AMITY INTERNATIONAL SCHOOL, PUSHP VIHAR

Competency Based Questions Class XI

Ch: Introduction to Accounting
Q-1 Deepa wants to buy a building for her business today. Which of the following is the most relevant
data for his decision?
a. Similar business acquired the required building in 2000 for ₹10,00,000.
b. Building cost details of 2003.
c. Building cost details of 1998.
d. Similar building cost in August 2005 ₹25,00,000.
Q-2 ‘A hotel receives an appreciation mail from a customer, who was very happy with the quality of food
and service provided to the guests by the hotel in his party.’ Can this be called a business transaction?
Also give reason.
Q-3 Kamal Prasad deals in computer parts & hard drives. Which of the following will not be recorded in
his books:
a. Purchase of 10 Cooler Master MH630 Stereo Gaming Over Ear Headset
b. Sale of Household (Personal) Seagate portable 1.5 TBHard drive for Rs 1,500
c. Purchase of 20 Silverstone 360mm ARGB AIO liquid cooler SST-IG360-ARGB
d. Sale of 10 Corsair Harpoon Ergonomic Wired Gaming Mouse CH-9301011-AP
Q-4 A businessman shows all his personal petrol bills, restaurant bills as business expenses thereby
reducing his business income so as to avoid taxation. Which limitation of accounting does it refer to?
a. Accounting is not fully exact.
b. Window dressing
c. Accounting ignores price level changes.
d. Accounting ignores qualitative elements
Q-5 X is a part of inventory of a firm. X needs further processing for converting into finished products i.e
X consists of partly finished goods or semi-finished goods. Identify X.
(a) Inventory of raw material (b) Inventory of work-in-progress
(c) Inventory of finished goods (d) Inventory of stock-in-trade
Q-6 "Some estimates are made for ascertaining profit or loss like provision for doubtful debts and net
realisable value of closing stock" Which limitation of accounting is being highlighted in the above
statement?
a. It ignores the effect of price level changes
b. It ignores the Qualitative elements
c. It is not fully exact
d. It may lead to window dressing
Q-7 The process of recording, classifying and summarizing all business transactions in order
to know the financial result is called –
(a) Book – keeping (b) Accounting (c) Journalizing (d) None of these.
Q-8 Use of common unit of measurement and common format of reporting promotes
(a) Comparability (b) Understandability (c) Relevance (d) Reliability
Q-9 Match the following:

Column A Column B
 a. Building i. Deferred Revenue
Expenditure

b. Advertising ii. Outstanding Expense

c. Salary iii. Capital Expenditure

d. Salary Payable iv. Revenue Expense

a. A-iv; B-iii; C-ii; D-i

b. A-iii; B-i; C-iv; D-ii
c. A-iii; B-ii; C-i; D-iv
d. A-i; B-ii; C-iii; D-iv

Q10 to Q12 are based on the following information:

Only those transactions and events are recorded in accounting which are of a financial character. There
are so many transactions in the business which are very important for business but which cannot be
measured and expressed in terms of money and hence such transactions will not be recorded. For
example, the quarrel between the Production Manager and the Sales Manager, resignation by an able and
experienced manager, strike by employees and starting of a new business by the other competitor etc.
Though these events affect the earnings of the business adversely but as no one can measure the effect of
such events in terms of money, these will not be recorded in the books of the business
Q10. What type of transactions are recorded in accounting?
(a) Only Financial transactions are recorded
(b) Financial and non-financial transactions
(c) All types of transactions are recorded.
(d) Accounting of all of the above
Q11. Which of the following are not recorded in accounting?
(a) Quarrel between production manager and sales manager
(b) Establishment of a similar business
(c) Resignation by cashier
(d) All of the above
Q12. What type of work is performed by accountant?
(a) Analytical nature
(b) Order type work
(c) Understanding work
(d) Work of own choice
Read the following case study and answer questions 13 to 16 on its basis.
Sen and Shetty are two friends who both have just attended their first class of accountancy. The friends
were intrigued by the different branches of accounting and their widespread application. Sen personally
liked the branch of accounting in which fund flow statement and budgetary control is used and that
branch helps in planning and controlling of operations. As the concept of accounting was further
explored, they began discussing the different users of accounting. Sen said that he finds it interesting that
even the employees demand information relating to business. Shetty said he finds more interesting the
fact that even competitors want information on the relative strengths and weaknesses of the enterprise
and for making comparisons. Shetty further said that even accounting helps owners to compare one
year’s costs, expenses, and sales with those of other years. However, they were quite shocked by the fact
that the management-worker relations was not taken into consideration in the accounting. Meanwhile,
Sen and Shetty had an argument at the end of the discussion. Sen was saying that accounting is an art
whereas Shetty was saying that accounting is a science. Their teacher came in and said something to
them which made them stop the argument.
Q13. Which branch of accounting is liked by Sen?
(a) Financial accounting
(b) Cost accounting
(c) Management accounting
(d) Tax accounting
Q14. Shetty talked about which type of users of accounting?
(a) Internal users
(b) External users
(c) Both (a) and (b)
(d) None of these
Q15. Which advantage of accounting is being talked by Shetty in last part of first para?
(a) Provides information regarding profit and loss
(b) Provides completes and systematic record
(c) Enables comparative study
(d) Evidence in legal matters
Q16. Which limitation of accounting is being talked by them?
(a) Influenced by personal judgement
(b) Omission of qualitative information
(c) Incomplete information
(d) Based on historical costs
Q-17 Assertion (A) Bookkeeping involves summarising the classified transactions in the form of profit
and loss account and balance sheet.
Reason (R) Bookkeeping is an art of recording in books of accounts, the monetary aspect of commercial
or financial transactions. It is concerned with record keeping maintenance of books of accounts.
(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct
explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Q-18 Assertion (A) – Financial accounting is confined to recording of financial transactions and events
in the books of account, preparation of financial statements.
Reason (R) – Financial accounting also records transactions which are of non-financial in nature.
a. Both (A) and (R) are true and (R) is the correct explanation of (A).
b. Both (A) and (R) are true and (R) is the correct explanation of (A).
c. (A) is true, but (R) is false
d. (d) (A) is false, but (R) is true.
Q-19 Assertion (A): The Management uses accounting information to arrive at various decisions like
determination of selling price, cost controls, investment into new ventures, etc.
Reason (R): The management has the responsibility to safeguard the customer’s investment and
increase its value by managing the business efficiently.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Q-20 Assertion (A): Financial statements are the summarized statements that give information
as to the profitability and financial position of the company.
Reason (R): Statement of Profit and Loss given the information as to net profit or net loss
for the year while Balance Sheet gives information of the financial position of the company
as at that date:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True