Accounting Equation – Short Questions and Answers

Accounting Equation 

Short Questions and Answers

Q.1      WHAT DO YOU MEAN BY ACCOUNTING CONCEPTS?

Ans.    The term ‘Concepts’ includes those basic assumptions or conditions upon which accounting is based. The following important accounting concepts are as :

1. Business Entity concept
2. Going concern concept
3. Money measurement concept
4. Cost concept
5. Duel Aspect concept
6. Accounting period concept
7. Matching concept
8. Realization concept

Q.2      WHAT DO YOU MEAN BY ACCOUNTING CONVENTIONS?

Ans.    The term ‘conventions’ includes, those customs or traditions which guide the accountants, while preparing the accounting statements. There are four main accounting conventions.

1. Convention of Disclosure
2. Convention of Materiality.
3. Convention of Consistency
4. Convention of Conservatism

Q.3      WHAT DO YOU MEAN BY EVENT AND ITS CLASSIFICATION?

Ans.    In ordinary language Event means anything that happens. The term event is classified into Two types that is i. Monetary Events   ii.  Non Monetary Events.

Q.4      WHAT DO YOU MEAN BY MONETARY EVENT?

Ans.    Events which are related with money i.e. which change the financial position of  a person are known as monetary events.
Q.5      WHAT DO YOU MEAN BY NON MONETARY EVENTS?
Ans.    The events which are not related to money and which do not change the financial position of  a person is called non monetary events.

6 WHAT IS MEANT BY BUSINESS ENTITY CONCEPT?

Ans.    In this concept it is declared that the business has separate entity apart from its owners.

Q.7      WHAT IS GOING CONCERN CONCEPT?

Ans.    According to this concept it is assumed that business will exist for a long period of time.

8. WHAT IS DUAL ASPECT CONCEPT?

Ans.    According to this concept, ‘for every debit, there is a credit’.

Q.9      WHAT IS COST CONCEPT?

Ans.    According to this Concept, the assets are ordinarily recorded in the books of accounts at its cost price.

Q.10    WHAT IS MONEY MEASUREMENT CONCEPT?

Ans.    According to this concept, only those transactions are recorded which have some money values.

Q.11    WHAT IS ACCOUNTING PERIOD CONCEPT?.

Ans.    According to this concept,. The business life is divided into appropriate segments for studying the results shown by the business after each segment.

Q.12    WHAT IS MEANT BY CONVENTION OF MATERILAITY?

Ans.    Convention mean traditions which guide the accountant while preparing the accounting statements.

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