Introduction
to Accounting
Complete study material โ Notes, 50 MCQs, and a 20-question built-in Quiz. All in one page. 100% CBSE syllabus 2026โ27. Click any section tab below.
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1. Meaning and Attributes of Accounting
๐ NCERT Definition
What is Accounting?
Accounting is the process of identifying, recording, classifying, summarising, interpreting and communicating financial information of a business to its users so that they can make informed economic decisions.
Think of accounting as the "language of business." Businesses use accounting to communicate their financial performance to owners, banks, tax authorities, and more.
Key Attributes (Characteristics) of Accounting:
1
Identifying Financial Events
Only events expressible in money are recorded. Non-financial events like hiring a manager are not recorded.
2
Recording
All identified financial transactions are recorded systematically and chronologically in books of accounts.
3
Classifying
Similar transactions grouped together (e.g., all sales in Sales Account) to make information easy to use.
4
Summarising
Classified data presented in summarised form โ Trial Balance, Trading A/c, P&L A/c, Balance Sheet.
5
Interpreting
Results are analysed โ finding trends, comparing ratios, drawing conclusions about business performance.
6
Communicating
Interpreted results are communicated to users through financial statements and reports.
Exam Tip: The 6 steps โ Identify โ Record โ Classify โ Summarise โ Interpret โ Communicate โ are frequently asked in CBSE exams. Remember this exact order.
2. Accounting Process
The Accounting Process (Accounting Cycle) is the complete sequence to convert raw financial data into meaningful financial statements. It repeats every accounting period.
1
Identifying Transactions
Select only events with financial character measurable in money. A contract signing is not recorded โ the advance payment for it is.
2
Source Documents / Vouchers
Every transaction must have a source document โ cash memo, invoice, receipt, etc. A Voucher is then prepared as the basis for recording.
3
Recording in Journal / Cash Book
Transactions recorded date-wise in the Journal (Book of Original Entry) or Cash Book using Double Entry System.
4
Posting to Ledger
Journal entries transferred (posted) to individual accounts in the Ledger โ the Principal Book of Accounts.
5
Trial Balance
Ledger balances listed in a Trial Balance to check arithmetic accuracy. Equal sides = books are arithmetically correct.
6
Financial Statements
Trading A/c, P&L A/c, and Balance Sheet prepared to show business results and financial position.
7
Analysis and Interpretation
Statements analysed using ratios, comparisons, and trend analysis to draw meaningful conclusions.
8
Communication
Results communicated to all users โ owners, investors, creditors, government โ through reports and disclosures.
3. Branches / Types of Accounting
| Branch | Meaning | Who Uses It |
|---|---|---|
| Financial Accounting | Records all financial transactions, prepares financial statements for external users. CBSE Class 11 & 12 covers this. | Investors, Banks, Creditors, Government |
| Cost Accounting | Ascertains cost of producing a product or service to help control costs and price products correctly. | Manufacturing companies, Management |
| Management Accounting | Provides financial and non-financial information to help management in planning, decision-making and controlling. | Internal Management only |
| Tax Accounting | Computation of taxes (Income Tax, GST) as per applicable laws and filing of returns. | Businesses, Tax Authorities |
| Social Responsibility Accounting | Measures social costs and benefits of business activities โ impact on society, environment, employees. | Society, Regulators, NGOs |
| Human Resource Accounting | Values human assets (employees) and shows them as assets in the Balance Sheet. | Large organisations, HR Departments |
4. Book-keeping, Accounting and Accountancy
| Basis | Book-keeping | Accounting | Accountancy |
|---|---|---|---|
| Meaning | Art of recording financial transactions in books of accounts | Recording, classifying, summarising, interpreting and communicating financial data | Complete body of knowledge covering Book-keeping and Accounting as a discipline |
| Scope | Narrow โ only recording | Wider โ recording + analysis + interpretation | Widest โ includes theory, principles, practices |
| Nature | Clerical / routine work | Analytical and managerial | Academic / professional discipline |
| Performed by | Book-keeper (clerk) | Accountant | Chartered Accountant / professional |
| Output | Books of accounts | Financial Statements | Knowledge, Standards, Principles |
| Basis | Basis of Accounting | Basis of Accountancy | โ |
Origin: Double Entry Book-keeping was introduced by Luca Pacioli in "Summa de Arithmetica" published in 1494. He is the Father of Accounting / Double Entry System.
5. Objectives of Accounting
Maintain Systematic Records โ Complete, organised record of all financial transactions.
Ascertain Profit or Loss โ Know whether business made profit or incurred loss during a period.
Ascertain Financial Position โ Prepare Balance Sheet showing assets owned and liabilities owed.
Provide Information to Users โ Supply financial information to owners, investors, banks, government.
Facilitate Decision Making โ Help management make informed decisions about pricing, expansion, borrowing.
Legal Requirements โ Fulfil statutory obligations under Companies Act, Income Tax Act, GST Act.
Control over Assets โ Track all assets and prevent misuse, theft, or loss.
Evidence in Court โ Properly maintained books serve as legal evidence in disputes.
6. Advantages of Accounting
โ
Permanent Record
Every transaction permanently recorded โ no reliance on memory.
โ
Knowledge of Business Results
Determines exact profit or loss for each period through the Profit & Loss Account.
โ
Knowledge of Financial Position
Balance Sheet shows exact financial health โ assets and liabilities โ at any point.
โ
Assistance in Raising Loans
Banks require financial statements before granting loans. Proper accounts make this smooth.
โ
Evidence in Legal Disputes
Properly maintained books serve as authentic legal evidence in courts of law.
โ
Facilitates Tax Assessment
Helps calculating and paying correct income tax, GST and other taxes accurately.
โ
Prevents and Detects Fraud
Systematic recording makes fraud difficult. Manipulation detectable through auditing.
โ
Comparative Study
Past and present data compared to identify trends and problem areas in business.
โ
Settlement of Claims
In case of death or insolvency, books help settle claims of different parties accurately.
7. Limitations of Accounting
Important: CBSE frequently asks about these limitations in MCQs and short-answer questions.
Records Only Monetary Transactions โ Employee morale, customer satisfaction cannot be recorded.
Historical in Nature โ Records past transactions only; does not predict the future.
Ignores Price Level Changes โ Recorded at historical cost; inflation effect not considered.
Based on Estimates โ Depreciation, bad debts, provisions are estimates โ not exact facts.
Possibility of Manipulation โ Window dressing โ different accounting policies used to show a better picture.
Inadequate for Decisions โ Financial statements alone are not enough for complex decisions.
Does Not Reflect True Value โ Shows historical cost, not current market value of assets.
Lack of Qualitative Information โ Cannot show brand reputation, staff loyalty, or management expertise.
8. Accounting as a Source of Information
Accounting converts raw financial data into structured, meaningful form that users can understand and act upon.
Flow: Books of Accounts โ Accounting Process โ Financial Statements โ Users โ Decisions
Quantitative Information โ Expressed in numbers/money (revenue, profit, assets). Traditional accounting provides this.
Qualitative Information โ Non-numerical (management quality, brand value). Traditional accounting does NOT capture this.
9. Users of Accounting Information
| User | Type | Why They Need It |
|---|---|---|
| Owner / Proprietor | Internal | To know profit/loss and evaluate business performance |
| Management | Internal | For planning, budgeting, controlling and day-to-day decisions |
| Employees | Internal | To assess job security and profit-sharing possibilities |
| Investors / Shareholders | External | To evaluate return on investment and investment decisions |
| Creditors / Suppliers | External | To assess ability to repay debts before offering credit |
| Banks and Lenders | External | To evaluate creditworthiness before granting loans |
| Government / Tax Authorities | External | To verify tax compliance and frame economic policies |
| Customers | External | To assess business continuity and reliability |
| Researchers and Analysts | External | For economic research and market studies |
10. Qualitative Characteristics of Accounting Information
Q1
Reliability
Information must be dependable and free from error or bias. Represents transactions faithfully.
Q2
Relevance
Information must be useful for the decision at hand โ should make a difference to the user's choice.
Q3
Understandability
Presented clearly so a reasonably informed user can understand without difficulty.
Q4
Comparability
Comparable across time periods (same business) and across different businesses.
Q5
Timeliness
Must be available at the right time. Outdated information loses its decision-making value.
Q6
Materiality
Only information significant enough to influence decisions needs disclosure. Trivial items can be grouped.
Q7
Completeness
All information necessary to understand financial position must be included. Nothing important omitted.
Q8
Prudence (Conservatism)
Anticipate all possible losses but do not anticipate gains until certain. Do not overstate assets or profit.
11. Systems of Accounting
| Basis | Single Entry System | Double Entry System |
|---|---|---|
| Meaning | Incomplete โ only one aspect recorded | Complete and scientific โ both debit and credit recorded equally |
| Completeness | Incomplete โ personal accounts only | Complete โ all types of accounts maintained |
| Accuracy | Cannot be verified โ no Trial Balance possible | Verified through Trial Balance |
| Reliability | Less reliable โ prone to errors and fraud | Highly reliable โ systematic and verifiable |
| Suitable for | Very small businesses, informal traders | All sizes of business โ always recommended |
| Financial Statements | Cannot prepare proper P&L A/c or Balance Sheet | Complete financial statements can be prepared |
| Inventor | โ | Luca Pacioli, 1494 |
Golden Rule โ Double Entry System
Every Debit = Every Credit
Every transaction has two equal and opposite effects โ one debit and one credit of the same amount.
12. Role of Accounting
Language of Business โ Universal language through which businesses communicate their financial health.
Decision-Making Tool โ Provides financial data needed by management, investors, and stakeholders.
Stewardship Function โ Helps owners assess how well management uses entrusted resources.
Control Mechanism โ Detects irregularities, wastage, and fraud. Acts as a check on employees and managers.
Economic Planning โ Government uses aggregate data (GDP, national income) to plan economic policies.
Social Role โ Measures social costs and benefits of business (CSR, environmental accounting).
Legal Compliance โ Helps comply with Companies Act, Income Tax, GST, SEBI regulations.
Investor Confidence โ Reliable, audited financial statements build trust and attract investment.
โก Quick Recall โ Chapter 1 Key Points
Accounting = Identify โ Record โ Classify โ Summarise โ Interpret โ Communicate
Luca Pacioli โ 1494 โ "Summa de Arithmetica" โ Father of Double Entry System
Book-keeping โ Accounting โ Accountancy (Book-keeping is narrowest; Accountancy is broadest)
Accounting records ONLY monetary transactions โ non-monetary events NOT recorded
Limitations: Historical, ignores inflation, based on estimates, no qualitative data, window dressing
Internal Users: Owner, Management, Employees | External: Banks, Investors, Creditors, Government, Customers
8 Qualitative Characteristics: Reliability, Relevance, Understandability, Comparability, Timeliness, Materiality, Completeness, Prudence
Single Entry = Incomplete. Double Entry = Complete, scientific, verifiable.
Role: Language of Business, Decision-making, Stewardship, Control, Economic Planning
Accounting Process: Source Doc โ Journal/Cash Book โ Ledger โ Trial Balance โ Financial Statements
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50 MCQs โ Introduction to Accounting
Four difficulty levels โ Easy (1โ15) ยท Moderate (16โ30) ยท Difficult (31โ40) ยท CUET Level (41โ50). Correct answers highlighted green.
๐ข Easy โ Q 1 to 15
1
Accounting is commonly referred to as the:
ALanguage of Management
BLanguage of Business
CLanguage of Finance
DLanguage of Commerce
Answer: B. Accounting is universally called the "Language of Business" โ it communicates financial information to all stakeholders in a standardised way.
2
Who is known as the Father of Accounting?
AAdam Smith
BLeonardo da Vinci
CLuca Pacioli
DCharles Darwin
Answer: C. Luca Pacioli described the Double Entry System in his 1494 book "Summa de Arithmetica" and is known as the Father of Accounting.
3
The book "Summa de Arithmetica" was published in:
A1484
B1494
C1504
D1474
Answer: B. Luca Pacioli published "Summa de Arithmetica, Geometria, Proportioni et Proportionalita" in 1494, which described the Double Entry System.
4
Which is the FIRST step in the accounting process?
ARecording
BClassifying
CIdentifying financial transactions
DSummarising
Answer: C. Identifying is the first step โ selecting events that have financial character and can be measured in money.
5
Which of the following does accounting record?
AAppointment of a skilled manager
BPurchase of goods for โน50,000
CEmployee satisfaction survey
DAward won by the company
Answer: B. Accounting records only transactions expressible in money. Purchase of goods is a financial transaction; the others cannot be measured in money.
6
The final output of the accounting process is:
AFinancial Statements
BJournal Entries
CTrial Balance
DVouchers
Answer: A. Financial Statements (Trading A/c, P&L A/c, Balance Sheet) are the final output of the accounting process โ they communicate results to users.
7
Book-keeping is concerned with:
AInterpreting financial data
BAnalysing business performance
CRecording financial transactions only
DPreparing financial statements
Answer: C. Book-keeping covers only the recording part. Analysis, interpretation, and communication of financial data fall under Accounting.
8
Which branch of accounting helps a business determine cost of its products?
AFinancial Accounting
BCost Accounting
CTax Accounting
DManagement Accounting
Answer: B. Cost Accounting specifically ascertains and controls costs involved in producing goods or services.
9
Which of the following is an INTERNAL user of accounting information?
ABank
BManagement
CGovernment
DCreditors
Answer: B. Management is an internal user โ uses accounting information for planning and decision-making within the organisation.
10
Double Entry System was described in which book?
ASumma de Arithmetica
BWealth of Nations
CPrincipia Mathematica
DGeneral Theory
Answer: A. "Summa de Arithmetica" (1494) by Luca Pacioli is the book where the Double Entry System of Book-keeping was formally described.
11
Accounting information expressed in terms of money is called:
AQualitative information
BQuantitative information
CDescriptive information
DStatistical information
Answer: B. Quantitative information is expressed in numbers and money (revenue, profit, costs) โ what traditional accounting directly provides.
12
Which of the following is a limitation of accounting?
AIt provides permanent records
BIt helps in decision-making
CIt ignores price level changes
DIt facilitates tax assessment
Answer: C. Accounting records at historical cost and ignores inflation. Comparisons over years become misleading โ a key limitation.
13
The broadest of the three terms โ Book-keeping, Accounting, Accountancy โ is:
ABook-keeping
BAccounting
CAccountancy
DAll are equal
Answer: C. Accountancy is the complete body of knowledge โ the professional discipline. Accounting is within it; Book-keeping is within Accounting.
14
Employees use accounting information primarily to:
AAssess the company's tax liability
BAssess job security and profit-sharing prospects
CDecide whether to grant credit to the business
DEvaluate management decisions
Answer: B. Employees evaluate the company's stability, job security, potential bonuses, and profit-sharing benefits.
15
Which event will be recorded in books of accounts?
ASigning a contract to supply goods next month
BEmployee receiving a promotion
CCash paid for office rent โน20,000
DInterviewing candidates for a job
Answer: C. Only completed monetary transactions are recorded. Cash paid for rent is a financial transaction; signing contracts and promotions are not.
๐ก Moderate โ Q 16 to 30
16
The qualitative characteristic requiring information to be free from bias is:
ARelevance
BReliability
CTimeliness
DComparability
Answer: B. Reliability means information is dependable, verifiable, and free from material error or bias โ users can trust it completely.
17
Which step converts journal entries into individual account balances?
AJournalising
BPosting to Ledger
CPreparing Trial Balance
DSummarising
Answer: B. Posting to Ledger transfers journal entries to individual accounts, creating separate balances for each item.
18
Which of the following is NOT an objective of accounting?
AMaintain systematic records
BAscertain profit or loss
CFix the selling price of products
DProvide financial information to users
Answer: C. Fixing selling price is a management decision โ not a direct objective of Financial Accounting. The other three are established objectives.
19
Management Accounting differs from Financial Accounting in that it:
AIs used only by internal management
BRecords past transactions only
CFollows GAAP strictly
DConcerns only cash transactions
Answer: A. Management Accounting is for internal decision-making only. Financial Accounting is for external parties and must follow GAAP.
20
In Double Entry System, every transaction affects at least:
AOne account
BTwo accounts
CThree accounts
DFour accounts
Answer: B. Double Entry requires at least two accounts โ one debit and one credit of equal amount for every transaction.
21
An accountant does not record employee skills. Which limitation explains this?
AHistorical in nature
BIgnores price level changes
CRecords only monetary transactions
DBased on estimates
Answer: C. Employee skills cannot be measured in money โ accounting only records events that can be expressed in monetary terms.
22
Which characteristic ensures comparison of performance over different years?
AReliability
BRelevance
CComparability
DUnderstandability
Answer: C. Comparability requires consistent accounting policies so data can be compared across years and between companies.
23
Which correctly describes the relationship between Book-keeping and Accounting?
ABoth are identical in scope
BAccounting is the basis of Book-keeping
CBook-keeping is the basis of Accounting
DAccounting ends where Book-keeping begins
Answer: C. Book-keeping is the foundation โ the recording of transactions. Accounting uses that recorded data to classify, summarise, interpret, and communicate.
24
Tax Accounting is concerned with:
AComputation of taxes and filing of returns
BRecording business transactions
CDetermining product costs
DValuing human resources
Answer: A. Tax Accounting focuses on computing taxes (Income Tax, GST) according to applicable laws and filing returns accurately.
25
The stewardship function of accounting refers to:
ARecording all business transactions
BComputing tax liability
CEnabling owners to assess how managers use resources
DDetecting errors in the books
Answer: C. Stewardship means accounting helps owners and shareholders evaluate whether management is using entrusted capital efficiently and honestly.
26
Providing accounting information at the right time is called:
AMateriality
BReliability
CTimeliness
DCompleteness
Answer: C. Timeliness means information is available when needed. Outdated information, even if accurate, loses its decision-making value.
27
Government using national income data for economic policy reflects which role of accounting?
AStewardship function
BControl mechanism
CEconomic planning
DLegal compliance
Answer: C. Governments use aggregate accounting data (GDP, national income, corporate profits) for economic planning and policy formulation.
28
Advantage of Double Entry System over Single Entry System:
AIt is simpler and faster
BIt requires fewer books
CIt allows preparation of Trial Balance to check accuracy
DIt records only cash transactions
Answer: C. Double Entry records both aspects of each transaction, allowing a Trial Balance to verify arithmetic accuracy โ Single Entry cannot do this.
29
Creditors use accounting information to:
AAssess whether the business can repay its debts
BEvaluate management performance
CCompute income tax of the business
DCheck employee salaries
Answer: A. Creditors assess the business's ability to pay before extending credit terms or increasing credit limits.
30
Anticipated losses recorded but profits not until realised โ this characteristic is:
AReliability
BRelevance
CMateriality
DPrudence (Conservatism)
Answer: D. Prudence says: provide for all possible losses, recognise profits only when certain. This prevents overstatement of assets and profits.
๐ด Difficult โ Q 31 to 40
31
Which activity is NOT part of accounting as per CBSE syllabus?
AIdentifying financial transactions
BCommunicating results to users
CPredicting future sales volumes
DInterpreting financial statements
Answer: C. Predicting future sales is forecasting/planning โ not accounting. Accounting deals with historical data only.
32
Machinery bought in 2020 for โน10 lakh; market value in 2025 = โน15 lakh. Balance Sheet will show:
Aโน15,00,000
Bโน12,50,000
Cโน10,00,000 minus depreciation
Dโน15,00,000 minus depreciation
Answer: C. Historical Cost principle โ assets are recorded at original cost minus accumulated depreciation, not at current market value.
33
Human Resource Accounting is relevant because:
ARecords employee salaries as liabilities
BRecognises employees as assets and values them monetarily
CRecords training costs as capital expenditure
DReplaces traditional financial accounting
Answer: B. Human Resource Accounting values human capital and treats employees as assets, recognising people as a key business resource.
34
Single Entry System is inferior to Double Entry because:
AIt takes more time
BIt records all transactions
CIt is incomplete, unreliable and prone to fraud
DIt requires professional accountants only
Answer: C. Single Entry is incomplete (one aspect only), unreliable (no Trial Balance), and prone to fraud and errors โ inferior to the scientific Double Entry System.
35
Social Responsibility Accounting primarily measures:
ACost of producing goods
BTax liability of the business
CSocial costs and benefits of business on society and environment
DMarket value of company's shares
Answer: C. Social Responsibility Accounting measures business impact on society, environment, and community โ going beyond financial profit.
36
"Accounting is a means, not an end." This implies:
AAccounting is a tool to achieve informed decision-making
BAccounting is the ultimate purpose of every business
CAccounting should be replaced by technology
DAccounting only serves tax purposes
Answer: A. Accounting is the tool (means) โ profit and informed decisions are the goals. Accounting helps measure and communicate those goals.
37
Window dressing in accounting refers to:
ADecorating the company's showroom
BManipulation of accounts to show a better financial position than actual
CPresenting accounts in a well-formatted layout
DAdjusting accounts for price level changes
Answer: B. Window dressing uses different accounting policies to paint a better picture than reality โ a key limitation arising from use of estimates and choices in accounting.
38
Which qualitative characteristic justifies ignoring a โน50 transaction as "too trivial"?
AMateriality
BTimeliness
CReliability
DPrudence
Answer: A. Materiality says only information significant enough to influence decisions needs separate disclosure. Trivial amounts can be grouped or ignored without misleading users.
39
Correct sequence of steps in the Accounting Process:
ARecord โ Identify โ Classify โ Summarise
BIdentify โ Record โ Classify โ Summarise โ Interpret โ Communicate
CClassify โ Record โ Identify โ Summarise
DIdentify โ Classify โ Record โ Communicate
Answer: B. The correct NCERT sequence: Identify โ Record โ Classify โ Summarise โ Interpret โ Communicate.
40
Investor confidence in capital markets is built through which role of accounting?
AControl mechanism
BDecision-making tool
CLegal compliance
DProviding reliable, audited financial statements stakeholders can trust
Answer: D. Capital markets function on trust. Reliable audited financial statements build investor confidence that keeps stock markets and investment flows functioning.
๐ CUET Level โ Q 41 to 50
41
CUET: Which pair correctly matches the branch with its purpose?
ACost Accounting โ Prepares Financial Statements for shareholders
BManagement Accounting โ Provides information for internal decision-making
CFinancial Accounting โ Ascertains cost of production
DTax Accounting โ Records only cash transactions
Answer: B. Management Accounting is for internal decisions only. Financial Accounting is for external users; Cost Accounting finds production costs.
42
CUET: Assertion (A): Accounting is historical in nature. Reason (R): It records transactions that have already taken place, not future events.
ABoth A and R are true, and R is the correct explanation of A
BBoth A and R are true, but R is NOT the correct explanation
CA is true, but R is false
DA is false, but R is true
Answer: A. Accounting IS historical โ it records past transactions. The Reason correctly explains the Assertion.
43
CUET: Which is a CORRECT statement about limitations of accounting?
AAccounting provides complete information about a business
BAccounting records reflect current market value of assets
CAccounting figures can be manipulated using different accounting policies
DAccounting captures both monetary and non-monetary events
Answer: C. Window dressing โ using different accounting methods to present a better picture โ is a real limitation. Other statements are incorrect about accounting.
44
CUET: A bank evaluating a loan needs which TWO qualitative characteristics MOST?
AUnderstandability and Timeliness
BReliability and Relevance
CComparability and Materiality
DCompleteness and Prudence
Answer: B. A bank needs Reliable (trustworthy) and Relevant (about repayment ability) information โ most critical for lending decisions.
45
CUET: Best distinction between Accounting and Book-keeping:
ABoth involve recording in the Journal
BBook-keeping analyses financial ratios
CBook-keeping records data; Accounting interprets business performance from that data
DAccounting only involves preparation of Trial Balance
Answer: C. Book-keeping = recording only. Accounting = classify, summarise, interpret and communicate the recorded data to users.
46
CUET: The Prudence concept requires an accountant to:
ARecord all gains when anticipated
BNeither provide for losses nor recognise gains until certain
CProvide for anticipated losses but recognise gains only when realised
DIgnore all contingent liabilities
Answer: C. Prudence = anticipate losses (create provision for doubtful debts) but don't anticipate profits (record gains only when certain and complete).
47
CUET: Best example of accounting's "control mechanism" role:
ACompany filing GST returns on time
BInvestor using Balance Sheet to buy shares
CAuditor detecting fraudulent cash withdrawals through ledger scrutiny
DBank approving a loan based on financial statements
Answer: C. Detecting fraud through systematic account scrutiny is the clearest example of accounting's control mechanism role.
48
CUET: 500 units manufactured at โน200 each. Market price = โน300. Accountant records inventory at โน1,00,000 not โน1,50,000. Which principle?
APrudence / Conservatism
BHistorical Cost principle
CMateriality
DRevenue Recognition
Answer: B. Historical Cost principle โ assets recorded at original cost (โน200ร500 = โน1,00,000), not market value. Profit recognised only when goods are sold.
49
CUET: Most comprehensive definition of accounting:
AMaintaining records of cash transactions
BPreparing the Balance Sheet annually
CProcess of identifying, recording, classifying, summarising, interpreting and communicating financial information
DFiling tax returns and computing taxable income
Answer: C. Option C covers all six activities of accounting as per NCERT definition โ the most complete and accurate definition.
50
CUET: "A firm's brand reputation worth โน50 crore does not appear in its Balance Sheet." The reason is:
AThe firm forgot to record it
BBrand reputation is a liability, not an asset
CAccounting records only monetary transactions; internally generated brand value cannot be reliably measured
DBrand reputation is not paid for in cash
Answer: C. Internally generated goodwill/brand cannot be objectively measured in money โ a key limitation of accounting that students must know.
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