customers

D
All of the above

Solution

There are various stake holders who want to know about the business. There are internal and external stakeholders.

Internal stakeholders are investor and management who wants to know about the business performance.

External stakeholders are creditors, lenders and customers. Customers want to know about the growth of the organization and various new products whereas creditors and lenders are more interested to know about the financial position of the organization in reference to the security of their money.
Question 7
1 / -0

Which of the following would be considered as an internal user of the financial statements?

A
Shareholder

B
Credotor

C
Debtor

D
Finance Manager

Solution

Financial statements record and outline the financial activities of a business, an individual or any other entity. Financial statements are meant to present the financial information of the entity in equation as clearly and concise as possible for both the entity and for readers. Internal users refers to mangers who use accounting information in making decision related to the company's operation.
Question 8
1 / -0

________ is/are not characteristic of financial statement.

A
Prudence

B
Full, fair and adequate disclosure

C
Flexibility

D
Faithful representation

Solution

Financial accounting is the field of accounting concerned with the summary, analysis and reporting of financial transactions pertaining to a business. Financial accounting reports the results and position of business to government, creditors investors and external parties. Understandability, comparability, full, fair and adequate disclosure, faithful representation and reliability is important characteristics of financial statements.
Question 9
1 / -0

Which of the following is/are the branch of accounting?
(P) Financial Accounting
(Q) Cost Accounting
(R) Management Accounting

A
(P)

B
(Q)

C
(R)

D
All of the above

Solution

There are various branches of accounting:
Financial Accounting: This branch deal with the recording of all business transactions , classifying, summarizing and interpreting the financial data to provide the logical information to the management in the form of financial statement.
Cost Accounting: It seeks to ascertain the cost of each product or job produced or undertaken by the business.
Management Accounting: It has the objective of collecting systematically and regularly all such information as will help the management in discharging functions in managerial decision making.
Question 10
1 / -0

Which of the following is/are not the branch of accounting?

A
Cost Accounting

B
Financial Accounting

C
Human Resources Accounting

D
All of the above

Solution

There are various branches of accounting:
Financial Accounting: This branch deal with the recording of all business transactions , classifying, summarizing and interpreting the financial data to provide the logical information to the management in the form of financial statement.
Cost Accounting: It seeks to ascertain the cost of each product or job produced or undertaken by the business.
Management Accounting: It has the objective of collecting systematically and regularly all such information as will help the management in discharging functions in managerial decision making.
Human Resource Accounting is not a branch of accounting.

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Introduction to Book Keeping and Accounting Test 4

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Introduction to Book Keeping and Accounting Test 4

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Question 1

Management Accounts

Financial Accounts

Management information systems

Cost accounts

Solution

Question 2

shareholders

government

lenders

all of the above

Solution

Question 3

Understandability and Materiality

Relevance and Reliability

Relevance and Understandability

Materiality and Reliability

Solution

Question 4

Compatibility

Relevance

Understandability

Reliability

Solution

Question 5

Understandability

Comparability

Reliability

All of the above

Solution

Question 6

Creditors

Lenders

Customers

All of the above

Solution

Question 7

Shareholder

Credotor

Debtor

Finance Manager

Solution

Question 8

Prudence

Full, fair and adequate disclosure

Flexibility

Faithful representation

Solution

Question 9

(P)

(Q)

(R)

All of the above

Solution

Question 10

Cost Accounting

Financial Accounting

Human Resources Accounting

All of the above

Solution

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