Very Short Answer Questions - Basic Accounting Terms Commerce Notes | EduRev

Crash Course of Accountancy - Class 11

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Commerce : Very Short Answer Questions - Basic Accounting Terms Commerce Notes | EduRev

The document Very Short Answer Questions - Basic Accounting Terms Commerce Notes | EduRev is a part of the Commerce Course Crash Course of Accountancy - Class 11.
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VERY SHORT ANSWER QUESTIONS

Q1. What is a Cash Transaction?

Ans: Cash transaction is a financial transaction or event that has been settled in cash.

Q2. What is a Credit Transaction?

Ans: Credit transaction is a financial transaction or event that has not been settled in cash, i.e., is agreed to be settled later.

Q3. Briefly explain Expenditure.

Ans:  Expenditure is the amount spent or liability incurred for acquiring assets, goods or services.

Q4. What are Assets?

Ans:  Asset, is a property (land, machine, goods, patents, etc.) or legal right (patents, copyright, etc.) owned by an individual or business which can be measured in money terms.

Q5. What are Fixed Assets?

Ans: Fixed Assets are the assets which are acquired not with a purpose to resell but with a purpose to increase the earning capacity of the business.

Q6. Name four Fixed Assets.

Ans: Land, Building, Plant and Machinery and Computers.

Q7. Briefly explain Tangible Assets.

Ans: Tangible Assets are the assets which have physical existence, i.e., they can be seen and touched.

Q8. Give two examples of Tangible Assets.

Ans: Land, Furniture and Fixtures.

Q9. Briefly explain Intangible Assets.

Ans: Intangible Assets are the assets which do not have a physical existence, i.e. they cannot be seen or touched.

Q10. Give two examples of Intangible Assets.

Ans: Patents and Goodwill.

Q11. Briefly explain the term 'Goods'.

Ans: Goods are the physical items of trade.

Q12. What are the main classes of Liabilities?

Ans: Non-current Liabilities and Current Liabilities.

Q13. Give any two examples of Current Assets.

Ans: Stock-in-Trade and Cash in hand.

Q14. Name three Current Liabilities.

Ans: Creditors, Bills Payable and Outstanding Expenses.

Q15. Name two Long-term Liabilities.

Ans: Long-term loans and Debentures.

Q16. What is a Capital?

Ans: Capital is the amount invested by the proprietor or the partner in the business.

Q17. Who is a Debtor?

Ans:  Debtor is a person who owes amount to the business on account of credit sales of goods or services.

Q18. Who is a Creditor?

Ans: Creditor is the person to whom amount is owed on account of credit purchases of goods or services.

Q19. What is Revenue? Or define Revenue with example.

Ans: Revenue is the amount which as a result of operations is added to capital. For example, Cash Sales.

Q20. What is an Income?

Ans: Income is the profit earned during the accounting period.

Q21. What is Drawings? Or define Drawings with example.
Ans: Drawings is the amount of money or value of goods which the proprietor or partner withdraws for personal use. For example, withdrawal of cash by the proprietor for personal use.

Q22. Define Voucher.

Ans: Voucher is an evidence of a business transaction.

Q23. Define Merchandise.

Ans: Merchandise means goods for resale.

Q24. A firm earns a revenue of Rs.21,000 and the expenses to earn this revenue are Rs.15,000. Calculate its income.

Ans: Income = Revenue - Expense = Rs.21,000 - Rs.15,000 - Rs.6,000.

Q25. What is Capital?

Ans: It refers to amount invested by the proprietor in a business enterprise. It can be expressed as: Capital = Assets = External Liabilities

Q26. What Drawings?

Ans: Drawings refer to any Cash or value of goods withdrawn by the owner for personal use.

Q27. What are Liabilities?

Ans: It refers to the amount which the firm owes to outsiders (expecting the amount owed to proprietors).

Q28. What are Assets?

Ans: It refers to the amount which the firm owes to outsiders (expecting the amount owed to proprietors).

Q29. What are Current Assets?

Ans: Current Assets include Cash and other assets which are expected to be converted into Cash within a short period (normally within one year).

Q30. Give two examples of Current Assets.

Ans: (i) Cash; (ii) Stock

Q31. Give two examples of Tangible Assets.

Ans: (i) Land and Building; (ii) Stock

Q32. Give two examples of Intangible Assets.

Ans: (i) Goodwill; (ii) Prepaid Expenses.

Q33. What are Current Liabilities?

Ans: Current liabilities refer to those liabilities which are to be paid in near future (normally within one year).

Q34. Give two examples of Current Liabilities?

Ans: (i) Creditors; (ii) Bills Payable

Q35. What is expense?

Ans: Expense is the cost incurred in production and selling the goods and services.

Q36. What is revenue?

Ans: Revenue is the income of a recurring (regular) nature such as receipts from sale of goods, rent, commission etc.

Q37. What is income?

Ans: Excess of revenue over expenses is called income.

Income = Revenue - Expenses

Q38. What is Voucher?

Ans: A voucher is a document on the basis of which transactions are first recorded in the books.

Q39. What is Trade Discount?

Ans: When discount is allowed by a seller to its customers at a fixed percentage on the list or catalogue price of the goods it is called trade discount. It is not recorded in the books of accounts.

Q40. What is Cash Discount?

Ans: When discount is allowed to the customers for making prompt payment it is called cash discount. It is always recorded in the books of accounts.

Q41. What is meant by Purchases?

Ans: The term purchases is used for buying of goods for resale or for use in manufacturing process. the term purchases includes both Cash and Credit purchase of goods.

Q42. What is meant by Sales?

Ans: The term sales is used for the amount of sale of goods and services rendered. The term sales includes both Cash and Credit Sales.

Q43. Define Merchandise.

Ans: Merchandise means goods for resale.

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