Sample Theory Questions

(Please find out answers for the following questions from your text book.)

1. What is meant by double entry book keeping?

2. State the rules of debit and credit for assets, liabilities, capital, revenue and expenses

3.Explain the important functions of accounting

4. What are the important limitations of accounting?

5.Explain the principle of conservatism in accounting

6. Explain the process of accounting

7. What is ‘money measurement concept’ of accounting?

8.Explain how you adjust outstanding expenses while preparing final accounts.

9. Classify the following accounts into the five basic categories of accounts:

Salary

Machinery

Capital

Discount received

Discount allowed

Creditors

10. What is contra entry in a three column cash book?

11. Explain the meaning of 'double entry' book keeping

12. What is the use of Journal Book in accounting?

13. What is use of Ledger in accounting?

14. Explain straight line and diminishing balance methods of depreciation.

15.What are the four qualitative characteristics of accounting information?

16. State the treatment of following adjustments in final accounts:

Outstanding expense

Prepaid expense

Income due but not received

Income received in advance

17. Explain the meaning of following accounting terms:

a. Account

b. Capital

c. Ledger

d. Journal

e. Posting

f. Balance Sheet

18. State the meaning and significance of accounting equation.

19. State the meaning and purpose of Bank Reconciliation Statement

20. State any reasons for disagreement between bank balance as per Bank Statement and Cash Book.

21. What is the need of 'subsidiary books' in accounting?

22. Distinguish between trade discount and cash discount

23. Explain the use of subsidiary books. List any four of them

24.Distinguish between capital expenditure and revenue expenditure.

25. What are the objectives of preparing financial statements?