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CBSE Questions for Class 11 Commerce Accountancy Introduction To Accounting Quiz 6 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Introduction To Accounting
Quiz 6
Accounting involves _________.
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decision making for the management easy as financial results can be compared.
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the records being put is a systematic pattern so that any point of time they can be used.
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the financial information being stored in a meaningful way for taxation purpose
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all of the above
Explanation
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.
Who is the father of Double entry- Book Keeping?
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F.W. Taylor
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Henry Fayol
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Lucas Pacioli
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None of the above
Explanation
Luca Pacioli was an Italian mathematician and is famously known as The Father of Accounting and Bookkeeping due to his tremendous contributions in the field of accounting.
Which of the following characteristics of accounting information primarily allows user of financial statements to generate predictions about an organization?
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Reliability
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Timeliness
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Neutrality
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Relevance
Explanation
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.
The branch of accounts that deals with the calculation of unit cost of services is called.
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Cost Accounting
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Management accounting
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Financial Accounting
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All of the above
Explanation
The
branch
of accounts that deals with the calculation of the unit cost of services are called
C
ost Accounting
.
Financial Accounting
deals with
recording, summarizing and reporting a company's business transactions through
financial
statements.
Management accounting
is the process of preparing reports about business operations that help
managers
make short-term and long-term decisions.
Accounting involves -
(I) Recording
(II) Classifying
(III) Summarizing
Select the correct answer from the options given below:
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(I)
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(I) & (III)
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(I) & (II)
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All of the above are correct
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.
Accounting information is being used by ___________.
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Customer
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Researchers
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Both a & b
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None of the above
Explanation
Well, Accounting information is used by customers for knowing about the continuity of the business and researchers for knowing about doing research on the business
Therefore, accounting information is used by Customers and Researcherrs
Which of the following is/are the branch of accounting?
(P) Financial Accounting
(Q) Cost Accounting
(R) Management Accounting
Select the correct answer:
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(P)
0%
(Q)
0%
(R)
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All of the above
Explanation
There are three branches of accounting. They are:
1. Financial Accounting:
Financial Accounting
deals with
recording, summarizing and reporting a company's business transactions through
financial
statements.
2. Cost Accounting:
The
branch
of accounts that deals with the calculation of the unit cost of services are called
C
ost Accounting
.
3. Management Accounting
:
Management accounting
is the process of preparing reports about business operations that help
managers
make short-term and long-term decisions.
Identify the external users of financial information or financial statements ____________________.
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Management of the business
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CFO of the business
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Employees of the business
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Investors of the business
Explanation
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.
Users of accounting information include ______________.
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Tax authorities
0%
Investors
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Creditors
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All of the above
Explanation
There are various stakeholders in the business who are interested to know about the accounting information for various reasons. User's or stake holders of the accounting information are creditors, Tax authorities, existing and prospective investors.
Creditors are interested to know about the safety of their money due from the company.
Tax Authorities are more interested to know that the company is maintaining the books of account as per the prevailing laws. Also want to ensure that due taxes are deposited by the company.
Investors both existing and prospective are more interested to know about the overall business.
Which of the following is one of the major professional accountancy bodies in the is____________________.
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Institute of Chartered Accountants of India
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Chartered Association of Accountants
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Indian Institute of Chartered Accounts
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Institute of Company Accountants
Explanation
The Institute of Chartered Accountants of India
is one of the major professional accountancy bodies in India.
The
ICAI
is the second largest professional body of Chartered Accountants in the world.
There is no institute named as Chartered Association of Accountants,
Indian Institute of Chartered Account, or
Institute of Company Accountants
Accounting is "the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof". This definition is given by ______________________.
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The Institute of Chartered Accountant of India (ICAI)
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The Institute of Chartered Accountant of England
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American Institute of Certified Public Accountants
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The Institute of Chartered Accountant of Pakistan
Explanation
American Institute of Certified Public Accountants has stated that
Accounting is "the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof".
Book-keeping is concerned with the ______ of transactions while Accounting is concerned with the _______ of the recorded transactions.
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Recording, Summarizing
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Summarizing, Recording
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Posting, Recording
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Summarizing, Posting
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.
Which of the following is/are external users of accounting information's?
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Shareholders/ Investors
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Creditors
0%
Government agencies
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All of the above
Explanation
External Users
are those which are
outside
the
affairs
of the business.
Example:
Shareholders, creditors, government
etc.
Which of the following is not a sub-field/Branch of Accounting?
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Cost Accounting.
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Management Accounting.
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Social Responsibility Accounting.
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Automated Accounting.
Explanation
The process of recording financial transactions in a systematic manner and classifying them into ledgers is termed as book keeping. It is a part of accounting. It is the basis for accounting. Whereas, information relating to the cost have specialized branch named as cost accounting and the information relating to the funds and its cost and profit have a branch called management accounting. A new dimension to accounting is the social responsibility accounting which looks after the entity's responsibility towards the society. Automated accounting is no branch or field to accounting.
Regulatory Agencies, interested as users of accounting information's includes _____________________.
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Various Government departments
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Agencies such as Company Law Board (CLB)
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Registrar of Companies (ROC)
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All of the above
Explanation
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)
External users of accounting information include ______________.
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Owner
0%
Customer
0%
Management
0%
None of these
Explanation
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
.
Internal users of accounting information include _______________.
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Short-Term Creditors
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Customers
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Long-term Lenders
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CEO
Explanation
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
.
Sale of goods to Ram for cash $$Rs.1000$$ is a ______________.
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Cash Transaction
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Credit Transaction
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Barter System
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Internal Event
Explanation
The transaction which involves immediate payment of cash is known as cash transaction. For e.g., Sale of goods to Ram for cash Rs. 1,000. In this transaction, goods are sold to Ram when he paid Rs. 1,000 cash.
An economic event that involves transfer of money or money's worth is a/are _______________.
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Financial Transactions
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Barter System
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Settlements
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Receipts/Payments
Explanation
Any event which involves transfer of money or money's worth is known as financial transaction. It is an agreement, or communication, carried out between a buyer and a seller to exchange an asset for payment. It is still a transaction if the goods are exchanged at one time, and the money at other.
Accounting covers only the following octillion __________________.
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Rewriting and Classifying.
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Recording, Classifying and Analysing.
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Analysing, Recording and Interpreting.
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Identifying, Classifying, Recording, Summarising and Communicating.
Explanation
Accounting starts with the golden rules of accounting after that it identifies which type of accounts are affected in the transaction and accordingly we have to record the transactions by passing journal entry.
Further, it measures the profit and loss and determines the financial position of the company. This is finally communicated to the users by way of financial reports.
Which of the following is not characteristic of accounting information?
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Understandability
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Relevance
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Future transactions
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Completeness
Explanation
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 the common unit of measurement and format of reporting.
Which of the following is/are characteristics of accounting information?
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Understandability
0%
Timeliness
0%
Completeness
0%
All of the above
Explanation
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.
Ram paid rent of Rs 10,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.
0%
Neither a transaction nor an event.
Explanation
'Transaction' involves money or money's worth, and hence, has a financial impact in the books of accounts.
Event may or may not have a financial impact in the books of accounts.
Example: Change of Operations Manager of the company.
In the given example amount paid as rent involves a financial element as amount is paid by one person to another.
Therefore, it is a transaction and not an event.
Drawings represent _______________.
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Cash withdrawn for office use
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Cash withdrawn for personal use
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Goods withdrawn for personal use
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B & C
Explanation
Drawing means when the owner withdraws something from business for personal use.
Capital
is the amount that is
invested
by the owner in the business.
Thus, cash is withdrawn for office use then is not drawings.
Drawing results in a decrease in the capital of the firm.
Sale of goods to Ram for Rs. 1,000 with a credit term of 5 days is a/an ____________.
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Cash Transaction
0%
Credit Transaction
0%
Barter System
0%
Internal Event
Explanation
The transaction in which there is no immediate payment of cash is known as credit transaction. For e.g., sale of goods to Ram for Rs. 1,000. In this transaction goods worth Rs. 1,000 sold to Ram on 5 days credit is a credit transaction as the payment is not made immediately for the goods.
Financial accounting information is characterized by all of the following except ___________.
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It is historical in nature
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It is factual, so it does not require judgement to prepare
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It results from appropriate measures
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It is enhanced by managements explanation
Explanation
'Professional judgement' is required to prepare accounting information since it is based on various accounting assumptions, policies, principles and standards. Therefore, financial accounting information involves professional judgement which cannot be ignored and hence, the statement that the judgement is not required is not correct.
A person to whom money is owed by the business __________________.
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A creditor
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A debtor
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A borrower
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A customer
Explanation
Creditors are persons and/or other entities who have 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 in the Balance Sheet as sundry creditors on the liabilities side.
A person who owes money to the firm is ____________.
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A creditor
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A debtor
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An investor
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A lender
Explanation
A debtor is the one who owes money to the firm i.e the firm has an amount receivable from debtor, which is an asset of the firm.
Drawing are deducted from ___________.
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Sales
0%
Purchases
0%
Returns outward
0%
Capital.
Explanation
Drawings is the money that is withdrawn by the owner for personal use and is an asset for the company. Capital is money brought by the owner in the business and is liability for the company. Drawings are deducted from the capital to reduce the liability of the company and not shown on the assets side.
The person to whom goods are sold on credit is known as _____________.
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Creditor
0%
Debtor
0%
Borrower
0%
None of these
Explanation
A
debtor
is a person, company, or other entity that owes money. In other words, the
debtor
has a debt or legal obligation to pay the amount owed for the goods sold to him on credit.
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Practice Class 11 Commerce Accountancy Quiz Questions and Answers
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