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CBSE Questions for Class 11 Commerce Accountancy Introduction To Accounting Quiz 7 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Introduction To Accounting
Quiz 7
If a company suffers heavy losses and its assets are not enough to pay off its liabilities, the balance can be recovered from the private assets of its members.
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0%
True
0%
False
Explanation
Statement is false because, in the view of limited liability of the members and shareholders of a company, they are not liable to pay any amount from their private assets if company suffers any loss or get into liquidation.
A specialised branch of accounting concerned with the processes and techniques of ascertaining costs of products and services is _______.
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Financial accounting
0%
Budgetary accounting
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Cost accounting
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Tax accounting
Explanation
Cost accounting is a specialized branch of accounting concerned with the processes and techniques of ascertaining the costs of products and services.
It also pinpoints any wastages, leakages, and defects during manufacturing and marketing processes. There are mainly three branches of accounting and cost accounting is one of them.
Hence, option (C) is the correct answer.
Management accounting involves _______________.
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Preparation of financial statements
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Analysis and interpretation of data
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Recording of transactions
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Preparation of cost statements
Explanation
Management Accounting is one of the branch of accountancy which helps management to make useful decisions.
Therefore, Analysis and interpretation of data is done in the management Accounting.
This helps management to know about the profitability and solvency of the business.
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Both Assertion and Reason are correct and Reason is the correct explanation for Assertion
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Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion
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Assertion is correct but Reason is incorrect
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Assertion is incorrect but Reason is correct
Explanation
Management accounting
is the process of preparing reports about business operations that help
managers
make short-term and long-term decisions.
There are three branches of accounting
1. Financial Accounting
2. Cost Accounting
3. Financial Accounting.
Therefore, Management accounting is the branch of accounting
The assertion is correct but the
Reason
is incorrect as cost accounting is the branch of accounting.
The Branch of Accounting which is concerned with the processing and presenting data for decision making is known as-
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Common Dollar Accounting
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Social Accounting
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Cost Accounting
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Management Accounting
Explanation
The Branch of Accounting which is concerned with the processing and presenting data for decision making is known as
Management Accounting.
Management accounting
is the process of preparing reports about business operations that help
managers
make short-term and long-term decisions.
There are three branches of accounting and management accounting is one of them.
Accounting is a substitute of ________ .
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Recording
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Book-keeping
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Memory
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None of these
Explanation
Accounting
is a
process
of
recording
, classifying, summarsing and interpretation of business transactions.
As
information
is
recorded
in the
books of the accounts
so, there is
no need
for users to
remember
each and every information in brain.
Thus,
Accounting is substitute of the memory.
Accounting is a language of _________.
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Business
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Commerce
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Economics
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None of these
Explanation
Accounting
is known as the
language
of the
business
as it
communicates
that how the business is
operating
, whether it is making
profit or loss
etc.
Accounting is used to communicate financial and other information to different interested parties like creditors, investors, researchers, governments etc.
Which of the following is the example of external users of accounting information ______________.
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Government
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Owners
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Management
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Employee
Explanation
Government is an external user of the accounting information as it is not part of the business.
There are two types of users of the financial statements
1. Internal Users: The examples of Internal users are owners, management and employee etc.
2. External Users: The example of External users are the government.
Drawings account is to be created by linking with
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Capital
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Current asset
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Current liability
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Drawings
Explanation
The
drawings account
is to be created by linking with Capital. Drawing means the amount withdrawn by the owner.
When the owner withdraws some amount from the business it is known as the drawings.
As per
Business Entity Concept
, the businessman is considered separate from the business.
Therefore,
capital
is the liability for the business and investment for the owner.
If an event involves transactions between an outsider and an organisation, these
are known as external events.
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True
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False
Explanation
External Events
are those economic events that involve transactions between
an outsider and the business organization
.
The
examples
of External events are
Sale of merchandise to the customers.
Rendering services to the customers by ABC Limited.
Purchase of materials from suppliers.
Payment of monthly rent to the landlord.
In general the financial year from shall be from ______________.
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1st April of any year
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31st March of any year
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All of them are true
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None of these
Explanation
The
financial year
starts from
1st April
of every year and ends on
31 March
of the
next calendar year
. The business prepares its
financial statement
for each financial year.
However, this is not mandatory, there are many business organisations where financial year starts from 1st January and ends on 31 December of the same year.
Some business organisations also follow the period of
18 months
as the financial year.
A transaction is known as a happening of consequence to a business organisation which consists of transactions
and which are measurable in monetary terms.
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0%
True
0%
False
Explanation
Transactions
are acts performed by the business organization.
Transactions
are recorded in the books of the accounts as they occur.
Whereas,
Events
are the results of the
transactions or happening as a consequence to a business organisation which consists of transactions and which are measurable in monetary terms
.
There are mainly two types of Events
1. Internal Events
2. External Events.
Therefore, the above statement is false.
_________ refers the amount invested by the owner into business.
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Loan
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Advance
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Capital
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Prepaid expenses
Explanation
Capital
refers the amount invested by the owner into business.
When the owner withdraws some amount from the business it is known as the
drawings
.
As per
Business Entity Concept
, the business man is considered separate from the business.
Therefore,
capital
is liability for the business and investment for the owner.
The person from who goods are bought on credit is known as ____________.
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Creditor
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Debtor
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Borrower
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None of these
Explanation
The person from whom goods are bought on credit is known as a Creditor.
When goods are purchased on credit bases then that person is known as creditor.
Creditors are current liabilities of the business.
Business organisations involves
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Non-financial Events
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Economic events
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Social Events
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Welfare events
Explanation
Economic Events
are
results of transactions
that take place in the business organisations and which can be measured in
monetary terms
.
For example, expenditure incurred on its installation and trial runs incurred on Purchase of machinery.
Business organization
involves only
economic transaction.
Non-Economic Events
are not recorded in the books of accounts as they cannot be recorded in measured in
monetary terms
.
Example: Death of the Partner or Key Manager.
Rendering services to the customers by ABC Limited is an Internal event.
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0%
True
0%
False
Explanation
External Events
are those economic events that involve
transactions between
an outsider and the business organization
.
In this example, the Customer is an outsider and the service belongs to the business organization,
therefore, this is an example of
External Events
.
Therefore, Rendering services to the customers by ABC Limited is an
External Event.
All are false except _________.
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Cash withdrawal by the proprietor for self-use need not be accounted for in books of account
0%
Cash withdrawal by the proprietor for self-use is a revenue expenses
0%
Cash withdrawal by the proprietor for self-use is a capital expenditure expenses
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Cash withdrawal by the proprietor for self-use is a drawing
Explanation
Any investment or contribution done by the owner in business is treated as capital and should be shown as liability. On the similar line, cash withdrawn by the proprietor for personal use is treated as drawings and to be recorded in books of account as drawing. Drawing should be deducted from capital of the owner.
State the fundamental steps in the accounting process __________.
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Identifying financial transaction
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Recording the business transaction
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Classifying the business transaction
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All of the above
Explanation
The first step involves identifying the transactions to be recorded and preparing the source documents which are in turn recorded in the basic book of original entry called journal and are then posted to individual accounts in the principal book called ledger. It involves classification of the business transaction, The process of recording transactions in journal is called journalising, Once this journalising process is completed, the journal entry provides a complete and useful description of the event's effect on the organisation. The process of transferring journal entry to individual accounts is called posting.
Business transaction in which cash is not paid or received immediately is known as ______________.
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Cash transaction
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Non monetary transaction
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Credit transaction
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Transaction in kind
Explanation
Transactions are the building blocks of accounts. Any transaction that occur within the business should be present in the accounting records. Credit transaction means any transaction by the terms of which the repayment of money loaned or loan commitment made, payment for goods, services or properties sold or leased is to made at a future date or dates. Credit transactions are paid at a later date than when the exchange of goods or services take place and almost at the time when the invoice for the transaction is issued.
Determining the debit and credit parts of a transaction is called _______________.
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Analyzing business transaction
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Classifying the transaction
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Summarizing
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Interpreting
Explanation
Before passing any accounting entry in journal, this has to identify that which account need to be debited and credited. For this, analysis of the business transaction is must which is done on the basis of nature of transaction.
Which of the following show the basic sequence of the accounting process?
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Transaction, journal entry, source document, ledger account, trial balance.
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Source document, transaction, ledger account, journal entry, trial balance.
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Transaction, source document, journal entry, trial balance, ledger account.
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Transaction, source document, journal entry, ledger account, trial balance.
Explanation
Every
business transaction
is to be recorded in the
journal
in
chronological
order. The sequence of any business transaction can be defined as:
1. Transaction-
Firstly, a transaction takes place in a business.
2. Source document-
Each transaction is supported by a source document.
3. Journal Entry-
A transaction is recorded in the journal with the help of a source document.
4. Ledger Account-
Once the transactions are recorded in the journal then they are posted to the ledger.
5. Trial balance-
All ledger balances are listed down in a statement named as trial balance
The gross decrease is economic benefits to the enterprise is referred to as _____________.
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Inflow
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Cash outflow
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Expense
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Income
Explanation
Expenses are those which are incurred for day to day business operations. All indirect expenses are debited to the profit & loss account which finally impact the owners' equity.
There are mainly two types of expenses
1. Capital Expense
2. Revenue Expense.
The main purpose of ___________ accounting is to ascertain profit or loss during a specific period and to show financial position of the business.
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Financial
0%
Cost
0%
Management
0%
Human resource
Explanation
Profit & loss account and balance sheet are prepared on the basis of information available through financial accounting. Profit and loss account shows the profit or loss during a specific period and balance sheet provides the financial position of the firm on a particular date.
Purpose of accounting is to provide financial information to _________.
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Shareholders
0%
Tax authorities
0%
Investors
0%
All of these
Explanation
There are various stakeholders who are interested in the financial position of the company. Shareholders and investors are the people who have provided the capital in the organization, hence want to know the financial position of the organization and more interested to know about the utilization of their money.
Tax Authorities are more interested to know about the overall financial position of the business to check and ensure that the company is paying the tax obligations on timely basis.
__________ is the interest of the owners in a business.
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Capital
0%
Assets
0%
Liability
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Income
Explanation
Capital is the contribution made by the owner. Based on the concept of separate entity concept, contribution made by owner will be treated as liability in the business books.
Goods that will be used in production are considered as___________.
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Raw Materials
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Work in Progress
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Finished Goods
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Inventory
Explanation
Inventory may be classified as:
Inventory of Raw Material
Inventory of Finished Goods
Work In Progress
The raw material is converted into finished goods by spending conversion cost.
_____________ includes identifying, recording, classifying and summarizing the transactions.
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Accounting posting
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Accounting cycle
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Tally of accounts
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All of the above
Explanation
Accounting cycle is a step-by-step process of recording, classification and summarization of economic transactions of a business. It generates useful information in the form of financial statements including income statement, balance sheet, cash flow statement and statement of changes in equity.
The time period principle requires that a business should prepare its financial statements on periodic basis. Therefore, cycle is followed once during each accounting period. Accounting cycle starts from the recording of individual transactions and ends on the preparation of financial statements and closing entries.
Which definition of accounting is most appropriate now-a-days?
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Accounting involves only the recording of those business transactions which are of financial character.
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Accounting is the recording, classifying, summarising, analysing and interpreting the business transactions which are of general character.
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Accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of accounts.
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Accounting is basically a scientific approach.
Explanation
Accounting is the systematic process of recording, classifying, summarizing, interpreting and communicating financial information to its users. It reveals profit and loss for a given period and the values and nature of firm's assets, liabilities and owner's equity.
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Practice Class 11 Commerce Accountancy Quiz Questions and Answers
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