Questions and Answers
What led to the emergence of financial accounting?
What is the primary purpose of financial statements?
What is the focus of Management Accounting?
What led to the development of Management Accounting?
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What is the primary goal of Social Responsibility Accounting?
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What contributed to the development of financial accounting?
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What is the primary characteristic of financial accounting?
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What is the current stage of Social Responsibility Accounting?
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What is the limitation of accounting as a language?
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What is one of the roles of an accountant in company formation?
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Which of the following factors cannot be measured in terms of money and hence do not find a place in the accounts?
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What is the primary responsibility of a cost accountant?
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What is the limitation of the Balance Sheet?
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What is an important aspect of an accountant's information system?
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What does accounting ignore?
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What is one of the onerous duties of an accountant in case of company insolvency?
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When do accounting principles conflict with each other?
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What is the role of an accountant in share registration work?
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What is an example of an accounting estimate that depends on personal judgement?
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What is an important characteristic of an accountant's information system?
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What is the limitation of financial statements?
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What is the benefit of an accountant's information system to management and investors?
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What is the limitation of accounting in assessing the worth of an enterprise?
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What is the role of an accountant in case of company liquidation?
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What is the primary role of a chartered accountant in an industry?
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What is the main difference between public sector enterprise accounting and ordinary government accounting?
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What is the primary responsibility of a chartered accountant in a public sector enterprise?
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What is the role of a chartered accountant in framing fiscal policies?
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What is the key to the success of a business enterprise?
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What is the primary goal of a chartered accountant in an industry?
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What is the main focus of a chartered accountant in a public sector enterprise?
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What is the role of a chartered accountant in advancing trade, commerce, and industry?
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What is the primary reason for accountants in industry and practice to disclose more information about corporate results?
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According to the role of chartered accountants, what should they aim to do?
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What is the primary objective of accounting?
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What can be divided into two basic parts?
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What is the positive role of chartered accountants?
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What is the primary goal of chartered accountants in a welfare state?
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Study Notes
Evolution of Accounting
- Stewardship accounting was prevalent until the emergence of large-scale enterprises in the form of public limited companies.
- The concept of financial accounting emerged with the concept of joint stock company and divorce of ownership from management.
- Financial statements (profit and loss account and balance sheet) were developed to safeguard the interests of shareholders and investors.
Development of Accounting
- Financial accounting emerged as an information system to identify, measure, and communicate useful information for informed judgments and decisions by a broad group of users.
- Management Accounting emerged in the 20th century to aid management decision-making and improve the quality of management decisions.
- Social Responsibility Accounting is a developing concept that aims to account for the social cost incurred by business as well as the social benefits created.
Limitations of Accounting
- Accounting figures are subject to various constraints and limitations.
- Assumptions and conventions used in accounting become limitations.
- Financial statements are not free from subjective factors, such as personal judgment of the accountant.
- Examples of limitations include:
- Certain factors, like loyalty and skill of personnel, cannot be measured in terms of money.
- Balance Sheet shows the position of the business on a specific date, not in the future.
- Accounting ignores changes in some money factors, like inflation.
- Accounting principles may conflict with each other.
- Personal judgment of the accountant is required in certain estimates.
Role of Accountants
- Accountants play a crucial role in various aspects, such as:
- Share registration work
- Company formation
- Receiverships, liquidations, and arbitrations
- Cost accounting and information services
- Industry and public sector enterprises
- Framing fiscal policies and promoting economic growth
Chartered Accountants
- Chartered Accountants play a vital role in performing important functions, such as accounting, costing, budgetary control, estimating, and treasury.
- They have a positive role to play in the determination of fiscal policies and advancement of trade, commerce, and industry.
- They should develop new techniques and prepare themselves for new fields of service.
- They have a social obligation to disclose greater information regarding corporate results.
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Description
This quiz explores the development of financial accounting, from its early stages to the emergence of large-scale enterprises and the concept of joint stock companies.