1. What is Accounting?
2. Define Accounting?
3. What are the objectives of Accounting?
4. What is Book-keeping?
5. Who are the different persons interested in Accounting information?
6. What are the Limitations of Accounting?
7. What is ‘Double-entry system"?
8. What do you understand by "Debit' and 'Credit"?
9. State the rules for debiting and crediting.
10. Describe the three kinds of Personal Accounts?
11. What are "Real Accounts'? Give examples.
12. What are 'Nominal Accounts' Give examples.
13. What is "Mercantile systern' of Accounting?
14. Write short notes on : (a) Assets (6) Liabilities (c) Capital
15. Explain the Meaning of (a) Tangible Assets (b) Intangible Assets (c) Fictitious di
16. Distinguish between Fixed Assets and Current Assets.
Answers
Answer:
1] As a result of economic, industrial, and technological developments, different specialized fields in accounting have emerged. The famous branches or types of accounting include: financial accounting, managerial accounting, cost accounting, taxation, AIS and forensic accounting.
2]Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing and reporting these transactions to oversight agencies and tax collection entities.
3] Partnership law, income tax law, and company law, etc. compel business organizations to maintain their accounts in an appropriate manner. The main objectives of accounting are maintaining a complete and systematic record of all transactions and analyzing the financial position of a business.
4]Bookkeeping clerks, also known as bookkeepers, often are responsible for some or all of an organization's accounts, known as the general ledger. They record all transactions and post debits (costs) and credits (income).
5]Examples of internal users are owners, managers, and employees. External users are people outside the business entity (organization) who use accounting information. Ex of external users are suppliers, banks, customers, investors and tax authorities.
6]One of the biggest limitations of accounting is that it cannot measure things/events that do not have a monetary value. If a certain factor, no matter how important, cannot be expressed in money it finds no place in accounting.
7]Double-entry refers to an accounting concept whereby assets = liabilities + owners' equity. In the double-entry system, transactions are recorded in terms of debits and credits.
8]A debit increases asset or expense accounts, and decreases liability, revenue or equity accounts. A credit is always positioned on the right side of an entry.
9]The following are the rules of debit and credit which guide the system of accounts, they are known as the Golden Rules of accountancy:
- First: Debit what comes in, Credit what goes out.
- Second: Debit all expenses and losses, Credit all incomes and gains.
- Third: Debit the receiver, Credit the giver.
10]Three Types of Personal Accounts
- Natural Personal Accounts. These accounts are related to human beings i.e. natural persons who are created by God.
- Artificial Personal Accounts. Second among three types of personal accounts is “Artificial” personal account.
- Representative Personal Accounts.
11]The real accounts are the balance sheet accounts which include the following: Asset accounts (cash, accounts receivable, buildings, etc. Liability accounts (notes payable, accounts payable, wages payable, etc.
12]The entire purpose of a nominal account is to track the revenue and expenses for a company so that the net profit or net loss for a specific period can be calculated. Ex of nominal accounts are service revenue, sales revenue and supplies.
13]Accrual system of Accounting is also known as the mercantile system of accounting wherein the transactions are recognized and recorded as and when they take place. Under the accrual accounting method, the revenue is recorded when it is actually earned, and the expenses are reported.
14]Assets:
An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. Assets are reported on a company's balance sheet and are bought or created to increase a firm's value or benefit the firm's operations.
Lisabilities:
Liabilities are settled over time through the transfer of economic benefits including money, goods, or services. They can include a future service owed to others; short- or long-term borrowing from banks, individuals, or other entities.
Capital:
Capital includes all goods that are made or created by humans and used for producing goods or services. Capital can include physical assets, such as a production plant, or financial assets, such as an investment portfolio.
15]Tangible Assets:
Tangible assets are typically physical assets or property owned by a company, such as equipment, buildings, and inventory.Intangible assets are non-physical assets that have a monetary value since they represent potential revenue.
Intangible Assets:
An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets. Intangible assets exist in opposition to tangible assets, which include land, vehicles, equipment, and inventory.
Fictitious di:
created, taken, or assumed for the sake of concealment; not genuine false fictitious names. of, relating to, or consisting of fiction; imaginatively produced or set forth; created by the imagination a fictitious hero.
16]Current assets are short-term assets that are typically used up in less than one year. Current assets are used in the day-to-day operations of a business to keep it running.