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CBSE Questions for Class 11 Commerce Accountancy Introduction To Accounting Quiz 2 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Introduction To Accounting
Quiz 2
Which is the last step of accounting as a process of information ?
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Recording of data in the books of accounts.
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Preparation of summaries in the form of financial statements.
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Communication of information.
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Analysis and interpretation of information.
Explanation
Accounting
starts with
-identifying
a transaction
-then
recording
in Journal
-then
classifying
in the ledger
-then
summarising
in final accounts
-then
interpretation
through Ratio analysis
-then finally
communicating
the information to the users of the financial statement.
So, the first step is
identifying
and the last step is
communicating
the information.
When information about two different enterprises have been prepared presented in a similar manner, the information exhibits the characteristics of______________.
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Verifiability
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Relevance
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Reliability
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None of these
Explanation
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.
The process of accounting starts with _______ and ends with_______.
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Classifying, Recording
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Identifying the transaction, Communicating the information
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Financial account, Journal
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Recording, Classifying
Explanation
Accounting
starts with
-identifying
a transaction and then
recording
in Journal
-then
classifying
in the ledger
-then
summarising
in final accounts
-then
interpretation
through Ratio analysis
-then finally
communicating
the information to the users of the financial statement.
Thus, the first step is
identifying
and the last step is
communicating
the information.
Sale or purchase of goods or services for immediate cash payment is known as ____________ .
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Cash transaction
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Credit transaction
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Non-monetary transaction
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All of the above
Explanation
The term "transaction" refers to any business dealing or event which has a value measurable in terms of money and which involves transfer of money or money's worth between the business and others. The capital introduced by the proprietor, the amount withdrawn by the proprietor, purchase of goods on cash or credit, selling of goods for cash or credit, receipt of money from a debtor, payment to a creditor, borrowing of loan from the bank or payment of a loan, payment of salaries, rent, telephone charges, and receipt of incomes such as discount, rent and interest are examples of transactions. Cash transactions refer to any transaction which involves immediate payment or receipt of cash, e.g. purchase of goods for cash, sale of goods for cash, and payment of expenses or receipt of incomes
Exchange of goods and services either for cash or any other goods or services is known as _______________ .
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Transaction
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Narration
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Monetary transaction
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None of the above
Explanation
A event involving some value between two or more entities. It can be purchase of goods, receipt of money, payment to a creditor, incurring expenses, etc. A transaction is a business event that has a monetary impact on entity's financial statements, and is recorded as an entry in its accounting records. A high-volume transaction, such as billing to a customer, may be recorded in a specialized journal, which is then summarized and posted to the general ledger. Alternatively, lower-volume transactions are posted directly to the general ledger. A transaction can be a cash transaction or a credit transaction.
Amount invested by the proprietor into the business from time to time is called drawings.
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True
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False
Explanation
Amount invested by proprietor from time to time is capital not drawings. Drawings are the amount withdrawn from a business by its owner. And capital is the financial investment of money or assets contribute to or invest in a business for the purpose of receiving a return over a period of time.
Book- keeping and accounting are one and the same thing.
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True
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False
Explanation
There are two parts of
Accountancy
1. Bookkeeping -
It is concerned with
recording
,
classifying
financial data.
2. Accounting -
It is concerned with
summarizing, analyzing, interpreting and communicating
financial data.
Dealings between two persons is a __________ .
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Narration
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Entry
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Transaction
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None of the above
Explanation
An event involving some value between two or more entities. It can be purchase of goods, receipt of money, payment of creditor, incurring expenses, etc. It can be a cash transaction or a credit transaction. A transaction is a business event that has a monetary impact on an entity's financial statements, and is recorded as an entry in its accounting records. A high-volume transaction, such as billing to a customer, may be recorded in a specialized journal, which is then summarized and posted to the general ledger. Alternatively, lower-volume transactions are posted directly to the general ledger.
Sale or purchase of goods or for certain value to be receivable or payable in future
is known as ____________ .
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Cash transaction
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Credit transaction
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Non-monetary transaction
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None of the above
Explanation
The term "transaction" refers to any business dealing or event which has a value measurable in terms of money and which involves transfer of money or money's worth between the business and others. The capital introduced by the proprietor, the amount withdrawn by the proprietor, purchase of goods on cash or credit, selling of goods for cash or credit, receipt of money from a debtor, payment to a creditor, borrowing of loan from bank or payment of a loan, payment of salaries, rent, telephone charges, and receipt of incomes such as discount, rent and interest are examples of transactions. A credit transaction is one in which payment or receipt of money is postponed for a future date. Here, the name of the party is mentioned (with or without the word 'credit'). Purchased furniture from Mohan on credit, sold goods to Rejeev on credit, and salary unpaid, are some examples of credit transactions.
Explain the term 'Goods' _________________.
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Manufactured for the purpose of sales to earn profit
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Purchased for the purpose of sales to earn profit
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Commodities into which seller trade
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All of the above
Explanation
The commodities which are bought to resale or for packing and selling or for production to produce final goods for sale are called goods. It is basically things in which sellers trade. For example, for a seller of furniture goods are wood that he will purchase to make furniture.
Accounting is a process of recording, classifying, summarising, analysing and interpreting the financial transactions and communicating the result thereof to the users of such information. State whether the statement is true or false.
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True
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False
Explanation
Accounting
starts with
-identifying
a transaction and then
recording
in Journal
-then
classifying
in the ledger
-then
summarising
in final accounts
-then
interpretation
through Ratio analysis
-then finally
communicating
the information to the users of the financial statement.
Thus, the first step is
identifying
and the last step is
communicating
the information.
The primary qualities that make accounting information useful for decision making are_________.
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Relevance and freedom from bias
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Reliability and Relevance
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Comparability and consistency
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None of these
Explanation
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.
A person to whom amount is payable is known as ___________ .
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Creditor
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Debtor
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Bad debt
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None of the above
Explanation
Creditors are persons and /or other entities who have been to be paid by an enterprise an amount for providing the enterprise goods and services on credit. The total amount standing to the favour of such persons and/or entities on the closing date, is shown on the Balance Sheet as sundry creditors on the liabilities side
If company X borrowed money from its bank , Company X is the debtor and the bank is the creditor. If Supplier A sold merchandise to Retailer B, then Supplier A is the creditor and Retailer B is the debtor
Any commodity, article or merchandise in which trader regularly deals or carries on trade is called goods.
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True
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False
Explanation
Goods is defined the article or commodity in which the trader is doing his business. Other than these item, nothing should be added to goods account.
For example, XYZ Electronics is dealing in electronic equipment. Hence, fan, refrigerator, cooler, washing machine etc purchased for resale is to be considered as goods for the business.
Total amount of goods and services withdrawn by the proprietor for self use
is known as ____________ .
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Capital
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Drawings
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Expense
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Income
Explanation
Withdrawal of money and/or goods by the owner from the business for personal use is known as drawings. Drawings reduces the investment of the owners. It is maintained to track money withdrawn from a business. A drawing account is used primarily for businesses that are taxed as sole proprietorship's or partnerships. Owner withdrawals from businesses that are taxed as separate entities must generally be accounted for as either compensation or dividends.
A commodity in which a trader deals is known as ______.
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Property
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Goods
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Expenditure
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Income
Explanation
Goods
means those commodities which are bought for
resale
.
The amount receives by selling goods is known as
Sales.
Purchase
of goods is termed as
Purchases.
If goods remain unsold at the end of the financial year then it termed as
Closing Stock.
The work of accounting depends upon________.
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Book keeping
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Cash book
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Subsidiary books
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Ledger
Explanation
Bookkeeping
is the
process
of daily
record-keeping
financial transactions.
In Bookkeeping
sales, expenses, cash and bank
transactions are recorded of the business in a
general ledger
.
With these ledgers, final accounts are prepared.
So the work of accounting depends upon
bookkeeping.
Amount received after selling of goods or services is known as _________.
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Revenue
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Cost
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Income
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None of the Above
Explanation
Revenue is a receipt normally received against the sale of goods or services.
It is not necessary that amount is received immediately at the time of sale of goods or services. Revenue is recognized once the legal title of goods is transferred. The amount may be received later on.
The work of book-keeping is of __________ nature.
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competitive
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primary/basic
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secondary
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none of these
Explanation
There are two parts of
Accountancy
1. Bookkeeping -
It is concerned with
recording
,
classifying
financial data. Therefore, the work of bookkeeping is of a
Primary/ basic
nature.
2. Accounting -
It is concerned with
summarizing, analyzing, interpreting and communicating
financial data.
Excess of revenue over its cost _______________.
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Income
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Loss
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Cost
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Profit
Explanation
At the end of a specified period normally a year, every business prepare a statement i.e. profit & loss account to know about the profitability of the organization.
There are two sides of profit & loss account. One side the revenue are recorded and on another side costs are recorded. Excess of revenue over the cost is called profit and vice versa.
A transaction is concerned with money and money 's worth.
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True
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False
Explanation
A transaction is an agreement between a buyer and a seller to exchange goods, services or financial instruments. Transaction is a business event that has a monetary impact on an entity 's financial statements. For example - paying a supplier for services rendered or for supply of goods, paying an employee for hours work etc. This all are transactions and involve money and money' s worth.
Commodity purchased or produced for sale
is known as ____________ .
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Goods
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Machinery
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Land
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None of the above
Explanation
Goods refer to the products in which the business units is dealing, i.e in terms of which it is buying and selling or producing and selling. The items that are purchased for use in the business are not called goods. For example, for a furniture dealer purchase of chairs and tables is termed as goods, while for other it is furniture and is treated as an asset. Similarly, for stationary merchant, stationary is goods, whereas for others it is an item of expense (not purchases).
State True or False.
Writing of account does not include specific skill and knowledge.
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True
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False
Explanation
Writing of accounts
meaning
recording, classifying, summarizing
of the financial transactions.
This require
specific set of skills and knowledge
to perform various tasks such as knowledge of rule for recording and knowledge of performing the accounting process etc.
Drawings made by the owner of the business decreases its equity.
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True
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False
Explanation
Business entity concept of accounting says that business and the owner are treated two separate entity.
Hence anything contributed by owner considered liability for the business and increase the capital/equity. On the same line, if anything withdrawn by the proprietor for personal use (drawings) will reduce the capital/equity.
Presentation will be as under in Balance Sheet:
Capital xxxxx
Add: Capital introduced during the year xxxxx
Less: Drawings xxxxx
Benefits which are given by seller to receiver is known as discount.
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True
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False
Explanation
A discount is a deduction allowed by the seller of goods or by the provider of services in order to motivate the customers to pay within a specified time.
There are mainly two types of discounts. They are
1. Trade Discount
2. Cash Discount.
Drawings made by the proprietor increases his capital.
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True
0%
False
Explanation
Capital
is the amount which is
invested
by the owner into the business.
The amount which is withdrawn by the
proprietor
from the business for the personal use is known as
drawing.
Thus,
drawings
is the decrease in the
Capital
of the business.
Therefore, the above statement is
false.
State True or False.
In credit transaction, goods or services are purchased for cash only.
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True
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False
Explanation
In credit transaction goods or services are purchased but the payment is settle in a later date and in cash transactions payment is settled immediately.
Cash discount is an incentive allowed for speedy recovery of income.
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True
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False
Explanation
There are mainly two types of discounts. They are
1. Trade Discount
2. Cash Discount.
A cash discount is a deduction allowed by the seller of goods or by the provider of services in order to motivate the customers to pay within a specified time.
State True or False.
Goods is a commodity which is purchased for self use.
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True
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False
Explanation
Goods
means those commodities which are bought for
resale
.
The amount receives by selling goods is known as
Sales.
Purchase
of goods is termed as
Purchases.
If goods remain unsold at the end of the financial year then it termed as
Closing Stock.
Therefore,
the above statement is false.
Irregularities, frauds and misappropriations can be detected only because of books accounts.
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True
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False
Explanation
Irregularities, frauds and misappropriation are not only detected by books of accounts but also by various strategies like making employees aware, set up reporting system, implement internal controls, hire experts etc.
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Practice Class 11 Commerce Accountancy Quiz Questions and Answers
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