Account 1 Marks Question

First machinery will be treated as goods, and second machinery will be treated as Fixed Asset.

No. Book Keeping is a part of accounting. Two processes of accounting, i.e., collecting and recording of financial transactions and events are the processes of Book Keeping.

No. Because only those transactions and events are recorded in accounting which are of a financial character and the effect of which can be measured in terms of money.

Revenue will be ₹ 8,00,000 (i.e. 20 TV Sets x ₹ 340,000) Revenue is the amount either received or receivable from sale of goods and services. Both cash sales and credit sales are included in revenue.

Current liabilities refer to those liabilities which are to be paid in near future (normally within one year).

All amounts which a business entity has to pay to the proprietor or owners are internal liabilities such as capital and accumulated profits.

1. Cost of goods sold.
2. salary.

A good accountant is the one who is honest and shrewd. He must ensure that all transactions are recorded in the books of accounts and there should be no hiding of facts. Sometimes, pressure may be put on him to hide certain facts in accounts to evade tax or any other purpose. But he should behave in a honest and shrewd manner.

Qualitative aspects of business units are those aspects which cannot be expressed in rnonetary terms, such as changes in management, reputation of the business, cordial management-labour relations, firm's ability to develop new products, efficiency of management, satisfaction of firm's customers etc.

Recording of financial transactions.

Yes, it is a limitation of accounting because there are events which have a vital bearing on the profitability of the firm and such events are ignored.

No. It is not a business transaction. It relates to personal dealings of the Proprietor which are not recorded in the books.

1. Owners.
2. Creditors.

The following transactions are financial character and will be recorded in the books:

1. Credit purchase of goods.

3. Goods worth ₹ 20,000 taken from the business and given by the proprietor to his friend as gift.
4. Withdrawing of money by proprietor from business for personal use.

10. Loss of goods by fire.

Creditors.

Profit and Loss Account (in case of firms) and Statement of Profit and Loss (in case of Companies) shows profit earned or loss incurred during the accounting period.

It refers to the amount invested by the proprietor in a business enterprise. It can be expressed as:
Capital = Assets - External Liabilities

No. Only the receipt of order has not resulted in any change in the financial position of the firm.

Long term lenders are interested in repaying capacity of the business, profitability, liquidity, operational efficiency, potential growth of business.

Revenue is the income of a recurring (regular) nature such as receipts from sale of goods, rent, commission etc.

External users: who are outsiders to an organisation and are interested in the financial affairs of the business. who have limited authority, ability and resources to obtain the necessary information and have to rely on financial statements (Balance Sheet, Profit and Loss account).
External users include: present and potential Investors (shareholders), Creditors (Banks and other Financial Institutions, Debentureholders and other Lenders), Tax Authorities, Regulatory Agencies (Department of Company Affairs, Registrar of Companies, Securities Exchange Board of India, Labour Unions, Trade Associations, Stock Exchange and Customers, etc.

No. Besides these two, accounting has objective of providing useful information to the management and communication of financial information to the users.

It is not recorded because it cannot be measured in money terms.

Accountant has violated the value of honesty and trust.

Yes. Accounting records only financial transactions and events. It is an advantage as transactions of diverse nature are recorded using a common yardstick, i.e., money, But there are other important transactions and events which may have far-reaching effect on business. They are not recorded because they cannot be measured in money terms. For example, production loss due to labour strike. Thus, it is a limitation to that extent.

Comparability.

They want information regarding risks and returns on their investment in the business enterprise.

Communicating the final results to the users who analyse them as per their individual requirements.

1. Creditors.
2. Bills Payable.

The basic objective of Book Keeping is to maintain systematic records of financial transactions.

By preparing a Balance Sheet.

1. Goodwill.
2. Prepaid Expenses.

1. Cash.
2. Stock.

Bad Debts.

Merchandise means goods for resale.

No. Besides recording them correctly and preparing financial statements, accounting has the objectives of facilitating management control and communicating financial information to the users.

Reliability.

It is a capital profit. Hence, it should be transferred to capital reserve.

No. The appointment will not be recorded because it has not resulted in any change in the financial position of the firm. (It will be recorded only when the salary is paid).

Expense is the cost incurred in producing and selling the goods and services.

Yes. It will be treated as drawings of Miss Priti and will be recorded in the books.

No. Only the purchased goodwill can be recorded in the books of accounts. As per Accounting Standard 26 (Intangible Assets), self generated goodwill is not recorded in the books of accounts because consideration in money or money's worth has not been paid for it.

Profit or loss of a particular period is ascertained by preparing a Trading and Profit and Loss Account.

1. Land and Building.
2. Stock.

The term sales is used for the amount of sale of goods and services rendered. The term sales includes both Cash and Credit Sales.

Reliability.

No. Personal dealings of the proprietor are not recorded in the books of the firm. However, if he invests this amount in the business it will be treated as additional capital introduced by the proprietor and then it will be recorded in books of the firm.

Supplier of goods.

1. Resignation by General Manager.
2. Value of hunan resources.

Drawings refer to any Cash or value of goods withdrawn by the owner for personal use.