1st PUC

You can Download Chapter 12 Applications of Computers in Accounting Questions and Answers, Notes, 1st PUC Accountancy Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.

Karnataka 1st PUC Accountancy Question Bank Chapter 12 Applications of Computers in Accounting

1st PUC Applications of Computers in Accounting One Mark and Two Marks Questions and Answers

Question 1.
Give the meaning of computer.
Answer:
Computer is an electronic device/Machine, which is capable of performing a variety of operations as instructed by operator.

Question 2.
State any two elements of computer system Answer: Two elements of computer system are:
Answer:

1. Hardware: A physical components, it includes key board, mouse, monitor etc.
2. Software: A set of programmes, which is helpful to work with Hardware.

Question 3.
State any two components of computer.
Answer:
Two Components of computer are:

1. Input unit
2. Central Processing unit (CPU)
3. Output unit.

Question 4.
State any two units of cpu.
Answer:
Two units of CPU are:
(a) Arithmetic and Logic unit (ALU)
(b) Memory unit
(c) Control unit

Question 5.
What do you mean by super computers?
Answer:
It is a type of computer. It is large in size and their storage capacity is also very large. They work with a super speed.

Question 6.
Give the meaning of micro computers.
Answer:
It is a type of computer. It is very small in size. The memory power and speed of computer is limited.

Question 7.
What are mini computers?
Answer:
Mini computer is comparatively small in size and less cost. The memory and speed is medium.

Question 8.
What do you mean by mainframe computers?
Answer:
A large computer called main frame computer. Its components are fitted in large frame.

Question 9.
State any two types of computers.
Answer:
The types of computer are:

1. Super Computer
2. Main Frame Computer
3. Mini Computer
4. Micro Computer.

Question 10.
Give the meaning of flow chart.
Answer:
A Flow Chart is a pictorial representation of an algorithm that uses symbols to denote different types of instructions. The actual instructions are written with in the boxes using clean and concise statements.

Question 11.
Write any two symbols of a flow chart.
Answer:
Two symbols of flow charts are:
(a) Terminal symbol
(b) Input – output symbol

Question 12.
What is Accounting Information System (AIS)?
Answer:
AIS is a transaction based in formation system as it deals with the economic events taking place in the enterprise.

Question 13.
What is Management Information System (MIS)?
Answer:
MIS is a system that provides the information necessary to take decisions and manage an organisation effectively.

Question 14.
Give the meaning of automation of accounting.
Answer:
Automated accounting is an approach to maintaining upto – date accounting records with the aid of accounting softward.

Question 15.
What do you mean by report?
Answer:
Report is the official explanation to the appointing authority. Auto mated accounting provides report as per the requirement of organisation.

Question 16.
Give the meaning of ready made software?
Answer:
It is a source of accounting system software. The accounting software available, off the shelf are Ready made software.

Question 17.
What is customised software?
Answer:
The term customised software means making changes in the ready made software to suit the specific requirement of the user

Question 18.
State the meaning of tailor-made software.
Answer:
The term ‘Tailor – made software refers to designing and developing user specific software.

Question 19.
What is meant by Computerised Accounting?
Answer:
Computerised Accounting is a business programme designated to provide experience in utilizing various data base and word processing programs. This program is Job Oriented curriculum designed to work closely with business.

Question 20.
State two features of Computerised Accounting.
Answer:
Following are the two features of Computerised Accounting:
(a) It is an accounting information system which deals with transactions which are of financial nature and can be expressed in terms of money.
(b) Data accuracy and user friendly.
(c) It is simple and well structured information system defined by professional bodies.

Question 21.
State any two differences between Manual Accounting and Computerised Accounting.
Answer:
Following are the two differences between Manual Accounting and Computerised Accounting.

Manual A/c	Computer A/c
(a) Manual Accounting consuming is more time	(a) Computerised Accounting is less time consuming.
(b) Manual Accounting requires more man power	(b) Computerised Accounting can be managed by only one person.

Question 22.
State any two advantages of Computerised Accounting.
Answer:
Following are the two advantages of Computerised Accounting:
(a) It provides accounting and statutory reports to the different users.
(b) It provides the record of accounting information or transactions which have taken place ‘ in an organisation.

Question 23.
State any two limitations of computerised Accounting.
Answer:
Following are the two limitations of the Computerised Accounting:
(a) Computerised Accounting requires more financial feasibility.
(b) It requires data security to be provided by the software to avoid manipulation by the multi users.

Question 24.
State any two factors to be considered while introducing Computerised Accounting.
Answer:
Following are the two factors which should be taken into consideration while introducing Computerised Accounting.
(a) Flexibility: Computerised Accounting system needs to be flexible and capable of adapting to the changes in the business environment and information technology.

(b) Reliability: Computerised Accounting must be designed to ensure that they do not accept erroneous data or incomplete records.

Question 25.
State any two areas in which Computerised Accounting is commonly used.
Answer:
Following are the two areas in which Computerised Accounting is commonly used.
(a) Payroll Accounting
(b) Stores Accounting.

Question 26.
State any two important aspects of Computerised Accounting.
Answer:
Following are the two important aspects of Computerised Accounting.
(a) Data Processing
(b) Spread Sheets.

Question 27.
What is meant by Data Processing?
Answer:
Data Processing is defined as series of actions or operations that convert collection of facts and figures into useful information.

Question 28.
What is meant by data representation?
Answer:
Data representation is related to storage of data, processing of data and interpretation of data to receive required results. It is basically of two types namely characters and numbers.

Question 29.
What is meant by concept of Computer files?
Answer:
Computer files are either programs or data. A program is a set of instructions given to computer and data is a collection of financial information that is needed to process the programs.

Question 30.
What is meant by Accounting Package?
Answer:
Accounting Package means a collection of programs which process accounting information or data to provide required results in the form of financial statements to users.

Question 31.
What is meant by Tally?
Answer:
Tally is an accounting package used to maintain day to day transactions to prepare financial statements of a business organisation relating to Income, Expenditure, Assets and Liabilities.

Question 32.
What is meant by Voucher Entry?
Answer:
Voucher entry is a proof of transaction which is also copy of transaction.

Question 33.
What is meant by Window Based Business Accounting Packages?
Answer:
Window based accounting packages are used in recording, classifying and summarising transactions and events which are of financial character and interpreting the results there of.

Question 34.
Name any two window based business accounting packages.
Answer:
The two window based accounting packages are:
(a) Tally
(b) MS-Excel

Question 35.
What is file in Computerised Accounting?
Answer:
A file is a collection of organised records related to each other.

1st PUC Applications of Computers in Accounting Additional Questions and Answers 

Question 1.
State the different elements of a computer system.
Answer:
A computer system is mainly composed of the following six elements:
Hardware: It includes all the physical components of a computer such as, keyboard, mouse, monitor, processor, etc. These can be touched and a user inputs commands through them. Software: It is referred to a set of the programs that enables a computer to perform its tasks or commands given by the user. There are following six types of software.
a. Operating System
b. Utility Programs
c. Application Software
d. Language Processors .
e. System Software
f. Connectivity Software

People: It constitutes the most important part of a computer system. It basically refers to the individuals or the users who interact with the computer through the use of hardware and software. The following are the people who are involved in a computer system.
a. System Analysts
b. Operators
c. Programmers

Procedures: A series of operations that are executed in a certain manner in order to achieve a desired set of results is known as ‘Procedures’. There are mainly following three types of procedures.
a. Hardware-oriented Procedures
b. Software-oriented Procedures
c. Internal Procedures

Data: The facts that are gathered and entered into a computer system is known as ‘Data’. It may comprise of numbers, text, graphics, etc.

Connectivity: This refers to the manner, in which a computer system is connected to the other electronic devices through telephone lines, microwave transmission, satellite link, etc., is known as ‘Connectivity’.

Question 2.
List the distinctive advantages of a computer system over a manual system.
Answer:
The following are some of the distinctive advantages of a computer system over a manual system.
a. High speed
b. Accuracy
c. Reliability
e. Storage
d. Versatility

Question 3.
Draw block diagram showing the main components of a computer.
Answer:

Question 4.
Give three examples of a Transaction Processing System.
Answer:
Transaction Processing System (TPS) refers to a computerised system that records, processes, validates and stores routine transactions that occur in various functional areas of a business on daily basis. Some of the examples of Transaction Processing System- a.Fe enlisted as:
a. Automatic Teller Machine (ATMs): These are those machines that handle the bank transactions through the use of specialised computer programs.

b. Payroll Applications: These are the applications that help to execute payroll programs using terminal and online processing. These are commonly used for preparing payroll or salary of the employees.

c. Order Processing: With the help of TPS applications, orders are collected from clients either manually or through mails and telephonic calls. Thereafter, these orders are processed to initiate invoicing, account receivables and inventory control processing. These are now-a-days widely used in almost every spheres of business, such as online purchasing of tickets, online booking, etc.

Question 5.
What is Accounting Information System?
Answer:
An Accounting Information System (AIS) is a system that identifies, collects, processes, summarises, generates and presents information about a business organisation to a wide variety of users.

Question 6.
State the various essential features of an accounting report.
Answer:
The following are the various features of an accounting report:
(a) Relevance
(b) Accuracy
(c) Timeliness
(d) Conciseness
(e) Completeness

Question 7.
Name three components of a Transaction Processing System.
Answer:
The following are three main components of a Transaction Processing System (TPS):
(a) Input: A computerised accounting system accepts the complete transaction data as input through the process of data collection, data editing, data validation and data manipulation.

(b) Storage: The system stores the inputted data in computer storage media such ashard disk.

(c) Output: The stored data, through the process of report generation and query support can be retrieved and processed as and when required for generating an accounting report as output.

Question 8.
Give example of the relationship between a Human Resource Information System and MIS.
Answer:
Management Information System (MIS) is a planned system of collecting, processing,storing and disseminating the data in the form of information to perform the task of decision making and management of an organisation.

Human Resource Information System (HRIS) maintains the records of the employees and prepares salaries and wages payable to them.

Relationship between MIS and HRIS
HRIS provides MIS with the information such as, the qualifications, skills, experiences and past performances of an individual employee. The MIS in turn uses this information to take appropriate decisions. This helps in placing the right person with right qualities at right job positions. This also helps in making decisions regarding promotions and increments of the employees.

Question 9.
Explain the components of computer.
Answer:
The functional components of computer system are:
1. Input unit: It controls various input devices which are used for entering data into the computer system. Key board and mouse are the input device.

2. Central Processing unit: It is the Brain of computers. It processes all the functions ofcomputer. It controls the flow of data by directing the data to enter system. It has 3 main units they are:
(a) (ALU) Arithmetic and Logic unit: It is responsible for performing all the arithmetic computations and logical operations involving comparisons among variables.
(b) Memory unit
(c) Control unit

3. Output unit: After processing data, the information produced according to a set of instruction need to be made available to user in a human readable and understandable form.

Question 10.
State the areas in which computerised accounting is commonly used.
Answer:
Computer Accounting is commonly used in the following areas.
(a) Transactions Processing.
(b) Payroll accounting.
(c) Debtors accounting.
(d) Stores accounting.
(e) Preparation of budget.
(f) Preparation of financial statements.

Question 11.
Explain any five features of Accounting Information System
Answer:
The features of the computerised Accounting are:
(a) It deals with transactions which are of financial nature and can be expressed interms of money.
(b) It deals with transactions, information to customers, share holders, statutory authorities and manager.
(c) It is simple and well structured accounting system based on accounting principles and procedures.
(d) It is used to prepare financial statements, budgets and forecasts.
(e) The source of data is mainly internal to the enterprise and data bases one well defined, integrated anti controlled.
(f) It is subject to greater risk of security and more prone to unauthorised access and computer crimes.

Question 12.
Explain the types ofManagement Information System (MIS) reports
Answer:
The different types of MIS reports are:
1. summary report: It summarises all activities of the organisation and present in the form of summary reports. Ex: P & L a/c, Balance sheet.
2. Customer /supplier reports: According to the specifications of the management it will be prepared. Ex: Purchase analysis, reminder letter etc.
3. Demand reports: This report will be prepared only when the management requests them. Ex: Bad debts report etc.
4. Exception reports: According to the conditions or exceptions the report is prepared.
5. Responsibility reports: The MIS streetcars specifies the premises of management, responsibilities. Ex: Cash position report etc.

Question 13.
Explain the differences between Manual Accounting and Computerised Accounting.
Answer:
Following are the differences between manual accounting and computerised accounting:

S. No.	Manual Accounting	Computerised Accounting
1.	It is more time consuming.	It is less time consuming.
2.	It requires more paperwork.	It requires less paper work.
3.	Retrieval of data is difficult.	Retrieval of data in very easy.
4.	Requires more man power.	Requires less man power.
5.	Modifying records is difficult.	Modifying records is easy.
6.	It is more prone to errors.	It is reliable and error-free.

Question 14.
Explain any five advantages of computerised accounting system.
Answer:
The advantages of computerised accounting are as follows:
(a) It is less time consuming in preparing financial statements.
(b) It is more reliable and error-free.
(c) It requires less man power to prepare accounts of an organisation.
(d) it is very easy to modify records of accounts.
(e) it requires less paper work.
(f) Retrieval of data is very easy in this system

Question 15.
Explain the limitations of Computerised Accounting.
Answer:
Following are the limitations of the computerised Accounting:
(a) It is subject to greater degree of risk of security and more prone to computer crimes.
(b) It depends on power supply to run the computer.
(c) A person has to be computer literate to use computer accounting.
(d) It requires highly reliable system to record day today transactions of business to provide accurate results.

Question 16.
Explain the various types of accounting software.
Answer:
Window based accounting packages are used in classifying, summarising transactions and events which are of financial character and interpreting the results there of.
The different window based business accounting packages are :
(a) Tally.
(b) MS-Excel.
Tally is user friendly software package and can be even be used by a new user. It is flexible and can be customised to suit daily work schedule and needs like customising voucher, balance sheet, etc. Tally has high security against data tampering to access and use of the data.

Question 17.
Write the advantages and dis-advantages of readymade software.
Answer:

Advantages	Dis-advantages
It is cost effective	The output in physical form is a slow process.
It saves time and customised services.	It grouping of accounts is in correct, it will lead to misleading results.
The software are readily available and used by a number of users.	It does not have the facility of secondary back up stored data. In case of loss of data cannot be recovered.
After sales services are provided. So, maintenance is very easy.
The software developed by experience, so practical problems are very less

Question 18.
Write the advantages and disadvantages of tailor-made software.
Answer:

Advantages	Dis-advantages
Well Trained users use the soft ware. So maximum utilisation possible	The cost of development and Maintenance is higher compare to other software.
It always user specific, takes, care of the accounting reports & MIS.	Conversion take large time form one level to other level.
The problems faced can be countered immediately. So maintenance is goods	It grouping of accounts is in correct will leads to misleading results.

Question 19.
What are the factors to be considered while introducing Computerised Accounting in a Business Concern?
Answer:
Following are the factors to be considered while introducing Computerised Accounting in a Business Concern.
(a) Efficiency: Cost effectiveness is an important factor to be considered while introducing Computer Accounting.

(b) Flexibility: A business concern should be capable of adapting to changes in business environment. Hence the flexibility factor has to be taken into consideration.

(c) Simplicity: It should be simple and user friendly to introduce in a business organisations.

(d) Reliability: Reliability is another factor to be considered based on accounting principles and procedures while introducing computerised accounting in business.

(e) User acceptance: User acceptance and involvement is also considered in adopting Computer Accounting.

Question 20.
State the important aspects of computerised accounting.
Answer:
Following are the important aspects of Computer Accounting.
(a) Data Processing.
(b) Data representation
(c) Spread sheets
(d) Word processing
(e) Tally
(f) Window based business accounting packages.

Question 21.
Explain the advantages and disadvantages of data base system.
Answer:
The advantages of data base systems are:
(a) The integration and sharing of data files minimises the duplication and redundancy of data to a great extent.
(b) Integration of data files also result in a considerable savings of storage space in data entry and data storage costs.
(c) Faster preparation of information to support non-recurring tasks and changing conditions is possible.
(d) Updation of data becomes easier due to integration of files.
(e) It is simple and reliable system.
(f) The query language facility helps non-programming personnel to access the data-base for information needed without the help of any programmer.

Disadvantages of data base system are:
(a) More complex and expensive software resources are required.
(b) Sophisticated security measures must be implemented to prevent unauthorised access of data.
(c) Hardware or software failures might result in destruction of vital data base contents.

Question 22.
Briefly explain the types of files.
Answer:
The different types of files are:

1. Master file: This file contains all records and it is a permanent file for information.
2. Transaction file: There files are created to record the transactions and keep detailed information.
3. Reference file: In order to retrieve a record from a file, the reference file is searched to find out where the record could be located.
4. Table files: It is a price list file.
5. Report files: It consist of reports created using the information from other files.
6. Historical files: These files are used to make comparisons between two periods.
7. Back up files: As a safety measure, copies of files are made.

Question 23.
What is meant by accounting package? State the contents of it?
Answer:
Accounting package is defined as processing transactions, accounting data to prepare financial statements and management reports under the control of accounting principle and procedures to the requirements of users.
The contents of accounting packages are:
(a) Input (Transactions).
(b) Process (Processing accounting data).
(c) Output (Financial statements and management reports).
(d) Control (Accounting principles and procedures)

Question 24.
State the list of Accounts.
Answer:
The list of accounts used in computerised accounting are related to:
(a) Assets.
(b) Liabilities.
(c) Revenue.
(d) Expenses.

The output of computerised accounting system are related to:
(a) Financial Statements.
(b) Management reports (Rates, expenses, Analysed reports)
(c) Output documents like customer invoice, material purchase order, pay cheques, etc.

1st PUC Applications of Computers in Accounting Long Answers

Question 1.
‘An organisation is a collection of interdependent decision-making units that exists to pursue organisational objectives. In the light of this statement, explain the relationship between information and decisions. Also explain the role of Transaction Processing System in facilitating the decision-making process in business organisations.
Answer:
An organisation consists of various interdependent decision making units at every level of management and department. All these separate departments take decisions for their respective fields to achieve the desired common organisational objectives. The organisation as a whole needs to set its targets, draft plans and formulate various policies. These activities are based on the information (in form of data) regarding the past experiences and expected future conditions.

It is on the basis of this information that an organisation allocates its resources and attempts to accomplish its determined targets. Thus, it can be said that on one hand, information facilitates the decision making process while on the other hand, decisions took in the past acts as a pool of information in the future.

In this aspect, information forms the most crucial part of today ’s business environment this context, Transaction Processing System (TPS) has emerged as crucial component of the business operations. Transaction Processing System (TPS) refers to a computerised system that records, processes, validates and stores routine transactions that occur in various functional areas of a business on daily basis.

This system facilitates the decision making in a business organisation through the following processes:
(a) Data Collection: The TPS collects all the required data to complete one or more transactions. The data can be collected either manually or through other devices suchas scanners and point of sale equipment’s.

(b) Data Editing: The system checks the data for its accuracy, correctness and completeness.

(c) Data Validation: It refers to a process, where TPS verifies the data for its correctness and rectifies the errors, if detected.

(d) Data Manipulation: TPS performs the process of calculation, then processes and analyses the inputted data on a pre-set design.

(e) Data Storage: It places or stores the data in one or more database.

(f) Output Generation: TPS helps in creating and generating reports and also presents the reports generated in a pre-designed format either as hardcopy or softcopy.

(g) Query Support: TPS provides a mechanism enabling its users to raise’a query upon the stored data and extract the required information in required format as and when the need arises.

Question 2.
Explain, using examples, the relationship between the organisational MIS and the other functional information system in an organisation. Describe how AlSreceives and provides information to other functional MIS.
Answer:
Relationship between the organisational MIS and the other functional information system in an organisation:
1. MIS is a planned system of collecting, processing, storing and disseminating the data in the form of information to perform the task of decision making and management of an organisation.

2. An organisation basically operates in an environment, which is surrounded by its suppliers and customers. The informational needs of the organisation emerge from the business processes stratified into its various functional areas. Thus, in this sense, MIS has functional relationship with other functional management information system namely Manufacturing Information System, Human Resource Information System, Accounting Information System and Marketing Information System.

3. MIS receives information from these other functional information systems and uses the . received information to take appropriate decisions.

An Accounting Information System (AIS) is a system that identifies, collects, processes, summarises, generates and presents information about a business organisation to a wide variety of users. It is an important component of MIS. It receives and provides information to the various sub-systems of the MIS
Relationship between AIS, Manufacturing Information System and Human Resource

Information System
The Human Resource Department sends a list of workers to the Manufacturing Department. The Manufacturing Department on the basis of this information prepares a report on the performance of each worker and deductions to be made from the wages, if any. There after, this report is send to both Accounts Department as well as to Human Resource Department. After this, the Human Resource Department sends report to the Accounts Department to pay the wages.

The Accounts Department with the help of these reports calculates the amount payable and statutory dues and subsequently,makes the final payments to the workers. The report of the final payments is send to the HR Department and the Manufacturing Department by the Accounts Department.

Relationship between AIS and Manufacturing Information System
Business processes in the Manufacturing Department include the following activities:
a. Preparation of Plans and Schedules
b. Issue of Material Requisition Form and Job Cards
c. Issue of Stock and Inventory
d. Issue of Raw Material Procurement Orders
e. Handling Supplier Invoices
f. Payments to Suppliers

The AIS would accordingly include the process of:
a. Purchasing Orders
b. Payments to Suppliers
c. Preparing Inventory Status Reports
d. Preparing Reports of Accounts Payable

Relationship between AIS and Marketing Information System
Business processes in the Marketing and Sales Department involve the following activities:
a. Inquiry Process
b. Creation of Contacts
c. Entry of Orders
d. Dispatching Goods
e. Generation of Bills to Customers

The AIS would accordingly include the following activities.
a. Processing of Sales Orders
b. Authorisation of Credit
c. Keeping Custody of the Goods
d. Inventory Status
e. Shipping Details
‘An accounting report is essential report which must be able to fulfil certain basic criteria’.

Question 3
Explain? List the various types of accounting reports.
Answer:
When the collected data is processed and manipulated in a useful sense that can be understood by the users without any ambiguity, then it becomes information. When this relevant information is further summarised to meet a particular aim, it is called a report.

The content and the design of the report depend upon the level of management to which it is to be submitted. The various decisions are to be made on the basis of this report.

Irrespective of the content and design, every accounting report must fulfill the following criteria:
a. Relevance
b. Timeliness
c. Accuracy
d. Completeness Summarisation
The various types of reports used in MIS can be broadly categorised as follows
(a) Summary Reports: These are the reports that summarise all the activities of an organisation.

(b) Demand Reports: These are the reports that are prepared on the request and need of the management.

(c) Customer/Supplier Reports: These are the reports that are prepared as per the specifications of the management showing various aspects of the suppliers/customers.

(d) Exception Reports: These are the reports that are prepared in accordance with some specific conditions or exceptions.

(e) Responsibility Reports: These reports are prepared by the managers who are responsible for their respective departments.

Describe the various elements of a computer system and explain the distinctive features of a computer system and manual system.
A computer system is ideally composed of the following six elements:
1. Hardware: It includes all the physical components of a computer such as, keyboard, mouse, monitor, processor, etc. These can be touched and a user inputs commands through them.

2. Software: It is referred to a set of the programs that enables a computer to perform its tasks or commands given by the user. There are following six types of software.

a. Operating System: It is an integrated set of specialised programs that are meant to manage and control the resources of a computer. They make the computer userinter active, i.e. user-friendly. It means that operating system forms an interactive link between the user and the computer hardware.

b. Utility Programs: Utility Programs refer to the set of pre-written computer programs that are designed to perform certain supporting operations. Most of the utility software are highly specialised and are specially designed to perform a single task or a small range of tasks.

c. Application Software: These are user-oriented programs that are designed and developed for performing certain specified tasks.

d. Language Processors: These are the software that interpret or translate a program language into a machine language.

e. System Software: These are the software that controls the internal functions of the system such as reading data from the input devices.

f. Connectivity Software: These are the software that creates and controls the connection between a computer and a server with the purpose of sharing the data.

3. People: It constitutes the most important part of a computer system. It basically refers to the individuals or the users who interact with the computer through the use of hardware and software. The following are the people who are involved in a computer system.
a. System Analyst: They are the people who design the data processing system.
b. Operators: They are the people who write programs to implement the data processing system.
c. Programmers: They are the people who participate in operating the computers.

4. Procedures: A series of operations that are executed in a certain manner in order to achieve a desired set of results is known as ‘Procedures’. There are mainly following three types of procedures.
a. Hardware Oriented Procedures: Hardware Oriented Procedures provide details about various components of a computer and their uses.

b. Software Oriented Procedures: Software Oriented Procedures provide detailed set of instructions required for using the software of a computer system.

c. Internal Procedures: These procedures help in sequencing the operation or working of each sub-set of overall computer system.

5. Data: It refers to the facts that are gathered and entered into a computer system. It may comprise of numbers, text, graphics, etc.

6. Connectivity: This refers to the manner, in which a computer system is connected to the other electronic devices through telephone lines, microwave transmission, satellite link, etc., is known as ‘Connectivity’.
The mentioned below are some distinctive features of a computer system and a manual system.
1. Accuracy: The computations and operations performed by a computer are highly accurate and correct. If any error is detected it may be due to input of the wrong data or wrong command by the user. As against this, in manual system the results generated or produced by the human beings are not very accurate due to carelessness, boredom and fatigue.

2. Speed: Computer systems require far less time than the manual systems in performing a task. Modem computers can perform 100 million calculations per second.

3. Reliability: It may be beyond the human capabilities to work continuously for long hours. Often people get tired, lack concentration and may feel mental stress while working out huge volume of data that involves tedious calculations. Computer systems overcome these limitations very easily. A computer can easily perform variety of tasks with great precision and accuracy, thereby making the results highly reliable.

Versatility: Computers are designed to perform a variety of task and has wide application in various areas such as, business, industry, etc. As against this, in manual systems human beings can perform only a few specialised tasks and thus are lesser versatile.

4. Storage: Computers have a huge storage capacity and can store huge volume of data in a very small physical space. For example a typical main frame computer can store billions of characters and thousands of graphic images. As against this, the capabilities of manual system are no where close to this.

You can Download Chapter 2 Theory Base of Accounting Questions and Answers, Notes, 1st PUC Accountancy Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.

Karnataka 1st PUC Accountancy Question Bank Chapter 2 Theory Base of Accounting

1st PUC Accountancy Theory Base of Accounting One Mark Questions and Answers

Question 1.
What is the need for theory base accounting?
Answer:
Theory base accountancy makes accounting information meaningful for internal and external uses. Such theory make information is reliable and comparable.

Question 2.
What is accounting concepts?
Answer:
Accounting concepts means assumptions upon which accounting is based and recorded.

Question 3.
What is accounting conventions?
Answer:
Accounting conventions refers to customs, traditions, usages or practices followed by accountants as guide for preparation of financial statements.

Question 4.
What is revenue said to be recognized?
Answer:
“Revenue is said to be recognised from sale of goods, or services only when revenue is actually realised”

Question 5.
Expand GAAP.
Answer:
Generally Accepted Accounting Principles: GAAP.

Question 6.
What is accrual concept of accounting?
Answer:
This concept distinguish between cash received and receivable, cash paid and payable on various income or expenees of business.

Question 7.
What do you mean by double entry system of Book Keeping?
Answer:
It is a method of book keeping. Double entry system means “The method of recording of two fold aspects of a transactions.

Question 8.
What is single entry system of book-keeping?
Answer:
It is a method of Book-keeping where both the aspects are not recorded, and for a few transactions none of the aspects is recorded.

Question 9.
Write any two Accounting standards, accepted under IAS.
Answer:
As 1. Disclosure of Accounting Policies As 2. Valuation of Inventories.

Question 10.
What is cost concept?
Answer:
An assets acquired by a concern is recorded in the books of accounts at cost called cost concept.

Question 11.
Write the accounting equation.
Answer:
Accounting equation is Assets = Liabilities + Capitals.

Question 12.
Find out the value of Liability, if capital is 50,000 and Assets is 70,000.
Answer:
Liability = Assets – Capital ⇒ Liability = 70,000 – 50,000
Liability = 20,000.

Question 13.
Find out capital, if liability is 70000, and Assets is 200000.
Answer:
Capital = Assets -Liability ⇒ Capital = 2,00,000 – 70,000
Capital = 1,30,000.

Question 14.
Find out Assets, if capital is 60000 and Liability is 90000.
Answer:
Assets = Capital + Liability ⇒ Assets = 60,000 + 9,0,000
Assets = 1,50,000.

Question 15.
What is Accounting cycles?
Answer:
It refers to the flow of accounting data, in the course of accounting during the period of accounting.

Question 16.
Write any two disadvantages of double entry system.
Answer:
The disadvantages of double entry system are :

1. It is a costly
2. It requires special knowledge and skills to maintain the accounts.

Question 17.
Write any two features of double entry system.
Answer:
The two features of double entry system are :

1. It maintain complete record of all transactions.
2. It is a costly system and requires a specialised skills to maintain.

Question 18.
State the two systems of book-keeping.
Answer:
The two systems of book-keeping are :

1. Single entry system of book-keeping.
2. Double.entry system of book-keeping.

Question 19.
Write the meaning of an account.
Answer:
An account refers to statement of business transactions relating to person, income, expenses related to a particular period.

Question 20.
Mention any one merit of single entry system of accounting.
Answer:
It is suitable for small business to recording business transaction is more helpful.

Question 21.
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.
(ii) The fact that a business is separate and distinguishable from its owner is best exemplified by the _________ concept.
(iii) Everything a firm owns, it also owns out to somebody. This’ co-incidence is explained _____________ by the concept.
(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.
(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 ____________  .
(vi) If a firm receives an order for goods, it would not be included in the sales figure owing to the ____________
(vii) The management of a firm is remarkably incompetent, but the firms, accountants cannot take this into account while preparing book of accounts because of concept ____________.
Answer:
(i) The conservatism concept.
(ii) The business entity concept.
(iii) The dual aspect concept.
(iv) The consistency concept
(v) Conservatism concept
(vi) The revenue recognition concept
(vii) The money measurement concept.

1st PUC Accountancy Theory Base of Accounting Two Marks Questions and Answers

Question 1.
Why is necessary for accountancy to assume that business will remain a going concern?
Answer:
According to this the assumption is made that “Every business is carried on with a view to ’ continue it for an indefinite period of time in future and not to liquidate the affairs.

Question 2.
Write any four concepts of accounting.
Answer:

1. Money measurement concepts
2. Dual concepts
3. Business entity concept
4. Continuity concept.

Question 3.
Mention any four accounting conventions.
Answer:

1. Convention of materiality
2. Convention of conservatism
3. Convention of consistency
4. Full disclosure.

Question 4.
What is money measurement concept?
Answer:
In accounting, a record is made only of those transactions which can be expressed in terms of money called money measurement concept.

Question 5.
Write any two assumptions of double entry system.
Answer:
The assumptions of double entry system of book keeping are :

1. Every transactions affects the financial position in two ways.
2. The effect of change is in opposite directions.
3. The benefit measured in terms of money.

Question 6.
Write any two advantages of double entry system.
Answer:
The advantages of double entry systems are :

1. It maintains complete record of all transactions.
2. The correctness of records can be verified easily.
3. It helps to ascertain correct profit and loss of the business.

Question 7.
Why it is necessary for accountants to assume that business entity will remain a going concern?
Answer:
Going Concern Concept assumes that the business entity will continue its operation for an indefinite period of time. It is necessary to assume so, as it helps to bifurcate revenue expenditure (i.e. expenditure related to current year), and capital expenditure (i.e. expenditure whose benefits accrue over a period of time).

Question 8.
When should revenue be recognized? Are there exceptions to the general rule?
Answer:
Revenue should be recognized when sales take place either in cash or credit and /or right to receive income from any source is established. Revenue is not recognized, in case, if the income or payment is received in advance or the. payment is actually received from the debtors. In a nutshell, revenue will be recognized when the right to receive income is established.
The exceptions to this rule are given below.

• Hire purchase: When goods are sold on hire-purchase system, the amount received in installments is treated as revenue.
• Long term construction contract: The long term projects like construction of dams, highways, etc. have long gestation period. Income is recognized on proportionate basis of work certified and not on the completion of contract.

Question 9.
What is the basic accounting equation?
Answer:
The basic accounting equation is Assets = Liabilities + Capital
It means that, the monetary value of all assets of a firm is equal to the total claims, viz. owners and outsiders.

Question 10.
The realization 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. This 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

Give reasons for your answer.
Answer:
According to the realization concept. Revenue is recognized when an obligation to receive the amount arises. 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 recognized.

Question 11.
What is the need for theory base accounting?
Answer:
Theory base accountancy makes accounting information meaningful for internal and external uses. Such theory make information is reliable and comparable.

Question 12.
What is accounting concepts?
Answer:
Accounting concepts means assumptions upon which accounting is based and recorded.

Question 13.
What is accounting conventions?
Answer:
Accounting conventions refers to customs, traditions, usages or practices followed by accountants as guide for preparation of financial statements.

Question 14.
Why is necessary for accountancy to assume that business will remain a going concern?
Answer:
According to this the assumption is made that “Every business is carried on with a view to continue it for an indefinite period of time in future and not to liquidate the affairs.

Question 15.
What is revenue said to be recognized? Are there exceptions to the general rule?
Answer:
“Revenue is said to be recognised from sale of goods, or services only when revenue is actually realsied”

Question 16.
Expand GAAP.
Answer:
Generally Accepted Accounting Principles.

Question 17.
Write any four concepts of accounting.
Answer:

1. Money measurement concepts
2. Dual concepts
3. Business entity concept
4. Continuity concept.

Question 18.
Mention any four accounting conventions.
Answer:

1. Convention of materiality
2. Convention of conservatism
3. Convention of consistancy
4. Full disclosure.

Question 19.
What is accrual concept of accounting?
Answer:
This concept distinguish between cash received and receivable, cash paid and payable on various income or expenees of business.

Question 20.
What do you mean by double entry system of Book Keeping?
Answer:
It is a method of book keeping. Double entry system means “The method of recording of two fold aspects of a transactions.

Question 21.
What is single entry system of book-keeping?
Answer:
It is a method of Book-keeping where both the aspects are not recorded, and for a few transactions none of the aspects is recorded.

Question 22.
Write any two Accounting standards, accepted under IAS.
Answer:
As 1. Disclosure of Accounting Policies
As 2. Valuation of Inventories.

Question 13.
What is money measurement concept?
Answer:
In accounting, a record is made only of those transactions which can be expressed in terms of money called money measurement concept.

Question 24.
What is cost concept?
Answer:
An assets acquired by a concern is recorded in the books of accounts at cost called cost concept.

Question 25.
Write the accounting equation.
Answer:
Accounting equation is: Assets = Liabilities + Capital.

Question 16.
Find out the value of Liability, if capital is 50,000 and Assets is 70,000.
Answer:
Liability = Assets – Capital
Liability = 70,000 – 50,000 Liability = 20,000.

Question 17.
Find out capital, if liability is 70000, and Assets is 200000.
Answer:
Capital = Assets – Liability
capital = 2,00,000 – 70,000
capital = 1,30,000.

Question 18.
Find out Assets, if capital is 60000 and Liability is 90000.
Answer:
Assets = Capital + Liability
Assets = 60,000 + 90,000
Assets = 1,50,000.

Question 19.
What is Accounting cycles?
Answer:
It refers to the flow of accounting data, in the course of accounting during the period of accounting.

Question 20.
Write any two assumptions of double entry system.
Answer:
The assumptions of double entry system of book keeping are :

1. Every transactions affects the financial position in two ways.
2. The effect of change is in opposite directions.
3. The benifit measured in terms of money.

Question 21.
Write any two advantages of double entry system.
Answer:
The advantages of double entry systems are :

1. It maintains complete record of all transactions.
2. The correctness of records can be verified easily.
3. It helps to ascertain correct profit and loss of the business.

Question 22.
Write any two disadvantages of double entry system.
Answer:
The disadvantages of double entry system are :

1.  It is a costly system
2. It requires special knowledge and skills to maintain the accounts.

Question 23.
Write any two features of double entry system.
Answer:
The two features of double entry system are :

1. It maintain complete record of all transactions.
2. It is a costly system and requires a specialised skills to maintain.

Question 24.
State the two systems of book-keeping.
Answer:
The two systems of book-keeping are :

1. Single entry system of book-keeping.
2. Double entry system of book-keeping.

Question 25.
Write the meaning of an account.
Answer:
An account refers to statement of business transactions relating to person, income, expenses related to a particular period.

1st PUC Accountancy Theory Base of Accounting One Mark Questions and Answers

Question 1.
Explain the different accounting concepts.
Answer:
Accounting concepts are basic assumptions and conditions on which the accounting is based, the different concept of accounting are:

(1) Business entity concept: According to this “the business is treated as a separate and distinct entity from the owner, who invests money or money’s worth”. If there is any branch or unit, is also treated as a distinct entity.

(2) Going concern concept: According to this the assumption is made that “Every business is carried on with a view to contiune it for an indefinite period of time in future and not to liquidate the affairs.

(3) Money measurement concept: According to this “the accounting entries made in the books are only of those transactions which can be measured and recorded in terms of money”.

(4) Cost concept: According to this “All the fixed assets which are acquired by a concern are recorded in the books of accounts at cost price”.

(5) Dual-aspect concept: According to this “Every business transactions has a two-fold- aspects (receiving and giving benifit) of same value”.

(6) Accounting period concept: As per the going concern concept every business is intended to be continued indefinitely for a long period in future. In that case the trading result cant be ascertained in the life time. For this “The convinient period of time is selected by dividing the estimated period of life of the business for ascertaining the net result of business during a given period as well as financial position of the business as on that date”.

(7) Realisation concept: According to the “revenue is said to be recognised from sale of goods, or services only when revenue is actually realised.

(8) Matching Concept: Earning prof it is the object of ever}’ business enterprise. It has been the duty of an accountant to calculate exact accurate prof it. The result of there efforts was the introduction of the principle of matching cost and Revenue. According to this principle income can be as curtained by matching revenue of the business with its costs.

(9) Accrual Concept: Accrual means recognition of revenue and costs as they are earned or incurred and not as money is received or paid. The accrual concept relates to measurement of income. Identifying assets is liabilities example: Recording salary payable to staff commission receivable etc.

Question 2.
What is matching concept?
Answer:
This concept mainly based on accounting period concept, according to this “The trading result of a business is calculated by matching the total revenues earned during the year with total amount of expenses incurred in the same year”. The difference between the two represents profit or loss.

Question 3.
Explain the different accounting conventions.
Answer:
Conventions are customs or traditions which are followed to maintain accounts and presentation of financial statements. The different accounting conventions are :

• Convention of conservatism: According to this “a safe policy is adopted in preparing the financial statements of a concern. Anticipate profits may be ignored not anticipated loss while financial statements are prepared.
• Convention of consistancy: According to this the accounting rules and practices should be continuously followed and applied in accounting”. Rules and practices once adopted should not be changed from year to year.
• Convention of full disclosure: According to this “all the important information should be fully disclosed in the financial statements of a concern”.
• Convention of materiality: According to this only the significant information which is material in nature, is disclosed in the financial statements.

Question 4.
Write a note on Generally Accepted Accounting Principles. (GAAP).
Answer:
Accounting is the systematic body of knowledge having cache and effect relationship. The subject has certain established concepts, conventions, standard language and terminology to enable the interested parties in the subject to understand it in the same sense as the accountant wants to communicate. There rules are usually called Generally Accepted Principles (GAAP). Accounting assumption rule of recording and reporting business transactions are also known by terms like concepts, principles, conventions, doctrines, axioms and postulates.

Question 5.
Write the difference between accounting and accountancy.
Answer:

Accounting	Accountancy
It is a process or activity	It is a profession or practice
It consist of principles, concepts, conventions and accounting standard	It involves application of accounting principles and conventions to practical problems
Accounting is a clerk	job It required public relations.
Without accountancy, accounting has no results or utility	Without accounting, accountancy has no conceptual foundation.
It is less scope compare to accountancy	It has wider scope than accounting.

Question 6.
Write the needs or importance of accounting.
Answer:
Accounting needs or importance are as follows-

• Book-keeping creates financial records in analytical and appropriate manner and also give reference in future.
• Accounting gives evidence in the eyes of law, it is accepted as evidence.
• Accounting provides relevant information to the management and helps in decision making.
• Accounting system develops reporting system, it helps to control the organisation.
• Accounting prevent fraud and errors, and also reduce the misappropriation of funds in business.
• As per legal requirement, some of the business should keep accounts compulsorily. It is statutory requirement.

Question 7.
Write a note on basis of accounting.
Answer:
The two basis of accounting are.
(a) Cash Basis of Accounting: It is a simple form of accounting and a payment is received for the sale of goods or services, a goods purchase and payment is recorded on same date. The payment or receipt recorded date wise and not post poring called cash basis accounting under this system accrual transactions are not considered.

(b) Accrual Basis of Accounting: Accrual basis of accounting matches revenue to the time period in which they are earned and matinees expenses to the time period in which they are incurred. It provides more information about business example: Commissioning on sales payable. Interest on fixed deposit receivable etc are recorded for the current period.

Question 8.
Mention the differences between cash basis accounting and accrual basis accounting.
Answer:

Cash basis	Accrual basis
Receivables are recessed on the date of receipt and not on the period which it belongs.	Receivables are recessed when they are earned and not on the day of received.
Expenses are recorded on the date of payment and not on the period which it belongs.	Expenses payables are recorded for the period which it belongs and not on the date of payment.
No receivables and payables and recorded.	Receivables by payables both are recorded.
Financial statements match only actual receipts and payments.	Financial statements match revenues to the expenses in cured in earning them and more accurately reflects the result and operations.
It reflects net cash profit for the year Accrual basis.	It reflects correct cash and for cash profit.

Question 9.
What do you mean by Accounting Standard? List out Indian Accounting Standard.
Answer:
According to Ghosh ‘Accounting standard are the policy documents issued by the recognised expert accountancy body relating to various aspects of measurements, treatment and disclosure of accounting transactions and events.’
The following are mandatory Accounting standards (AS) issued by institute of chartered accountants of India (ICAI).

AS 1 Disclosure of Accounting Policies.
AS 2 Valuation of Inventories.
AS 3 Cash Flow Statement
AS 4 Contingencies and events occuring after the balance sheet
AS 5 Net profit or loss for the period. Prior period items and changes in accounting policies AS 6 Depreciation Accounting.
AS 7 Constriction contracts (revised 2002) ‘
AS 8 Presently in in As 26 AS 9 Revenue Recognitions
AS 10 Accounting for Fixed Assets
AS 11 The effects of changes in foreign exchange rates (Revised 2003)
AS 12 Accounting for Government grants
AS 13 Accounting for Investments
AS 14 Accounting for Amalgamation
AS 15 Employes Benefits (revised 2005)
AS 16 Borrowing costs
AS 17 Segment Report
AS 18 Related party disclosure
AS 19 Leases
AS 20 Earning per share
AS 21 Consolidated financial statements.
AS 22 Accounting for Taxes and Incomes
AS 23 Accounting for investments in associates in Consolidated Financial statement.
AS 24 Discontinuing operation AS 25 Interim Financial Reporting
AS 26 Intangible Assets .
AS 27 Financial reporting of interest in joint venture.
AS 28 Impairment of Assets
AS 29 Provisions, contingent liabilities and contingent assets.
AS30 Financial Instruments: Recognition and Measurement.
AS31 Financial Instruments: Presentation
AS32 Financial Instruments: Disclosure.

1st PUC Accountancy Theory Base of Accounting Six Marks Questions and Answers

ESSAY TYPE / LONG ANSWERS

Question 1.
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 Measurements, consistency, Conservation, 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.

Question 2.
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 organization) 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.

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.

Question 3.
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 of 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 ₹ 1200 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, ₹ 1200 – ₹ 900 = ₹ 300

Thus, according to the matching concept, the expense of ₹ 900 will be taken into account ₹ and not ₹ 1200 for determining profit, as the.benefit of only ₹ 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 under casting of the profit or loss, which may not reveal the truth, efficiency of the business and its activities in the concerned accounting period,

Question 4.
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 ₹ 10,000 each are purchased and this event js recorded in the books with a total amount of ₹ 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 ₹ 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 arid liabilities of the business.

You can Download Chapter 8 Endige Questions and Answers Pdf, Notes, Summary, 1st PUC Kannada Textbook Answers, Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.

Karnataka 1st PUC Kannada Textbook Answers Sahitya Sanchalana Chapter 8 Endige

Endige Questions and Answers, Notes, Summary

You can Download Chapter 7 Akhanda Karnataka Questions and Answers Pdf, Notes, Summary, 1st PUC Kannada Textbook Answers, Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.

Karnataka 1st PUC Kannada Textbook Answers Sahitya Sanchalana Chapter 7 Akhanda Karnataka

Akhanda Karnataka Questions and Answers, Notes, Summary