Accounting Module-1: Introduction to Concepts

The objective of the accounting system is to provide the financial information needed to assess the efficacy of both current and past activities.

The primary function of accounting is to provide information primarily financial in nature about economic entities that is intended to be useful in making economic decisions.

<p>To fulfill law compliance (A), To assist in decision-making (B), To keep systematic records (C), To ascertain profitability (D), To ascertain the financial position (E)</p> Signup and view all the answers

<p>Cost Accounting (A), Financial Accounting (B), Management Accounting (C)</p> Signup and view all the answers

<p>To capture a company's production costs (C)</p> Signup and view all the answers

<p>Management accounting involves utilizing professional knowledge and skills to assist the management in the formulation of policies and also in planning and controlling the operations of the organization.</p> Signup and view all the answers

<p>Accounting is the systematic recording of financial transactions and presentation of the related information of the appropriate persons.</p> Signup and view all the answers

<p>Management Accounting is primarily based on the data available from Financial Accounting. Financial Accounting is based on the monetary transactions of the company. (C)</p> Signup and view all the answers

<p>Book-keeping is a science and art of correctly recording in books of accounts, all the business transactions resulting in the transfer of money or money’s worth.</p> Signup and view all the answers

<p>Book-keeping deals with the recording of financial transactions. Accounting is the art of recording, classifying and summarizing in a significant manner and terms of money, transactions and events, which are, in part at least, of a financial character and interpreting the result thereof. (B), Book-keeping is a foundation of accounting, while Accounting is considered as a language of business. (D)</p> Signup and view all the answers

<p>GAAP is a widely accepted set of rules, conventions, standards, and procedures for reporting financial information, as established by the Financial Accounting Standards Board.</p> Signup and view all the answers

<p>It simplifies accounting procedures by avoiding the need for constant revaluation of assets. (A)</p> Signup and view all the answers

The process of systematically recording and summarizing financial transactions, providing information for informed decisions.

A process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by the users of accounting.

The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions, and events which are, in part at least, of a financial character and interpreting the result thereof.

A service activity that provides primarily financial information about economic entities, useful for making economic decisions.

The systematic recording of financial transactions and presentation of the related information to the appropriate people.

The process of performing specific tasks related to collecting, processing, and communicating financial data.

It's considered an art because it involves creativity and skill in classifying, summarizing, and finalizing financial data.

The ability of a business to continue its operations indefinitely.

Separate identity of the business from its owners, ensuring business transactions are only recorded in the business books.

The assumption that all business transactions are recorded in terms of money, only those transactions expressed in monetary terms are recorded.

The concept that a business's infinite life is divided into specific periods for reporting financial performance (usually a year).

Revenues are recognized when they become receivable, and expenses are recognized when incurred, regardless of when cash is received or paid.

Transactions are recorded when they are actually realized, like when goods are delivered and payment is received.

All expenses incurred during an accounting period are matched with the revenues earned during that same period.

All relevant information that could influence investors' decisions must be disclosed in financial statements.

Each transaction has two aspects: a benefit received and a benefit given. Both aspects must be recorded in the books.

Accounting data must be backed by verifiable evidence, ensuring accuracy and reliability.

Assets are recorded at their original purchase price, regardless of their current market value, and are adjusted for depreciation.

Every debit must have a corresponding credit, and vice-versa, reflecting the balance between assets and liabilities.

Information, amount, procedure, and nature of transactions must be considered to determine their significance for financial reporting.

Consistent accounting methods and practices should be applied over time to ensure comparability.

When there are alternative valuations, the one that is least likely to overstate assets or income should be chosen.

Accounting information should be provided to users in a timely manner so that it is relevant for decision-making.

Different industries may have their own specific practices and adjustments to the standard accounting principles.

The set of global accounting standards developed by the International Accounting Standards Board (IASB) to improve transparency and comparability of financial statements.

An independent, not-for-profit organization that works to create a single set of high-quality, internationally-accepted accounting standards.

A record that classifies and summarizes the activity of a business.

A method where every transaction is recorded in at least two accounts, ensuring a balance between debits and credits.

An increase in assets, expenses, or a decrease in liabilities or revenues.

A decrease in assets, expenses, or an increase in liabilities or revenues.

A statement that summarizes the financial position of a business on a certain date, reflecting assets, liabilities, and equity.

Expenditures incurred by a company to earn revenue.

The total claims against a company, including owner's claims (capital) and outsider's claims (liabilities).

A method that recognizes revenue when earned and expenses when incurred, rather than when cash is received or paid.

Something of value that a business owns and can be used to generate future benefits.

A company's obligation to pay money or provide goods or services to others.

The monetary value of products or services sold to customers during an accounting period.