.

Which of the following statements best describes the function of accounting in

a rm?
(1) It measures transactions and events of the rm on monetary basis.
(2) It analyses nancial information of the rm for the use of its managers.
(3) It records the transactions and events of the nn in the books of accounts.
(4) It provides information about the rm for decision making by its
stakeholders.
(5) It provides information about utilisation of resources of the rm to its
managers.
. A balance of Rs. 100000, payable to a creditor of a business was settled by
its owner out of his personal
money. At the time of settlement, the creditor allowed a discount of Rs. 10000.
The effect of this transaction
on liabililities and equity is shown in the accounting equation as:
Liabilities Equity
(1) Decrease by Rs. 90000 Decrease by Rs. 90000
(2) Decrease by Rs. 90000 Increase by Rs. 90000
(3) Decrease by Rs. 100000 Decrease by Rs. 100000
(4) Decrease by Rs. 100000 Increase by Rs. s 100000
.(5) Decrease by Rs. 110000 Increase by Rs. 110000
. What is the correct sequence in which the following activities take place in
the accounting process?
A The transaction is recorded in the relevant prime entry book.
B The business transaction takes place.
C - The source document is prepared for the transaction.
D -V The transaction is posted to the ledger.
,
(1) B, A, C, D. (2) B, C, A, D. (3) B, C, D, A. (4) C, B, A, D. (5)0 C, B, D, A.
. The order of use of prime entry books to record the following transactions of
a shoe manufacturing business is:
A - Purchase of a lorry on credit.
B - Purchase of leather on credit.
C *- Provision of income tax for the year.
D Return to the supplier, part of the leather purchased.
(1) General Journal, Purchase Journal, General Journal, Purchase Journal.
(2) General Journal, Purchase Journal, General Journal, Purchase Returns
Journal.
(3) General Journal, Purchase Journal, Cash Book, Purchase Returns Journal.
(4) Purchase Journal, Purchase Journal, General Journal, Purchase Journal. (5) Purchase Journal, Purchase Joumal, General Journal, Purchase Returns
Journal.
. Which of the following accounting concept provides the basis to recognize
debtors and creditors in the
nancial" statements?
(1) Accrual (2) Entity (3) Periodicity , (4) Matching (5) Realization
. Which of the following accounting concept provides the basis for classication
of assets and liabilities as current

and non-current?
4
(1) Accrual (2) Consistency (3) Going concern * (4) Periodicity (5) Realization
. Which of the following are the characteristics of an asset as per the
conceptual framework for nancial accounting?
A - It is a resource controlled by -a rm.
B - Future economic benets are expected to ow into the rm through it.
C - Its cost or value can be measured reliably.
a
(1) B only (2) A and B only (3) A and C only (4) B and C only (5) All A, B and C