Introduction to Book Keeping and Accounting Test 6

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Introduction to Book Keeping and Accounting Test 6

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Weekly Quiz Competition

Question 1
1 / -0

Select the odd on in relation to users of accounting information.

A
Officers

B
Managers

C
Debtors

D
Board of directors

Solution

Officers, Mangers and Board of directors are the team of employees and board.

Debtors are those to whom company has sold goods on credit. These are part of current assets.
Question 2
1 / -0

Identify the external users of financial information or financial statements ____________________.

A
Management of the business

B
CFO of the business

C
Employees of the business

D
Investors of the business

Solution

Investors of the business are considered as the external users of financial information or financial statements. As they are not directly involved in working of organization like CFO, Employee or management.
Question 3
1 / -0

Which of the following is characteristic of accounting information?
P. Relevance
Q. Reliability
R. Comparability
Select the correct answer from the options given below ______________.

A
P

B
Q

C
R

D
All of the above

Solution

There are mainly 4 characteristics of the accounting information
1. Understandability:
2. Relevance
3. Reliability
4. Comparability
Question 4
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

There are number of users who are interested in the accounting information relating to the business. These users may be classified as internal and external users.
1) Owner
2) Management
3) Creditors
4) Employees
5) Investors/Shareholders
6) Government
7) Researchers
Shareholders since not related to the management of business operations are considered as external users.
Question 5
1 / -0

Accounting information is being used by __________.

A
Customers

B
Researchers

C
Both A & B

D
None of the above

Solution

There are different people or the stake holders interested to know about the financial position of the organization. These are customers, creditors, lenders, existing and prospective investors , tax authorities.
Customers are more interested to know about the business performance and the future plans of the organization.
Researchers are interested to know the accounting information to do further research and cpmparison with other similar industries.
Question 6
1 / -0

Which of the following is characteristic of accounting information?

A
Verifiability

B
Neutrality

C
Completeness

D
All of the above

Solution

There are mainly 4 characteristics of the accounting information
1. Understandability:
2. Relevance
3. Reliability
4. Comparability

Here, Reliability includes information to be verifiable, neutral and complete.
Thus, all the options are correct.
Question 7
1 / -0

Accounting involves _________.

A
decision making for the management easy as financial results can be compared.

B
the records being put is a systematic pattern so that any point of time they can be used.

C
the financial information being stored in a meaningful way for taxation purpose

D
all of the above

Solution

Accounting plays an important and useful role for the business owner. Main advantages are :
To record all the business transactions in a systematic way so that information can be used as and when required.
Financial statements are prepared on the basis of information recorded in the books of account, so that management can take a decision by comparing the results.
Accounting plays a vital role in giving the information to the taxation authorities to know whether business is following all the rules and laws and paying the tax in timely manner.
Question 8
1 / -0

Which of the following characteristics of accounting information primarily allows user of financial statements to generate predictions about an organization?

A
Reliability

B
Timeliness

C
Neutrality

D
Relevance

Solution

Information is relevant if it is available in time and helps in prediction.
The management needs accounting information for making a useful decision like where to invest, how was the performance of the business the year, where management needs to improve but if management does not get this information on time then they cannot make a certain prediction which is important for the success of the company.
Question 9
1 / -0

Regulatory Agencies, interested as users of accounting information's includes _____________________.

A
Various Government departments

B
Agencies such as Company Law Board (CLB)

C
Registrar of Companies (ROC)

D
All of the above

Solution

Regulatory Agencies, interested as users of accounting information's includes
1. Various Government departments
2. Agencies such as Company Law Board (CLB)
3. Registrar of Companies (ROC)
Question 10
1 / -0

Internal users of accounting information include _______________.

A
Short-Term Creditors

B
Customers

C
Long-term Lenders

D
CEO

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.

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Introduction to Book Keeping and Accounting Test 6

Result

Introduction to Book Keeping and Accounting Test 6

Score

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SHARING IS CARING

Question 1

Officers

Managers

Debtors

Board of directors

Solution

Question 2

Management of the business

CFO of the business

Employees of the business

Investors of the business

Solution

Question 3

P

Q

R

All of the above

Solution

Question 4

Board of Directors

Shareholders

Finance manager

Sales manager

Solution

Question 5

Customers

Researchers

Both A & B

None of the above

Solution

Question 6

Verifiability

Neutrality

Completeness

All of the above

Solution

Question 7

decision making for the management easy as financial results can be compared.

the records being put is a systematic pattern so that any point of time they can be used.

the financial information being stored in a meaningful way for taxation purpose

all of the above

Solution

Question 8

Reliability

Timeliness

Neutrality

Relevance

Solution

Question 9

Various Government departments

Agencies such as Company Law Board (CLB)

Registrar of Companies (ROC)

All of the above

Solution

Question 10

Short-Term Creditors

Customers

Long-term Lenders

CEO

Solution

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