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CLASS 11 ACCOUNTANCY LESSON - 1 INTRODUCTION TO ACCOUNTING
1.What type of transactions do we record in the books of accounts?
A. Monetary nature
B. Cash nature
C. Political nature
D. Social nature
Answer - A
Explanation - Only those transactions that can be measured in terms of money are recorded in the books of Accounts.
2.The main purpose of accounting is to give a ________ view of accounting.
A. Biased
B. Inadequate
C. True and Fair
D. All of these
Answer - C
Explanation - It provides a complete view of the financial position of the business. Financial Statement provides True and Fair View.
3.Where ________ ends then ________ begins.
A. Finance and Accounting
B. Book keeping and Accounting
C. Accounting and Book keeping
D. Book keeping and Finance
Answer - B
Explanation - Bookkeeping involves only recording and classifying the transactions whereas accounting in addition to these involves summarising, interpreting and communication of end result to the users of accounting.
4. The person from whom goods are purchased on credit is known as ________.
A. Owner
B. Debtor
C. Investors
D. Creditor
Answer - D
Explanation - The person from whom goods are purchased on credit is known as the creditor. Creditors are the persons to whom we have to pay.
5.Goods/Assets or Cash used for personal use by a businessman is called ________.
A. Drawings
B. Profit
C. Capital
D. Investment
Answer - A
Explanation - The money, goods or asset withdrawn from the business by the owner for personal use is called drawings.
6.Accounting is helpful in replacing the ________.
A. Method
B. Material
C. Money
D. Memory
Answer - D
Explanation - Since all the transactions are recorded in chronological order there is no need to remember the transactions. Hence it replaces the memory.
7.The objective of financial accounting is to ascertain ________ for a particular period.
A. Assets only
B. Profit/Loss
C. Accounts
D. Debt only
Answer - B
Explanation - Accounting helps in calculating the profit and loss of the business during an accounting period.
8.The main purpose of the balance sheet is to show ________.
A. Financial Position
B. Assets and Capital
C. Creditors
D. Old Accounting Records
Answer - A
Explanation - The balance sheet shows the position of assets and liabilities of the business at a point of time.
9.Which of the following does not represent a business transaction?
A. Capital introduced in the business
B. Goods are sold on credit
C. Assets sold and money introduced in the business
D. Efficiency of Management
Answer - D
Explanation - Only transactions of monetary nature are considered as business transactions. The efficiency of management is not a monetary transaction hence it will not be recorded in the books of accounts.
10. Which one is not the step of accounting
A. Interpretation
B. Classifying the recorded entries
C. Recording in the book of accounts
D. Window Dressing
Answer - D
Explanation - There are five steps in accounting- recording, classifying, summarising, interpreting the transactions and communicating the result of the business transactions.
11. What accounting method is followed for the recording of transactions?
A. Single entry system
B. Cash Basis System
C. Double Entry System
D. None of these
Answer - C
Explanation - Every transaction in recording has two effects. Double Entry System of Book-keeping is followed to record the transaction.
12. Book-keeping is mainly concern with:
A. All of these
B. Interpreting data for internal and external users.
C. Recording financial data relating to business operations and classifying it. D. Designing for system recording, classifying and summarizing.
Answer - C
Explanation - Book-keeping includes two steps of accounting that are recording and classifying of financial transactions.
13. Which is the last step of accounting as a process of information:
A. Preparation of financial transaction
B. Communication of information
C. Analysis of information
D. Recording the transaction
Answer - B
Explanation - The financial position or financial performance of the business is to be communicated to internal and external users.
14.Posting of entries in the ledger is done from ________.
A. Journal
B. Vouchers
C. Balance sheet
D. None of these
Answer - A
Explanation - The first step in accounting is to record the transaction in the journal than from the journal it is posted to the ledger.
15.Which is the evidence of business transaction:
A. Voucher
B. Journal
C. Balance sheet
D. Ledger
Answer - A
Explanation - These are the recorded evidence of different business transactions. Hence they are evidence in court.