Introduction to Book Keeping and Accounting Test 5

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Introduction to Book Keeping and Accounting Test 5

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following is the branch of accounting?
(I) Human Resources Accounting
(II) Social Accounting
(III) Security Accounting
The correct answer is-

A
(I) & (II)

B
(II) & (III)

C
(I) & (III)

D
None of the above

Solution

Accounting has following branches:
1) Financial Accounting
2) Management Accounting
3) Cost Accounting

Human Resource Accounting/Social Accounting/Security Accounting are not the branch of accounting.
Question 2
1 / -0

The primary qualities that makes accounting information useful for decision-making are ________________.

A
Comparability and consistency

B
Materiality and timeliness

C
Relevance and reliabilty

D
Reliability and comparability

Solution

Option C is correct.
Relevance is the concept that the information generated by an accounting system should impact the decision making of someone perusing the information and reliability concept says only those transactions should be recorded which can be verified with objective evidence.

Therefore, these two are the primary qualities which makes accounting information useful for decision making.
Question 3
1 / -0

Which of the following groups/ parties are interested in the accounting information of the business?

A
Proprietors or owners

B
Creditors

C
Tax authorities

D
All of these

Solution

There are various stakeholders in the business who want to know about the business progress and financial position of the business.
Owner of the business is interested to know the profitability and business growth.
Creditors are more interested to know the financial position of the concern. Whether the firm will be able to repay their debt on time.
Tax Authorities are interested to know that the concern is maintaining the books of account properly and due taxes are paid on time.
Question 4
1 / -0

When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristics of _______________.

A
Reliability

B
Consistency

C
Verifiability

D
Comparability

Solution

The chosen option is correct. Comparability concept says that financial statements of two different enterprises can be compared if both are presented in a similar manner using same accounting policies and conventions.This helps in analyzing the performance and position of an enterprise in the industry.
Question 5
1 / -0

Which of the following are internal users of accounting information?

A
Board of directors

B
Partners

C
Managers

D
All of the above

Solution

There are various agencies or stake holders interested to know about the accounting information. These stakeholders may be internal and external.
Accounts are prepared by the organization by following the compliance of various acts. Various agencies are interested to know about the accounts to ensure that organization is following the various laws applicable.

Board of directors, Partners and Mangers are considered as internal users.
Question 6
1 / -0

Which of the following is/are the advantages of accounting?

A
Decision making relating to financial aspect

B
Evidence in legal matters relating to accounting

C
Provides information to interested parties

D
All of the above

Solution

Accounting plays an important and useful role for the businessman. Following are the points which shows the advantages of accounting:

1) It helps in decision making relating to financial aspect
2) It is helpful in comparison
3) It provides information regarding costs
4) It provides information to interested parties
5) It provides the evidence in the court of law
6) It provides the value of the business.
Question 7
1 / -0

Which of the following is/are external users of accounting information?

A
Shareholders/investors

B
Creditors

C
Government agencies

D
All of the above

Solution

There are various agencies or stake holders interested to know about the accounting information. These stakeholders may be internal and external.
Accounts are prepared by the organization by following the compliance of various acts.
Shareholders, creditors and government agencies are considered as the external agencies which are interested to know about the accounting information.
Various agencies are interested to know about the accounts to ensure that organization is following the various laws applicable.
These regulatory agencies may includes Income Tax Authorities, Company Law Board, Registrar of Companies, SEBI, RBI etc.
Question 8
1 / -0

What are the important objectives of accounting?
I. To maintain records of a business
II. Calculation of profit or loss
III. Depiction of financial position
IV. To make information available to various groups and users.

A
I and II

B
I and III

C
I, II and III

D
I, II, III and IV

Solution

Definition of accounting is:
" Accounting is an art of recording, classifying and summarizing in terms of money transactions and events of a financial character and interpreting the results thereof"

It specifies that, accounting starts when all the business transactions are recorded. Accounting provides detailed information on financial position of the business to all the interested stake holders. The interested stake holders are creditors, lenders, customers, present and potential investors.
Question 9
1 / -0

Regulatory Agencies interested as users of accounting information includes __________.

A
Various Government departments

B
Agencies such as Company Law Board (CLB)

C
Registrar of Companies (ROC)

D
All of the above

Solution

There are various agencies or stake holders interested to know about the accounting information. These stakeholders may be internal and external.
Accounts are prepared by the organization by following the compliance of various acts. Various agencies are interested to know about the accounts to ensure that organization is following the various laws applicable.
These regulatory agencies may includes Income Tax Authorities, Company Law Board, Registrar of Companies, SEBI, RBI etc.
Question 10
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.

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Introduction to Book Keeping and Accounting Test 5

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Introduction to Book Keeping and Accounting Test 5

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SHARING IS CARING

Question 1

(I) & (II)

(II) & (III)

(I) & (III)

None of the above

Solution

Question 2

Comparability and consistency

Materiality and timeliness

Relevance and reliabilty

Reliability and comparability

Solution

Question 3

Proprietors or owners

Creditors

Tax authorities

All of these

Solution

Question 4

Reliability

Consistency

Verifiability

Comparability

Solution

Question 5

Board of directors

Partners

Managers

All of the above

Solution

Question 6

Decision making relating to financial aspect

Evidence in legal matters relating to accounting

Provides information to interested parties

All of the above

Solution

Question 7

Shareholders/investors

Creditors

Government agencies

All of the above

Solution

Question 8

I and II

I and III

I, II and III

I, II, III and IV

Solution

Question 9

Various Government departments

Agencies such as Company Law Board (CLB)

Registrar of Companies (ROC)

All of the above

Solution

Question 10

Understandability

Timeliness

Completeness

All of the above

Solution

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