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List any five users who have indirect interest in accounting.

Present and potential investors, creditors, Tax authorities, regulatory agencies, trade associations are some of the users who have indirect interest in accounting.


Enumerate informational needs of management.

The management requires the information for the purpose of decision making, planning and controlling.


Give any three examples of revenues.

Commission, interest, dividends are three examples of revenues.


Distinguish between debtors and creditors.

S. No Debtors Creditors
1. People who owe some amount to the company are called debtors. People from whom the company is to receive money are called creditors.
2. Debtors appears on the asset side of the balance sheet. Creditors appear on the liabilities side of the balance sheet.



‘Accounting information should be comparable’. Do you agree with this statement. Give two reasons.

Yes, this statement is agreeable. The reasons are as follows

a) It helps in planning for the future

b) It also is useful in the areas of decision making in an organization




(i) Fixed assets:- Plant and Machinery, Land, buildings, furniture and fittings

(ii) Gain:- Sale of fixed assets

(iii) Profit:- Dividends, Commission, interest, etc

(iv) Revenue:- Commission, interest, dividends are three examples of revenues.

(v)  Expenses:- Rent, wages, depreciation, salaries

(vi) Short-term liability:- Creditors, bills-payable, bank overdraft


How will you define revenues and expenses?

Revenue: This is the income earned by providing Services/Selling of products. E.g. Sales receipt, commission, brokerage etc.,

Expenses: It is the cost of the use of things/services for the purpose of earning revenue.

For e.g., Wages, Rent, Salary etc.,


Describe the role of accounting in the modern world.

Accounting is the art of recording business transactions.
It analyses the data of an enterprise through identification, Measurement, classification and summarisation. It presents the data in the form of report/statements to show the Net result and financial position of the business operation.
Accounting supplies appropriate information to different interested group both internal and external.
The major limitations in accounting information system is , it does not provide qualitative and non-financial information.


What do you mean by an asset and what are different types of assets?



Explain the meaning of gain and profit. Distinguish between these two terms.

S. NO Gain Profit
1. The profit that arises from a single transaction like sale of fixed assets, financial assets etc. The excess revenue generated by the business over a period of time.
2. Expenses are not calculated in this case. Profit is calculated after taking the expenses incurred during that specific period.


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