Question 1.
Which of the following is not a business transaction?
(a) Bought furniture of Rs. 10,000 for business
(b) Paid for salaries of employees Rs. 5,000
(c) Paid sons fees from her personal bank account Rs. 20,000
(d) Paid sons fees from the business Rs. 2,000

Answer

Answer: (c) Paid sons fees from her personal bank account Rs. 20,000

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Question 2.
Deepti wants to buy a building for her business today. Which of the following is the relevant data for his decision?
(a) Similar business acquired the required building in 2000 for Rs. 10,00,000
(b) Building cost details of 2003
(c) Building cost details of 1998
(d) Similar building cost in August, 2005 Rs. 25,00,000

Answer

Answer: (a) Similar business acquired the required building in 2000 for Rs. 10,00,000

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Question 3.
Which is the last step of accounting as a process of information?
(a) Recording of data in the books of accounts
(b) Preparation of summaries in the form of financial statements
(c) Communication of information
(d) Analysis and interpretation of information

Answer

Answer: (c) Communication of information

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Question 4.
Which qualitative characteristics of accounting information is reflected when accounting information is clearly presented?
(a) Understandability
(b) Relevance
(c) Comparability
(d) Reliability

Answer

Answer: (a) Understandability

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Question 5.
Use of common unit of measurement and common format of reporting promotes
(a) Comparability
(b) Understandability
(c) Relevance
(d) Reliability

Answer

Answer: (a) Comparability

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Complete the following sentences with appropriate words

Question 1.
Information in financial reports’is based on ……………. transactions.

Answer

Answer: economic

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Question 2.
Internal users are the ……………… of the business entity.

Answer

Answer: management/employees

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Question 3.
A ………………. would most likely use an entities financial report to determine whether or not the business entity is eligible for a loan.

Answer

Answer: creditor

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Question 4.
The Internet has assisted in decreasing the ………………… in issuing financial reports to users.

Answer

Answer: time-gap

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Question 5.
………………….. users are groups outside the business entity, who uses the information to make decisions about the business entity.

Answer

Answer: external

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Question 6.
Information is said to be relevant if it is ……………….

Answer

Answer: free from bias

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Question 7.
The process of accounting starts with …………….. and ends with ……………….

Answer

Answer: identifying the transactions, communicating information

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Question 8.
Accounting measures the business transactions in terms of ……………….. units.

Answer

Answer: monetary

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Question 9.
Identified and measured economic events should be recording in ……………….. order.

Answer

Answer: chronological

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