DCM1103 Fundamentals of Accounting I - Introduction to Accounting Quiz
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Questions and Answers

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?

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

Which term refers to the limitations of accounting?

<p>Limitations of financial statements (B)</p> Signup and view all the answers

Why is a systematic accounting procedure essential for businesses?

<p>To ascertain profits earned or loss incurred (A)</p> 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)?

<p>Business Entity (C)</p> 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?

<p>Sole trader (A)</p> 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?

<p>Partnership (C)</p> 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?

<p>Joint Stock Company (D)</p> Signup and view all the answers

What are funds brought in to start a business called?

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

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

<p>Fixed Capital (C)</p> Signup and view all the answers

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

<p>To provide relevant and reliable financial information (C)</p> Signup and view all the answers

Which statement best describes the evolution of accounting?

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

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

<p>To provide relevant and reliable financial information (D)</p> Signup and view all the answers

What is the main objective of accounting for stakeholders?

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

How do stakeholders use accounting information?

<p>To make informed decisions (C)</p> Signup and view all the answers

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

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

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

<p>To protect the interest of the general public (C)</p> Signup and view all the answers

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

<p>By enabling effective planning and control (B)</p> Signup and view all the answers

Who are considered internal users of accounting information?

<p>Management at all levels (A)</p> Signup and view all the answers

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

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

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

<p>Compliance and planning activities (D)</p> Signup and view all the answers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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