Tick the Correct Answer
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
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
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
4. Which qualitative characteristics of accounting information is reflected when
accounting information is clearly presented?
a. Understandability
b. Relevance
c. Comparability
d. Reliability
5. Use of common unit of measurement and common format of reporting promotes;
a. Comparability
b. Understandability
c. Relevance
d. Reliability
Answers
The correct is given with a little explanation why it is correct to get better understanding.
Explanation:
1. (c) Paid sons fees from her personal bank account Rs 20000
Only this transaction is a non business transaction rest all other are business transaction. She paid fees from her personal account business has nothing to do with it.
2.(a) Similar business acquired the required building in 2000 for rs 1000000
Historic concept can be used here to identify the current value of the building by comparing it with present context .
3.(c) Communication of information
The last step is the communication of relevant information to various peoples.
4. (a) Understandability
5.(a) Comparability
Use of common unit helps in comparing. For example we can compare present and previous financial position of company or other relevant data.
Explanation:
1.Paid Son's fees from her personal bank a/c Rs. 20,000
3. Communication of Information
4. Understandability
5.Comparability