Introduction To Accounting - Class 11 Commerce Accountancy - Extra Questions

Any four types of working capital required by a business concern are:

A transaction is a business event having a monetary value on the financial statements of a business. It is recorded in the accounting records of the business. It is an event which involves some value between two or more entities.
For example, sale of goods, purchase of goods, etc.

The excess of expenses over related revenues is known as loss. It also refers to money or money worth lost without it being beneficial in return, e.g., cash or goods lost by theft or a fire accident, loss on sale of assets, etc.

Measurement means enumeration of business transactions into financial terms by using the monetary unit as a measuring unit. If an event cannot be quantified in monetary terms, it will not be considered for recording in financial accounts.

An external economic event is an event where a business organization is engaged in a transaction with an outsider. It basically involves the transactions between a business and its external environment. 
For example, Sale of goods to customers, purchase of goods from suppliers, payment of rent for warehouse.

A business entity is an organization created by an individual or individuals to conduct business, engage in a trade, or partake in similar activities.
There are various types of business entities sole proprietorship, partnership, LLC, corporation, etc.

Discount is the deduction in the price of the goods sold. 
There are two types of discounts:
1. Trade Discount: Offering deduction of an agreed percentage of list price at the time selling goods is one way of giving a discount. Such a discount is called a trade discount. It is generally offered by manufacturers to wholesalers and by wholesalers to retailers.
2. Cash Discount: After selling the goods on a credit basis the debtors may be given a certain deduction in the amount due in case if they pay the amount within the stipulated period or earlier. This deduction is given at the time of payment on the amount payable. Hence, it is called a cash discount. It acts as an incentive that encourages rapid payment by the debtors.

Management accounting is the branch of accounting that addresses the needs of a single user group i.e., the management, as it enables the management to gather information relating to funds, costs, profits, etc. which enables them to take proper decisions.

The written document through which financial transactions are recorded in the books is called a voucher. It is the document that holds evidence of the occurrence of the transaction.

The amount of cash or goods which is withdrawn by the proprietor from the business for its private uses is called drawings. It reduces the investment of the owners, i.e., the capital of the business.

The person, firm, or organization from whom goods or services are purchased on credit by the business are called creditors of the business. The business owes money to them. The amount payable to creditors is a liability of the business.

Yes, I do agree with statement that accounting information should be comparable we will not be able to compare the result of previous year with the current year and secondly if these information are not comparable we will not be able to compare our self with our competitors.

(a) Revenue Expenditure; 

(a) The organization is a sole proprietorship firm. Sole proprietors have unlimited liability. This implies that the owner is personally responsible for payment of debts in case the assets of the business are not sufficient to meet all the debts. 

The Companies Act of $$1956$$ imposes certain conditions on the utilisation of amount of premium by the company. As per the Section $$78$$ of the Companies Act of $$1956$$, the amount of securities premium can be used by the company for several purposes such as for writing off the preliminary expenses of the company.

The person, firm, or organization who takes goods or services on credit from the business are called debtors of the business. In other words, the person, firm, or organization who owes money or Money worth to the business is called a debtor.

Gain is a profit that arises from events or transactions which are incidental to business such as the sale of fixed assets, appreciation in the value of an asset, etc.

Spending money or incurring liability for some benefit, service, or property received is called expenditure. If the benefit of expenditure is exhausted within a year, it is treated as an expense (also called revenue expenditure). 
On the other hand, the benefit of an expenditure lasts for more than a year, it is treated as an asset (also called capital expenditure) such as the purchase of machinery, furniture, etc. 

Sales are total revenues from goods or services sold or provided to customers. When purchase goods are sold in order to earn a profit are called sales. When goods are sold for cash it is called cash sales and goods sold on credit are called credit sales.

Understandability means decision-makers must interpret accounting information in the same sense as it is prepared and conveyed to them. The qualities that distinguish between good and bad communication in a message are fundamental to the understandability of the message. A message is said to be effectively communicated when it is interpreted by the receiver of the message in the same sense in which the sender has sent. Accountants should present comparable information in the most intelligible manner without sacrificing relevance and reliability.