Financial and Management Accounting-I Exam 2022

Accounting is a system of recording and summarizing financial transactions to provide information for decision-making. In business, it helps track income and expenses, monitor financial performance, and aid in making investment and operational decisions.

Some limitations of accounting include reliance on historical data, which may not reflect current trends, and the subjectivity inherent in accounting estimates and judgments.

<p>Accounting is crucial for business success as it provides essential financial information for decision-making, investors, and stakeholders. Through accounting, a business can track performance, identify areas for improvement, and make strategic decisions to enhance its financial well-being.</p> Signup and view all the answers

<p>International Financial Reporting Standards</p> Signup and view all the answers

<p>All of the above</p> Signup and view all the answers

<p>Challenges include adapting to new reporting requirements, aligning with existing Indian GAAP, and potential complexities for small and medium-sized enterprises (SMEs).</p> Signup and view all the answers

<p>Ethical issues in accounting encompass matters like integrity, objectivity, and professional competence. Accountants are expected to adhere to ethical codes of conduct, ensuring trustworthiness and transparency in their work. Examples of ethical dilemmas include conflicts of interest, confidentiality breaches, and misrepresentation of financial data.</p> Signup and view all the answers

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

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

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

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

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

<p>The heads of accounts involved are Salary Expense and Cash.</p> Signup and view all the answers

<p>Salary Paid is an Expense account and Cash is an Asset account.</p> Signup and view all the answers

<p>For the transaction 'Salary Paid', the Salary Expense account is debited, and the Cash account is credited.</p> Signup and view all the answers

<p>The heads of accounts involved are Machinery and Cash</p> Signup and view all the answers

<p>Machinery is an Asset account, and Cash is also an Asset account.</p> Signup and view all the answers

<p>For the transaction 'Machinery Purchased for Cash', the Machinery account is debited, and the Cash account is credited</p> Signup and view all the answers

<p>The heads of accounts involved are Salary Expense and Salary Payable.</p> Signup and view all the answers

<p>Salary Expense is an Expense account, and Salary Payable is a Liability account</p> Signup and view all the answers

<p>For the transaction 'Outstanding Salary', the Salary Expense account is debited, and the Salary Payable account is credited</p> Signup and view all the answers

<p>The heads of accounts involved are Building, Accumulated Depreciation, Cash, and Profit or Loss on Sale of Building.</p> Signup and view all the answers

<p>Building and Accumulated Depreciation are Asset accounts, Cash is an Asset account, and Profit or Loss on Sale of Building is an Equity account.</p> Signup and view all the answers

<p>The accounts debited and credited will depend on whether there is a profit or loss on the sale. If there is a profit, the Cash account will be debited, and the Building account, Accumulated Depreciation, and Profit on Sale of Building accounts will be credited.</p> Signup and view all the answers

<p>Cash is an Asset account, and Ramesh can be considered a Debtor.</p> Signup and view all the answers

<p>For the transaction 'Received Cash from Ramesh', the Cash account is debited, and the Ramesh account (a Debtor account) is credited.</p> Signup and view all the answers

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

<p>Sales - Cost of Goods Sold</p> Signup and view all the answers

<p>Direct Expenses</p> Signup and view all the answers

<p>To show the financial position of a business at a particular point in time</p> Signup and view all the answers

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

<p>Assets = Liabilities + Equity</p> Signup and view all the answers

<p>Absorption costing (also known as full costing) allocates all manufacturing costs, both fixed and variable, to products. Marginal costing only includes variable manufacturing costs when calculating the cost of goods sold, with fixed manufacturing costs treated as a period cost. Absorption costing typically results in a higher cost per unit, while marginal costing provides a lower cost per unit.</p> Signup and view all the answers

<p>Marginal Costing</p> Signup and view all the answers

<p>Normal loss is an expected loss incurred during the production process, considered an inherent part of manufacturing. Abnormal loss is an unexpected and avoidable loss, often due to factors like accidents or negligence. Normal loss is usually absorbed as a cost in the production process, while abnormal loss is treated as an expense and recorded separately.</p> Signup and view all the answers

<p>The Trial Balance lists all account balances at a specific time to ensure that the total debits equal the total credits in the accounting system. Its main purpose is to confirm the mathematical accuracy of the accounting records before preparing financial statements.</p> Signup and view all the answers

<p>A Trial Balance is an internal accounting document listing all account balances to check for mathematical accuracy. A Balance Sheet is an externally reported financial statement presenting the financial position of a company at a specific time, showing assets, liabilities, and equity.</p> Signup and view all the answers

<p>ABC is a costing method that assigns overhead costs to products based on their actual consumption of activities. Factors to consider when adopting ABC include identifying key activities, determining cost drivers for each activity, and assigning overhead costs based on the activities used by each product.</p> Signup and view all the answers

<p>Traditional costing systems typically allocate overhead costs based on a single cost driver, such as direct labor hours or machine hours. ABC, however, allocates overhead costs based on multiple activities and cost drivers, providing a more accurate cost allocation to products.</p> Signup and view all the answers

<p>The formula for calculating Break-Even Point in units is: BEP (units) = Fixed Costs / (Sales Price Per Unit - Variable Cost Per Unit)</p> Signup and view all the answers

<p>The formula to calculate the sales required to achieve a target profit is: Required Sales = (Fixed Costs + Target Profit) / (Sales Price Per Unit - Variable Cost Per Unit)</p> Signup and view all the answers

<p>The formula used to calculate sales required to earn a profit of 10% of sales can be derived as follows: Target Profit = 10% of Sales. Rearranging the formula for calculating sales required for target profit, we get: Required Sales = (Fixed Costs + (10% * Sales)) / (Sales Price Per Unit - Variable Cost Per Unit). Simplifying the equation, we can find the required sales revenue to achieve a 10% profit margin.</p> Signup and view all the answers

<p>Overhead expenses refer to indirect costs incurred in running a business and are not directly related to the production of a specific product. These include costs like rent, utilities, and administrative expenses. Direct expenses, on the other hand, are costs directly traceable to the production of a specific product, such as raw materials and direct labor.</p> Signup and view all the answers

<p>A Reconciliation Statement is a document that reconciles the differences between two sets of accounting data, often used to reconcile differences between the financial statements produced by the cost accounting system and the financial accounting system for a business. It is used to identify discrepancies and explain the reasons for those differences.</p> Signup and view all the answers

<p>Job Costing is a method used to track costs associated with individual jobs or projects. It is used to calculate the total cost of a job, including direct materials, direct labor, and overhead expenses, to determine the profitability of specific projects.</p> Signup and view all the answers