i com accounting q a

7/30/2019 I Com Accounting Q A

1/29

1. Define Abnormal loss.Loss, which arises naturally due tofire, flood or some other abnormalreasons, is known as abnormal loss

2. What is an account?

Account is the individual record of anasset, liability, revenue, expense or

capital in a summarized manner.

3. Define Accrued/outstandingExpenses.

Expenses which are still payable by

the business are called accrued or

outstanding expenses. Eg rent

payable, salaries payable.

4. Define Bad Debts.

A debt that is not collectible andwritten off by the entity.

5. Define Balance Sheet.It is a statement of assets, liabilities

and owner's equity, which shows

the financial position of the business

on a particular date.

6. Define Bearer Cheque.

7. Define Bills payable book.

8. Define Bills Received & Receiveable.9. Define Book Keeping Errors.

10.Define BRS.

11.Define Business.

12.Define cash & Credit Sales.

13.Define cash and Credt Purchases.

14.Define Cash Book. Single, double &

Tripple.

15.Define Cheque Book.

16.Define Commission.

17.Define days of grace.18.Define Debit and Credit Note.

19.Define Debt.

20.Define Depreciation.

21.Define Direct Income.

22.Define Drawee.

23.Define Errors of Commission.

24.Define Internal Liabilities.

25.Define journalizing.

26.Define Management Accounting.

27.Define Narration.

28.Define Notes payable.

29.Define partnership.

30.Define Pass Book.31.Define Personal & Nominal

Accounts

32.Define Petty Cash Book.

33.Define Posting.

34.Define preliminary Expenses.

35.Define Profit & Loss Acount/ Income

Statement.

36.Define Propriter.

37.Define Purchase Account.

38.Define Renwal of Bill of Exchange.

39.Define Reserve for Bad Debts.

40.Define Returns Inwards and

Outwards.

41.Define Stock in trade.

42.Define opening Stock.

43.Define Suspence Account.

44.Define Trading Account.

45.Define Trial Balance.

46.Define Uncollected Cheques/

uncredited cheques.

47.Define Unearned Income.48.Define unrepresented Cheques.

49.Define Voucher.

50.Define Worksheet.

51.Diffrenciate between cash and trade

discount.

52.Define Direct Expenses

53.Explain Errors of omission.

54.Explain Intrest on Drawings.

55.Explain Purchase Journal.

56.Define revenue expenditures & Give2 Examples.

57.Mention Parties of bills of Exchange.

58.Name any four long term liabilities.

59.What are Current Liabilities?

60.What are drawings?

61.What are errors of principle.

62.What are ficticious assets?


2/29

63.What are the stages of Accounting

Cycle?

64.What are Trial Balance Errors?

65.What is bank draft?

66.what is capital loss?

67.What is capital Payment?68.What is cash discount?

69.What is Closing Stock?

70.What is contra entry?

71.What is credit Trasaction?

72.What is Double entry Book keeping

System

73.What is endorsment of a bill of

Exchange.

74.What is Entry.

75.What is financial Accouting?

76.What is Gross Profit/Loss?

77.What is invoice?

78.What is ledger?

79.What is meant by Asset? Current &

Non Current

80.What is meant by Capital?

81.What is meant by income?

82.What is revenue Loss?

83.What is revenue payment?

84.What is revenue receipts?

85.What is Net Profit/ Loss?86.Write Down Accounting Equation.

87.Define Journal

88.Define Accouting

89.Define Zero Balance

90.what is meant by Balancing

91.What is Acceptance of Bill of

Exchange

92.What is meant by "Maturity".

93.Define "Bill of Exchange"

94.What is " Noting"95.Define Postal Order

96.Defien Prepaid Expenses

97.Define Accrued/outstanding Income.

98.What is meant by Revenue Receipts

99.What is meant by defered Revenue

Expenditure

100. Define Compensating errors


3/29

Define cash discount.

it is a ded uc tion or al lowan ce given by a credi tor to a debtor if the amount is paid by the

debtor before th e due date.

Define stock.

Unsold goods or merchandises in the business are called stock.

Define accounting cycle.

Accounting cycle includes, recording, classi fy in g and su mm ar iz in g of business

transactions.

OR

Accounting cycle includes:

Transaction > Journal > ledger ---> tr ia l balance > final accounts.

What is invoice?

A document given by th e sel ler to th e buyer for cred it sales of goods is called invoice.

OR

When goods or services are exchanged on credit basis , t he voucher used is known as

invoice or bil l.


4/29

Define personal account.

Account which is related wit h person or inst itut ion is known as personal account e.g.

Habib Bank, Debtor's account, creditor's account etc.

What is compound journal entry?

An entry in which more tha n one account is debited or more than one account is credited

is called compound journal entry.

Define trial balance.

An informal accounting schedule or statement that lists the ledger account balances at a point in

time and compares the total of debit balances with the total of credit balances is called trial

balance

What is cheque?

A cheque is an unconditional order in writing, drawn by a customer on his bank, requesting to

pay on demand a certain sum of money, to a person named in the cheque, or to the bearer of its or

to the order of a stated person.

Define cash Book

A. book in winch all the transactions in which cash is involved, (whether the business has paid cash

or received cash) are recorded is called cash book.

What is debit note?

If goods bought on credit are returned to the seller for any solid reason, the buyer debits the

seller account and informs the seller through a note. This note is called debit note.


5/29

What is accrued income?

The income, which we have been earned in the current year but has not been received in cash

within the current year, it will be received in next year, is known as accrued income e.g. accrued

commission (Cr.), rent receivable etc.

Define interest on drawings.

Interest on drawing is charged to owner on his drawings by business. This interest on drawings is

revenue to the business a nd credited to profit and loss account.

What are direct expenses?

Expenses connected with the purchase of goods are known as direct expenses e.g. freight, wages,

carriage inward etc

Define depreciation.

Gradual decrease in the monetary value of an asset due to usage in business is known as

depreciation. Depreciation is a loss to the business.

What is account period?

The life of a business is divided into a series of relatively short periods of equal length to know the

profit or loss of the business. Such a period is known as accounting period. In accounting such

accounting period is usually of a year.

Define Book keeping.

Book keeping is the art of recording monetary transactions in the books of accounts in a proper

manner.


6/29

What is credit transaction?

If the value of a transaction is not met in cash immediately, it is called credit transaction. e.g.

furniture purchased on account or on credit. .

Define equity.

Equity is the sum of liabilities and owner's equity.

Or

A claim enforced against at business assets is called equity.

I.e.Equit y = Lia bilit ies + Owner's equi ty )

Define real account.

Account which is related with properties or things owned by a business is known as real account,

e.g. land, building, office equipment etc.

What is an entry?

Recording a transaction in the appropriate place of the concerned book of account is called

entry.

Define posting.

The process of transferring information, debits and credits, from journal to ledger is

Called posting,

What is bank draft?


7/29

Bank draft is one of the means of transferring money from one place to another. It is an order

drawn by a bank on one of its branches requesting the later to pay a specified sum of money to

the person named in the draft.

Define insolvency.

Insolvency of a person means that he is unable to pay his liabilities,

OR

The excess of liab il ities over assets of a business is known as insolvency.

Define capital receipt.

Receipt which is non-recurring (not received again and again) by nature and whose benefit is

enjoyed over a long period is called capital receipt, e.g. money brought into the business by the

owner.

Define net loss.

If the debit side of profit and loss account is more than the credit side, then the difference will be

net loss.

Define creditors.

Creditors are the persons or suppliers from whom goods have been purchased on credit basis

and to whom the business has to pay money in near future. These are also known as accounts

payable.

Define accounting.


8/29

"Accounting is the art of recording, classifying and summarizing in a significant manner and in

terms of money, transactions and events, which are in part at least, of a financial character, and

interpreting the result thereof,

OR

"The system of providing quantified information about an organization to people who need

such information".

What is double entry system of book-keeping?

The system under which both the changes in a transaction are recorded, one change is debited,

while the other change is credited with an equal amount.

What do you mean by capital loss?

Loss suffered by a business on the sale of a fixed asset or it is incurred on raising capital for a

company (by issuing shares at discount) is known as capital loss, e.g., Machinery having Book

value of Rs. 50,000 is sold for Rs. 45,000, the loss of Rs. 5000 wil l be capital loss.

What are fictitious assets?

Assets which have no market value are called fictitious assets, e.g. Preliminary expenses, loss on

issue of shares or debentures etc.

What is bank reconciliation statement? / Why bank reconciliation statement is prepared?

If there is any discrepancy arises between the balance of the cash book and that of pass book,

the depositor prepares a statement to explain the causes of discrepancies and to reconcile the

two balances. This statement of explanation is called bank reconciliation statement.

Define errors of commission.


9/29

An error in which a transaction instead of being recorded in the right account, has been

recorded in a wrong account of the same class, is known as error of commission, e.g., Sale of

goods to Amir wrongly debited to Anwar account.

Define preliminary expenses.

These are expenses which are incurred in the initial stages of incorporation e.g., legal fees,

remuneration of promoters etc. It is also known as organization cost.

What is endorsement of a bill of exchange?

The procedure by which a bill of exchange is transferred from one person to another person for

the settlement of debts is called endorsement of bi ll.

What is provision for discount on creditors?

Provision which is created at the year end for the estimated amount of discount receivable from

creditors is known as provision for discount on creditors. It is possible revenue of the business.

What is gross loss?

If the value of cost of goods sold is more than sales of the business, then the difference will be

gross loss.

How are bad debts recovered?

Bad debts can be recovered from debtors if the seller demands from the buyer previouspayment before the further sale of goods on credit.

What are sundry debtors?


10/29

Sundry debtors are the persons or customers to whom goods have been sold on credit basis

and from whom the business has to receive money in near future. These are also known as

accounts receivable.

Define commission.

It is a form of remuneration for services rendered by one person to another.

Define sales.

The goods are purchased for selling purposes. When these goods are sold to customers at a specific

price, it is said that sales have been made.

Explain the advantages of the ledger.

(a) It is the ledger through which successful application of double entry system is ensured.

(b) Transactions relating to different persons or concerns are recorded in the account of each

person or concern separately. As a result complete reliable information is available.

(c) Valuable information and statistics are collected from ledger and supplied to the management

to enable them to run the concern efficiently.

What is contra entry?

An entry in which cash account and bank account are involved and it is recorded on both sides of cash

book is called contra entry.

What do you mean by deferred revenue expenditure?

Revenue expenditure, the benefit of which is not confined to one accounting year, it extends to

future accounting year or years known as deferred revenue expenditure, e.g., heavy advertisement

expenditure on the introduction of a new product in the market.


11/29

What is suspense account?

A suspense account is an account in which those transactions are entered which cannot be placed to

their proper accounts.

Define assets.

Assets are the properties and possession of a business both tangible (having physical existence) and

intangible (having no physical existence), e.g., land, building, goodwill etc.

Define journal / book of original entry / book of prime entry.

The book in which transactions are first of all recorded chronologically together with its short

Description is called journal. It is also called book of original entry or prime entry or preliminary entry or

first entry.

What is net profit?

It is ascertained by deducting all indirect expenses (the expenses incurred for running the business

and

Selling the goods) from the gross profit.

Net profit = Gross profit - All indirect expenses

Define purchases.

When saleable goods are bought in a business it is said that purchases have been made.

What are the advantages of journal?

The following are the advantages of journal:

(a) Each transaction is recorded as soon as it takes place.


12/29

(b) Journal shows the complete story of a transaction in one entry.

(c) Any mistake in ledger can be easily deducted with the help of journal.

What is meant by maturity?

Maturity is the due date of the bill at which the amount of bill is received or paid.

What is business?

Any legal activity which is done for the purpose of earning profit is known as business.

Define sales return.

If a person to whom goods have been sold finds that the goods are defective, unsatisfactory,

below standard or not according to specification, he may return these goods to the seller. Such

return of goods is known as sales return.

Define nominal account.

Account which is related with income and expense, loss and gain is known as nominal account e.g.,

carriage in, loss by theft etc.

What is bank?

An institution which purchases and sells money and transacts other financial business of like nature is

known as bank.

What are wasting assets?

Those assets whose value gradually reduce on account of use and finally exhausted completely

are called wasting assets e.g., mine, forest etc.


13/29

Define transaction.

A business event which can be measured in terms of money and which must be recorded in books

of account is called a transaction.

What is trade discount?

Discount allowed by a manufacturer or wholesaler at the time of selling goods to a retailer as a

deduction from the list price or catalogue price is called trade discount.

What is accrual system of accounting?

The system under which all items of revenue and expenses relating to the current accountingperiod whether received/paid in cash or not are taken into consideration while determining the

profit or loss of the business, is called accrual or mercantile system of accounting.

Define marshalling concept.

An arrangement in which assets and liabilities are shown in the balance sheet is known as

marshalling.

What is business entity concept?

According to this concept, business is treated as a separate entity from its owners. The entity

owns its own property and has its own debts.

Define narration.

A short explanation of each transaction which is written under each entry is called narration.

What is folioing?


14/29

The process in which the page number of the ledger is recorded in ledger folio column of journal

and the page number of the journal is recorded in journal folio column of ledger is known as

folioing.

Who is endorsee?

If the holder of the bill puts his signature on the back of the bill with a view to transfer

the property contained in it (right to receive money from the acceptor), then person to

whom the bill is transferred wil l become endorsee.

Explain the imprest system of petty cash book.

Under this system, the total petty expenses for a particular period are estimated and that

amount is advanced by the chief cashier to the petty cashier. This amount is called imprest cash

and the system is known as imprest system. The petty expenses are recorded in petty cash book.

Define provision for bad and doubtful debts.

The provision which is maintained for doubtful debts in future, is known as provision for bad and

doubtful debts or allowances for uncollectible.

What are revenue receipts?

Receipts which are recurring (received again and again) by the nature and which are available for

meeting all day-to-day expenses of the business are known as revenue receipts e.g., sale

proceeds of goods, interest received, commission received etc.

What is account?

Account is the individual record of an asset, liability, revenue, an expense or capital in a summarized

manner e.g., machinery account, sales account etc.


15/29

Define drawings.

The amount of cash or goods taken by the owner/owners from the business for his personal use

is known as drawings. '

What are uncollectible cheques?

All those cheques which are deposited in the bank by the customers but the bank has not credited the

amount of these cheques to the customer's bank account are called uncredited cheques or uncollected

cheques or cheques deposited but not collected by bank.

What are revenue expenditures?

All those expenditures which are incurred in day-to-day conduct and administration of a business

and effect of which is completely exhausted within the current accounting year are known as

revenue expenditures. These are also known as expenses or expired cost.

What are book keeping errors?

Errors which are made in the original documents (journal and ledger) are called book keeping

errors.

Define purchases returns.

Goods once purchased may subsequently be sent back to the seller for certain reasons, i.e., Goods

are defective, not according to the specification, damaged or below standard, such return of goods

by the buyer is known as purchases returns.

What is an accounting equation?

An expression of the equality of an entity's assets with the claims against them is"

referred to as the accounting equation i.e., Assets = Claims against them

Or Assets = Liabilities + Owner's equity


16/29

Define bills of exchange

An unconditional instrument in writing addressed by one person to another, signed by the

person giving it, requiring the person to whom it is addressed to pay on demand or at a

fixed or determinable future time a sum certain in money to or to the order of a specified person or

to the bearer.

Explain the method of posting from journal to ledger.

(a) Recording the relevant amount on the left hand side of the account which

according to the journal is to be debited.

(b) Recording the relevant amount on the right hand side of the account which

according to the journal is to be credited.

What Is meant by proof of accuracy?

If the debit and credit totals of the trial balance are equal and also correspond with the

total of journal, we may be satisfied that the postings have been properly made and are

arithmetically accurate.

Explain the term retiring of a bill.

Retiring of a bill .means to pay the amount of bill before due date under concession (rebate).

What do you understand by capital expenditure?

An expenditure, which results in the acquisition of permanent asset in the business for the

purpose of earning revenue, is known as capital expenditure, e.g., purchase of land for


17/29

Rs, 400,000.

Explain the errors of omission.

An error in which a transaction has been completely omitted from the original books of

an account is known as error of omission e.g. goods sold to Shakeel have been omitted to

record in the sales journal.

Define impersonal accounts.

All nominal and real accounts are impersonal accounts. It means.

i) Accounts which are related with expenses, losses and gains are known as nominal

accounts e.g. Carriage in. Loss by theft etc.

ii) Accounts which are related with properties or things owned by a business are known

as real account.

What are ledger / king of all accounts?

The book in which classification is done is called ledger

OR

The book in which all the transactions of business concern are finally recorded in the concerned

accounts in summarized and classified form is called ledger.

Explain fixed accounts.

In fixed account, the amount can be withdrawn from bank after fixed determinable period of

time. The bank allows interest on fixed account.

Explain current account.

In current account a customer is allowed to deposit or withdraw the money from the bank

according to his own will. Generally, bank allows no interest on current account.


18/29

Explain saving account.

An account in which deposits can be made only up to certain limit and the customer is not

allowed to withdraw the amount from such account twice or thrice a week is called PLS savingaccount. It is also known as saving account or profit or loss saving account.

What is adjustment?

An adjustment means to make a correct record of a transaction which has not been entered or

which has been entered but in an incomplete or wrong way.

Define bad debts reserve / allowance for uncollectible / Provision for doubtful debts.

The provision, which is maintained for doubtful debts in future, is known as provision for

doubtful debts or allowances for uncollectible.

What are trial balance errors?

Errors, which are made in the preparation of trial balance, are called Trial balance errors.

Define working capital?

The excess of current assets over the current liabilities is called working capital.

Define contingent liability.

Contingent liability is not a liability at present but May or may not become liability in future. It

depends upon certain future event.

Define pass book.


19/29

Pass book is a copy of the depositors account in the banks ledger which is provided to the

depositor. This book is prepared by bank but kept with the depositor.

Define subsidiary books.

Under double entry system transactions are first of all recorded in journal and thereafter posted

to the ledger. The book which gives additional help to the ledger is called subsidiary book.

Define general journal.

The transactions which do not fall within the scope of special journal are recorded in this journal

e.g., Purchase of an asset on credit, depreciation on asset etc. It is also known as journal proper,

modern journal or principaljournal. Some authors call it only journal.

Define special journal.

By special journal we mean, a journal in which transactions relating to a certain special group are

recorded. Special journal is again subdivided into eight journals e.g. cash journal. Sales journal,

purchases journal etc.

Provision for Discount on Debtors.

Provision, which is created for those debtors, who pay their debts within the discount period, is

known as provision for discount on debtors. It is possible loss of the business.

Define expenses.

Expenses are the costs of the goods and services used up in the process of obtaining revenue

e.g. Salaries, Insurance, rent etc.

Define revenues.


20/29

It is a price of goods sold or services provided by a business to its customers. e.g. Sales, rent

received etc.

What is voucher?

Any written evidence in support of a business transaction is known as voucher.

What is recording?

Recording means to record the transactions chronologically in the books of account.

What is cross cheque?

A cheque which cannot be encashed at the counter of the bank but it is transferred to the

customer account is called cross cheque.

Define work sheet

A work sheet is a large columnar sheet of paper, especially designed to arrange in a convenient

systematic form, all the accounting data, required at the end of the period. It is not a permanent

record but it is a working paper of the accountant.

What is formation expense?

An expense which is incurred in the initial stage of business is known as formation expense.

What is freight inward?

Freight which is paid on the purchase of goods is known as freight inward.

What are three rules of posting?

i) Locate the ledger account for the first debit in the journal entry.


21/29

ii) Record the date in the date column on the debit side of the account.

iii) Record the name of the opposite account in the reference column.

Explain foreign bills of exchange.

Foreign bill is drawn in one country and accepted and payable in another country.

Describe the meaning of accounting principle.

Accounting is the language of business. In order to make this language easily understandable all

over the world, it is necessary to frame or make certain uniform standards which are acceptable

universally. These standards are termed as Accounting Principles.

What is meant by accounting principles?

Accounting principles may be defined as those rules of action or conduct which are adopted by

the accountants universally while recording accounting transactions.

Explain various kinds of bank accounts.

There are three kinds of bank accounts.

a) Fixed deposit account:

In this amount is deposited for a fixed period.

b) Saving bank account:

In this deposit can be made only up to a certain limit and withdrawals are allowed by

twice or thrice a week, not exceeding a certain amount.

c) Current account:

In this case customer is allowed to deposit or withdraw money as and when he likes.


22/29

Define accommodation bill.

Accommodation bill is drawn and accepted without any sale and purchase of goods, the main

purpose of such bill is to help one party or both the parties financially.

Explain floating assets.

Assets which have short life and which can be converted into cash quickly to meet the short

term liabilities are called floating assets. E.g., Stock, debtors, cash etc. These are also called

current assets or circulatory assets.

What are trial balance errors & give examples?

Errors, which are made in the preparation on of trial balance, are called trial balance errors.

These are:

a) The amount of the balance wrongly entered in the trial balance.

b) Transfer of balance to the wrong column of the trial balance.

c) Omission of balance from the trial balance.

d) Wrong additions of the trial balance columns.

Define order cheque.

A cheque on which the phrase or order is written after the name of the payee. It is payable to

a certain person or order.

What are closing entries?

At the end of every accounting period, all accounts relating to expenses and revenues are closed

by transferring their balances to trading and profit and loss account. Entries are necessary for

such transfers are known as closing entries.

What is an outstanding liability?

A liability which has become due but has not been paid till the end of the current year is called

outstanding liability. e.g., Wages payable accrued salaries etc.


23/29

What are adjusting entries?

Adjusting entries are made at the end of an accounting period to update and correct the

information shown in the accounts.

Define Event

Event means any thing happens.

Define monetary events

Events which are related with money i.e. which change the financial position of a person are

known as monetary events.

Define Non- Monetary eventsEvents which are not related with money i.e. which do not change the financial position of a

person are known as non- monetary events

Define Cash transactionIf the value of a transaction is met in cash immediately, it is called cash transaction. E.g. we buy

car for Rs. 500,000 from Toyota show rooms and immediately paid cash to them.

What is capital?

It is a source of funds provided by the owner/owners of the Business.

Define Goods.

It includes all commodities, which are purchased by the business for selling purpose.

Define sales return or return inward


24/29

If a person to whom goods have been sold finds that the goods are defective, unsatisfactory,

below standard or not according to specification, he may return these goods to the seller. Such

return of goods is known as sales return

Define purchases returns or purchase outward

Goods once purchased may subsequently be sent back to the seller for certain reasons, i.e., Goods

are defective, not according to the specification, damaged or below standard, such return of goods

by the buyer is known as purchases returns.

Define fixed assets

These are the assets, which are acquired not for sale but for permanent use in business.

Define current assets

These denotes those assets, which are held for resale purpose or to be converted into cash

after some time e.g. debtors, stock

Define liability

They are debts due by the business to its owner & others

Define fixed liability / long term liability

These are the liabilities, which are not payable immediately or in near future

Define current liability/ short term liability

These are the liabilities, which are payable immediately or in near future

Explain purchase journal

A book in which only all credit purchases of goods are recorded is called purchase journal. It is

also called bought book, bought journal, purchase day book, purchases book, inward invoice

book or invoice book


25/29

Define cheque book

Cheque book is used to withdraw the amount from the bank. It is issued by the bank to the

depositor.

Write adjusting entry for un-collectables/ bad debts

Bad debts a/c ) Dr.)

To debtors a/c

(being adjusting the bad debts)

Define income statement.

A statement, which is prepared to ascertain the net income or net loss of the business for a

specific accounting period, is known as income statement.

Give four examples of current assets

Following are the examples of current assets:-

a) stock

b) debtors

c) pre-paid expense

d) accrued income

Define internal liabilities.

The total amount of debts payable by a business to its owner are called internal liabilities. E.g.

capital.

What is debt?

Amount receivable by the business from its debtors is known as debts.


26/29

Give journal entry for cash purchases.

Purchases a/c (Dr.)

To cash a/c

(being goods purchased for cash)

Give four examples of revenue expenditures

Following are the examples of revenue expenditure:-

a) salary

b) rent

c) insurance

d) repairs

What is revenue payment?

The amount, which is actually paid on account of revenue expenditure, is known as revenue

payment.

What is the difference between general crossing and special crossing?

A general crossing is one when two transverse parallel lines are drawn across the face of a

cheque with or without the words co., a/c payee only, etc.

And

A special crossing is one which contains the name of the bank also between the two parallel

lines drawn across the face of the cheque.

Define cash purchases.

The purchase for which payment is paid at the time of purchases is called cash purchases.


27/29

What are cash sales?

The sale for which payment is promptly received at the time of sales is called cash sales.

Explain notes payable/ bill payable

A bill of exchange is regarded as a bill payable by one who has to pay it on the due date. When

we accept a bill and thereby become liable to pay on its maturity. It is our bill payable.

Explain notes receivable/ bill receivable

A bill of exchange is treated as a bill receivable by one who is entitled to receive the sum duo on

it.

Define external liabilities.

The total amount of debts payable by a business to the outsiders (other than owner) are called

external liabilities. E.g. creditors, bills payable.

What is capital payment?

The amount, which is actually paid on account of capital expenditure, is known as capital

payment.

Define indirect expenses.

All those expense. - other than direct expenses are known as indirect expenses e.g. rent,

salaries, legal charges etc.

OR

All those expenses which are related with the sales of goods are called indirect expenses e.g.

advertisement, commission paid etc.

OR

All-kinds of expenses incurred during the operation of business are known as indirect expenses.

It includes al l selling expenses, such as sales man salaries, advertising, discount, commission etc.


28/29

Q:1 what is book-keeping ?

Ans: book-keeping is the art of recording monetary transactions in the book of account in a

proper manner.

Q: 2Define term transaction:

Ans: any dealing between two persons for anything is a transaction.Q:3define the term business?

Ans : Any activity undertaken for the purpose of earning profit is called business.

Q:4 what is the proprietor:

ans: propritor is the owner of business he invests his capitals, gives his time and attention to his

business.

Q:5 explain the term drawings?

ans: the -cash or goods taken from business for his personal use are called his drawings.

Q:6 what is purchases?

ans: in accounting language the word "purchases" hs a speical meaning when saleable good are

bought in a business,it is said that "purchases" have been made.

Q:7 what is sale?

ans: when the goods are sold to customer at a specific price.

Q:8 what is trade discount?

ans: it is a rebate or a allowance from granted by the seller to the buyer.

Q:9 what is meant by "commision.?

ans: it is a form of remuneration for services rendered by one person to another.

Q:10 what is meant by "expenditure"

ans:an expenditure takes place when assets or services is a acquired.

Q:11 define the term "expense"?

ans: it mean on expenditure whose benefit is finished or enjoyed immediately such salaries rent

etc...Q:12 explain the term accounts?

ans : a summarized record of transaction relating to a person or things is called account.

Q:13 define the term "debtor"?

ans: a person who owns money to another is a debtor?

Q:14 define the term creaditor?

ans: a person who payout something or to whom money is owning is called creditors.

Q:15 what is acccounting?

ans: the act of collecting processing ,reporting analyzng, interpreting and projecting financial

information is called accounting.

Q:16 define the term assets?ans: the properties and possessions of a business both tangible and intangible are called assets.

Q:17 what is liabilities?

ans: liabilities are the debts due by a business to its propritor and others.

Q:18 define the term merchandise:?

ans: it includes all merchandise commodities which are purchased by the business for selling.

Q:19 define the term "inventory"?

ans: goods or merchandise on hands that is good remaining unsold , is called stock stock -in-


29/29

trades or inventory.

Q:20 what is Equity?

ans: a claim which can be enforced against the assets of the firm is called equity.

Q:21 name three branches of accounting?

ans: accounting has three main forms of branches , viz financial accounting ,cost accounting andmanagement accounting.

Q:22 On which systems accounting based ? Name them.

ans: 1 cash system of accounting 2 accrual system of Accounting.

Q:23 Difference between the book-keeping and accounting ?

ans: book-keeping is art of recording of business data in the prescribed manner while the

accountingis primarily concerned with the design of the system of record ,the preparation of

reports and interpretation of reports.

Q:24 what is meant by term" concept of accounting?

ans: the term concept includes those basic assumptions upone which accounting is based.

Q:25 what is dual aspect concepts?

ans: dual aspect concept mayy be started as "for every debit, there is a credit.

Q:26 what is money measurement concept?

ans: according to this concept , accounting records only those transactions which can be

expresssed in terms of money.

Q: 27 what is going concern concept?

ans: according to this concept, it is assumed that the business will exist for a longtime or

foreseeable future.

Q:28 state the formula of accounting equation?

ans: The formula ,known as the accounting equation is as follows:

Assets = liabilities + proprietorship or capital or owners activity

Q:29 define the term assets?ans: the properties owned by a business are called assets.

Q:30 define the term income?

ans: income is simple the amount by which "revenue for a particular period of time exceed the

expense incurred to generate them.

i com accounting q a

Documents