TN STATEBOARD 11th ACCOUNTANCY 2nd UNIT BOOK BACK ANSWERS
11. Very Short Answer Questions
Question 1.
Define book - keeping.
Answer:
"Book - keeping is an art of recording business dealings
in a set of books".
(J.R.Batlibai)
"Book - keeping is the science and art of recording
correctly in the books of account all those business transactions of money or
money's worth". (R.N.
Carter)
Question 2.
What is meant by accounting concepts?
Answer:
Accounting concepts are the basic assumptions or conditions
upon which accounting has been laid. Accounting concepts are the results of
broad consensus. The word concept means a notion or abstraction which is
generally accepted. Accounting concepts provide unifying structure to the
accounting process and accounting reports.
Question 3.
Briefly explain about realisation concept.
Answer:
According to realisation concept, any change in value of an asset is to be recorded only when
the business realises it. When assets are recorded at historical value, any change in value is to
be accounted only when it realises.
Question 4.
What is "Full Disclosure Principle" of accounting?
Answer:
It implies that the accounts must be prepared honestly and
all material information should be disclosed in the accounting statement. This
is important because the management is different from the owners in most of the
organisations.
Question 5.
Write a brief note on 'Consistency ' assumption.
Answer:
The consistency convention implies that the accounting
policies must be followed consistently from one accounting period to another.
The results of different years will be comparable only when same accounting
policies are followed from year to year.
111. Short Answer Questions
Question 1
what is matching concept? Why should a business concern
follow this
concept?
Answer:
Matching concept: According to this concept, revenues during
an accounting period are matched with expenses incurred during that period to
earn the revenue during that period. This concept is based on accrual concept
and periodicity concept. Periodicity concept fixes the time frame for measuring
performance and determining financial status. All expenses paid during the
period are not considered, but only the expenses related to the accounting
period are considered.
On the basis of this concept, adjustments are made for
outstanding and prepaid expenses and accrued and unearned revenues. Also due
provisions are made for depreciation of the fixed assets, bad debts, etc.,
relating to the accounting period. Thus, it matches the revenues earned during
an accounting period with the expenses incurred during that period to earn the
revenues before sharing any profit or loss
Question 2.
"Only monetary transactions are recorded in
accounting". Explain the statement.
Answer:
This concept implies that only those transactions, which can
be expressed in terms of money, are recorded in the accounts. Since, money
serves as the medium of exchange transactions expressed in money are recorded
and the ruling currency of a country is the measuring unit for accounting.
Transactions which do not involve money will not be recorded in the books of
accounts. For example, working conditions in the work place, strike by
employees, efficiency of the management, etc. will not be recorded in the
books, as they cannot be expressed in terms of money.
Question 3.
"Business units last indefinitely". Mention and
explain the concept on which the statement is based.
Answer:
It is the basic assumption that business is a going concern and will continue its operations
for a foreseeable future. Going concern concept influences accounting practices in relation to
valuation of assets and liabilities, depreciation of the fixed assets, treatment of outstanding and
prepaid expenses and accrued and unearned revenues. For example, assets are generally valued
at historical cost. Any increase or decrease in the value of assets in the short period is ignored.