Characteristics of Accounting

False (B)

Classification

<p>money</p> Signup and view all the answers

<p>Recording = Documenting financial transactions Classifying = Grouping similar transactions together Summarizing = Presenting data in a useful manner Communicating = Sharing financial data with users</p> Signup and view all the answers

<p>Preparing financial statements like Profit &amp; Loss Account (D)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Assets, liabilities, and capital</p> Signup and view all the answers

<p>Cost Accounting (D)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>To compute taxes like income tax and GST.</p> Signup and view all the answers

<p>parties</p> Signup and view all the answers

<p>Assist in marketing strategies (D)</p> Signup and view all the answers

<p>Financial Accounting = Record transactions and ascertain profit or loss Cost Accounting = Determine total and per unit cost Management Accounting = Assist management in planning and control Tax Accounting = Compute taxes for tax purposes</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>It provides essential information to make informed decisions.</p> Signup and view all the answers

<p>Net profit or loss during the period (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Personal Judgement</p> Signup and view all the answers

<p>incomplete</p> Signup and view all the answers

<p>Influenced by Personal Judgement = Difficult to determine asset life Based on Historical Costs = Figures do not reflect current prices Omission of Qualitative Information = Excludes non-monetary aspects Affected by Window Dressing = Manipulating accounts for favorable presentation</p> Signup and view all the answers

<p>Accounting is influenced by accounting concepts and conventions. (D)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Because actual profit or loss can only be determined when the business is closed.</p> Signup and view all the answers

Accounting uses a systematic approach to record, classify, and summarize financial transactions to understand a business's financial health.

Accounting only tracks transactions that involve money, not other valuable things (like ideas or goodwill).

All business transactions are recorded in terms of their monetary value.

Grouping similar transactions (like all sales or all expenses) into categories to make analysis easier.

Presenting condensed information about a business's financial performance and position in a clear and understandable way.

Analyzing the results of financial summaries (like profit or loss) to understand the reasons behind them.

Communicating financial information to different stakeholders who need it, like investors, managers, or lenders.

One of the key objectives of accounting is to provide a clear and accurate record of all business transactions.

The process of recording, classifying, summarizing, and interpreting financial transactions to provide information for decision-making.

Providing regular reports to assess a business's growth and performance over time.

Identifying and preventing errors or fraudulent activities within a business.

Communicating financial information to stakeholders like owners, investors, creditors, and government agencies.

Focusing on recording and reporting financial transactions to reflect a business's profitability and financial position.

Analyzing and calculating the cost of producing goods or services to help businesses optimize their operations.

Presenting financial information in a way that assists management in making informed decisions and controlling business operations.

Specializing in accounting practices related to tax reporting and compliance.

The Profit & Loss Account shows the final profit or loss earned during a specific period.

The Balance Sheet reports the financial health of a company at a specific point in time.

Comparing financial data from different accounting periods helps in making informed decisions.

Proper accounting records simplify tax calculations and audits by tax authorities.

Accurate accounting information serves as valid evidence in legal disputes.

Accounting relies on professional judgment, which can lead to variations in financial reporting.

Accounting standards and principles influence how financial information is presented, potentially affecting its accuracy.

Accounting records only capture information that can be expressed in monetary terms, ignoring non-financial aspects.