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MBA – 5208: Principles of Accounting (Sections: B &G1) Spring- 2024 – 2025 Assignment- 3 ================================================== =============== Student Name : Student ID : Dated:15.03. ================================================= ============= Short Questions and Answers ================================================== ============== Question-01: What is accounting? Answer: Accounting is an information system that identifies, records, and reports to interested users the economic activities of an organization. Question-02: What is called Accounting? Answer: Accounting is called the language of business. Question-03: What is the main objective of accounting? Answer: The main objective of accounting is keeping accounting records and determine the financial results of the organization. Question-04: What are the names of the three functions of accounting? Answer: The three functions of accounting are Identification, Classification, and Communication. Question-05: What does accounting encourage people to do? Answer: Accounting encourages people to exercise regularity, honesty, and accountability. Question-06: In the past, what was the scope of accounting? Answer: In the past, the scope of accounting is limited only to business. Question-07: What are the branches or types of accounting? Answer: Major branches are: Financial Accounting, Cost Accounting,
Management Accounting, Tax Accounting, Forensic Accounting, etc. Question-08: What does Accounting create? Answer: Accounting creates values and accountability. Question-09: Accounting has a relationship to which subjects? Answer: Accounting is related to Economics Mathematics Computers Statistics Law Political Science Engineering Environmental Science, etc. Question-10: What kind of science is accounting? Answer: Accounting is a Social science. Question-11: Is Accounting art or science? Answer: Accounting is both art and science. Question-12: When does the journey of accounting begin? Answer: The journey of accounting began when people lived in caves. Question-13: Who is the father of accounting? Answer: Luca de Pacioli. Question-14: Who was Luca de Pacioli? Answer: Luca de Pacioli was an Italian priest, philosopher, and mathematician. Question-15: What is the name of the famous book written by Luca de Pacioli? Answer: Summa de Arithmetica, Geometria, Proportioniet Proportionalite. Question-16: Which part of the book by Luca de Pacioli discusses the double-entry accounting process?
Answer: Computed or Mechanical Accounting. Question-28: How did people of primitive age keep an account of themselves? Answer: Cut the stains on the walls of the cave, knots on the rope. Question-29: Which way has the accounting improved considerably? Answer: by improving trade and commerce and by advancing science and technology. Question-30: How’s the history of accounting? Answer: The history of accounting is as old as the history of human civilization. Question-31: The basis for the collection of income tax, value-added tax, and excise duty is — Answer: Maintain accurate accounting Question-32: What is bookkeeping? Answer: Bookkeeping is a part of accounting that only involves the recording of economic events. Question-33: What is the main function of bookkeeping? Answer: Record transactions in the book of accounts. Question-34: What is the part of accounting that only records economic events? Answer: Bookkeeping. Question-35: What is the purpose of bookkeeping in an organization? Answer: Determine the financial status of an organization. Question-36: What is Accounting Information? Answer: The consolidated statement of all financial information of an organization is called Accounting Information. Question-37: How many users of accounting information are there? Answer: There are two types of accounting information users. One is an internal user and the other is an external user. Questions-38: Who are the internal users of accounting information? Answer: The internal users of accounting information are Owners Management authorities
Internal auditors, and Accounting departments. Questions-39: Who are the external users of accounting information? Answer: The external users of accounting information are Government Lenders Investors Consumers Researchers Business Associations People Creditors, and External auditors. Question-40: What are the sources of accounting information? Answer: The sources of accounting information are as follows : Comprehensive Income Statement, Balance Sheet, Owner’s Equity Statement, Cash Flow Statement, and Notes & Explanation. Question-41: What is a transaction? Answer: Any event that brings to it a change in the pattern of assets or liabilities of the business, is called a transaction. Question-42: What is an event? Answer: Event refers to a process or part of a process that has a particular time and place of occurrence. Question-43: How many types of events and what are they? Answer: There are two types events which are as follows: Financial events and Non-financial events.
Answer: Transactions that take place in personal and family life are referred to as personal transactions. For example, the school salary of the boy, the wedding expenses of the girl, etc. Question-54: What’s the internal transaction? Answer: Transactions that take place within an organization are referred to as internal transactions. For example, depreciation, deletion, etc. Question-55: What’s an external transaction? Answer: Transactions with another person or organization are referred to as external transactions. For example, Paid electricity bills, paid to the vendor, etc. Question-56: What is a cash transaction? Answer: Cash transactions are transactions that result in a change in the cash of the organization. For example, cash received from the debtors. Question-57: What’s the credit transaction? Answer: Transactions that take place on credit, that is, transactions that do not result in a change in the organization’s cash, are called credit transactions. For example, goods are sold on credit to Peter. Question-58: What’s a non-cash transaction? Answer: All other transactions except cash and credit are referred to as non-cash transactions. For example, depreciation. Question-59: What’s the visible transaction? Answer: Transactions that can be accessed or perceived are referred to as visible transactions. For example, a product is bought at $100. Question-60: What’s the invisible transaction? Answer: Transactions that cannot be touched or viewed are referred to as invisible transactions. For example, Depreciation of Building Question-61: What is a capital transaction? Answer: Transactions that have long-term results are called capital transactions. For example, the purchase of furniture. Question-62: What is the revenue transaction? Answer: Transactions that have short-term results are called revenue transactions. For example, House rent. Question-63: What is the accounting equation? Answer: The equation that expresses the relationship between the elements of the financial condition of an organization, such as property, liabilities, and ownership, is called an accounting equation.
Question-64: What is the basic accounting equation? Answer: A=L+OE Question-65: What is the expanded accounting equation? Answer: A=L+(C+R-E-D) Question-66: What also affects the result of the transaction? Answer: Accounting Equation Question-67: What is the documentary evidence of the transaction? Answer: The written and valid evidence that accompanies the transaction is called the documentary evidence of the transaction. Question-68: Which documents are used in business transactions? Answer: The documents are used in business transactions are as follows: Invoice Cash Memo Debit Note Credit Note VAT Invoice Debit Voucher Credit Voucher Journal Voucher, etc. Question-69: What’s the invoice? Answer: Invoice is the authentic document of purchase and sale Question-70: What is a credit voucher? Answer: A voucher that is used to sell goods and other income is called a credit voucher. Question-71: What is a cash memo? Answer: The receipt issued by the seller to the buyer as an authentic document in case of cash purchase and sale is called a cash memo. Question-72: To who is the original copy of the Cash Memo provided? Answer: To the buyer. Question-73: How many copies of cash memos are made? Answer: 3 copies
The complexity of the accounting system, Need an experienced person, Increase the volume of work, Limited application, etc. Question-84: What are the principles of the double-entry system? Answer: The principles of double-entry system are as follows: Dual aspect Giver and receiver A scientific system of accounting Justify arithmetical accuracy, etc. Question - 85: What is “Debit”? Answer: The left side of an account is called Debit. Question-86: What is “Credit”? Answer: The right side of an account is called Credit. Question-87: What types of books are maintained under a double entry system? Answer: The books are maintained under the double-entry system is as follows: Purchase book Sales book Purchase return book sales return book Note receivable book Note payable book General Journal Cash book Ledger, Etc. Question-88: What is a complete and scientific method of accounting? Answer: Double Entry System. Question-89: Why is the double-entry system called the scientific method?
Answer: The double entry system is called the scientific method because it verifies the mathematical accuracy of the calculation. Question-90: In a double-entry system, which book transactions are recorded first? Answer: The Journal is the first book where transactions are recorded. Question-91: What is the name of the account that benefits from the double-entry system? Answer: The name of the account that benefits from the double-entry system are Debtor. Question-92: In the double-entry system, what is the account that provides benefits? Answer: The account that provides benefits is Creditor. Question- 93: What does “Debit” mean? Answer: Debit means: Increases in assets, expenses and Decreases in liabilities, owners’ equity & income. Question- 94: What does “Credit” mean? Answer: Credit means: Decreases in assets, expenses and Increases in liabilities, Owners equity & income. Question-95: What is the final result of the double-entry system? Answer: The double entry system’s final result is that total asset equal total liabilities. Question-96: For each transaction, what does a double-entry accounting system produce? Answer: a double-entry accounting system produces two retrograde outcomes of equal value. Question-97: which is affected by each transaction in the double-entry accounting system? Answer: Accounting Equation is affected by each transaction in the double-entry accounting system. Question-98: What is the modern method used to determine the debit- credit of various accounts? Answer: Accounting equation method.
Question-108: What is the 3rd step of the accounting cycle? Answer: The 3rd step of the accounting cycle is Journal. Question-109: What is Journal called? Answer: A journal is called the Primary books, Daily books, and Subsidiary books of accounts. Question - 110 What is the feature of the journal? Answer: The features of the journal are as follows: Primary/Daily/Subsidiary books of accounts. Analysis into the dual aspect. Provide necessary narration. Recording in equal amounts. A reference to the litigation of disputes, etc. Question-111: What are the benefits of a journal? Answer: The benefits of the journal are as follows: A permanent record of transactions. Determination of heads of accounts. A storehouse of information. Future reference. Maintenance of continuity of transactions. Aid to maintain the cleanliness of the ledger. Aid to litigate disputes, etc. Question-112: Why is Journal called the book of basic accounts? Answer: Journal is called the book of basic accounts because if any doubt arises, it can be examined in the journal. Question-113: Which accounts can be easily separated through the journal? Answer: The accounts that can be easily separated through the journal are as follows: Nominal accounts,
Personal accounts, and Asset accounts. Question-114: What is the main purpose of the journal? Answer: The main purpose of the journal is initial accounting. Question-115: For accounting purposes, how many categories are there in a journal? Answer: There are eight (8) categories in a journal. Question-115: Journal makes it easy to prepare which account? Answer: Ledger Account. Question-116: What is the total number of columns in the journal table? Answer: The total number of columns in the journal table is five (5). Question-117: What is a simple journal? Answer: Simple journal is a journal that has one debit account and one credit account. Question-118: What is a mixed journal? Answer: Mixed journal is a journal that has multiple debit accounts and multiple credit accounts. Question-119: Special journals can be divided into how many parts? What are their names? Answer: Journals can be divided into two (2) parts which are as follows: Special Journal and Proper Journal. Question-120: What is a Special journal? Answer: Special journal is a journal entry that is made for recording almost all the transactions that take place in business. Question-121: Special journals can be divided into how many parts? What are their Names? Answer: Special journals can be divided into six (6) parts which are as follows: Purchase Journal Sales Journal Purchase Return Journal Sales Return Journal
Question-131: What is the adjusting Journal? Answer: The adjusting Journal is the entry that is made for the unrecorded and unadjusted items. Question-132: What is a closing Journal? Answer: Closing Journal is the entry that is made for the closing of nominal accounts (income and expenditure accounts). Question-133: What is an opening Journal? Answer: The entry which is given for carrying out the last year’s assets, liabilities, and owner’s equity to the beginning of the next year is known as opening Journal. Question-134: what is known from the journal? Answer: Total number of transactions, the total number of money, and the reason for transactions are easily known from the journal. Question-135: What is Ledger? Answer: The book in which a trader’s transactions are recorded in a classified permanent form is called the ledger. Question-136: What is the feature of the ledger? Answer: The main feature of Ledger is as follows: Each account is given a heading. “T” table and Moving Balance table are followed to prepare ledger. Record the date, the amount of money, and the journal folio no. The balance of each of the accounts is identified individually. Verify the arithmetic accuracy of accounting activities. Question-137: What is the importance or necessity of Ledger? Answer: The importance of ledger is as follows: Permanent records of transactions Summarizing and classifying the transactions Providing the arithmetical accuracy Provide information about financial conditions. Preventing misappropriation and fraud. Question-138: Why ledger is called the king of all the books? Answer: Ledger is called the king of all the books because it
Keeps records permanently. Classify the accounts Provides the financial picture of the organization Helps to prepare final accounts of the organization. Justify arithmetical accuracy. Question- 139: From which word does the word “Ledger” come? Answer: The word “Ledger” comes from the word “Ledge” Question- 140: What does the word “ledge” mean? Answer: The word “ledge” means Shelf. Question-141: What is the permanent book of accounts? Answer: The permanent book of accounts is Ledger. Question-142: What is the basement of the ledger? Answer: the basement of the ledger is Journal. Question-142: Why is Ledger called “Shelf”? Answer: The ledge is called a shelf due to the arrangement of the transactions. Question-143: How many types of personal ledgers and what are they? Answer: There are 2 types of personal ledger which are as follows: Debtors Ledger and Creditors Ledger. Question-144: How many types of impersonal ledgers and what are they? Answer: There are 2 types of impersonal ledgers which are as follows: Assets & Liabilities related Ledger and Nominal Ledger. Question- 145: Which is the most commonly used “Ledger format” in modern times? Answer: The most commonly used “Ledger format” in modern times is “Moving Balance Format”. Question- 146: How many money columns are there in Ledger’s Moving Balance format? Answer: There are Four (4) columns in Ledger’s Moving Balance format. Question-147: What is Balance?
Answer: Eight (8) columns. Question-158: What is the main purpose of preparing a ledger account? Answer: The main purpose of preparing a ledger account is to determine the balance of the account. Question-159: What is a Trial Balance? Answer: A trial balance is a list of debit and credit balances extracted from the ledger, including the balance of cash and bank columns of the cash book on a given date. Question-160: What is the objective of the trial balance? Answer: The objectives of preparing the trial balance are as follows: Verification of accurate posting of journal and ledger entries. Facilitate the preparation of a statement of comprehensive income and a statement of financial position. Find out the mistakes and correct the mistakes. Question- 161: What is the main objective of trial balance? Answer: The main objective of the trial balance is to test the arithmetical accuracy of the accounts. Question-162: Which ledger balances are written on the debit side of the trial balance? Answer: The ledger balances are written on the debit side of the trial balance is as follows Assets, Expenses, Expenses paid in advance, Accrued incomes, and etc. Question-163: Which ledger balances are written on the credit side of the trial balance? Answer: The ledger balances are written on the credit side of the trial balance is as follows: Liabilities, Incomes, Outstanding Expenses, Unearned Incomes,
Reserves, etc. Question-164: What kinds of errors are not detected by the trial balance? Answer: The types of errors that are not detected by trial balance are as follows: Errors of omission Errors of writing Compensating Errors Errors of miss-posting Errors of Principle. Questions-165: What kinds of errors are detected by the trial balance? Answer: The types of errors detected by the trial balance are as follows: Posting Errors Listing Errors Costing and balancing errors Question-166: Is it mandatory to prepare a trial balance? Answer: It is not mandatory to prepare a trial balance. Question-167: Suspense Account is basically what kind of account? Answer: Suspense Account is a temporary account. Question-168: When is the trial balance prepared? Answer: The trial balance is prepared at the end of the specified accounting period. Question-169: What is an error of omission? Answer: If a transaction is not recorded in the journal or is not transferred from the journal to the ledger, it is called an error of omission. Question-170: What is an error of commission? Answer: If you debit and credit more or less than the amount of money that has been transacted, or if you have recorded more or less amount of money as both sides in the ledger, it is called an error of commission. Question-171: What is a compensating Error? Answer: If an error is unknowingly corrected by another error, it is called a compensating error. Question-172: What is an error of principle?
