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Introduction to Book-Keeping and Accountancy
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Introduction to Book-Keeping and Accountancy

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Questions and Answers

What is meant by 'Bad Debts' in a business context?

  • An irrecoverable amount from a debtor. (correct)
  • A loan taken from a creditor.
  • An amount owed that is likely to be repaid.
  • Any expense incurred by the business.

    • Which of the following is an example of Capital Expenditure?

  • Purchase of machinery. (correct)
  • Utility bills for the office.
  • Rent paid for a month.
  • Salaries paid to employees.

    • How is Revenue Expenditure characterized?

  • Is recoverable after one year.
  • Gives immediate or short-term benefits. (correct)
  • Provides long-term benefits.
  • Increases asset value.

    • What primarily distinguishes Deferred Revenue Expenditure from Revenue Expenditure?

    <p>Deferred revenue expenditure benefits extend beyond one year.</p> Signup and view all the answers

    What is a Cash Discount?

    <p>The amount deducted from the final sum at the time of payment.</p> Signup and view all the answers

    Which of the following statements is true about Trade Discount?

    <p>It is deducted from the catalogue price before recording the sale.</p> Signup and view all the answers

    Which of the following expenditures is classified under Revenue Expenditure?

    <p>Monthly office rent.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of Capital Expenditure?

    <p>Is recurring in nature.</p> Signup and view all the answers

    What is the primary purpose of balancing accounts at the end of a certain period?

    <p>To understand the overall financial health of the business.</p> Signup and view all the answers

    Which type of account is represented by Sunita's A/c?

    <p>Representative personal account</p> Signup and view all the answers

    What type of accounts do cash and machinery fall under?

    <p>Real accounts</p> Signup and view all the answers

    What type of account is represented by Prepaid Expenses A/c?

    <p>Real account</p> Signup and view all the answers

    Which of the following is an example of an intangible real account?

    <p>Goodwill A/c</p> Signup and view all the answers

    In what category is Interest Received A/c classified?

    <p>Nominal account</p> Signup and view all the answers

    Which of the following accounts is classified as a representative personal account?

    <p>Bank of India A/c</p> Signup and view all the answers

    Which type of account does Purchase A/c fall under?

    <p>Nominal account</p> Signup and view all the answers

    Which of the following is NOT typically included in the features of accounting?

    <p>Regulation of stock market prices.</p> Signup and view all the answers

    What is a fundamental aspect of the Double Entry System in accounting?

    <p>Each transaction affects two accounts.</p> Signup and view all the answers

    What is the purpose of preparing a Trial Balance?

    <p>To ensure that debits equal credits.</p> Signup and view all the answers

    Which statement correctly describes Subsidiary Books?

    <p>They categorize different types of transactions for easier tracking.</p> Signup and view all the answers

    What is the correct method for analyzing the effects of transactions?

    <p>Using accounting equations and classification of accounts.</p> Signup and view all the answers

    What does GST stand for in accounting terms?

    <p>Goods and Services Tax</p> Signup and view all the answers

    Which of the following is NOT a type of account classification?

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

    Which accounting principle defines the treatment of transactions within subsidiary books?

    <p>Accrual accounting</p> Signup and view all the answers

    What is the primary purpose of recording business transactions in book-keeping?

    <p>To analyze whether activities are profitable and feasible</p> Signup and view all the answers

    Which of the following correctly differentiates between book-keeping and accountancy?

    <p>Book-keeping records transactions while accountancy analyzes them</p> Signup and view all the answers

    What does the term 'accounting concepts' refer to?

    <p>The fundamental principles underlying the accounting process</p> Signup and view all the answers

    Which of the following best describes the importance of book-keeping?

    <p>It provides accurate information for decision-making</p> Signup and view all the answers

    Who are the primary stakeholders that require accounting information?

    <p>Proprietors, managers, investors, customers, and employees</p> Signup and view all the answers

    What is a basic characteristic of reliable accounting information?

    <p>It should be timely and accurate</p> Signup and view all the answers

    What significant contribution did Kautilya make to accounting practices?

    <p>He referenced methods of maintaining accounting records in 'Arthashastra'</p> Signup and view all the answers

    What is the primary function of a Bank Reconciliation Statement?

    <p>To reconcile differences between bank statements and company records</p> Signup and view all the answers

    What type of account is affected when Rajesh commenced business with cash?

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

    When a mobile bill of `4,200 is paid, which account is credited?

    <p>Cash A/c</p> Signup and view all the answers

    What is the effect on the Cash A/c when `8,000 is paid for purchased goods?

    <p>Decrease in Cash</p> Signup and view all the answers

    What type of account is the Commission A/c categorized as when `4,500 is received as commission?

    <p>Revenue A/c</p> Signup and view all the answers

    In the context of accounting, what does 'increase in assets' typically signify?

    <p>More capital</p> Signup and view all the answers

    Which of the following accounts is debited when cash of `2,500 is received as rent?

    <p>Cash A/c</p> Signup and view all the answers

    What happens to assets when goods worth `6,000 are sold to Manoj?

    <p>Assets increase by `6,000</p> Signup and view all the answers

    When goods are purchased on credit from Suresh for `15,000, which accounts are impacted?

    <p>Increase in Assets and Increase in Liabilities</p> Signup and view all the answers

    Study Notes

    Introduction to Book-keeping and Accountancy

    • Book-keeping records business transactions, and these records are used for decision making in a business to determine if activities are profitable and whether they should be continued.
    • Book-keeping information is needed by multiple stakeholders, including business owners, managers, government, investors, customers, employees, and researchers.

    Meaning and Fundamentals of Book-Keeping

    • A creditor provides goods or services on credit and is owed money from the business.
    • A debtor is someone who owes money to the business.
    • Bad debts are amounts owed by a debtor that are no longer recoverable.
    • Expenditure is the amount spent by the business in exchange for something.
    • Capital expenditure is made to acquire a fixed asset, or improve its value, and benefits the business for a long period of time.
    • Revenue expenditure is used for immediate benefit with returns expected within a year and does not impact the profit-earning capacity of the business.
    • Deferred revenue expenditure is an expenditure that provides benefit for a period longer than a year, and is written-off over the course of multiple years.
    • Trade discount is an allowance made on the list price of goods and is deducted at the time of purchase or sale.
    • Cash discount is given at the time of payment, and affects multiple accounts.
    • An account is a summarized record of transactions regarding a person, property, or a class of gain or loss.

    Classification of Accounts

    • Accounts are classified as either: Personal Accounts (natural, artificial, or representative), Real Accounts (tangible or intangible), or Nominal Accounts (expenses and losses, or income and gains).

    Journal

    • Journal entries are recorded in a standard format with a specific arrangement.
    • GST is calculated on both the purchase and sale of goods.

    Ledger

    • Ledger accounts are balanced.
    • A trial balance is a summary of all ledger accounts at a certain point in time.

    Subsidiary Books

    • Subsidiary books are used for recording transactions in specific journals.
    • The cash book records cash and credit transactions.
    • Bank reconciliation statements reconcile bank balances with book balances, which often differ.

    Depreciation

    • Depreciation is a reduction in the value of a fixed asset over time.

    Rectification of Errors

    • Errors are mistakes made in recording financial transactions and need to be rectified.

    Final Accounts of a Proprietary Concern

    • Final accounts are prepared to determine the financial position of a business.

    Single Entry System

    • The single-entry system is a simpler method of accounting used by smaller businesses.

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    Book-Keeping and Accountancy Standard Eleven PDF

    Description

    This quiz covers the fundamentals of book-keeping and accountancy, highlighting important concepts such as creditors, debtors, and types of expenditures. It is essential for understanding how financial records support business decision-making and stakeholder interests.

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