DCM1103 Fundamentals of Accounting I - Introduction to Accounting Quiz

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What is the primary purpose of starting a business?

To create employment opportunities

To engage in transactions

To establish a brand presence

To earn profits (correct)

What is the key method to determine the profits or losses of a business for a specific period?

Budget forecasting

Tax assessment

Accounting procedure (correct)

Financial analysis

What is the distinction between bookkeeping and accounting?

Bookkeeping focuses on profits, accounting focuses on expenses

Bookkeeping is manual, accounting is automated

Bookkeeping is strategic, accounting is tactical

Bookkeeping involves day-to-day recording, accounting involves financial analysis (correct)

Who are the various users of accounting information?

Internal management, investors, creditors, government agencies (D) Signup and view all the answers

Which term refers to the limitations of accounting?

Limitations of financial statements (B) Signup and view all the answers

Why is a systematic accounting procedure essential for businesses?

To ascertain profits earned or loss incurred (A) Signup and view all the answers

What is the term for an economic unit that performs economic activities and is assumed to have a separate existence from its owner(s)?

Business Entity (C) Signup and view all the answers

Which type of business involves a single individual carrying on business with or without the help of family members?

Sole trader (A) Signup and view all the answers

What is the term for a relationship between partners who contribute capital, agree to distribute profits, and may have the business carried on by all or anyone acting for all?

Partnership (C) Signup and view all the answers

Which type of organization has a legal entity, perpetual existence, and capital contributed by shareholders under the Companies Act?

Joint Stock Company (D) Signup and view all the answers

What are funds brought in to start a business called?

Capital (D) Signup and view all the answers

What is the term for capital used to purchase fixed assets in a business?

Fixed Capital (C) Signup and view all the answers

What is the primary purpose of accounting information for a business enterprise?

To provide relevant and reliable financial information (C) Signup and view all the answers

Which statement best describes the evolution of accounting?

It has evolved in response to social and economic needs (A) Signup and view all the answers

What best describes the accounting system's role in providing information to stakeholders?

To provide relevant and reliable financial information (D) Signup and view all the answers

What is the main objective of accounting for stakeholders?

To provide economic information for rational decision making (D) Signup and view all the answers

How do stakeholders use accounting information?

To make informed decisions (C) Signup and view all the answers

What is one of the limitations of accounting as mentioned in the text?

Difficulty in capturing all aspects of an organization's activities (D) Signup and view all the answers

What is the primary purpose of satisfying statutory requirements like ROC, SEBI, and tax authorities?

To protect the interest of the general public (C) Signup and view all the answers

How does maintaining books of accounts make planning, controlling, and decision-making easier?

By enabling effective planning and control (B) Signup and view all the answers

Who are considered internal users of accounting information?

Management at all levels (A) Signup and view all the answers

How does accounting help in prediction and estimation for the future?

By providing a basis for future predictions (C) Signup and view all the answers

Which function of accounting involves preparing budgets, cost analysis, tax planning, and auditing?

Compliance and planning activities (D) Signup and view all the answers

Why do different categories of users need different types of accounting information?

To provide customized information for specific decisions (A) Signup and view all the answers

What does the term 'carried forward' or its abbreviation [c/f] indicate in accounting?

The total amount at the foot of a page has been transferred to the head of the next page. (B) Signup and view all the answers

What is the purpose of 'brought down' or its abbreviation [b/d] in accounting?

To indicate that the opening balance in an account has been brought down from the previous period. (B) Signup and view all the answers

What information does a 'trial balance' provide in accounting?

A list of all accounts from the general ledger with their debit or credit balances. (A) Signup and view all the answers

What is the purpose of a 'balance sheet' in accounting?

To show the amount and nature of business assets, liabilities, and owner's equity as of a specific point in time. (D) Signup and view all the answers

When is the term 'carried down' or its abbreviation [c/d] typically used in accounting?

At the closing time of a ledger account. (A) Signup and view all the answers

What does 'brought forward' or its abbreviation [b/f] refer to in accounting?

The total amount at the head of a page being brought forward from the foot of the previous page. (C) Signup and view all the answers