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All questions of Unit 1: Meaning and Scope of Accounting for CA Foundation Exam
Net Profit or Loss will be derived at _______ stage of accounting- a)Classifying
- b)Interpretation
- c)Recording
- d)Summarising
Correct answer is 'D'. Can you explain this answer?
Net Profit or Loss will be derived at _______ stage of accounting
a)
Classifying
b)
Interpretation
c)
Recording
d)
Summarising
|
Alok Mehta answered |
The answer is D.Summarising stage is concerned with the preparation and presentation of the classified data in a manner useful to the internal as well as external users of financial statements. This process leads to the preparation of the following financial statements. Therefore, Net Profit or Loss is derived at the summarising stage.
Can you explain the answer of this question below:On January 1, Sohan paid rent Rs. 5,000. This can be classified as
- A:
An event
- B:
A transaction.
- C:
A transaction as well as an event.
- D:
Neither a transaction nor an event.
The answer is b.
On January 1, Sohan paid rent Rs. 5,000. This can be classified as
An event
A transaction.
A transaction as well as an event.
Neither a transaction nor an event.
|
Anand Dasgupta answered |
Explanation:
A transaction is an exchange of goods, services, or money between two or more parties. In this case, Sohan paid rent of Rs. 5,000 which involves an exchange of money between Sohan and his landlord. Hence, it is a transaction.
An event, on the other hand, is a happening or occurrence that may or may not involve an exchange of goods, services, or money. In this case, if Sohan had received the rent payment from his landlord, it would have been an event. However, since he paid the rent, it is not just an event.
Therefore, the correct answer is option 'B' - A transaction.
A transaction is an exchange of goods, services, or money between two or more parties. In this case, Sohan paid rent of Rs. 5,000 which involves an exchange of money between Sohan and his landlord. Hence, it is a transaction.
An event, on the other hand, is a happening or occurrence that may or may not involve an exchange of goods, services, or money. In this case, if Sohan had received the rent payment from his landlord, it would have been an event. However, since he paid the rent, it is not just an event.
Therefore, the correct answer is option 'B' - A transaction.
On March 31, 2011 after sale of goods worth Rs. 2,000, he is left with the closing inventory of Rs. 10,000. This is- a)An event
- b)A transaction.
- c)A transaction as well as an event.
- d)Neither a transaction nor an event
Correct answer is option 'A'. Can you explain this answer?
On March 31, 2011 after sale of goods worth Rs. 2,000, he is left with the closing inventory of Rs. 10,000. This is
a)
An event
b)
A transaction.
c)
A transaction as well as an event.
d)
Neither a transaction nor an event
|
Rashmi Chaurasia answered |
We can say that a event is result after the transaction. So value of closing inventory is result after the transaction so we can say that it is "an event" .
Can you explain the answer of this question below: If owner’s capital is Rs. 50,000 liability is Rs. 30,000 and fixed assets is Rs. 70,000, then what is the value of current assets?- A:Rs. 10,000
- B:Rs. 40,000
- C:Rs. 80,000
- D:Rs. 1,00,000
The answer is a.
If owner’s capital is Rs. 50,000 liability is Rs. 30,000 and fixed assets is Rs. 70,000, then what is the value of current assets?
A:
Rs. 10,000
B:
Rs. 40,000
C:
Rs. 80,000
D:
Rs. 1,00,000
|
Srestha Shah answered |
According to the accounting equation:
Owner's capital= Assets- Liabilities
50,000= (70,000+ current assets)- 30,000
Current Assets= Rs. 10,000
Owner's capital= Assets- Liabilities
50,000= (70,000+ current assets)- 30,000
Current Assets= Rs. 10,000
On 31st December, 2005, Ashok Ltd. purchased a machine from Mohan Ltd. for Rs. 1,75,000. This is : (year end : 31st December)
- a)A transaction
- b)An event
- c)Both transaction as well as event
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
On 31st December, 2005, Ashok Ltd. purchased a machine from Mohan Ltd. for Rs. 1,75,000. This is : (year end : 31st December)
a)
A transaction
b)
An event
c)
Both transaction as well as event
d)
None of these
|
|
Alok Mehta answered |
The purchase of a machine by Ashok Ltd. from Mohan Ltd. for Rs. 1,75,000 on 31st December, 2005, is both a transaction as well as an event.
A transaction is an exchange of goods or services for something of value. In this case, Ashok Ltd. exchanged Rs. 1,75,000 for a machine from Mohan Ltd., which qualifies as a transaction.
An event, on the other hand, is a happening or occurrence that has significance or consequences. The purchase of a machine by Ashok Ltd. from Mohan Ltd. on 31st December, 2005, can be considered an event as it is a significant happening that has financial implications for both companies.
Therefore, the purchase of the machine is both a transaction and an event.
On 31st December, 2005, Ashok Ltd. purchased a machine from Mohan Ltd. for Rs. 1,75,000. This is : (year end : 31st December)
- a)A transaction
- b)An event
- c)Both transaction as well as event
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
On 31st December, 2005, Ashok Ltd. purchased a machine from Mohan Ltd. for Rs. 1,75,000. This is : (year end : 31st December)
a)
A transaction
b)
An event
c)
Both transaction as well as event
d)
None of these
|
Rajat Patel answered |
Transaction means a business, performance of an act, an agreement while event signifies a happening, as a consequence of transaction, a result. Thus, purchase of Machinery on 31st Dec, 2005 i.e. last day of accounting year will be a transaction as well as event.
On March 31, 2011 after sale of goods worth Rs. 2,000, he is left with the closing inventory of Rs. 10,000. This is- a)An event
- b)A transaction.
- c)A transaction as well as an event.
- d)Neither a transaction nor an event
Correct answer is 'A'. Can you explain this answer?
On March 31, 2011 after sale of goods worth Rs. 2,000, he is left with the closing inventory of Rs. 10,000. This is
a)
An event
b)
A transaction.
c)
A transaction as well as an event.
d)
Neither a transaction nor an event
|
Neha Yadav answered |
Correct answer is option A
Which of the following is correct? Owner’s Equity is : - a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)
- b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)
- c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
Which of the following is correct? Owner’s Equity is :
a)
(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)
b)
(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)
c)
(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)
d)
None of the above.
|
|
Deepika Desai answered |
Owner.
Accounting has universal application for recording _______ and events and presenting suitable information for decision making- a)Entries
- b)Transactions
- c)Data
- d)Figures.
Correct answer is option 'B'. Can you explain this answer?
Accounting has universal application for recording _______ and events and presenting suitable information for decision making
a)
Entries
b)
Transactions
c)
Data
d)
Figures.
|
Kavita Joshi answered |
Accounting has universal application for recording transactions and events and presenting suitable information to aid decision-making regarding any type of economic activity ranging from a family function to functions of the national government. But hereinafter we shall concentrate only on business activities and their accounting because the objective of this study material is to provide a basic understanding on accounting for business activities. Nevertheless, it will give adequate knowledge to think coherently of accounting as a field of study for universal application.
Rs. 5,000 paid as rent of office premises in an/a _________- a)Event
- b)Transaction
- c)Both
- d)None
Correct answer is option 'B'. Can you explain this answer?
Rs. 5,000 paid as rent of office premises in an/a _________
a)
Event
b)
Transaction
c)
Both
d)
None
|
|
Palak Choudhary answered |
Explanation:
This question is related to the accounting concept of "transactions".
Transactions are defined as any financial event that affects a business's financial position and can be measured reliably.
In this case, the payment of rent for office premises is a financial event that affects the business's financial position and can be measured reliably. Therefore, it is considered a transaction.
Events, on the other hand, are occurrences that may or may not have a financial impact on the business. For example, attending a business conference may be considered an event, but it does not have a direct financial impact on the business.
Therefore, the correct answer is option B - Transaction.
This question is related to the accounting concept of "transactions".
Transactions are defined as any financial event that affects a business's financial position and can be measured reliably.
In this case, the payment of rent for office premises is a financial event that affects the business's financial position and can be measured reliably. Therefore, it is considered a transaction.
Events, on the other hand, are occurrences that may or may not have a financial impact on the business. For example, attending a business conference may be considered an event, but it does not have a direct financial impact on the business.
Therefore, the correct answer is option B - Transaction.
Net Profit or Loss will be derived at _______ stage of accounting- a)Classifying
- b)Interpretation
- c)Recording
- d)Summarising
Correct answer is option 'D'. Can you explain this answer?
Net Profit or Loss will be derived at _______ stage of accounting
a)
Classifying
b)
Interpretation
c)
Recording
d)
Summarising
|
|
Sonal Patel answered |
Summarising stage is concerned with the preparation and presentation of the classified data in a manner useful to the internal as well as external users of financial statements. This process leads to the preparation of the following financial statements. Therefore, Net Profit or Loss is derived at the summarising stage.
Which of these is not available in the Financial Statements of Company?- a)Total Sales
- b)Total Profit & Loss
- c)Capital
- d)Cost of Production
Correct answer is option 'D'. Can you explain this answer?
Which of these is not available in the Financial Statements of Company?
a)
Total Sales
b)
Total Profit & Loss
c)
Capital
d)
Cost of Production
|
Srsps answered |
The correct answer is d: Cost of Production.
Financial statements of a company typically include the following:
1. Balance Sheet: This statement provides a snapshot of a company's financial position at a specific point in time, showing its assets, liabilities, and shareholders' equity. Key elements include:
- Assets: What the company owns
- Liabilities: What the company owes
- Shareholders' Equity: The owners' claim on the company's assets
2. Income Statement: This statement shows a company's performance over a specific period, usually a year or a quarter. It lists the company's revenues and expenses, resulting in net income or loss. Key elements include:
- Total Sales: The total revenue generated by the company during the period
- Total Profit & Loss: The net income or loss resulting from the company's operations
- Expenses: The costs incurred by the company in generating its revenues
3. Statement of Cash Flows: This statement provides information about a company's cash inflows and outflows during a specific period. It helps investors understand how a company generates and uses its cash. Key elements include:
- Operating Activities: Cash generated from the company's core operations
- Investing Activities: Cash used for investing in long-term assets or other companies
- Financing Activities: Cash generated from or used for financing activities, such as issuing stocks or paying dividends
4. Statement of Changes in Equity: This statement shows the changes in the company's equity during a specific period. It includes changes resulting from issuing new shares, paying dividends, and changes in retained earnings due to net income or loss.
Cost of Production is not directly available in the financial statements of a company. It is an internal metric used by management to assess the efficiency and profitability of the company's operations. However, you can calculate the cost of goods sold (COGS) using the income statement, which represents the direct costs associated with producing the goods or services sold by the company. This includes costs related to materials, labor, and manufacturing overhead. The cost of production is a broader term and may include additional costs beyond the COGS.
Financial statements of a company typically include the following:
1. Balance Sheet: This statement provides a snapshot of a company's financial position at a specific point in time, showing its assets, liabilities, and shareholders' equity. Key elements include:
- Assets: What the company owns
- Liabilities: What the company owes
- Shareholders' Equity: The owners' claim on the company's assets
2. Income Statement: This statement shows a company's performance over a specific period, usually a year or a quarter. It lists the company's revenues and expenses, resulting in net income or loss. Key elements include:
- Total Sales: The total revenue generated by the company during the period
- Total Profit & Loss: The net income or loss resulting from the company's operations
- Expenses: The costs incurred by the company in generating its revenues
3. Statement of Cash Flows: This statement provides information about a company's cash inflows and outflows during a specific period. It helps investors understand how a company generates and uses its cash. Key elements include:
- Operating Activities: Cash generated from the company's core operations
- Investing Activities: Cash used for investing in long-term assets or other companies
- Financing Activities: Cash generated from or used for financing activities, such as issuing stocks or paying dividends
4. Statement of Changes in Equity: This statement shows the changes in the company's equity during a specific period. It includes changes resulting from issuing new shares, paying dividends, and changes in retained earnings due to net income or loss.
Cost of Production is not directly available in the financial statements of a company. It is an internal metric used by management to assess the efficiency and profitability of the company's operations. However, you can calculate the cost of goods sold (COGS) using the income statement, which represents the direct costs associated with producing the goods or services sold by the company. This includes costs related to materials, labor, and manufacturing overhead. The cost of production is a broader term and may include additional costs beyond the COGS.
Double Accounting System owes its origin to : a)Luca De Pacioli b)Adam Smithc)Kohlerd)Karl MarxCorrect answer is option 'A'. Can you explain this answer?
b)Adam Smith
c)Kohler
d)Karl Marx
Correct answer is option 'A'. Can you explain this answer?
|
Poonam Reddy answered |
Luca Pacioli, in venice (1494) is considered as the first book on double entry book-keeping. A portion of this book contains knowledge of business and book-keeping.
The main objectives of Book- Keeping are :- a)Complete Recording of Transactions
- b)Ascertainment of Financial Effect on the Business
- c)Analysis and interpretation of data
- d)(a) and (b) both
Correct answer is option 'D'. Can you explain this answer?
The main objectives of Book- Keeping are :
a)
Complete Recording of Transactions
b)
Ascertainment of Financial Effect on the Business
c)
Analysis and interpretation of data
d)
(a) and (b) both
|
|
Arjun Singhania answered |
- Objective of Book-keeping
- - To have a permanent record of each transaction of the business.
- - To show the financial effect on the entity of each transaction recorded.
- - To ascertain the combined effect of all the transactions (during an accounting period) on the financial position on a particular date.
- - To disclose the factors responsible for earning profit or suffering loss in a given period.
- - The amount recoverable by the business from others (sundry debtors) and payable to others (sundry creditors)
- - Determination of tax-liability of the business.
- - Prevention of errors and frauds.
- - Protection of assets.
- - Measure of exercising a system of control.
Users of accounting information include
- a)Trade payables/ Suppliers
- b)Lenders.
- c)Customers.
- d)all of the above.
Correct answer is option 'D'. Can you explain this answer?
Users of accounting information include
a)
Trade payables/ Suppliers
b)
Lenders.
c)
Customers.
d)
all of the above.
|
Jayant Mishra answered |
The correct answer is 4 - all of the above.
Users of accounting information include various stakeholders who have an interest in a company's financial performance and position. These stakeholders can use accounting information to make decisions regarding their engagement with the company. The users of accounting information can include trade payables/suppliers, lenders, customers, investors, regulatory authorities, employees, management, and others. All of the options given in the question - trade payables/suppliers, lenders, and customers - are users of accounting information, but there are also many others.
Financial position of the business is ascertained on the basis of - a)Records prepared under book-keeping process.
- b)Trial balance.
- c)Accounting reports.
- d)None of the above.
Correct answer is option 'C'. Can you explain this answer?
Financial position of the business is ascertained on the basis of
a)
Records prepared under book-keeping process.
b)
Trial balance.
c)
Accounting reports.
d)
None of the above.
|
|
Arjun Singhania answered |
Accounting reports are compilations of financial information that are derived from the accounting records of a business. These can be brief, custom-made reports that are intended for specific purposes, such as a detailed analysis of sales by region, or the profitability of a specific product line. More commonly, accounting reports are considered to be equivalent to the financial statements. These statements include the following reports:
1. Income statement. States the revenues earned during a period, less expenses, to arrive at a profit or loss. This is the most commonly used accounting report, since it is used to judge the performance of a business.
2. Balance sheet. Shows the ending asset, liability, and equity balances as of the balance sheet date. It is used to judge the liquidity and financial reserves of a business.
3. Statement of cash flows. Shows the sources and uses of cash related to operations, financing, and investments. Can be the most accurate source of information regarding the cash-generating ability of an entity.
A number of disclosures may accompany the financial statements, in the form of footnotes. This is more likely to be the case when the financial statements have been audited.
Financial statements do not consider- a)Assets expressed in monetary terms.
- b)Liabilities expressed in monetary terms.
- c)Only assets expressed in non-monetary terms.
- d)Assets and liabilities expressed in non-monetary terms
Correct answer is option 'D'. Can you explain this answer?
Financial statements do not consider
a)
Assets expressed in monetary terms.
b)
Liabilities expressed in monetary terms.
c)
Only assets expressed in non-monetary terms.
d)
Assets and liabilities expressed in non-monetary terms
|
|
Pallabi Khanna answered |
Nonmonetary items are those assets and liabilities appearing on the balance sheet that are not cash, or cannot be readily converted into cash. ... Nonmonetary liabilities include those obligations that are not payable in cash, or items that will adjust an expense.
Interpreting Financial Statements means:- a)Methodical classification of the data given in the financial statements.
- b)Preparation and presentation of the classified data in a manner useful to the users of financial statements.
- c)Systematic analysis of the recorded data so as to put information in usable from.
- d)Explaining the meaning and significance of the relationship of analysis of accounting data.
Correct answer is 'D'. Can you explain this answer?
Interpreting Financial Statements means:
a)
Methodical classification of the data given in the financial statements.
b)
Preparation and presentation of the classified data in a manner useful to the users of financial statements.
c)
Systematic analysis of the recorded data so as to put information in usable from.
d)
Explaining the meaning and significance of the relationship of analysis of accounting data.
|
|
Alok Mehta answered |
Interpretation of financial statements are an attempt to determine the significance and meaning of the financial statement data so that a forecast may be made of the prospects for future earnings, ability to pay interest, debt maturities, both current as well as long term, and profitability of sound dividend policy.
Interpretation of financial statements involves many processes like arrangement, analysis, establishing relationship between available facts and drawing conclusions on that basis.
Book-keeping is mainly concerned with - a)Recording of financial data.
- b)Designing the systems in recording, classifying and summarizing the recorded data.
- c)Interpreting the data for internal and external users.
- d)None of the above.
Correct answer is option 'A'. Can you explain this answer?
Book-keeping is mainly concerned with
a)
Recording of financial data.
b)
Designing the systems in recording, classifying and summarizing the recorded data.
c)
Interpreting the data for internal and external users.
d)
None of the above.
|
|
Kavita Joshi answered |
According to North Cott ,“Book-keeping is an art of recording in books of accounts the monetary aspect of commercial or financial transactions”. It is mainly concerned with record keeping or maintenance of books of accounts.
Financial Statements are a part of : - a)Accounting
- b)Book- Keeping
- c)Both
- d)None
Correct answer is option 'A'. Can you explain this answer?
Financial Statements are a part of :
a)
Accounting
b)
Book- Keeping
c)
Both
d)
None
|
Freedom Institute answered |
Financial statement is a formal record of the financial activities and position of a business, person or other entity. Financial statement are major part of accounting as accounting is incomplete without financial statements.
Book-keeping is mainly concerned with- a)Recording of financial data.
- b)Designing the systems in recording, classifying and summarising the recorded data.
- c)Interpreting the data for internal and external users.
- d)None of the above.
Correct answer is option 'A'. Can you explain this answer?
Book-keeping is mainly concerned with
a)
Recording of financial data.
b)
Designing the systems in recording, classifying and summarising the recorded data.
c)
Interpreting the data for internal and external users.
d)
None of the above.
|
|
Kavita Joshi answered |
Book-keeping. According to North Cott ,“Book-keeping is an art of recording in books of accounts the monetary aspect of commercial or financial transactions”. It is mainly concerned with record keeping or maintenance of books of accounts.
If owner’s capital is Rs. 50,000 liability is Rs. 30,000 and fixed assets is Rs. 70,000, then what is the value of current assets?- a)Rs. 10,000
- b)Rs. 40,000
- c)Rs. 80,000
- d)Rs. 1,00,000
Correct answer is 'A'. Can you explain this answer?
If owner’s capital is Rs. 50,000 liability is Rs. 30,000 and fixed assets is Rs. 70,000, then what is the value of current assets?
a)
Rs. 10,000
b)
Rs. 40,000
c)
Rs. 80,000
d)
Rs. 1,00,000
|
|
Malavika Basak answered |
According to the accounting equation:
Owner's capital= Assets- Liabilities
50,000= (70,000+ current assets)- 30,000
Current Assets= Rs. 10,000
Owner's capital= Assets- Liabilities
50,000= (70,000+ current assets)- 30,000
Current Assets= Rs. 10,000
The direct advantage of accounting do not include: - a)Preparation of financial statements
- b)Competitive advantage
- c)Ascertainment of profit or loss
- d)Information to interested groups
Correct answer is 'B'. Can you explain this answer?
The direct advantage of accounting do not include:
a)
Preparation of financial statements
b)
Competitive advantage
c)
Ascertainment of profit or loss
d)
Information to interested groups
|
|
Arun Khanna answered |
Accounting is defined as the art of recording, classifying, summarizing, analyzing, interpretation and communicating the results of transactions and events which are of financial character. Hence, it includes preparation of final accounts, ascertainment of profit or loss and its communication to users, but it does not includes any kind of competitive advantage.
Match the following items from column A with column B.
- a)1-b, 2-c, 3-d, 4-a
- b)1-a, 2-c, 3-d, 4-b
- c)1-b, 2-a, 3-d, 4-c
- d)1-b, 2-d, 3-a, 4-c
Correct answer is option 'D'. Can you explain this answer?
Match the following items from column A with column B.
a)
1-b, 2-c, 3-d, 4-a
b)
1-a, 2-c, 3-d, 4-b
c)
1-b, 2-a, 3-d, 4-c
d)
1-b, 2-d, 3-a, 4-c
|
|
Freedom Institute answered |
The correct answer is Option (D).
1. Events - (b). Are the end result of the transaction.
Events refer to the outcomes or end results that occur as a result of a business's transactions. For example, when a business purchases inventory, the event is the acquisition of goods that will be used in the business's operations. The end result of this transaction is the increase in the inventory account.
2. Government and their agencies - (d). Are one of the external users of the financial statements.
Governments and their agencies, such as tax authorities and regulatory bodies, are external users of financial statements because they need to assess the financial health and compliance of a business. They rely on financial statements to ensure that the business is following laws and regulations, paying taxes correctly, and operating in a transparent manner.
3. Management of the business enterprise - (a). Are the Internal users of financial statements.
Management of a business enterprise is considered an internal user of financial statements because they use the information to make decisions about the business's operations, strategy, and performance. They need to analyze financial data to assess the company's financial health, allocate resources efficiently, and evaluate the effectiveness of their strategies and decisions.
4. Purchase of goods worth Rs. 1,000 - (c). Is a transaction.
A transaction refers to an economic event that involves the exchange of goods or services between two parties. In this case, the purchase of goods worth Rs. 1,000 is a transaction because it involves the exchange of goods (inventory) for money (payment). This transaction will be recorded in the company's financial records, affecting its assets and liabilities.
Management Accounting:
- a)Is a clerical work
- b)Is accounting for future
- c)Is a recording technique of the management related transactions
- d)Is an analysis of the past business activities
Correct answer is option 'C'. Can you explain this answer?
Management Accounting:
a)
Is a clerical work
b)
Is accounting for future
c)
Is a recording technique of the management related transactions
d)
Is an analysis of the past business activities
|
|
Jayant Mishra answered |
Hence, the correct option is c) is a recording technique of management related transaction. Other options, such as b) is accounting for the future is not correct as management accounting is being used today to analyze the cost in a business.
Which of the following is not a subfield of accounting?- a)Management accounting.
- b)Cost accounting.
- c)Financial Accounting.
- d)Book-keeping
Correct answer is option 'D'. Can you explain this answer?
Which of the following is not a subfield of accounting?
a)
Management accounting.
b)
Cost accounting.
c)
Financial Accounting.
d)
Book-keeping
|
|
Arjun Singhania answered |
Book Keeping is the Recording Branch of Accountancy. Accountancy includes Book Keeping and classifying,interpreting and summarizing of the business transactions.
Net Profit or Loss will be derived at _______ stage of accounting- a)Classifying
- b)Interpretation
- c)Recording
- d)Summarising
Correct answer is option 'D'. Can you explain this answer?
Net Profit or Loss will be derived at _______ stage of accounting
a)
Classifying
b)
Interpretation
c)
Recording
d)
Summarising
|
|
Jayant Mishra answered |
Summarising stage is concerned with the preparation and presentation of the classified data in a manner useful to the internal as well as external users of financial statements. This process leads to the preparation of the following financial statements. Therefore, Net Profit or Loss is derived at the summarising stage.
Financial position of the business is ascertained on the basis of- a)Records prepared under book-keeping process.
- b)Trial balance.
- c)Accounting reports.
- d)None of the above.
Correct answer is 'C'. Can you explain this answer?
Financial position of the business is ascertained on the basis of
a)
Records prepared under book-keeping process.
b)
Trial balance.
c)
Accounting reports.
d)
None of the above.
|
Saikumar Guttula answered |
Financial position means the total position of business whether it is profit or loss .we should only consider from accounting reports only.
Which of the following is correct? Owner’s Equity is : - a)(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)
- b)(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)
- c)(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
Which of the following is correct? Owner’s Equity is :
a)
(Current Asset + Fixed Asset) + (Current Liabilities + Long term Liabilities)
b)
(Current Asset + Fixed Asset) – (Current Liabilities + Long term Liabilities)
c)
(Current Asset – Fixed Asset) – (Current Liabilities + Long term Liabilities)
d)
None of the above.
|
|
Deepika Nambiar answered |
It seems like you have not provided any options for us to evaluate. Could you please provide the options you want us to choose from?
On January 1, Sohan paid rent of Rs. 5,000. This can be classified as- a)An event.
- b)A transaction.
- c)A transaction as well as an event.
- d)Neither a transaction nor an event.
Correct answer is 'B'. Can you explain this answer?
On January 1, Sohan paid rent of Rs. 5,000. This can be classified as
a)
An event.
b)
A transaction.
c)
A transaction as well as an event.
d)
Neither a transaction nor an event.
|
|
Rajat Patel answered |
A rent can be a office rent then it will be a transaction according to book-keeping OR if a rent is house rent then it is not consider as a transaction.
Which of the following is an event? - a)Sale of goods for Rs.5,000
- b)Closing stock of worth Rs.4,000
- c)Purchase of goods for Rs.8,000
- d)Rent paid Rs.2,000
Correct answer is option 'B'. Can you explain this answer?
Which of the following is an event?
a)
Sale of goods for Rs.5,000
b)
Closing stock of worth Rs.4,000
c)
Purchase of goods for Rs.8,000
d)
Rent paid Rs.2,000
|
|
Srsps answered |
The correct option is B.
In accounting terms, an event is simply an economic activity which can be cash or noncash which happens in day to day operation of a business which does not involves changes in account balances.
Difference between transaction and event is when an event brings change to account balances, it is classified as a transaction.
Therefore since in case of closing stock accounting, we are only presenting it in the books of final accounts, it is an event and not a transaction.
______ was the root of financial accounting system:- a)Social accounting
- b)Stewardship accounting
- c)Management accounting
- d)Responsibility accounting
Correct answer is 'B'. Can you explain this answer?
______ was the root of financial accounting system:
a)
Social accounting
b)
Stewardship accounting
c)
Management accounting
d)
Responsibility accounting
|
|
Alok Mehta answered |
In its oldest form, accounting aided the stewards to discharge their stewardship function. The wealthy men employed steward to manage their property; the steward in return rendered an account periodically of their stewardship. Thus 'Stewardship Accounting' was the root of financial accounting system.
Financial statements users include: - a)Shareholders
- b)Government
- c)Vendors
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Financial statements users include:
a)
Shareholders
b)
Government
c)
Vendors
d)
All of the above
|
|
Freedom Institute answered |
The correct answer is (d) All of the above. Financial statements are essential tools that provide valuable information to various users. These users can be classified into internal and external users. Here, let's explain each of them in detail:
Shareholders
- Shareholders are the owners of a company and have a direct interest in its financial performance.
- Financial statements provide information about a company's profitability, financial stability, and potential for growth, which are crucial factors for shareholders when making investment decisions.
- Shareholders use financial statements to assess the company's management effectiveness and the return on their investment.
Government
- Governments use financial statements to ensure companies comply with tax laws and regulations.
- Financial statements provide the necessary information for tax authorities to determine the amount of taxes owed by a company.
- Governments also use financial statements to assess the economic health of a country, as they provide insights into various industries and sectors.
Vendors
- Vendors, or suppliers, provide goods and services to a company, and they need to ensure that the company can pay for these goods and services.
- Financial statements help vendors assess a company's creditworthiness and financial stability.
- By analyzing financial statements, vendors can determine whether to extend credit to a company, negotiate payment terms, or require upfront payment for goods and services.
In conclusion, financial statements are essential tools for various users, including shareholders, government, and vendors. These users rely on financial statements to make informed decisions and ensure the financial stability and growth of companies, industries, and the overall economy.
Shareholders
- Shareholders are the owners of a company and have a direct interest in its financial performance.
- Financial statements provide information about a company's profitability, financial stability, and potential for growth, which are crucial factors for shareholders when making investment decisions.
- Shareholders use financial statements to assess the company's management effectiveness and the return on their investment.
Government
- Governments use financial statements to ensure companies comply with tax laws and regulations.
- Financial statements provide the necessary information for tax authorities to determine the amount of taxes owed by a company.
- Governments also use financial statements to assess the economic health of a country, as they provide insights into various industries and sectors.
Vendors
- Vendors, or suppliers, provide goods and services to a company, and they need to ensure that the company can pay for these goods and services.
- Financial statements help vendors assess a company's creditworthiness and financial stability.
- By analyzing financial statements, vendors can determine whether to extend credit to a company, negotiate payment terms, or require upfront payment for goods and services.
In conclusion, financial statements are essential tools for various users, including shareholders, government, and vendors. These users rely on financial statements to make informed decisions and ensure the financial stability and growth of companies, industries, and the overall economy.
Purposes of an accounting system include all the following except- a)Interpret and record the effects of business transaction.
- b)Classify the effects of transactions to facilitate the preparation of reports.
- c)Summarize and communicate information to decision makers.
- d)Dictate the specify types of business enterprise transactions that the enterprises may engage in.
Correct answer is option 'D'. Can you explain this answer?
Purposes of an accounting system include all the following except
a)
Interpret and record the effects of business transaction.
b)
Classify the effects of transactions to facilitate the preparation of reports.
c)
Summarize and communicate information to decision makers.
d)
Dictate the specify types of business enterprise transactions that the enterprises may engage in.
|
Nikita Singh answered |
The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business. This information is then used to reach decisions about how to manage the business, or invest in it, or lend money to it. This information is accumulated in accounting records with accounting transactions, which are recorded either through such standardized business transactions as customer invoicing or supplier invoices, or through more specialized transactions, known as journal entries.
accounting involves recording, classifying, summarizing, and interpreting financial information.So it does not define which type of business transactions that the enterprise must engage in.
On January 1, Sohan paid rent Rs. 5,000. This can be classified as - a)An event
- b)A transaction.
- c)A transaction as well as an event.
- d)Neither a transaction nor an event.
Correct answer is option 'B'. Can you explain this answer?
On January 1, Sohan paid rent Rs. 5,000. This can be classified as
a)
An event
b)
A transaction.
c)
A transaction as well as an event.
d)
Neither a transaction nor an event.
|
|
Aditi Joshi answered |
Explanation:
The given situation involves an exchange of value between two parties, where Sohan pays rent of Rs. 5,000. This exchange of value is known as a transaction. Here, we can identify the following components of a transaction:
- Parties involved: Sohan and the landlord/owner of the property
- Exchange of value: Sohan pays rent of Rs. 5,000 to the landlord/owner
- Time of transaction: January 1
Hence, we can conclude that the given situation is a transaction.
On the other hand, an event is a happening or occurrence that may or may not involve an exchange of value. For example, if Sohan's apartment building catches fire on January 1, that would be an event. However, paying rent is not an event, but a transaction.
Therefore, the correct answer is option B - A transaction.
The given situation involves an exchange of value between two parties, where Sohan pays rent of Rs. 5,000. This exchange of value is known as a transaction. Here, we can identify the following components of a transaction:
- Parties involved: Sohan and the landlord/owner of the property
- Exchange of value: Sohan pays rent of Rs. 5,000 to the landlord/owner
- Time of transaction: January 1
Hence, we can conclude that the given situation is a transaction.
On the other hand, an event is a happening or occurrence that may or may not involve an exchange of value. For example, if Sohan's apartment building catches fire on January 1, that would be an event. However, paying rent is not an event, but a transaction.
Therefore, the correct answer is option B - A transaction.
On March 31, 2006 after sale of goods worth Rs. 2,000, he is left with the closing stock of Rs. 10,000. This is- a)An event.
- b)A transaction.
- c)A transaction as well as an event.
- d)Neither a transaction nor an event.
Correct answer is 'A'. Can you explain this answer?
On March 31, 2006 after sale of goods worth Rs. 2,000, he is left with the closing stock of Rs. 10,000. This is
a)
An event.
b)
A transaction.
c)
A transaction as well as an event.
d)
Neither a transaction nor an event.
|
|
Poonam Reddy answered |
Unsold items i.e Closing stock is captured in the financial statements as 'Current Assets'.
An event can be internal or external. This is an internal event.
There is no exchange of goods or services or money. Hence, it cannot be termed as a 'transaction'.
Purposes of an accounting system include all the following except- a)Interpret and record the effects of business transaction.
- b)Classify the effects of transaction to facilitate the preparation of reports.
- c)Summarize and communicate information to decision makers.
- d)Dictate the specific types of business enterprise transactions that the enterprises may engage in.
Correct answer is option 'D'. Can you explain this answer?
Purposes of an accounting system include all the following except
a)
Interpret and record the effects of business transaction.
b)
Classify the effects of transaction to facilitate the preparation of reports.
c)
Summarize and communicate information to decision makers.
d)
Dictate the specific types of business enterprise transactions that the enterprises may engage in.
|
|
Alok Mehta answered |
The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business. This information is then used to reach decisions about how to manage the business, or invest in it, or lend money to it. This information is accumulated in accounting records with accounting transactions, which are recorded either through such standardized business transactions as customer invoicing or supplier invoices, or through more specialized transactions, known as journal entries.
Once this financial information has been stored in the accounting records, it is usually compiled into financial statements, which include the following documents:
Income statement
Balance sheet
Statement of cash flows
Statement of retained earnings
Disclosures that accompany the financial statements
Financial statements are assembled under certain sets of rules, known as accounting frameworks, of which the best known are Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The results shown in financial statements can vary somewhat, depending on the framework used. The framework that a business uses depends upon which one the recipient of the financial statements wants. Thus, a European investor might want to see financial statements based on IFRS, while an American investor might want to see statements that comply with GAAP.
The accountant may generate additional reports for special purposes, such as determining the profit on sale of a product, or the revenues generated from a particular sales region. These are usually considered to be managerial reports, rather than the financial reports issued to outsiders.
Thus, the purpose of accounting centers on the collection and subsequent reporting of financial information.
If owner’s capital is Rs. 50,000 liability is Rs. 30,000 and fixed assets is Rs. 70,000, then what is the value of current assets?- a)Rs. 10,000
- b)Rs. 40,000
- c)Rs. 80,000
- d)Rs. 1,00,000
Correct answer is option 'A'. Can you explain this answer?
If owner’s capital is Rs. 50,000 liability is Rs. 30,000 and fixed assets is Rs. 70,000, then what is the value of current assets?
a)
Rs. 10,000
b)
Rs. 40,000
c)
Rs. 80,000
d)
Rs. 1,00,000
|
|
Jayant Mishra answered |
According to the accounting equation:
Owner's capital= Assets- Liabilities
50,000= (70,000+ current assets)- 30,000
Current Assets= Rs. 10,000
Interpreting Financial Statements means:- a)Methodical classification of the data given in the financial statements.
- b)Preparation and presentation of the classified data in a manner useful to the users of financial statements.
- c)Systematic analysis of the recorded data so as to put information in usable from.
- d)Explaining the meaning and significance of the relationship of analysis of accounting data.
Correct answer is option 'D'. Can you explain this answer?
Interpreting Financial Statements means:
a)
Methodical classification of the data given in the financial statements.
b)
Preparation and presentation of the classified data in a manner useful to the users of financial statements.
c)
Systematic analysis of the recorded data so as to put information in usable from.
d)
Explaining the meaning and significance of the relationship of analysis of accounting data.
|
|
Alok Mehta answered |
Financial statement analysis (or financial analysis) is the process of reviewing and analyzing a company's financial statements to make better economic decisions. These statements include the income statement, balance sheet, statement of cash flows, and a statement of changes in equity.
Financial statements are part of- a)Accounting.
- b)Book-Keeping.
- c)All of the above.
- d)None of the above.
Correct answer is option 'A'. Can you explain this answer?
Financial statements are part of
a)
Accounting.
b)
Book-Keeping.
c)
All of the above.
d)
None of the above.
|
|
Snehal Das answered |
Financial statements are part of accounting.
Financial statements are a crucial component of accounting as they provide a summary of a company's financial transactions and activities. These statements are prepared at the end of an accounting period to provide an overview of the company's financial performance, financial position, and cash flows.
Here are some key points to understand why financial statements are part of accounting:
1. Definition of Accounting:
Accounting is the process of recording, summarizing, analyzing, and interpreting financial transactions of a business. It involves the systematic and comprehensive recording of financial data to produce useful information for decision-making.
2. Purpose of Financial Statements:
Financial statements serve the purpose of communicating the financial information of a business to various stakeholders, such as investors, creditors, employees, and government authorities. These statements provide a snapshot of the company's financial health and help in assessing its performance, profitability, and liquidity.
3. Components of Financial Statements:
Financial statements typically include four main components:
a. Income Statement: It reports a company's revenues, expenses, gains, and losses for a specific period. The income statement helps in determining the net income or net loss of the business.
b. Balance Sheet: It presents a company's assets, liabilities, and shareholders' equity at a specific point in time. The balance sheet provides insights into the company's financial position and its ability to meet its obligations.
c. Cash Flow Statement: It shows the inflows and outflows of cash and cash equivalents during a specific period. The cash flow statement helps in understanding the company's liquidity and cash management.
d. Statement of Changes in Equity: It summarizes the changes in a company's equity during a specific period, including contributions, distributions, and retained earnings.
4. Compliance with Accounting Standards:
Financial statements need to comply with accounting standards and regulations. These standards provide guidelines on the measurement, recognition, and presentation of various financial elements, ensuring consistency, comparability, and transparency in financial reporting.
5. Importance for Decision-Making:
Financial statements play a crucial role in decision-making processes, both internally and externally. Managers use these statements to evaluate the company's performance, make strategic decisions, and plan for the future. External users rely on financial statements to assess the company's creditworthiness, investment potential, and overall financial stability.
In conclusion, financial statements are an integral part of accounting as they provide a comprehensive view of a company's financial performance and position. They are prepared in accordance with accounting standards and serve as a key tool for decision-making and financial analysis.
Financial statements are a crucial component of accounting as they provide a summary of a company's financial transactions and activities. These statements are prepared at the end of an accounting period to provide an overview of the company's financial performance, financial position, and cash flows.
Here are some key points to understand why financial statements are part of accounting:
1. Definition of Accounting:
Accounting is the process of recording, summarizing, analyzing, and interpreting financial transactions of a business. It involves the systematic and comprehensive recording of financial data to produce useful information for decision-making.
2. Purpose of Financial Statements:
Financial statements serve the purpose of communicating the financial information of a business to various stakeholders, such as investors, creditors, employees, and government authorities. These statements provide a snapshot of the company's financial health and help in assessing its performance, profitability, and liquidity.
3. Components of Financial Statements:
Financial statements typically include four main components:
a. Income Statement: It reports a company's revenues, expenses, gains, and losses for a specific period. The income statement helps in determining the net income or net loss of the business.
b. Balance Sheet: It presents a company's assets, liabilities, and shareholders' equity at a specific point in time. The balance sheet provides insights into the company's financial position and its ability to meet its obligations.
c. Cash Flow Statement: It shows the inflows and outflows of cash and cash equivalents during a specific period. The cash flow statement helps in understanding the company's liquidity and cash management.
d. Statement of Changes in Equity: It summarizes the changes in a company's equity during a specific period, including contributions, distributions, and retained earnings.
4. Compliance with Accounting Standards:
Financial statements need to comply with accounting standards and regulations. These standards provide guidelines on the measurement, recognition, and presentation of various financial elements, ensuring consistency, comparability, and transparency in financial reporting.
5. Importance for Decision-Making:
Financial statements play a crucial role in decision-making processes, both internally and externally. Managers use these statements to evaluate the company's performance, make strategic decisions, and plan for the future. External users rely on financial statements to assess the company's creditworthiness, investment potential, and overall financial stability.
In conclusion, financial statements are an integral part of accounting as they provide a comprehensive view of a company's financial performance and position. They are prepared in accordance with accounting standards and serve as a key tool for decision-making and financial analysis.
Which of the following is not an event?
- a)Sale of goods for Rs.5,000
- b)Closing stock of worth Rs.4,000
- c)Purchase of goods for Rs.8,000
- d)Rent paid Rs.2,000
Correct answer is option 'B'. Can you explain this answer?
Which of the following is not an event?
a)
Sale of goods for Rs.5,000
b)
Closing stock of worth Rs.4,000
c)
Purchase of goods for Rs.8,000
d)
Rent paid Rs.2,000
|
Nilanjan Saha answered |
Event in Accounting
An event in accounting refers to any transaction or occurrence that affects a company's financial position and can be measured reliably. Let's understand the given options and identify the event.
a) Sale of goods for Rs.5,000 - It is a transaction but not an event as it has not affected the company's financial position.
b) Closing stock of worth Rs.4,000 - This is an event as it affects the company's financial position. The closing stock is an asset and its value is added to the company's balance sheet.
c) Purchase of goods for Rs.8,000 - This is a transaction but not an event as it has not affected the company's financial position.
d) Rent paid Rs.2,000 - This is a transaction but not an event as it has not affected the company's financial position.
Conclusion
From the above analysis, it is clear that the closing stock of worth Rs.4,000 is an event. The closing stock is an important component of the company's balance sheet and it affects the company's profitability. Therefore, the correct answer is option 'B'.
An event in accounting refers to any transaction or occurrence that affects a company's financial position and can be measured reliably. Let's understand the given options and identify the event.
a) Sale of goods for Rs.5,000 - It is a transaction but not an event as it has not affected the company's financial position.
b) Closing stock of worth Rs.4,000 - This is an event as it affects the company's financial position. The closing stock is an asset and its value is added to the company's balance sheet.
c) Purchase of goods for Rs.8,000 - This is a transaction but not an event as it has not affected the company's financial position.
d) Rent paid Rs.2,000 - This is a transaction but not an event as it has not affected the company's financial position.
Conclusion
From the above analysis, it is clear that the closing stock of worth Rs.4,000 is an event. The closing stock is an important component of the company's balance sheet and it affects the company's profitability. Therefore, the correct answer is option 'B'.
Financial accounting information is characterized by all of the following except- a)It is historical in nature.
- b)It is factual, so it does not require judgement to prepare.
- c)It results from inexact and appropriate measures.
- d)It is enhanced by management’s explanation.
Correct answer is option 'B'. Can you explain this answer?
Financial accounting information is characterized by all of the following except
a)
It is historical in nature.
b)
It is factual, so it does not require judgement to prepare.
c)
It results from inexact and appropriate measures.
d)
It is enhanced by management’s explanation.
|
|
Kavita Joshi answered |
It is historical in nature. It is used mainly by creditors, investors, and potential creditors and investors.
Users of accounting information include- a)Trade payables/ Suppliers
- b)Lenders.
- c)Customers.
- d)all of the above.
Correct answer is option 'D'. Can you explain this answer?
Users of accounting information include
a)
Trade payables/ Suppliers
b)
Lenders.
c)
Customers.
d)
all of the above.
|
|
Arun Khanna answered |
1. Owners and prospective owners. Has the company earned satisfactory income on its total investment? Should an investment be made in this company? Should the present investment be increased, decreased, or retained at the same level? Can the company install costly pollution control equipment and still be profitable?
2. Creditors and lenders. Should a loan be granted to the company? Will the company be able to pay its debts as they become due?Hand Putting Deposit Into Piggy Bank
Employees and their unions. Does the company have the ability to pay increased wages? Is the company financially able to provide long-term employment for its workforce?
3. Customers. Does the company offer useful products at fair prices? Will the company survive long enough to honor its product warranties?
4. Governmental units. Is the company, such as a local public utility, charging a fair rate for its services?
5. General public. Is the company providing useful products and gainful employment for citizens without causing serious environmental problems?
All of the following are functions of Accounting except- a)Decision making.
- b)Measurement.
- c)Forecasting.
- d)Ledger posting.
Correct answer is option 'D'. Can you explain this answer?
All of the following are functions of Accounting except
a)
Decision making.
b)
Measurement.
c)
Forecasting.
d)
Ledger posting.
|
|
Arjun Singhania answered |
It is clear that the functions of Accounting are
- identification,
- recording,
- classification and
- summarization of transactions
- ascertainment of results
- exhibition of financial position of an organization
- communication of necessary information derived from interpretation
- analysis to the interested parties including the management.
- Carter in his Advanced Accounts has also divided the functions of Accounting into two parts –
(a) permanent recording of financial transactions of a business,
(b) exhibiting the financial impact of each transaction or collective transactions over financial position of interested parties.
Yorston, Smyth and Brown have divided functions of Accounting in two groups;
(1) Historical or stewardship functions and
(2) Managerial functions. These are listed below;
Five Managerial Functions of Accounting
The management is to take various decisions for smooth running of the business. These decisions are taken by evaluation of past activities.
Accounting provides reports of past financial activities which are made suitable for decision-making through analysis.
These activities of Accounting are regarded as managerial functions.
Five Managerial Functions of Accounting are;
Control of financial policy and formation of planning.
Preparation of budget.
Cost control.
Evaluation of employees’ performance.
Prevention of errors and frauds.
Financial accounting information is characterized by all of the following except- a)It is historical in nature.
- b)It is factual, so it does not require judgement to prepare.
- c)It results from inexact and appropriate measures.
- d)It is enhanced by management’s explanation.
Correct answer is option 'B'. Can you explain this answer?
Financial accounting information is characterized by all of the following except
a)
It is historical in nature.
b)
It is factual, so it does not require judgement to prepare.
c)
It results from inexact and appropriate measures.
d)
It is enhanced by management’s explanation.
|
|
Srsps answered |
The correct answer is B.
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 .
Financial statements do not consider- a)Assets expressed in monetary terms.
- b)Liabilities expressed in monetary terms.
- c)Assets expressed in non-monetary terms.
- d)Assets and liabilities expressed in non-monetary terms
Correct answer is option 'D'. Can you explain this answer?
Financial statements do not consider
a)
Assets expressed in monetary terms.
b)
Liabilities expressed in monetary terms.
c)
Assets expressed in non-monetary terms.
d)
Assets and liabilities expressed in non-monetary terms
|
|
Rajat Patel answered |
Non-monetary asset. An asset (such as equipment, inventory, land, or plant) that does not have a fixed exchange cash value, but whose value depends on economic conditions.
Chapter doubts & questions for Unit 1: Meaning and Scope of Accounting - Accounting for CA Foundation 2025 is part of CA Foundation exam preparation. The chapters have been prepared according to the CA Foundation exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for CA Foundation 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
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Accounting for CA Foundation
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