Chapter 1

True or False
1.Accounting has a function of keeping
systematic records
2.Accounting is concerned with monetary and
non-monetary transactions
3.Book-Keeping and accounting are different
terms.
4.Accounting focuses on quantitative financial
information
5.Managerial accounting information is provided
to external users to aid in decision making
6.Accounting is the language of business
7.Accounting is a service function
8.Accounting involves only the recording of
business transactions

Answers:
1.True
2.False
3.True
4.True
5.False
6.True
7.True
8.False
9.True

MCQs
1.Which of the following statement is not an
objective of accounting?
a.To provide information about the enterprises
assets, liabilities, and capital
b. To provide information on the
personal assets and liabilities of the
owner of an enterprise
c. To maintain records of business
d.To provide information on the performance of
an enterprise
2.The information provided in the annual
financial statements of an enterprise pertains
to:
a. Individual business enterprise
b.Business industries
c. The economy as a whole
d.None of the above
3.The prime function of accounting is to
a.Record economic data
b.Provide the informational basis for action
c.Classifying and recording business
transactions
d.Attain non-economic goals
4.The basic function of financial accounting is to
a. Record all business transactions

b.Interpret financial data

c. Assist the management in performing
functions effectively
5.Book-Keeping is mainly concerned with
a. Recording financial data relating to
business operations
b.Designing the systems in recording,
classifying, summarizing the recorded data

Fill in the Blanks:

1.Financial Accounting is recording and
classifying of ----------a. Transactions
b.Religious activities
c. Social activities
d.Cultural activities
2.The main objective of financial accounts is
------------------a. Calculation of profit
b.Comparison of final statements
c. Calculation of ratios
d.All of the above
3.Accounting is done through the
--------------------------a. Record of transactions
b.Classify Assets

c. Apply costing techniques

d.Prepare budgets
4.Accounting is -----------------------a.Formation of rules
b.Recording transactions
c. An art
d. All the above
Short Answers:
1.Accounting is business evaluation tool.
Discuss
2.State the role of Accounting to stake holders of
the business
3.Discuss the aim of accounting
4.Limitations of accounting.
5.Explain Objectives of Accounting
6.What is Financial Accounting?
7.Accounting involves communication.
Comment.
8.List the steps in the accounting process.
9.Distinguish between book-keeping and
accounting.
10. Give two advantages of accounting
11. Who are the users of accounting
information?
12. Why do users need accounting
information?

13. Write a short note on Role of Accountant

in the society.
14. Who are normally included as stakeholders
of a business?
Long Answers:
1.Explain the need of accounting in modern
business.
2.What are the functions of accounting? How
does book-keeping differ from accounting?
3.Name the parties/groups interested in
accounting information and explain how they
are going to use it.
4.Discuss the advantages and limitations of
accounting.
5.What is an accounting cycle? List the
sequential steps involved in Accounting cycle.
6.Define Accounting and explain the steps in
accounting process.
7.Explain the primary objectives of accounting.
8.State the role of accounting to stake holders of
the business.