Short Answer Questions - Basic Accounting Terms Commerce Notes | EduRev

SHORT ANSWER QUESTIONS

Q1. Explain the following terms with examples:

(a) Sales (b) Cost

Q2. Explain the meaning of any three of the following terms:

(i) Assets (ii) Capital

(iii) Goods (iv) Drawings

(v) Trade Receivables

Q3. Explain the meaning of any three of the following terms:

(i) Liability (iv) Stock

(iii) Business Transaction

Q4. Explain the following terms:

(a) Revenue (b) Trade Payables

(c) Fictitious Assets (d) Working Capital

Hint : Working Capital = Current Assets – Current Liabilities.

Q5. Give any three examples of revenues.

Ans: 
(i) Amount received from sale of goods;

(ii) Amount received from providing service to customers;

(iii) Receipts of commission, interest, rent etc.

Q6. Distinguish between debtors and creditors.

Ans:  Debtors are the persons who owe an amount to the enterprise for the goods sold or service provided to them on credit whereas creditors are the persons who are to be paid an amount by the enterprise for buying from them goods or services on credit.

Q7. Distinguish between profit and gain.

Ans: Profit is the excess of revenues over expenses during an accounting period. It is the result of business transactions which are of regular nature whereas gain arises from events or transactions which are incidental to business such as sale of a fixed asset or winning a lottery prize.

Q8. Distinguish between fixed assets and current assets.

Ans: Fixed assets refer to those assets which are held for continued use in the business and are not meant for resale whereas current assets are either meant for sale or which are expected to be converted into cash within one year.

Q9. Distinguish between revenue expenditure and capital expenditure.

Ans: If the benefit of an expenditure is exhausted within a year, it is treated as revenue expenditure (also called expense). On the other hand, if the benefit of an expenditure lasts for more than a year it is treated as capital expenditure (also called an asset).

Q10. Distinguish between expenses and losses.

Ans: If the benefit of an expenditure is exhausted within a year it is called expense whereas excess of expenses of a period over its related revenues is termed as loss.

Q11. Give two characteristics of a business transaction,

Ans: (i) It results in a change in the financial position of the firm, i.e. a change in the values of some of the assets, liabilities or capital.

(ii) The change must be capable of being expressed in terms of money.

Q12. From the Balance Sheet given below calculate the following:

(i) Non-Current Assets (ii) Current Assets

(iii) Current Liabilities (iv) Working Capital

BALANCE SHEET

as at 31.3.2008

Ans: (i) Non-current Assets 80,000; (ii) Current Assets 84,400;

(ii) Current Liabilities 51,000; (iv) Working Capital 33,400.

Hint: Working Capital = Current Assets – Current Liabilities