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CBSE Questions for Class 11 Commerce Accountancy Introduction To Accounting Quiz 4 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Introduction To Accounting
Quiz 4
Which of these processes are the function of book keeping?
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Summarising
0%
Interpreting
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Classifying
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Communicating
Explanation
Book keeping is an activity concerned with the recording and classification of financial data relating to business operations in significant and orderly manner. It is a process concerned with financial data recording.
____________ are important characteristics of Financial Statement.
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Understandability
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Comparability
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Reliability
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All of the above
Explanation
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.
________ is/are not characteristic of financial statement.
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Prudence
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Full, fair and adequate disclosure
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Flexibility
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Faithful representation
Explanation
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.
The basic objective of accounting is ________________.
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To maintain systematic records of financial transactions
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To ascertain financial performance
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To ascertain financial position
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All of Above
Explanation
Basic objective of accounting is -
1. To record financial transactions and events.
2. To determine profit or loss.
3. To determine financial position.
4. Communicating accounting information to users.
____________is a reduction from the list price of goods and services on account of immediate or payment within a stipulated period.
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Trade discount
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Cash discount
0%
Festival discount
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Inaugural discount
Explanation
Discount are categorized as Trade discount and Cash discount.
Trade discount are general discount allowed to every customer to promote the sales.
Cash discount is method of speedy collection of money from the customers to whom goods were sold on credit. Cash discount is allowed to the existing customer with a condition that if the amount is paid on immediate basis or within a stipulated period, a certain percentage will be allowed as discount.
Accounting process does not includes __________.
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Classifying.
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Summarizing.
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Popularizing.
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Recording.
Explanation
Accounting
starts with
identifying
a transaction and then
recording
in Journal
-then
classifying
in the ledger
then
summarizing
in final accounts
-then
interpretation
through Ratio analysis
then finally
communicating
the information to the users of the financial statement.
Thus, there is no popularizing step in the
entire accounting process.
Accounts that are prepared in order to comply with statutory requirement and to cater the information requirement of external users are known as
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Management Accounts
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Financial Accounts
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Management information systems
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Cost accounts
Explanation
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.
_________is a reducing from the list price of goods and services on business consideration other than prompt payment.
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Trade discount
0%
Cash discount
0%
Festival discount
0%
Inaugural discount
Explanation
Discount are categorized as Trade discount and Cash discount.
Trade discount are general discount allowed to every customer to promote the sales. Its a reduction to the published price of a product.
Cash discount is method of speedy collection of money from the customers to whom goods were sold on credit.
_______ is a liability that results from a purchase of goods or service.
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Accounts payable
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Bills payable
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Accounts receivables
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Accrued liability
Explanation
When a company purchases goods on credit which needs to be paid back in a short period of time, it is known as Accounts Payable. It is treated as a liability and comes under the head 'current liabilities'. Accounts payable is a short-term debt payment which needs to be paid to avoid default.
When a proprietor withdraw cash from the firm for self use, this is treated as ______.
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Loss
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Drawing
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Depreciation
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Expenses
Explanation
When the owner of the business withdraws some amount from the business for personal use then it is known as drawings.
Capital
is the amount that is
invested
by the owner in the business.
Drawings
are the decrease in the
Capital
of the business.
Accounting standards are issued by the _______.
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Institute of Cost and Work Accountants of India.
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Institute of Chartered Accountants of India.
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Ministry of Finance.
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Comptroller and Auditor General of India
Explanation
The
Institute of Chartered Accountants of India
has issued
Accounting Standard
to make
financial statements
from
multiple companies
comparable.
As all entities follow the same rules,
accounting standards
make the financial statements credible and allow for more economic decisions based on accurate and consistent information
The ICAI has
issued
32
Accounting Standards
so far, out of which 29 are notified by
Central Government
.
A person or entity who owes money is known as ________.
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Creditor
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Claimant
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Bailee
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Debtor
Explanation
A debtor is a person or entity that owes money. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this debt arrangement is a bank, the debtor is more often referred to as a borrower. For example, if you borrow $10,000 from a bank, you are the debtor and the bank is the creditor.
Which of these is not entered in the books of account?
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Cash discount
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Custom duty
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Trade discount
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Interest on capital
Explanation
Discounts are classified as trade discount and cash discount. If a discount is not associated with any precondition and available to all the customers, it's considered a trade discount. In such a situation, the net price will only be recorded in the books of account.
Trade Discount is not recorded the books of accounts.
Accounting process does not includes _______
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Classifying
0%
Summarizing
0%
Interpreting
0%
Printing
Explanation
Accounting
starts with
identifying
a transaction and then
recording it
in Journal
-then
classifying
in the ledger
then
summarizing
in final accounts
-then
interpretation
through Ratio analysis
then finally
communicating
the information to the users of the financial statement.
Therefore, there is no printing step in the accounting process.
The primary qualities that makes accounting information useful for decision-making are ________________.
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Comparability and consistency
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Materiality and timeliness
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Relevance and reliabilty
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Reliability and comparability
Explanation
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.
Allowance made for prompt payment is called trade discount.
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True
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False
Explanation
Discount are of two types i.e. trade discount and cash discount.
Cash discount is allowed to the customers to speed up the cash recovery from customers against the credit sales done.
Cash discount is an indirect expenses and to be debited to profit & loss account.
Which of the following is a cash transaction?
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Sold goods
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Sold goods to a customer
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Sold goods to a customer on credit
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None of above
Explanation
This can be summarized as:
Sold Goods- It represent the sale of goods on cash as nothing is mentioned about customer name or sold on credit. Hence this is considered as cash sales.
Sold Goods to customer- Its a credit sale.
Sold goods to customer on credit- Its a credit sales.
Sold goods to customer on account- Its also a credit sales.
Users of accounting information include _____________.
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Creditors
0%
Lenders
0%
Customers
0%
All of the above
Explanation
Accounting information is used by all the options given in the question, since they use information to make economic decisions and they are stakeholders of the business who deserve to know it all as well.
The Double Entry System of accounting originated in _________.
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America
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Russia
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Italy
0%
England
Explanation
Double entry accounting system
first invented in Italy by a church father who's named Luca Bartolomes Pacioli. He was the mathematician and contemporary of Leonardo Da Vinci.
When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristics of _______________.
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Reliability
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Consistency
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Verifiability
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Comparability
Explanation
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.
Two primary qualitative characteristics of financial statements are _________.
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Understandability and Materiality
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Relevance and Reliability
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Relevance and Understandability
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Materiality and Reliability
Explanation
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.
Which of the following are users of accounting information?
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Creditors
0%
Lenders
0%
Customers
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All of the above
Explanation
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.
Ram purchased goods of Rs. $$10,000$$. This can be classified as _________.
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An Event
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A Transaction
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A transaction as well as an event
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Neither a transaction nor an event
Explanation
Any exchange of value for value (for money or money's worth) is called a transaction. Something having value is received, and something having value goes out. Selling or purchasing of goods or taking or granting any loan are examples of transactions.
Ram purchased goods of Rs.10,000 is a transaction.
On March 31, there is closing stock of Rs. $$10,000$$. This can be classified ________________.
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An event
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A transaction
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A transaction as well as an event
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Neither a transaction nor an event
Explanation
Transactions
are acts performed by the business organization.
Transactions
are recorded in the books of the accounts as they occur. whereas,
Economic Events
are
results of transactions
that take place in the business organizations and which can be measured in
monetary terms
.
There Closing Stock of Rs. 10,000 is the result of the business transaction therefore, it is an
event.
In order to enable retailer earn profit and still sell goods at the list price, the manufacturers frequently grant them substantial reduction from the list price. Such a reduction in price is called ____________.
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Trade Discount
0%
Cash Discount
0%
Price Reduction
0%
Subsidies
Explanation
Trade discount is allowed to the customer to promote the sales. Trade discount is allowed on the list price. It reduces the price for the customer.
Trade discount is not recorded in the books of account. Only net value is recorded in books of account.
Which of the following groups/ parties are interested in the accounting information of the business?
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Proprietors or owners
0%
Creditors
0%
Tax authorities
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All of these
Explanation
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.
Purchase include ______________.
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Both cash and credit purchases
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Purchase of such goods which are purchased for resale
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Purchase of assets such a motor ans, furniture, plant and machinery
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Both (a) and (b)
Explanation
Purchases of goods done by the organization on credit and cash basis. If any goods is purchases for resale, it is accounted as purchases.
Accounting entry will be as under:
Purchases A/c Dr.
To Cash/ Sundry Creditors.
The withdrawal of goods from the business by the proprietor should be recorded in the __________.
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Drawing Account
0%
Purchase Account
0%
Capital Account
0%
Profit and Loss Account
Explanation
An
account
is set up in the balance sheet to
record
the transactions taken place of money removed from the
company
by the owners. This is known as the '
drawing account
'. In the
drawing account
, the amount
withdrawn
by the
owner
is
recorded
as a debit. If
goods
are
withdrawn
, the amount
recorded
is at cost value.
Which of the following is a credit transaction?
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Sold goods
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Sold goods for cash
0%
Sold goods to a customer for cash
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Sold goods to a customer
Explanation
Sold goods to customer is defined as credit sales.
Rest three statements are specifically denotes cash sales.
All those to whom business owes money are ___________.
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debtors
0%
investors
0%
creditors
0%
customers
Explanation
In accounting, customers
who owe money
to
the business
are called debtors.
Creditors are stakeholders
who
are
owed money
by
the business
. Creditors are typically suppliers that have delivered goods or services to
the business
but
the business
has not yet paid
the
supplier for
those
goods and services.
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Practice Class 11 Commerce Accountancy Quiz Questions and Answers
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