BBA 1st Semester Bookkeeping Important Question Answer

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Q.1.        Write down the need for Accounting.

Ans.       Every person doing business is interested to know the trading results of his business. Further, he would also like to know his financial position (assets and liabilities) at a given date.

In addition to proprietors, other persons who have some stake in the business need accounting information. Accounting is the language of business. If communicates the desired information to various persons. In addition to business undertakings accounting is needed by Government also.

Q.2.        Write down any four objectives of Accounting.

Ans.       Flowing are the four objectives of accounting :

Maintaining a proper record of the business.

Calculation of profit and loss.

To show the financial position.

To communicate the information to the users.

Q.3.        What is the main Feature of Accountancy?

Ans.       The main features of Accountancy are :

Recording.

Classification.

Summarising.

In terms of money.

Transactions and Events.

Interpretations of results.

Q.4.        Write Down the System of Accounting.

Ans.       There are two Systems of Accounting :

Cash system accounting.

Accrual system of accounting.

Q.5.        What are the Branch of Accounting?

Ans.       Accounting has three main branches :

Bookkeeping and financial accounting.

Cost accounting.

Management accounting.

Q.6.        Give any five advantages of accounting.

Ans.       Following are the five advantages of accounting :

Replace money.

Give assistance to management.

Act as legal evidence.

Helps in taxation matters.

Facilitates the sale of the business.

Q.7.        What is Management?

Ans.       The management uses accounting information to arrive at many decisions such as determination of selling price, investments to be made, cost controls and reduction, etc.

Q.8.        What is Sales Book?

Ans.       Sales book is used for recording credit sales of goods dealt in by the firm. Hence, cash sale of goods and sale of any other assets, e.g. sales of machinery, etc. are not recorded in this book.

Q.9.        Differentiate between profit & loss account and balance sheet.

Ans.       The profit and loss account shows the profit or loss of a business over a given period of time e.g. 3 Months, 1 Year, etc. In contrast the balance sheet is like a photograph taken at an instant in time giving a picture of what the business owns and what the business owes at that moment in time. As we shall see it will always balance because what the business owns is financed by what the business owes.

One of the most important objectives of a business is to make a profit. The profit and loss account shows the extent to which it has been successful in achieving this objective.

Q.10.     Mention the four basic principles of accounting?

Ans.       Four basic principles of accounting are :

Verifiability, objectivity, and evidence.

Revenue Recognition principles.

Convention to full disclosure.

Dual aspect.

Q.11.     Define Financial accounting.

Ans.       Nearly every business enterprise has an accounting system. It is a means of collecting. Analyzing and reporting monetary terms information about the business.

Q.12. What is bookkeeping?

Ans.       Bookkeeping is that branch of knowledge that tells us how to keep a record of financial transactions. It is mainly concerned with record-keeping or maintenance of accounts in a systematic manner. It is restricted to journal, subsidiary book, and ledger account only.

Q.13.     Who is Proprietor?

Ans.       The proprietor is the main user of accounting through accounts he ascertains the operating results of his business. Further, he knows his financial position (assets and liabilities). He uses accounting information to know amounts due to others and due from others.

Q.14.     Define goods and revenue.

Ans.       Goods: The articles or things purchased for sale or for sale or for use in the manufacture of certain other goods as raw materials are called goods.

Revenue: It refers to the amount charged by a business entity for the goods sold or service rendered or by permitting others to use its resources.

Q.15.     What do you mean by Accounting as a Measurement Discipline?

Ans.       Measurement in accounting has traditionally meant the assignment of numerical values to objectives or events related to an enterprise and obtained in such a way that they are suitable for aggregation (such as total valuation of assets ) or disaggregation as required for specific situations.