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Introduction to Accounting - Short Questions and Answers

Introduction to Accounting

Introduction to Accounting - Short Questions and Answers

Short Questions & Answers

Q.1.     DEFINE BUSINESS?
Ans.    Any legal activities in a country undertaken for earning profit is called business.
Q.2.     WHAT ARE THE KINDS OF BUSINESS?
Ans.    There are three kinds of business.
  1. Manufacturing ii. Merchandise Trading    iii. Service.
Q.3.     DEFINE BUSINESS TRANSACTION?
Ans.    Business transaction means dealing with two persons like acquiring and giving.
Q.4.     WHAT IS CASH TRANSATION?
Ans.    When cash is received or paid for commodities and goods, called cash transaction.
Q.5.     WHAT IS CREDIT TRANSACTION?
Ans.    When goods or services are bought or sold on credit it is called credit transaction.
Q.6.     WHAT IS CAPITAL?
Ans.    That amount and assets like machinery, Furniture invested in business by the owner is called Capital.
Q.7.     DEFINE DRAWINGS?
Ans.    Goods or Cash taken away by the owner of the business for his domestic use is called drawings.
Q.8.     DEFINE TERM PURCHASES?
Ans.    Goods are bought in a business for earning profit is called purchases.
Q.9.     DEFINE CASH PURCHASES?
Ans.    When goods are purchased and Payment is made in cash is called Cash purchases.
Q.10.   DEFINE CREDIT PURCHASES?
Ans.    When goods are purchased from a business on account is called credit Purchases.
Q.11.   DEFINE TERM PURCHASES RETURN?
Ans.    When goods are not supplied by the supplier according to the sample. These are returned to supplier is called Purchases Return.
Q.12.   DEFINE TREM SALES?
Ans.    When merchandise are purchased for earning profit and these goods sold on credit or on Cash is called Sales.
Q.13.   DEFINE CASH SALES?
Ans.    Goods are sold and Cash received , it is called Cash Sales.
Q.14.   DEFINE CREDIT SALES?
Ans.    When goods are sold on account to a person is called credit Sales.
Q.15.    DEFINE TERM SALES RETURN?
Ans.    Defective goods returned by a customer is called sales return.
Q.16.   DEFINE TRADE DISCOUNT?
Ans.    That amount which is paid or received less than list price is called trade discount. It is not recorded in the books of accounts.
Q.17.   DEFINE CASH DISCOUNT?
Ans.    Less amount received from debtor or paid to creditor is called Cash discount. It is recorded in the books of accounts.
Q.18.   DEFINE COMMISSION?
Ans.    When services are performed by one to another person is called commission.
Q.19.   DEFINE EXPENDITURE?
Ans.    That amount which is paid for purchase of Assets is called expenditure.
Q.20. DEFINE TERM EXPENSES?
Ans.    That amount which is paid for operating the business is called expenses.
Q.21. DEFINE TERM DEBTOR/ACCOUNTS RECEIVABLE?
Ans. Total credit amount of a business receivable from different persons is called “Debtor.”
Q.22. DEFINE TERM CREDITOR/ACCOUNTS PAYABLE?
Ans.  Total credit amount of a business payable to different peoples is called “Creditor”.
Q.23. DEFINE ASSETS?
Ans.  Some goods which are not for sale in a business is called assets like Machinery, Equipment and furniture etc.
Q.24.   DEFINE LIABILITIES?
Ans. That amount which is payable in a business to other and its owner is called liabilities.
Q.25.   WHAT IS A VOUCHER?
Ans.  All business transactions are recorded on a printed slip. This slip is called voucher and used for evidence.
Q.26.   DEFINE GOODS OR PURCHASES?
Ans.   That goods which are purchased in a business for earning profit is called goods.
Q.27.   DEFINE STOCK?
Ans.  That goods which are remained unsold at the end of each year is called stock.
Q.28.   DEFIFNE EQUITY?
Ans.  The persons have right to claim against the assets of a business is called equity.
Q.29. DEFINE ACCOUNTING?
Ans.   Accounting is an art of recording, classifying and summarizing of a business t     ransactions and events of a financial character and interpreting the results there of.
Q.30.   WHAT ARE NAME THE STAGES OR FUNCTIONS OF ACCOUNTING?
Ans.  There are four functions of accounting.    i. Recording     ii. Classifying
iii. Summarizing      iv. Interpretation
Q.31.   DEFINE RECORDING IN ACCOUNTING?
Ans. In this stage the transactions are recorded chronologically in the books of account.
Q.32.   DEFINE CLASSIFYING IN ACCOUNTING?
Ans.   In this point the transactions of the same or similar nature are classified and recorded separately.
Q.33.   DEFINE SUMMERIZING IN ACCOUNTING?
Ans.  All the necessary date and information are summarized on the basis or classified record of transactions and communicated to management and other interested people.
Q.34.   DEFINE INTERPRETATION IN ACCOUNTING?
Ans.   To k now the true position of a concern all the accounting data and information relating to a business are analyzed and interpreted.
Q.35.   WHAT DO YOU MEAN BY BOOK KEEPING?
Ans.  It is an art of recording business transactions in the books of account in a proper manner.
Q.36.   WHAT ARE THE MAIN BRANCHES OF ACCOUNTING?
Ans. Three are three branches of accounting.  i. Financial Accounting.
  1. Cost Accounting    iii.   Management accounting
Q.37.   DEFINE FINACIAL ACCOUNTING?
Ans.  In this, main financial statements are prepared for the use of outsider like banks, financial institution and creditors etc.
Q.38.   DEFINE COST ACCOUNTING? 
Ans. In cost accounting the cost of product is calculated and it helps the management to  control of price or cost.
Q.39.   DEFINE MANAGEMENT ACCOUNTING?
Ans.  That accounting which provides important information to the management for discharging its function.
Q.40.   DEFINE REVENUE?
Ans. That incomes which are earned, received or receivable in business.
Q.41.   WRITE THE SYSTEMS OF ACCOUNTING?
Ans. There are two systems of accounting,   i. Cash system.     ii.  Accrued system.
Q.42.   DEFINE CASH SYSTEM OF ACCOUNTING?
Ans. In this system only those accounting entries are recorded when cash is received or paid.
Q.43.   DEFINE ACCRUED SYSTEM OF ACCOUNTING?
Ans.  In this system only those accounting entries are made on the basis of amount having become due for payment or receipt.
Q.44.   WRITE THE NAME OF PARTIES INTERESTED IN THE BUSINESS     INFORMATION?
Ans. There are many parties interested in business information such as followings:
  1. Proprietor ii. Creditors     iii. Investors    iv. Customers
  2. Management vi. Employees     vii. Government
 Q.45.   DEFINE DOUBLE ENTRY BOOK KEEPING?
Ans.   When two aspects of a transaction are recorded in a business is called double entry book keeping.
Q.46.   DEFINE SINGLE ENTRY BOOK KEEPING?
Ans. When only one aspect of a transaction is recorded is called single entry book keeping.

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