Distance Formula The distance between two points A(x1, y1) and B (x2, y2) is given by
The distance of a point A(x, y) from the origin 0 (0, 0) is given by …….
Section Formula The coordinates of the point which divides the joint of (x1, y1) and (x2, y2) in the ratio m : n internally, is
Mid-point of the joint of (x1, y1) and (x2, y2) is
X-axis divides the line segment joining (x1, y1) and (x2, y2) in the ratio -y1 : y2.
Y-axis divides the line segment joining (x1, y1) and (x2, y2) in the ratio -x1 : x2.
The coordinates of the centroid of the triangle whose vertices are (x1, y1), (x2, y2) and (x3, y3) is
Area of Triangle The area of the triangle, the coordinates of whose vertices are (x1, y1), (x2, y2)and (x3, y3) is the absolute value of
If the points (x1, y1), (x2, y2) and (x3, y3) are collinear, then x1 (y2 – y3) + x2 (y3 – y1) + x3 (y1 – y2) = 0.
Shifting of Origin Let the origin is shifted to a point O'(h, k). If P(x, y) are coordinates of a point referred to old axes and P'(X, Y) are the coordinates of the same points referred to new axes, then x = X + h, y = Y + k.
Straight Line Any curve is said to be a straight line if two points are taken on the curve such that every point on the line segment joining any two points on it lies on the curve. General equation of a line is ax + by + c = 0.
Slope or Gradient of Line The inclination of angle θ to a line with a positive direction of X-axis in the anti-clockwise direction, the tangent of angle θ is said to be slope or gradient of the line and is denoted by m. i.e. m = tan θ The slope of a line passing through points P(x1, y1) and Q(x2, y2) is given by
Note: Slope of a line parallel to X-axis is zero and slope of a line parallel to Y-axis is not defined.
Angle between Two Lines The angle θ between two lines having slope m1 and m2 is
If two lines are parallel, their slopes are equal i.e. m1 = m2.
If two lines are perpendicular to each other, then their product of slopes is -1 i.e. m1m2 = -1.
Various Forms of the Equation of a Line If a line is at a distance k and parallel to X-axis, then the equation of the line is y = ± k.
If a line is parallel to Y-axis at a distance c from Y-axis, then its equation is x = ± c.
Slope-intercept form: The equation of line with slope m and making an intercept c on the y-axis, is y = mx + c.
One point-slope form: The equation of a line which passes through the point (x1, y1) and has the slope of m is given by y – y1 = m (x – x1).
Two points form: The equation of a line passing through the points (x1, y1) and (x2, y2) is given by
The Intercept form: The equation of a line which cuts off intercepts a and b respectively on the x and y-axes is given by xa+yb=1
The normal form: The equation of a straight line upon which the length of the perpendicular from the origin is p and angle made by this perpendicular to the x-axis is α, is given by x cos α + y sin α = p.
General Equation of a Line Any equation of the form Ax + By + C = 0, where A and B are simultaneously not zero is called the general equation of a line.
Different Forms of Ax + By + C = 0 Slope intercept form: If B ≠ 0, then Ax + By + C = 0 can be written as
If B = 0, then x = – C / A which is a vertical line, whose slope is not defined and x-intercept is – C/A.
Intercept form If C ≠ 0, then Ax + By + C = 0 can be written as
where a = – C / A and b = – C/B If C = 0, then Ax + By + C = 0 can be written as Ax + By = 0 which is a line passing through origin and therefore has zero intercept on the axes.
Normal form: The normal form of equation Ax + By + C = 0 is x cos α + y sin α = p where
Note: Proper choice of signs to be made so that p should be always positive.
Position of Points is Relative to a Given Line Let the equation of the given line be ax + by + c = 0 and let the coordinates of the two given points be P(x1, y1) and Q(x2, y2). The two points are on the same side of the straight line ax + by + c = 0, If ax1 + by1 + c and ax2 + by2 + c have the same sign.
The two points are on the opposite sides of the straight line ax + by + c = 0, If ax1 + by1 + c and ax2 + by2 + c have opposite sign.
Condition of concurrency for three given lines a1x + b1y + c1 = 0, a2x + b2y + c2 = 0 and a3x + b3y+ c3 = 0 is a3(b1c2 – b2c1) + b3(a2c1 – a1c2) + c3(a1b2 – a2b1) = 0
Point of intersection of two lines Let equation of lines be ax1 + by1 + c1 = 0 and a2x + b2y + c2 = 0, then their point of intersection is
Distance of a Point from a Line The perpendicular distanced of a point P(x1, y1)from the line Ax + By + C = 0 is given by
Distance Between Two Parallel Lines The distance d between two parallel lines y = mx + c1 and y = mx + c2 is given by
Sequence A succession of numbers arranged in a definite order according to a given certain rule is called sequence. A sequence is either finite or infinite depending upon the number of terms in a sequence.
Series If a1, a2, a3,…… an is a sequence, then the expression a1 + a2 + a3 + a4 + … + an is called series.
Progression A sequence whose terms follow certain patterns are more often called progression.
Arithmetic Progression (AP) A sequence in which the difference of two consecutive terms is constant, is called Arithmetic progression (AP).
An arithmetic progression (A.P .) is a sequence in which terms increase or decrease regularly by the same constant. This constant is called common difference of the A.P. Usually, we denote the first term of A.P . by a, the common difference by d and the last term by . The general term or the nth term of the A.P. is given by
Single Arithmetic mean between any two given numbers a and b: A.M. =
Arithmetic mean between two given numbers a and b: form an A.P.
If a constant is added to each term of an A.P., then the resulting sequence is also an A.P.
If a constant is subtracted to each term of an A.P., then the resulting sequence is also an A.P.
If each term of an A.P. is multiplied by a constant, then the resuting sequence is also an A.P.
If each term of an A.P. is divided by a constant, then the resuting sequence is also an A.P.
Sum of first terms of an A.P.: and , where is the last term, i.e., .
GEOMETRIC PROGRESSION
A sequence of non-zero numbers is said to be a geometric progression, if the ratio of each term, except the first one, by its preceding term is always the same. , where is the first term and is the common ratio.
term of a G.P.:
Sum of terms of a G.P.: if .
Sum to infinity of a G.P.:
Geometric mean between a and b:
Geometric means between a and b:
If all the terms of a G.P. be multiplied or divided by the same quantity the resulting sequence is also a G.P.
The reciprocal of the terms of a given G.P. form a G.P.
If each term of a G.P. be raised to the same power, the resulting sequence is also a G.P.
ARITHMETIC – GEOMETRIC SERIES
A sequence of non-zero numbers is said to be a arithmetic-geometric series, if its terms are obtained on multiplying the terms of an A.P. by the corresponding terms of a G.P. For example:
The general form of an arithmetic-geometric series:
nth term of an arithmetic-geometric series: of A.P. x of G.P.
Addition Law: If there are two operations such that such that they can be performed independently in and ways respectively, then either of the two operations can be performed in ways.
Multiplication: If one operation can be performed in ways and if corresponding to each of the ways of performing this operation, there are ways of performing a second operation, then the number of ways of performing two operations together in .
Factorial Notation: The continued product of first natural numbers is called the ‘ factorial’ and is denoted by .
Addition Principle: If an operation A can be performed in m ways and another operation S, which is independent of A, can be performed in n ways, then A and B can performed in (m + n) ways. This can be extended to any finite number of exclusive events
Factorial The continued product of first n natural number is called factorial ‘n’. It is denoted by n! or n! = n(n – 1)(n – 2)… 3 × 2 × 1 and 0! = 1! = 1
Permutation Each of the different arrangement which can be made by taking some or all of a number of objects is called permutation.
Permutation of n different objects The number of arranging of n objects taking all at a time, denoted by nPn, is given by nPn = n! The number of an arrangement of n objects taken r at a time, where 0 < r ≤ n, denoted by nPr is given by nPr = n!(n−r)!
Properties of Permutation
Important Results on Permutation The number of permutation of n things taken r at a time, when repetition of object is allowed is nr.
The number of permutation of n objects of which p1 are of one kind, p2 are of second kind,… pk are of kth kind such that p1 + p2 + p3 + … + pk = n is n!p1!p2!p3!…..pk!
Number of permutation of n different objects taken r at a time, When a particular object is to be included in each arrangement is r. n-1Pr-1
When a particular object is always excluded, then number of arrangements = n-1Pr.
Number of permutations of n different objects taken all at a time when m specified objects always come together is m! (n – m + 1)!.
Number of permutation of n different objects taken all at a time when m specified objects never come together is n! – m! (n – m + 1)!.
Combinations Each of the different selections made by taking some or all of a number of objects irrespective of their arrangements is called combinations. The number of selection of r objects from; the given n objects is denoted by nCr, and is given by nCr = n!r!(n−r)!
Inequation A statement involving variables and the sign of inequality viz. >, <, ≥ or ≤ is called an inequation or an inequality.
Numerical Inequalities Inequalities which do not contain any variable is called numerical inequalities, e.g. 3 < 7, 2 ≥ -1, etc. Literal Inequalities Inequalities which contains variables are called literal inequalities e.g. x – y > 0, x > 5, etc.
Linear Inequation of One Variable Let a be non-zero real number and x be a variable. Then, inequalities of the form ax + b > 0, ax + b < 0, ax + b ≥ 0 and ax + b ≤ 0 are known as linear inequalities in one variable.
Linear Inequation of Two Variables Let a, b be non-zero real numbers and x, y be variables. Then, inequation of the form ax + by < c, ax + by > c, ax + by ≤ c and ax + by ≥ c are known as linear inequalities in two variables x and y.
Solution of an Inequality The value(s) of the variable(s) which makes the inequality a true statement is called its solutions. The set of all solutions of an inequality is called the solution set of the inequality.
The values of x, which make an inequality a true statement, are called solutions of the inequality.
To represent x < a (or x > a) on a number line, put a circle on the number and dark line to the left (or right) of the number a.
To represent x ≤ a (or x ≥ a) on a number line, put a dark circle on the number and dark the line to the left (or right) of the number x.
If an inequality is having ≤ or ≥ symbol, then the points on the line are also included in the solutions of the inequality and the graph of the inequality lies left (below) or right (above) of the graph of the equality represented by dark line that satisfies an arbitrary point in that part.
If an inequality is having < or > symbol, then the points on the line are not included in the solutions of the inequality and the graph of the inequality lies tothe left (below) or right (above) of the graph of the corresponding equality represented by dotted line that satisfies an arbitrary point in that part.
To remove the denominator when the sign of the value of the denominator is unknown, may be +ve or -ve: We multiply by the square of the denominator. Square of the denominator is always positive. On multiplication of an inequation by a positive number the sign of inequality does not change.
Solution of a system of Linear Inequality: The solution set of a system of linear inequality in one variable is defined as the intersection of the solution sets of the linear inequality of the system. For example: If we have two solution sets and then solution of the system is the intersection of and i.e.,
Properties of absolute values: (i) i.e., (ii) i.e., (iii) or i.e., (iv) or i.e.,
Triangle Inequality: ,
Solving Linear Inequations in One Variable Same number may be added (or subtracted) to both sides of an inequation without changing the sign of inequality.
Both sides of an inequation can be multiplied (or divided) by the same positive real number without changing the sign of inequality. However, the sign of inequality is reversed when both sides of an inequation are multiplied or divided by a negative number.
Representation of Solution of Linear Inequality in One Variable on a Number Line To represent the solution of a linear inequality in one variable on a number line. We use the following algorithm.
If the inequality involves ‘>’ or ‘<‘ we draw an open circle (O) on the number line, which indicates that the number corresponding to the open circle is not included in the solution set.
If the inequality involves ‘≥’ or ‘≤’ we draw a dark circle (•) on the number line, which indicates the number corresponding to the dark circle is included in the solution set.
Graphical Representation of the Solution of Linear Inequality in One or Two Variables To represent the solution of linear inequality in one or two variables graphically in a plane, we use the following algorithm.
If the inequality involves ‘<’ or ‘>’, we draw the graph of the line as dotted line to indicate that the points on the line are not included from the solution sets.
If the inequality involves ‘≥’ or ‘≤’, we draw the graph of the line as a dark line to indicate the points on the line is included from the solution sets.
Solution of a linear inequality in one variable can be represented on number line as well as in the plane but the solution of a linear inequality in two variables of the type ax + by > c, ax + by ≥ c,ax + by < c or ax + by ≤ c (a ≠ 0, b ≠ 0) can be represented in the plane only.
Two or more inequalities taken together comprise a system of inequalities and the solution of the system of inequalities are the solution common to all the inequalities comprising the system.
1. Why is it necessary for accountants to assume that business entity will remain a going concern?
Answer
It is necessary for accountants to assume that business entity will remain a going concern because
→ It helps in recording fixed assets at their original cost and depreciation is charged on these assets without reference to their market value. For example: if a machinery is purchased which would last for next 5 years, the cost of this machinery will be spread over the next 5 years for calculating the net profit or loss of each year. The full cost machinery would not be treated as an expense in the year of its purchase itself.
→ It is also because of this concept that outside parties enter into long-term contracts with the enterprise, give loans and purchase the debentures and shares of enterprise.
2. When should revenue be recognised? Are there exceptions to the general rule?
Answer
Revenue is recognised only when it is realised i.e., when a legal right to receive it arises. Thus credit sales are treated as revenue on the day sales are made and not when cash is received from the buyers. Similarly, rent for the month of March even if received in April month will be treated as revenue of the financial year ending 31st March. There are two exceptions to this rule: → In case of sales on installment basis, only the amount collected in installments is treated as revenue. → In case of long-term construction contracts, proportionate amount of revenue, based on part of the contracted completed by the end of the financial year is treated as realised.
3. What is the basic accounting equation?
Answer
Assets = Liabilities + Capital
4. The realisation concept determines when goods sent on credit to customers are to be included in the sales figure for the purpose of computing the profit or loss for the accounting period. Which of the following tends to be used in practice to determine when to include a transaction in the sales figure for the period. When the goods have been: (a) dispatched (b) invoiced (c) delivered (d) paid for
Answer
According to the realisation concept, revenue is recognised when a legal right to receive it arises. Therefore, when the goods are invoiced, it is treated as the transfer of ownership of goods from the seller to the buyer and hence the revenue is recognised.
5. Complete the following work sheet:
(i) If a firm believes that some of its debtors may ‘default’, it should act on this by making sure that all possible losses are recorded in the books. This is an example of the ___________ concept. ► conservatism
(ii) The fact that a business is separate and distinguishable from its owner is best exemplified by the ___________ concept. ► business entity concept
(iii) Everything a firm owns, it also owns out to somebody. This co-incidence is explained by the ___________ concept. ► dual aspect
(iv) The ___________ concept states that if straight line method of depreciation is used in one year, then it should also be used in the next year. ► consistency
(v) A firm may hold stock which is heavily in demand. Consequently, the market value of this stock may be increased. Normal accounting procedure is to ignore this because of the ___________. ► conservatism
(vi) If a firm receives an order for goods, it would not be included in the sales figure owing to the ___________. ► revenue recognition
(vii) The management of a firm is remarkably incompetent, but the firms accountants can not take this into account while preparing book of accounts because of ___________ concept. ► money measurement
Long Answer Type Questions
Q1. ‘The accounting concepts and accounting standards are generally referred to as the essence of financial accounting’. Comment. Answer : Financial accounting is concerned with the preparation of the financial statements and provides financial information to various accounting users. It is performed according to the basic accounting concepts like Business Entity, Money Measurement, Consistency, Conservatism, etc. These concepts allow various alternatives to treat the same transaction. For example, there are a number of methods available for calculating stock and depreciation, which can be followed by various firms. This leads to wrong interpretation of financial results by external users due to the problem of inconsistency and incomparability of financial results among different business entities. In order to mitigate inconsistency and incomparability and to bring uniformity in preparation of the financial statements, accounting standards are being issued in India by the Institute of Chartered Accountant of India. Accounting standards help in removing ambiguities and inconsistencies. Hence, accounting standards and accounting concepts are referred as the essence of financial accounting.
Q2. Why is it important to adopt a consistent basis for the preparation of financial statements? Explain. Answer : Financial statements are drawn to provide information about growth or decline of business activities over a period of time or comparison of the results, i.e. intra-firm (comparison within the same organisation) or inter-firm comparisons (comparison between different firms). Comparisons can be performed only when the accounting policies are uniform and consistent. According to the Consistency Principle, accounting practices once selected should be continued over a period of time (i.e. years after years) and should not be changed very frequently. These help in a better understanding of the financial statements and thus make comparisons easy. For example, if a firm is following FIFO method for recording stock, and switches over to the weighted average method, then the results of this year cannot be compared to that of the previous years. Although consistency does not prevent change in the accounting policies, but if change in the policies is essential for better presentation and better understanding of the financial results, then the firm must undertake change in its accounting policies and must fully disclose all the relevant information, reasons and effects of those changes in the financial statements.
Q3. Discuss the concept-based on the premise ‘do not anticipate profits but provide for all losses’. Answer : According to the Conservatism Principle, profits should not be anticipated; however, all losses should be accounted (irrespective whether they occurred or not). It states that profits should not be recorded until they get recognised; however, all possible losses even though they may happen rarely, should be provided. For example, stock is valued at cost or market price, whichever is lower. If the market price is lower than the cost price, loss should be accounted; whereas, if the former is more than the latter, then this profit should not be recorded until unless the stock is sold. There are numerous provisions that are maintained based on the conservatism principle like, provision for discount to debtors, provision for doubtful bad debts, etc. This principle is based on the common sense and depicts pessimism. This also helps the business to deal uncertainty and unforeseen conditions.
Q4 . What is matching concept? Why should a business concern follow this concept? Discuss? Answer : Matching Concept states that all expenses incurred during the year, whether paid or not, and all revenues earned during the year, whether received or not, should be taken into account while determining the profit of that year. In other words, expenses incurred in a period should be set off against its revenues earned in the same accounting period for ascertaining profit or loss. For example, insurance premium paid for a year is Rs1200 on July 01 and if accounts are closed on March 31, every year, then the insurance premium of the current year will be ascertained for nine months (i.e. from July to March) and will be calculated as, Rs 1200 – Rs 900 = Rs 300 Thus, according to the matching concept, the expense of Rs 900 will be taken into account and not Rs 1200 for determining profit, as the benefit of only Rs 900 is availed in the current accounting period. The business entities follow this concept mainly to ascertain the true profit or loss during an accounting period. It is possible that in the same accounting period, the business may either pay or receive payments that may or may not belong to the same accounting period. This leads to either overcasting or undercasting of the profit or loss, which may not reveal the true efficiency of the business and its activities in the concerned accounting period. Similarly, there may be various expenditures like, purchase of machinery, buildings, etc. These expenditures are capital in nature and their benefits can be availed over a period of time. In such cases, only the depreciation of such assets is treated as an expense and should be taken into account for calculating profit or loss of the concerned year. Thus, it is very necessary for any business entity to follow the matching concept.
Q5. What is the money measurement concept? Which one factor can make it difficult to compare the monetary values of one year with the monetary values of another year? Answer : Money Measurement Concept states that only those events that can be expressed in monetary terms are recorded in the books of accounts. For example, 12 television sets of Rs10,000 each are purchased and this event is recorded in the books with a total amount of Rs 1,20,000. Money acts a common denomination for all the transactions and helps in expressing different measurement units into a common unit, for example rupees. Thus, money measurement concept enables consistency in maintaining accounting records. But on the other hand, the adherence to the money measurement concept makes it difficult to compare the monetary values of one period with that of another. It is because of the fact that the money measurement concept ignores the changes in the purchasing power of the money, i.e. only the nominal value of money is concerned with and not the real value. What Rs 1 could buy 10 years back cannot buy today; hence, the nominal value of money makes comparison difficult. In fact, the real value of money would be a more appropriate measure as it considers the price level (inflation), which depicts the changes in profits, expenses, incomes, assets and liabilities of the business.
Accounting is the art of recording, classifying, summarising and communicating financial information to users for correct decision making.
2. State the end product of financial accounting.
Answer
The end product of financial accounting are Trading account, Profit and loss account and Balance sheet.
3. Enumerate main objectives of accounting.
Answer
The main objectives of accounting are: → To keep a systematic record of all business transactions → To determine the profit earned or loss incurred during an accounting period by preparing profit and loss account → To ascertain the financial position of the business at the end of each accounting period by preparing balance sheet → To assist management for decision making, effective control, forecasting, etc. → To assess the progress and growth of business from year to year → To detect and prevent errors and frauds → To communicate information to various users
4. List any five users who have indirect interest in accounting.
Answer
The five users who have indirect interest in accounting are: • Trade associations • Labour unions • Customers • Lenders and Financial Institutions • Tax authorities
5. State the nature of accounting information required by long-term lenders.
Answer
Long term lenders are interested in repaying capacity of the business, profitability, liquidity, operational efficiency, potential growth of business.
6. Who are the external users of information?
Answer
External users of information are the individual or the organisations that have direct or indirect interest in the business firm, however, are not a part of management. They do not have direct access to the internal data of the firm and uses published data or reports like profit and loss accounts, balance sheets, annual reports, press releases, etc. Some examples of external users are government, tax authorities, labour unions, etc.
7. Enumerate informational needs of management. Answer The informational needs of management: → For Planning: Management would like to know whether sales are increasing or decreasing also the speed of increase in the cost of production which helps the management in estimating future sales and expenses. → For Decision making: Management needs information to take number of decisions such as what will be the selling price of goods and how much discount they should offer. → For Controlling: Management would like to know that cost incurred is manufacturing the product is reasonable and that no department is overspending.
8. Give any three examples of revenues. Answer
Three examples of revenue are given below. • Sales revenue • Interest received • Dividends
9. Distinguish between debtors and creditors.
Answer
Basis of difference
Debtors
Creditors
Meaning
Persons or organisations that are liable to pay money to a firm are called debtors.
Persons or organisations to whom the firm is liable to pay money are called creditors.
Nature
They have debit balance to the firm.
They have credit balance to the firm.
Payment
Payments are received from them.
Payments are made to them.
Shown
They are shown as assets in the Balance sheet under Current Assets.
They are shown as liabilities in the Balance Sheet under Current Liabilities.
10. ‘Accounting information should be comparable’. Do you agree with this statement? Give two reasons.
Answer
Yes, accounting information should be comparable because:
→ Comparability is needed to make inter-firm comparisons, i.e., to find out how a firm has performed as compared to the other firms.
→ Comparability is needed to make inter-period comparisons, i.e., to find out how it has performed as compared to the previous years.
11. If the accounting information is not clearly presented, which of the qualitative characteristic of the accounting information is violated?
Answer
If the accounting information is not clearly presented, then it will violate the ‘Reliability and Understandability’ qualitative characteristics of accounting because if accounting information is not clearly presented then it will not be reliable and also cannot be understood easily.
12. The role of accounting has changed over the period of time”- Do you agree? Explain.
Answer
The role of accounting has now shifted from that of a mere recording of business transactions to that of providing information to managers and other various interested parties in order to help them in making appropriate decisions. It now becomes an information system.
13. Giving examples, explain each of the following accounting terms: • Fixed assets • Revenue • Expenses • Short-term liability • Capital
Answer
• Fixed Assets: Fixed Assets refers to those assets which are held for continued use in the business for the purpose of producing goods and services and not meant for resale. Examples: Plant and Machinery, Land and Building etc.
• Revenue: Revenues refer to the amount received from day to day activities of the business, likesale proceeds of goods and rendering services to the customers. Example: Commission received, dividend, royalty etc.
• Expenses: Expense is the cost incurred in producing and selling the goods and services. Example: wages, depreciation, salaries etc.
• Short-term liability: Those liabilities which are to be paid in near future (normally within one year). Example: Bank Overdraft, Bills payable etc.
• Capital: It refers to the amount invested by the proprietor in a business enterprise. It is the amount with the help of which goods and assets are purchased in the business.
14. Define revenues and expenses?
Answer
Revenues is the income of a regular nature such as receipts from sale of goods, rent, commission etc. Expense is the cost incurred in producing and selling the goods and services.
15. What is the primary reason for the business students and others to familiarise themselves with the accounting discipline?
Answer
Every monetary transaction must be recorded in such a manner that various accounting users must understand and interpret these results in the same manner without any ambiguity. The primary reason to study accounting discipline because it helps in the learning: • the various aspects of accounting. • how to maintain books of accounts. • how to summarise accounting information. • how to interpret the accounting information with relative accuracy.
Long Answer Type Questions:
Q1. Explain the factors, which necessitated systematic accounting. Answer: The factors that necessitated systematic accounting are given below. 1. Only financial transactions are recorded- Those events that are financial in nature are only recorded in the books of accounts. For example, salary of an employee is recorded in the books but his/her educational qualification is not recorded. 2. Transactions are recorded in monetary terms- Only those transactions which can be expressed in monetary terms are recorded in the books. For example, if a business has two buildings and four machines, then their monetary values is recorded in the books, i.e. two buildings costing Rs 2,00,000, four machines costing Rs 8,00,000. Thus the total value of assets is Rs 10,00,000. 3. Art of recording- Transactions are recorded in the order of their occurrence. 4. Classification of transaction- Business transactions of similar nature are classified and posted under their respective accounts. For example, all the transactions relating to machinery will be posted in the Machinery Account. 5. Summarising of data- All business transactions are summarised in the form of Trial Balance, Trading Account, Profit and Loss Account and Balance Sheet that provides necessary information to various users. 6. Analysing and interpreting data- Systematic accounting records enable users to analyse and interpret the accounting data in a proper and appropriate manner. These accounting data and information are presented in form of graphs, statements, charts that leads to easy communication and understandability by various users. Moreover, these facilitates in decision making and future predictions.
Q2. Describe the brief history of accounting. Answer: The history of accounting can be traced long back in civilisation. Around 4000 B.C., in Babylonia and Egypt, payment of wages and taxes were recorded on clay tablets. As history claims that Egyptians kept the record of gold and valuables deposits and withdrawal from the treasuries. These records were reported on daily basis by the incharge of treasuries to the wazir, who used to forward the monthly reports to the king. Babylonia and Egypt used this method to rectify and remove errors, frauds and inefficiency from the records. Around 2000 B.C., China used sophisticated form of accounting. In Greece, accounting was used to maintain total receipts and total payments and to balance government accounts. In Rome, around 700 B.C., receipts and payments were recorded in daybook and were posted in the ledger at the end of the month. In India, around twenty three centuries ago, Kautilya wrote the book Arthshastra, which describes how accounting records have to be maintained. In 1494, Luca Pacioli wrote the book Summa de Arithmetica Geometria Proportioni et Proportionalita. In this, he explained the term debit and credit, which are used in accounting till date.
Q3. Explain the development of and role of accounting. Answer : Development of accounting In ancient times, around 4000 B.C., accounting was used for recording wages and salaries, deposits and withdrawals of valuable goods (such as gold and silver) from the treasures of the king. Afterwards, it was used to record the receipts and payments and balancing of government financial transactions. During 1500 A.D., accounting was used by business firms for recording transactions related to business. In 1800 A.D., accounting was used to record transactions and also to provide information to various users of financial data.
Role of accounting- While in the earlier times accounting was merely concerned with recording the financial events (i.e. record-keeping activity); however, now-a-days, accounting is done with the rationale of not only maintaining records, but also providing an information system that provides important and relevant information to various accounting users. 1. Substitute of memory- As, it is beyond human capabilities to remember each and every business transaction, so accounting plays an important role in recording these transactions in the book of accounts. 2. Assistance to management- Management uses accounting information for short term and long term planning of business activities and to control various costs and budgets. 3. Comparative study- In order to ascertain the performance of the business, accounting enables comparison of current year’s profit with that of previous years (intra-firm comparison)and also with other firms in the same business (inter-firm comparison). 4. Evidence in court- It acts as evidence that can be used or presented in the court, if any discrepancy arises in the future.
Q4. Define accounting and state its objectives. Answer :Accounting is a process of identifying the events of financial nature, recording them in the journal, classifying in their respective accounts and summarising them in profit and loss account and balance sheet and communicating results to users of such information, viz. owner, government, creditor, investors, etc. According to American Institute of Certified Accountants, 1941, “Accounting is the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events that are, in part at least, of financial character and interpreting the results thereof.” In 1970, American Institute of Certified Public Accountants changed the definition and stated, “The function of accounting is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions.” Objectives of Accounting: 1. Recording business transactions systematically- It is necessary to maintain systematic records of every business transaction, as it is beyond human capacities to remember such large number of transactions. Skipping the record of any one of the transactions may lead to erroneous and faulty results. 2. Determining profit earned or loss incurred- In order to determine the net result at the end of an accounting period, we need to calculate profit or loss. For this purpose trading and profit and loss account are prepared. It gives information regarding how much of goods have been purchased and sold, expenses incurred and amount earned during a year. 3. Ascertaining financial position of the firm- Ascertaining profit earned or loss incurred is not enough; proprietor also interested in knowing the financial position of his/her firm, i.e. the value of the assets, amount of liabilities owed, net increase or decrease in his/her capital. This purpose is served by preparing the balance sheet that facilitates in ascertaining the true financial position of the business. 4. Assisting management- Systematic accounting helps the management in effective decision making, efficient control on cash management policies, preparing budget and forecasting, etc. 5. Assessing the progress of the business- Accounting helps in assessing the progress of business from year to year, as accounting facilitates the comparison both inter-firm as well as intra-firm. 6. Detecting and preventing frauds and errors- It is necessary to detect and prevent fraud and errors, mismanagement and wastage of the finance. Systematic recording helps in the easy detection and rectification of frauds, errors and inefficiencies, if any. 7. Communicating accounting information to various users- The important step in the accounting process is to communicate financial and accounting information to various users including both internal and external users like owners, management, government, labour, tax authorities, etc. This assists the users to understand and interpret the accounting data in a meaningful and appropriate manner without any ambiguity.
Q5. Describe the informational needs of external users. Answer : There are various external users of accounting who need accounting information for decision making, investment planning and to assess the financial position of the business. The various external users are given below. 1. Banks and other financial institutions- Banks provide finance in form of loans and advances to various businesses. Thus, they need information regarding liquidity, creditworthiness, solvency and profitability to advance loans. 2. Creditors- These are those individuals and organisations to whom a business owes money on account of credit purchases of goods and receiving services; hence, the creditors require information about credit worthiness of the business. 3. Investors and potential investors- They invest or plan to invest in the business. Hence, in order to assess the viability and prospectus of their investment, creditors need information about profitability and solvency of the business. 4. Tax authorities- They need information about sales, revenues, profit and taxable income in order to determine the levy various types of tax on the business. 5. Government- It needs information to determine national income, GDP, industrial growth, etc. The accounting information assist the government in the formulation of various policies measures and to address various economic problems like employment, poverty etc. 6. Researcher- Various research institutes like NGOs and other independent research institutions like CRISIL, stock exchanges, etc. undertake various research projects and the accounting information facilitates their research work. 7. Consumer- Every business tries to build up reputation in the eyes of consumers, which can be created by the supply of better quality products and post-sale services at reasonable and affordable prices. Business that has transparent financial records, assists the customers to know the correct cost of production and accordingly assess the degree of reasonability of the price charged by the business for its products and thus helps in repo building of the business. 8. Public- Public is keenly interested to know the proportion of the profit that the business spends on various public welfare schemes; for example, charitable hospitals, funding schools, etc. This information is also revealed by the profit and loss account and balance sheet of the business.
Q6. What do you mean by an asset and what are different types of assets? Answer :Any valuable thing that has monetary value, which is owned by a business, is its asset. In other words, assets are the monetary values of the properties or the legal rights that are owned by the business organisations. Fixed Assets- These are those assets that are hold for the long term and increase the profit earning capacity and productive capacity of the business. These assets are not meant for sale, for example, land, building machinery, etc. Current Assets- Assets that can be easily converted into cash or cash equivalents are termed as current assets. These are required to run day to day business activities; for example, cash, debtors, stock, etc. Tangible Assets- Assets that have physical existence, i.e., which can be seen and touched, are tangible assets; for example, car, furniture, building, etc. Intangible Assets- Assets that cannot be seen or touched, i.e. those assets that do not have physical existence, are intangible assets; for example, goodwill, patents, trade mark, etc. Liquid Assets- Assets that are kept either in cash or cash equivalents are regarded as liquid assets. These can be converted into cash in a very short period of time; for example, cash, bank, bills receivable, etc. Fictitious Assets- These are the heavy revenue expenditures, the benefit of whose can be derived in more than one year. They represent loss or expense that are written off over a period of time, for example, if advertisement expenditure is Rs 1,00,000 for 5 years, then each year Rs 2,00,000 will be written off.
Q7. Explain the meaning of gain and profit. Distinguish between these two terms. Answer : Profit- Excess of revenue over expense is known as profit. It is normally categorised into gross profit or net profit. It increases the owner’s capital as it is added to the capital at the end of each accounting period. For example, goods costing Rs 1, 00,000 is sold at Rs 1,20,000, then the sale proceeds of Rs 1,20,000 is the revenue and 1,00,000 is the expense to generate this revenue. Hence, accounting profit of Rs 20,000 (i.e. Rs 1,20,000 – Rs 1,00,000) is the difference between the revenue and expense that is earned by the business. Gain- It arises from irregular activities or non-recurring transactions. In other words, a gain is a result of transactions that are incidental to the business, other than operating transactions. For example, an old machinery of book value Rs 20,000 is sold at Rs 25,000. Hence, the gain is Rs 5,000 (i.e. Rs 25,000 – Rs 20,000). Here, the sale of the old machinery is an irregular activity; so, the difference is termed as gain Thus, in other words the only difference between profit and gain is that profit is the excess of revenue over expense and gain arises from other than operating transactions.
Q8. Explain the qualitative characteristics of accounting information. Answer : The following are the qualitative characteristics of accounting information: 1. Reliability- It means that the user can rely on the accounting information. All accounting information is verifiable and can be verified from the source document (voucher), viz. cash memos, bills, etc. Hence, the available information should be free from any errors and unbiased. 2. Relevance- It means that essential and appropriate information should be easily and timely available and any irrelevant information should be avoided. The users of accounting information need relevant information for decision making, planning and predicting the future conditions. 3. Understandability- Accounting information should be presented in such a way that every user is able to interpret the information without any difficulty in a meaningful and appropriate manner. 4. Comparability- It is the most important quality of accounting information. Comparability means accounting information of a current year can be comparable with that of the previous years. Comparability enables intra-firm and inter-firm comparison. This assists in assessing the outcomes of various policies and programmes adopted in different time horizons by the same or different businesses. Further, it helps to ascertain the growth and progress of the business over time and in comparison to other businesses.
Q9. Describe the role of accounting in the modern world. Answer: The role of accounting has been changing over a period of time. In the modern world, the role of accounting is not only limited to record financial transactions but also to provide a basic framework for various decision making, providing relevant information to various users and assists in both short-run and long run planning. The role of accounting in the modern world are given below. 1. Assisting management- Management uses accounting information for short term and long term planning of business activities, to predict the future conditions, prepare budgets and various control measures. 2. Comparative study- In the modern world, accounting information helps us to know the performance of the business by comparing current year’s profit with that of the previous years and also with other firms in the same industry. 3. Substitute of memory- In the modern world, every business incurs large number of transactions and it is beyond human capability to memorise each and every transaction. Hence, it is very necessary to record transactions in the books of accounts. 4. Information to end user- Accounting plays an important role in recording, summarising and providing relevant and reliable information to its users, in form of financial data that helps in decision making.
In This Post we are providing Chapter-5 Organic Chemistry- Some Basic Principles and Techniques NCERT MCQ for Class 11 Chemistry which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON ORGANIC CHEMISTRY- SOME BASIC PRINCIPLES AND TECHNIQUES
Question 1: In laboratory, first organic compound was synthesized by
a) Wohler
b) Kekule
c) Hennel
d) Liebig
Answer: Wohler
Question 2: Who is known as the “Father of Chemistry”?
a) Lavoisier
b) Priestley
c) Faraday
d) Rutherford
Answer: Lavoisier
Question 3: The percentage of s- character of the hybrid orbitals in ethane, ethene and ethyne are respectively
a) 25, 33, 50
b) 50, 75, 100
c) 25, 50, 75
d) 10, 20, 40
Answer: 25, 33, 50
Question 4: The functional group present in organic, acid is –
a) –COOH
b) – OH
c) – CHO
d) > C = O
Answer: –COOH
Question 5: Which of these contains the carbonyl group?
a) all of these
b) aldehydes
c) ketones
d) esters
Answer: all of these
Question 6: Butanone is a four-carbon compound with the functional group –
a) ketone
b) carboxylic acid
c) aldehyde.
d) alcohol.
Answer: ketone
Question 7: Which of the following compounds contains 1°, 2°, 3° as well as 4° carbon atoms ?
a) 2,2,3-trimethyl pentane
b) 2-methyl pentane
c) Neopentane
d) 2,3-dimethyl butane
Answer: 2,2,3-trimethyl pentane
Question 8: The number of secondary hydrogens in 2, 2-dimethylbutane is
a) 2
b) 6
c) 8
d) 4
Answer: 2
Question 9: The compound which has one isopropyl group is
a) 2- Methypentane
b) 2, 2, 3- Trimethylpentane
c) 2, 2 – Dimethylpentane
d) 2, 2, 3, 3 – Tetramethylpentane
Answer: 2- Methypentane
Question 10: Which of the following statements is false for isopentane ?
a) It has a carbon which is not bonded to hydrogen
b) It has one CH group
c) It has one CH2 group
d) It has three CH3 groups
Answer: It has a carbon which is not bonded to hydrogen
Question 11: The number of primary, secondary and tertiary carbons in 3, 4-dimethylheptane are respectively
a) 4, 3 and 2
b) 4, 2 and 3
c) 2, 3 and 4
d) 3, 4 and 2
Answer: 4, 3 and 2
Question 12: The number of primary, secondary, tertiary and quaternary carbons in neopentane are respectively
a) 4, 0, 0 and 1
b) 4, 3, 2 and 1
c) 5, 0, 0 and 1
d) 4, 0, 1 and 1
Answer: 4, 0, 0 and 1
Question 13: What is the IUPAC name of t-butyl alcohol.
a) 2–Methyl-propan–2-ol
b) Propanol-2
c) Butanol–2
d) Butanol–1
Answer: 2–Methyl-propan–2-ol
Question 14: The IUPAC name of CH3COCH (CH3)2 is –
a) 3-methyl-2-butanone
b) 4-methylisopropyl ketone
c) 2-methyl-3-butanone
d) isopropyl methyl ketone
Answer: 3-methyl-2-butanone
Question 15: Which of the following statements is false for isopentane–
a) It has a carbon which is not bonded to hydrogen
b) It has one CH group
c) It has three CH3 groups
d) It has one CH2 group
Answer: It has a carbon which is not bonded to hydrogen
In This Post we are providing Chapter-4 The p-block Elements NCERT MCQ for Class 11 Chemistry which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON THE p-BLOCK ELEMENTS
Question 1 : Which of the following is/are true regarding gallium?
(i) It has unusually low melting point (303 K). (ii) It exist in liquid state during summer. (iii) It has a high boiling point (2676 K). The correct option is
a) (i), (ii) and (iii)
b) (i) and (ii)
c) (i) and (iii)
d) (ii) and (iii)
Answer : (i), (ii) and (iii)
Question 2 : The element which shows least metallic character is
a) Boron
b) Gallium
c) Indium
d) Aluminium
Answer : Boron
Question 3 : Which one of the following has the lowest m.p.?
a) Ga
b) B
c) Al
d) Tl
Answer : Ga
Question 4 : Which of the following does not form M3+ ion?
a) Boron
b) Indium
c) Aluminium
d) Gallium
Answer : Boron
Question 5: The group 13 element that is liquid during summer and used for measuring high temperature is
a) Gallium
b) Boron
c) Aluminium
d) Indium
Answer : Gallium
Question 6: Thallium shows different oxidation states because
a) of inert pair effect
b) of its amphoteric character
c) of its higher reactivity
d) it is transition element
Answer : of inert pair effect
Question 7 : Aluminium chloride is a/an
a) Lewis acid
b) Bronsted – Lowery acid
c) Arhenius acid
d) Lewis base
Answer : Lewis acid
Question 8 : The strongest Lewis acid is
a) BI3
b) BCl3
c) BF3
d) BBr3
Answer : BI3
Question 9 : Which metal is protected by a layer of its own oxide?
a) Al
b) Au
c) Ag
d) Fe
Answer : Al
Question 10 : Aluminium vessels should not be washed with materials containing washing soda because
a) washing soda reacts with aluminium to form soluble aluminate
b) washing soda reacts with aluminium to form insoluble aluminium oxide
c) washing soda is easily decomposed
d) washing soda is expensive
Answer : washing soda reacts with aluminium to form soluble aluminate
Question 11 : When Al is added to KOH solution
a) hydrogen is evolved
b) oxygen is evolved
c) no action takes place
d) water is produced
Answer : hydrogen is evolved
Question 12: Which of the following does not react with aqueous NaOH ?
a) B
b) Al
c) Ga
d) Tl
Answer : B
Question 13 : In borax bead test which compound is formed?
a) Meta-borate
b) Tetra-borate
c) Ortho-borate
d) Double oxide
Answer : Meta-borate
Question 14 : Boric acid is polymeric due to
a) the presence of hydrogen bonds
b) its acidic nature
c) its monobasic nature
d) its geometry
Answer : the presence of hydrogen bonds
Question 15 : Orthoboric acid when heated to red hot gives
In This Post we are providing Chapter-3 The s-block Elements NCERT MCQ for Class 11 Chemistry which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON THE s-BLOCK ELEMENTS
Question 1. The paramagnetic species is (a) KO2 (b) SiO2 (c) TiO2 (d) BaO2
Answer: (a) KO2
Question 2. On dissolving moderate amount of sodium metal in liquid ammonia at low temperature, which one of the following does not occur? (a) Blue coloured solution is obtained (b) Na+ ions are formed in the solution (c) Liquid NH3 becomes good conductor of electricity (d) Liquid ammonia remain diamagnetic.
Answer: (d) Liquid ammonia remain diamagnetic.
Question 3. The substance not likely to contain CaCO3 is (a) Dolomite (b) A marble (c) Calcined gypsum (d) Sea shells.
Answer: (c) Calcined gypsum
Question 4. TLe active constituent of bleaching powder is (a) Ca(OCl)2 (b) Ca(OCl)Cl (c) Ca(ClO2) (d) Ca(ClO2)Cl
Answer: (b) Ca(OCl)Cl
Question 5. Which of the following is the correct order of gradually decreasing basic nature of the oxides? (a) Al2O3, MgO, Cl2O7, SO3 (b) Cl2O7, SO3, Al2O3, MgO (c) SO3, Cl2O7, MgO, Al2O3 (d) MgO, Al2O3, SO3, Cl2O7
Answer: (d) MgO, Al2O3, SO3, Cl2O7
Question 6. Among the alkaline earth metals, the element forming the predominantly covalent compound is (a) Barium (b) Strontium (c) Calcium (d) Beryllium.
Answer: (d) Beryllium.
Question 7. Which of the following substances can be used for drying gases? (a) Calcium carbonate (b) Sodium carbonate (c) Sodium bicarbonate (d) Calcium oxide
Answer: (d) Calcium oxide
Question 8. The stability of the following alkali metal chlorides follows the order (a) LiCl > KCl > NaCl > CsCl (b) CsCl > KCl > NaCl > LiCl (c) NaCl > KCl > LiCl > CsCl (d) KCl > CsCl > NaCl > LiCl
Answer: (a) LiCl > KCl > NaCl > CsCl
Question 9. Solubility of carbonates decrease down the Magnesium group due to decrease in (a) Entropy of solution formation (b) Lattice energies of solids (c) Hydration energy of cations (d) Inter-ionic attraction.
Answer: (c) Hydration energy of cations
Question 10. In curing cement plasters, water is sprinkled from time to time. This helps in (a) Converting sand into silicic acid (b) Keeping it cool. (c) Developing interlocking like crystals of hydrated silicates (d) Hydrating sand and gravel mixed with cement.
Answer: (c) Developing interlocking like crystals of hydrated silicates
Question 11. Bleaching powder loses its power on keeping for a long time because (a) It changes into calcium hypochlorite (b) It changes into calcium chloride and calcium hydroxide (c) It absorbs moisture (d) It changes into calcium chloride and calcium chlorate
Answer: (d) It changes into calciumchloride and calcium chlorate
Question 12. A metal M readily forms water soluble sulphate MSO4, water insoluble hydroxide M(OH)2 and oxide MO which becomes inert on heating. The hydroxide is soluble in NaOH. The metal M is (a) Be (b) Mg (c) Ca (d) Sr
Answer: (a) Be
Question 13. KO2 (Potassium superoxide) is used in oxygen cylinders in space and submarines because it (a) Absorbs CO2 and increases O2 content (b) Eliminates moisture (c) Absorbs CO2 (d) Produces ozone
Answer: (a) Absorbs CO2 and increases O2 content
Question 14. Which one is used as an air purifier in space craft? (a) Quick lime (b) Slaked lime (c) Potassium superoxide (d) Anhydrous CaCl2
Answer: (c) Potassium superoxide
Question 15. The correct order of increasing ionic character is (a) BeCl2 < MgCl2 < CaCl2 < BaCl2 (b) BeCl2 < MgCl2 < BaCl2 < CaCl2 (c) BeCl2 < BaCl2 < MgCl2 < CaCl2 (d) BaCl2 < CaCl2 < MgCl2 < BeCl2
