SAQs 1)Introduction to Accounting" and 2)"Journal, Ledger, Trial Balance":

 Here are 25 short answer-type questions with answers from the chapters 1)Introduction to Accounting" and 2)"Journal, Ledger, Trial Balance":

### 1. **Introduction to Accounting**

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**Q1.** What is accounting?  

**A1.** Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business.

**Q2.** What are the primary objectives of accounting?  

**A2.** The objectives of accounting are to maintain systematic records, determine profit or loss, ascertain financial position, and provide information for decision-making.

**Q3.** Define bookkeeping.  

**A3.** Bookkeeping is the recording of financial transactions in a systematic manner, forming a part of the accounting process.

**Q4.** What is the difference between bookkeeping and accounting?  

**A4.** Bookkeeping involves recording financial transactions, while accounting includes recording, classifying, summarizing, and interpreting the financial data.

**Q5.** Name the main branches of accounting.  

**A5.** The main branches are financial accounting, cost accounting, management accounting, and tax accounting.

**Q6.** What is the accounting equation?  

**A6.** The accounting equation is: **Assets = Liabilities + Equity**.

**Q7.** What are assets?  

**A7.** Assets are resources owned by a business that are expected to bring future economic benefits.

**Q8.** Define liabilities.  

**A8.** Liabilities are obligations or debts that a business owes to outsiders, which must be settled in the future.

**Q9.** What is capital in accounting terms?  

**A9.** Capital refers to the amount invested by the owner(s) in the business and is represented by the owner’s equity in the firm.

**Q10.** What are revenues?  

**A10.** Revenues are the earnings of a business from the sale of goods or services.

**Q11.** What is the accrual concept in accounting?  

**A11.** The accrual concept states that revenue and expenses should be recorded when they are earned or incurred, regardless of when the cash is received or paid.

**Q12.** Explain the matching principle.  

**A12.** The matching principle dictates that expenses should be recorded in the same period as the revenues they help generate.

**Q13.** What is GAAP?  

**A13.** GAAP stands for Generally Accepted Accounting Principles, which are the standard guidelines for financial accounting.

**Q14.** Define financial statements.  

**A14.** Financial statements are formal reports of the financial activities of a business, including the balance sheet, income statement, and cash flow statement.

**Q15.** What is the going concern concept?  

**A15.** The going concern concept assumes that a business will continue to operate indefinitely, unless there is evidence to the contrary.

**Q16.** What is a balance sheet?  

**A16.** A balance sheet is a financial statement that shows a company’s assets, liabilities, and capital at a specific point in time.

**Q17.** What is the difference between current and non-current assets?  

**A17.** Current assets are those expected to be converted into cash within a year, while non-current assets are long-term resources, such as property or equipment.

**Q18.** Define depreciation.  

**A18.** Depreciation is the systematic allocation of the cost of a tangible asset over its useful life.

**Q19.** What are the types of accounting errors?  

**A19.** The types of accounting errors include errors of omission, errors of commission, and compensating errors.

**Q20.** What is the role of accounting in decision-making?  

**A20.** Accounting provides financial information that helps stakeholders make informed decisions regarding investments, operations, and management.

**Q21.** What is the prudence concept?  

**A21.** The prudence concept states that one should not overestimate income or assets, and all potential losses should be accounted for.

**Q22.** What is a trial balance?  

**A22.** A trial balance is a statement that lists all the ledger accounts and their balances at a particular date to check the arithmetical accuracy of the books.

**Q23.** What are the qualitative characteristics of accounting information?  

**A23.** The qualitative characteristics are relevance, reliability, comparability, and understandability.

**Q24.** Define an income statement.  

**A24.** An income statement is a financial report that shows the revenue and expenses of a business for a specific period, indicating profit or loss.

**Q25.** What is double-entry bookkeeping?  

**A25.** Double-entry bookkeeping is a system of accounting where every transaction is recorded in at least two accounts, involving a debit in one and a credit in another.

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2. Journal, Ledger, Trial Balance

Q1. What is a journal in accounting?  

**A1.** A journal is a chronological record of financial transactions, also known as the book of original entry.

**Q2.** What is the purpose of a journal entry?  

**A2.** A journal entry records the dual aspect of a transaction (debit and credit) and initiates the process of recording it in the ledger.

**Q3.** Define ledger.  

**A3.** A ledger is a book or computerized record where all the journal entries related to a particular account are summarized.

**Q4.** What is posting in accounting?  

**A4.** Posting is the process of transferring the entries from the journal to the respective accounts in the ledger.

**Q5.** What is a compound journal entry?  

**A5.** A compound journal entry involves more than one debit or credit account in a single transaction.

**Q6.** Explain the format of a journal entry.  

**A6.** A journal entry format includes the date, the accounts to be debited and credited, the amounts, and a brief description of the transaction.

**Q7.** What is the rule of debit and credit for assets?  

**A7.** The rule is: debit an increase in assets, and credit a decrease in assets.

**Q8.** What is the rule of debit and credit for liabilities?  

**A8.** The rule is: debit a decrease in liabilities, and credit an increase in liabilities.

**Q9.** Why is a ledger referred to as the "principal book"?  

**A9.** The ledger is called the "principal book" because it contains all the information necessary to prepare financial statements.

**Q10.** What is a trial balance used for?  

**A10.** A trial balance is used to ensure that total debits equal total credits, thus checking the accuracy of the ledger accounts.

**Q11.** Define the cash book.  

**A11.** A cash book is a specialized journal that records all cash receipts and payments.

**Q12.** What is a subsidiary ledger?  

**A12.** A subsidiary ledger contains detailed information about specific accounts, such as accounts receivable or payable, which are summarized in the general ledger.

**Q13.** What are closing entries?  

**A13.** Closing entries are journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

**Q14.** What is an adjusted trial balance?  

**A14.** An adjusted trial balance is prepared after adjusting entries are made, ensuring that the ledger accounts are up-to-date.

**Q15.** Define suspense account.  

**A15.** A suspense account is a temporary account used to record discrepancies or incomplete transactions until they can be properly classified.

**Q16.** What is meant by rectification of errors?  

**A16.** Rectification of errors involves correcting mistakes made in the books of accounts.

**Q17.** What is the importance of the journal in accounting?  

**A17.** The journal is important because it ensures that every transaction is recorded in chronological order, with both debit and credit aspects.

**Q18.** What is a ledger folio?  

**A18.** A ledger folio is the page number of the ledger where the journal entry is posted, serving as a reference.

**Q19.** What is a contra entry?  

**A19.** A contra entry involves a transaction that affects both sides of the cash book, such as cash withdrawn from the bank.

**Q20.** What is the format of a trial balance?  

**A20.** A trial balance is formatted with two columns: one for debit balances and the other for credit balances.

**Q21.** Explain the term "debit balance."  

**A21.** A debit balance means that the total debits in an account exceed the total credits.

**Q22.** What is a credit balance?  

**A22.** A credit balance means that the total credits in an account exceed the total debits.

**Q23.** What is an opening entry?  

**A23.** An opening entry is the first journal entry made in a new accounting period to record the balances carried over from the previous period.

**Q24.** Define balancing of ledger accounts.  

**A24.** Balancing of ledger accounts involves finding the difference between the total debits and total credits and bringing down the balance for the next period.

**Q25.** What is the purpose of the genera

l journal?  

**A25.** The general journal records non-recurring transactions that do not fit into specialized journals, such as adjusting or closing entries.