These are some Very Important Questions with Answers which students must understand:

Questions

  1. Give any three points of superiority of Accrual Basis of Accounting over Cash Basis of Accounting.
  2. Give a transaction that can break the Accounting Equation.
  3. 'Provide for all the possible losses but don't anticipate profits.' Identify the Accounting concept referred in this sentence.
  4. What is window dressing?
  5. How does Cash book serve the dual purpose?
  6. What is contra entry?
  7. What do you mean by imprest?
  8. Is Trial Balance the conclusive evidence of accuracy of Accounting records?
  9. What option is available to the accountant if Trial Balance doesn't match and Final Accounts are to be prepared?
  10. What is the nature of Suspense Account?
  11. Which accounts are not balanced?
  12. Which accounts are not taken to Trial Balance?
  13. Which accounts are taken to Trading account and Profit and Loss account?
  14. What types of accounts are taken to the Balance Sheet?
  15. When is CGST used?
  16. Identify the subsidiary book in which the following can be recorded:                                                                                                                     (a) Paid rent, (b) Outstanding wages.
  1. Identify the type of Accounting Error:

(a) Wages paid to Ankit debited to Ankit account.

(b) Debit side of Mahesh account cast short.

  1. Identify whether the following are capital items or revenue items:                                                                                                                               (a) Rent paid, (b) Wages paid for construction of building.
  1. What are the two basis of Marshalling of Balance Sheet?
  2. Arrange the following items in order of permanence:                                                                                                                                                 (a) Land and building, cash in hand, stock.      (b) Bank loan, Bills payable, Capital.
  1. What type of accounts are included in financial statements?
  2. Where do we transfer different types of accounts from Trial Balance, while preparing financial statements of sole proprietor?
  3. What is secret reserve?
  4. What are operating expenses and non-operating expenses?
  5. Give two examples of indirect expenses.
  6. What is the difference between operating profit and net profit?
  7. Write the main difference between provision and reserve.
  8. What is opening journal entry?
  9. Give an example of adjusting entry.
  10. Write the difference between depreciation and amortization.
  11. What is depletion of an asset?
  12. Write the main difference between gross profit and net profit.
  13. Give any two similarities of Balance Sheet and Trial Balance.
  14. Give any two objectives of GST.
  15. Out of journal and ledger which one is known as book of prime entry and why?
  16. What is the purpose of pay-in-slip?
  17. Why do we record personal expenses of proprietor as drawings, while preparing financial statements of sole proprietor?
  18. Give any two qualitative characteristics of accounting information.
  19. Give any two examples of specific reserve.
  20. Which system of accounting is called unscientific and incomplete and why?
  21. What is revenue expenditure?
  22. What is deferred revenue expenditure?
  23. Give any two uses of accounting standards.
  24. Give the full form of ICAI and IFRS.

 

Answers

  1. Accrual basis of accounting considers all transactions cash transactions as well as credit transactions where as in case of cash basis of accounting only cash transactions are considered.
  2. No transaction can break the accounting equation.
  3. Prudence concept or conservatism concept.
  4. Manipulation of accounting records to show a different picture is called window dressing.
  5. All the transactions relating to cash and Bank are recorded in cash book in chronological order so it becomes a journal. All the transactions relating to cash and Bank can be checked at a single place with its balance so it becomes ledger also.
  6. Contra entry is the entry recorded on both sides of cash book one in cash column the other in Bank column.
  7. Imprest is the monthly advance given to the petty cashier for petty expense.
  8. No, Trial Balance is not a conclusive evidence of accuracy of accounting records. There can still be some errors left after matching of the Trial Balance.
  9. The difference in trial balance can be put to suspense account.
  10. The nature of suspense account is not fixed as it is an artificial and Temporary account.
  11. Nominal accounts are not balanced.
  12. The accounts having Nil balance or not taken to trial balance.
  13. Nominal accounts are taken to trading and profit and loss account.
  14. Real and personal accounts are taken to balance sheet.
  15. Cgst is used for intra State transactions means within the same state.
  16. a. Cash book , b. journal proper
  17. a.  Error of principle, b. clerical errors
  18. a. Revenue item, b. capital item
  19. a. Order of liquidity, b. order of permanence
  20. a. Land and building, stock, cash in hand, b. Capital, bank loan, bills payable
  21. Personal accounts, real accounts and nominal accounts.
  22. Nominal accounts are taken to trading and profit and loss account and Real and personal accounts are taken to balance sheet.
  23. Secret reserve is the Reserve which is not disclosed in the balance sheet, it is also called hidden reserve.
  24. Operating expenses are the expenses relating to operating activities of the business that is expenses which are related to to day to day functioning of the business. Non-Operating expenses are the expenses which are not required for the day-to-day functioning of the business.
  25. Examples of indirect expenses -  salaries, rent.
  26. Net profit is calculated after considering non-operating expenses and non-operating income but operating profit is calculated without considering non-operating expenses and non-operating income.
  27. The purpose of making provision is to meet some known liability whereas the purpose of creating reserve is to strengthen the financial position or payment of an unknown liability.
  28. Opening journal entry is journal entry passed in the beginning of the accounting year to open the accounting books.
  29. Expenses A/c     Dr.   To Outstanding Expenses
  30. Depreciation is charged on Fixed assets whereas amortization is used for writing off Intangible Assets.
  31. Exhausting of an asset (natural resources) like Coal mine.
  32. Gross profit is after meeting cost of production but the net profit is after meeting all the expenses and losses.
  33. There is main similarity i.e. Totals of both the sides/ columns of these statements must be same for meaningful results. Both are based on Accounting Equation.
  34. Two objectives of GST are: To simplify tax structure and to solve the problem of black money.
  35. Journal is called book of prime entry as all transactions are first of all recorded in Various types of journal.
  36. The purpose of pay-in-slip is to deposit cash into bank.
  37. To calculate correct amount of net profit of business.
  38. Relevance, comparability.
  39. Debenture Redemption Reserve, Workmen's Compensation Reserve.
  40. Single entry system, because it doesn't record both the aspects of a transaction and there is absence of any principles.
  41. The expenses on normal day to day business activities the benefit of which is obtained during the same accounting period.
  42. The revenue expenditure the benefits of which will be obtained over many accounting years.
  43. To bring uniformity in accounting records and provide comparability.
  44. ICAI - Institute of Chartered Accountants of India, IFRS - International Financial Reporting Standards.

Learning Games and Activities in Accountancy – Class 11