Chp-3 ~ Meaning, Objectives, Scope and Nature of Accounting

Question 2

What are the characteristics of accounting?

Answer 2

1. Recording in terms of money
2. Classifying
3. Summarising
4. Interpretation of the results
5. Communicating

Question 3

What are the objectives of accounting?

Answer 3

1. To calculate profit or loss
2. To ascertain the financial position of the business
3. To prevent and detect error and frauds
4. To know the exact reasons leading to net profit or net loss
5. To provide information to various parties

Question 4

What are the functions of accounting?

Answer 4

1. Preparation of financial statements
2. Protecting assets of the business
3. Providing assistance to management
4. Trusteeship
5. Fixing responsibility

Question 5

What is book-keeping?

Answer 5

It is mainly concerned with record keeping or maintenance of books of accounts.
It includes the following activities:
1. Identifying the transactions of financial nature
2. Measuring the identified transactions in terms of money
3. Recording the identified transactions in the books of original entry
4. classifying them into ledger

Question 6

What is accounting? What activities does it include?

Answer 6

Accounting starts where book-keeping ends.
It includes the following activities:
1. summarising the classified transactions in the form of P&L A/c and balance sheet, etc.
2. analysing and interpreting
3. communicating

Question 7

What is accountancy?

Answer 7

It refers to a systematic knowledge of accounting concerned with principles and techniques which are applied in accounting.

Question 8

What are the various branches of accounting?

Answer 8

1. Financial accounting
2. Cost accounting
3. Management accounting
4. Tax accounting
5. Social responsibility accounting

Question 9

What are the various aspects of accounting?

Answer 9

1. Economic events
2. Identification, measurement, recording and communication
3. Organisation
4. Interested users of information

Question 10

What are the advantages of accounting?

Answer 10

1. Provides complete and systematic records
2. Information regarding profit or loss
3. Evidence in legal matters
4. Helpful in partnership accounts
5. Helpful in assessment of tax liability

Question 11

What are the limitations of accounting?

Answer 11

1. Influenced by personal judgement
2. Based on accounting concepts and conventions
3. Incomplete information
4. Omission of qualitative informations
5. Unsuitable for forecasting