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Test: Nature and Scope of Accounting- 1 - B Com MCQ


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10 Questions MCQ Test - Test: Nature and Scope of Accounting- 1

Test: Nature and Scope of Accounting- 1 for B Com 2024 is part of B Com preparation. The Test: Nature and Scope of Accounting- 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Nature and Scope of Accounting- 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Nature and Scope of Accounting- 1 below.
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Test: Nature and Scope of Accounting- 1 - Question 1
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Which of the following best describes the primary objective of accounting?

Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 1
The primary objective of accounting is to ascertain the financial position of the business. This involves preparing financial statements like the balance sheet, which provides insights into what the business owns (assets) and owes (liabilities), and whether the capital has increased or decreased over time.
Test: Nature and Scope of Accounting- 1 - Question 2
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Why is it advisable to obtain receipts or bills for the payments you make?

Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 2
Obtaining receipts or bills for payments ensures that you can accurately render an account of your expenses. This practice is essential for maintaining transparency and accuracy in accounting records, which is crucial for both personal and business financial management.
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Test: Nature and Scope of Accounting- 1 - Question 3
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What is a key difference between accounting and bookkeeping?

Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 3
Bookkeeping is primarily concerned with the recording of financial transactions, while accounting encompasses a broader scope, including the interpretation and analysis of this financial data. Accountancy provides the systematic knowledge needed for accounting practices.
Test: Nature and Scope of Accounting- 1 - Question 4
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What is the significance of classifying transactions in accounting?
Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 4
Classifying transactions is important because it groups transactions of similar nature together, facilitating easier analysis and reporting. This classification helps in summarizing the financial data meaningfully, which is essential for preparing financial statements.
Test: Nature and Scope of Accounting- 1 - Question 5
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Why do businesses need systematic accounting records?
Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 5
Systematic accounting records are crucial for monitoring and controlling financial activities within a business. They help in tracking all financial transactions accurately, which is essential for financial planning, management, and reporting.
Test: Nature and Scope of Accounting- 1 - Question 6
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Which financial statement reveals the profit earned or loss incurred by a business firm during a particular period?
Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 6
The Profit and Loss Account, also known as the income statement, reveals the profit earned or loss incurred by a business during a specific period. It summarizes revenues, costs, and expenses, providing insights into the business’s operational performance.
Test: Nature and Scope of Accounting- 1 - Question 7
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How does accounting help in decision-making for businesses?
Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 7
Accounting supplies relevant financial information that is critical for decision-making in businesses. This information helps managers plan, control, and evaluate business operations effectively, ensuring informed and strategic business decisions.
Test: Nature and Scope of Accounting- 1 - Question 8
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What role does accounting play in a partnership firm?
Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 8
In a partnership firm, accounting plays a crucial role in maintaining transparent records of all transactions, which helps satisfy all partners regarding the financial position and performance of the business. This transparency is essential for trust and cooperation among partners.
Test: Nature and Scope of Accounting- 1 - Question 9
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Why is accounting important for non-business organizations like schools and hospitals?
Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 9
Accounting is important for non-business organizations like schools and hospitals as it provides systematic records and financial information. This information is essential for managing funds, planning budgets, and ensuring accountability and transparency in financial management.
Test: Nature and Scope of Accounting- 1 - Question 10
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In a business context, why is it not advisable to depend on memory for recording transactions?
Detailed Solution for Test: Nature and Scope of Accounting- 1 - Question 10
Depending on memory for recording transactions is impractical, especially when numerous transactions occur over extended periods. Recording transactions systematically ensures accuracy and completeness, preventing errors and omissions.
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