BCOM 1st Year Meaning And Scope Of Accounting Short Question Answer Notes
BCOM 1st Year Meaning And Scope Of Accounting Short Question Answer Notes : In this post you will get full information related to BCOM All notes Study Material Sample Model Practice Paper Examination Paper here you will find all the questions of BCOM 1st Year This website parultech.com is very helpful for all students.
SHORT ANSWER QUESTIONS
Q.1. Define the term accounting.
Ans. Accounting means an information system that provides useful accounting information to various parties and users to arrive at a rational decision. In common parlance, it implies recording of daily transactions of an enterprise in account books in accordance with accounting principles. The main object of accounting is to ascertain the amount of profit or loss earned by the enterprise during a certain period and to show the financial position of the business on a particular date so that necessary information concerning the affairs of concern could be supplied to all interested parties.
Definitions of Accounting
‘Accounting is a means of measuring and reporting the result of economic activities!
-Smith and Ashborne
‘Nearly every business enterprise has accounting system. It is a means of collecting, summarising, analysing and reporting in monetary terms, information about the business.
‘Accounting is the process of identifying, measuring and communicating economic information to permit informed judgement and decision by user of the information!
-American Accounting Association
Thus accounting is an information system that provides -Bierman and Derbin financial information expressed in monetary terms to users to correct decision-making.
Q.2. Discuss the objectives of accounting.
Ans. The following are the main objectives of accounting:
1. Maintaining Proper Record of Business : The main purpose of accounting is to identify business transactions of financial nature and enter them into books of accounts. Business transactions Classified as assets, liabilities, capital, revenue and expenses are accordingly passed through books. The accounting records should be made properly and systematically, so that requisite information may be obtained at a glance from the books of accounts.
2. Calculation of Profit and Loss: Accounting helps in calculating the profit and loss of business ncome, statements are prepared with the help of trial balance. At the end of accounting period, we repare trading account to calculate gross profit and loss. After that profit and loss account is prepared calculate net profit or net loss. Accounting, in this way, is the source to evaluate the performance of ne business in terms of profit.
3. To Show the Financial Position: At the end of accounting period, we prepare position statement. The value of assets and liabilities are shown in the balance sheet also known as position statement.
The Balance sheet is a statement of assets and liabilities of the business on a particular date.
The assets sides of balance sheet show the position of various assets such as cash in hand cash at Bank, closing stock building furniture, etc. The liabilities sides show creditors, B/R, loans, outstanding, etc. sheet is said to be a mirror reflecting the true position of assets and liabilities of a particular date.
4. Producing Effective Control over the Business: Accounting shows the actual performance of business in terms of production, sales, profit, loss, cost of production and books value of assets. The actual performance can be compared with the desired performance of the business.
5. To Communicate the Information to the Users: Accounting communicates information to internal user like the officers and staff of the firm and external users like owners, the creditor, the government, etc. Accounting aims to meet the information needs of the decision makers and helps them in rational decision-making.
Q.3. Write a short note on various users of accounting information.
Ans. Accounting information is required by different users for making their decisions. These can be as follows:
1. Internal Users: Top, middle and lower level of management executives are the internal users of accounting information. They need it for making their decisions. These users are interested in the profitability, efficiency and financial soundness of the business.
2. External Users: External users may have direct users and indirect users:
(a) Direct Users: The existing and prospective creditor and investor have direct interest in the accounting information. The sources of information for external users are financial statement, reports of directors and auditors. Investors calculate the financial worth of the business, so that they may decide about buying, selling or holding investment in the business.
(b) Indirect Users: These users such as department of company affairs, registrar of joint stock companies, sales tax and income tax authorities, labour union, customers, stock exchange, trade union are also interested in the affairs of the business.