Financial & Managerial Accounting (ME-101)

1. What is accounting?
Ans: Accounting is the act of recording, classifying, summarizing in a significant manner in terms
of money transaction & events which are financial connector and interpreting the results of the
intended users.

2. Transaction vs Events
Ans: Three condition are Transaction vs Events
1.Change in financial condition.
2.Measure in term of money
3.Two parties (Dr, Cr)

3. User type of accounting

Ans: Two types of users in accounting

1.Internal user
a) Owner
b) Plant manager
c) Employee
2.External user
a) Investor
b) Researcher
c) Public
d) Suppliers

4. Definition of extended accounting equation

Ans: The equation is: A= L+OE+R-E-D

Assets = Liabilities + Owner's equity + Revenues – Expenses – Owner's Draws.

5. extended accounting Material

Ans: 1. Sole proprietorship

2. Partnership

3. Joint venture/Company’s

ME-4th-007
 GREEN ACCOUNTING
6. What is Green Accounting System?
Ans: The Green accounting system is a type of accounting that attempts to factor
environmental costs into the financial results of operations. It has been argued that gross
domestic product ignores the environment and therefore policymakers need a revised
model that incorporates green accounting. The term was first brought into common
usage by economist and Professor Peter Wood in the 1980s.

7. What are Objectives of Green Accounting System?

Ans: The objectives of green accounting system are discussed below:

1. To identify that part of the gross domestic product that reflects the costs necessary to
compensate for the negative impacts of economic growth, that is, the defensive
expenditures.

2. To established the linkage of Physical Resource Accounts with Monetary Environmental

Accounts

3. To assessment of Environmental Costs and Benefits

4. To accounting for the Maintenance of Tangible resources

5. To elaborate and Measurement of Indicators of Environmentally Adjusted Product and

Income.

8. What is the importance of Green Accounting System?

Changes in the environment have a negative bearing on not just the Environment but on
the economy as a whole. And, it is a well-known fact that changes in the economy have a
direct bearing on the changes in any business. It is also important to note that the Gross
domestic product of a country can be affected by the environmental and climatic change.

Therefore, it is the best tool for the businesses to understand and manage the potential
quid pro quo between traditional economic goals and environmental goals. It also
increases the important information available for analyzing policy issues, especially when
those vital pieces of information are often overlooked.

Hence, we can say that it is necessary for understanding of “better lose the saddle than
horse”, enterprises designing their accounting system organizations without taking
environmental costs into consideration should fulfil this requirement as soon as possible.

ME-4th-007
 Forensic Accounting
9. What is Forensic Accounting?

Forensic accounting is a specialty practice area where accounting, auditing and

investigative skills are used to analyze information that is suitable for use in a court
of law. Forensic accountants are often engaged to quantify damages in instances
related to fraud and embezzlement as well as on matters involving insurance,
personal injury, business disputes, business interruption, divorce and marital
disputes, construction, environmental damages, cyber-crime, products liability,
business valuation and more. MDD specializes in economic damage quantification
(EDQ). This is the practice of measuring, in financial terms the value of harm or injury
that has been inflicted on a person or property.

10. What is a Forensic Accountant and what do Forensic Accountants do?

Forensic accounting professionals are skilled at quantifying damages and

determining the full extent of a loss. They are involved in four basic areas of forensic
analytics: data collection, data preparation, data analysis and reporting. Specifically,
forensic accountants perform tasks that include examining business records,
analyzing historical statements, looking for irregularities in business practices,
reviewing journal entries, analyzing trends, tracing the flow of funds, interviewing
relevant parties, analyzing electronic data and performing an overall evaluation of
the situation in question. Beyond this, they can serve as consultants or expert
witnesses. When required, they also collaborate with other experts. Forensic
accountants are sometimes relied on to train internal auditors and investigators.
They can also help gauge an organization’s vulnerability to issues such as fraud. Plus,
they can help companies implement controls that will reduce their exposure to
criminal and civil wrongdoing as well as irreparable damage to their reputation.
Forensic accountants are regularly called on to provide evidence and expert witness
testimony in courts, arbitrations and mediations. This evidence may be used to help
an attorney establish their case or reinforce the merits of their argument. In other
instances, the evidence may be utilized to refute the conclusions that are being
proposed by opposing counsel. When serving as expert witnesses in court
proceedings, forensic accountants give testimony that is based upon sufficient facts
or data that is the product of reliable and accepted principles and methods.

ME-4th-007
11. What is Intended User?

Ans: Intended user are these users who will be benefitted from the accounting future.

12. What are assets?

Ans: Things that are resources owned by a company and which have future economic value that
can be measured and can be expressed in dollars. Examples include cash, investments, accounts
receivable, inventory, supplies, land, buildings, equipment, and vehicles.

Assets are reported on the balance sheet usually at cost or lower. Assets are also part of the
accounting equation: Assets = Liabilities + Owner's (Stockholders') Equity.

13. What are Liabilities?

Ans: A liability is an obligation arising from a past business event. It is reported on a

company's sheet. Liabilities are also part of the basic accounting equation: Assets = Liabilities
+ Stockholders' Equity. Liabilities are often viewed as claims against the company's assets.
However, liabilities can also be viewed as sources of the company's assets.

Examples of a Liability
Examples of a liability include:

 accounts payable
 loans payable
 wages payable
 interest payable
 customer deposits
 deferred revenues

9. Why a Mechanical Engineer should study accounting?

Ans: A basic course in accounting will really help a mechanical engineer understand some of
the business aspects that go into a project. During my BSC in engineering, I saw some
accounting classes in Business focusing on marketing and development. It’s helpful my career,
I have found these classes to be very useful Although I think future work in engineering, I
have taken on management roles that also flow into the business side of things. Having this
additional knowledge is extremely useful and I highly recommend it.

ME-4th-007
10. Basis of Accounting?

Ans: Three step of Accounting

1. Cash basis of Accounting

2. Accrual basis of Accounting

3. Mixed or hybrid basis of Accounting

* Cash basis of Accounting

Under cash basis of accounting entries are recorded only where cash is received or paid no entry
is passed when a payment or receipts becomes due.

* Accrual basis of Accounting

Under accrual basis of accounting, companies recorded revenues when it earned either it is
received in cash or not similarly under this method, companies recorded expenses when it
included either it is paid in cash or not.

* Mixed or hybrid basis of Accounting

When certain items of revenue or expenditure are recorded in the books of accounts on cash
basis and certain items or mercantile basis the basis of accounting so employed is called hybrid
basis of accounting.

11. Types of Accounting?

Ans:

Types of
Accounting

Personal Impersonal

Natural Artificial Real Nominal

Group
Tangible Intangible Revenue Expenses
Representative

ME-4th-007
12. Elements of financial statement

1. Statement of financial position.

2. Statement of financial performance.
3. Statement of financial owner’s equity.
4. Statement of financial cash flow.
5. Notes and disclose.

ME-4th-007