Chapter 1: Introduction to Accounting — Online MCQ Test
ACCOUNTANCY · CLASS 11 FIRST PUC · Karnataka State Board
Practice Chapter 1: Introduction to Accounting with a free chapter-wise online MCQ test.
This chapter covers: Book-keeping, Economic events, Identifying, Measuring, Recording, Communicating, Internal and external users, Reliability, Relevance, Understandability, Comparability.
AI-generated questions from basic to board-exam level, with instant results and explanations.
Chapter 1: Introduction to Accounting — Important Questions & Answers
What is the primary objective of accounting?
- A. To record business transactions only
- B. To identify, measure, record, and communicate economic events to users
- C. To prepare financial statements only
- D. To collect money from customers
Answer: B. To identify, measure, record, and communicate economic events to users
Accounting is a comprehensive process that involves identifying, measuring, recording, and communicating economic events to help users make informed decisions.
Accounting is a comprehensive process that involves identifying, measuring, recording, and communicating economic events to help users make informed decisions.
Which of the following is NOT a primary function of accounting?
- A. Recording economic events
- B. Identifying business transactions
- C. Manufacturing products
- D. Communicating financial information
Answer: C. Manufacturing products
Manufacturing products is a business operation, not a function of accounting. Accounting records and communicates information about such operations.
Manufacturing products is a business operation, not a function of accounting. Accounting records and communicates information about such operations.
What does 'relevance' mean in the context of accounting information?
- A. Information should be easy to understand
- B. Information should be comparable over time
- C. Information should be pertinent to the decision-making needs of users
- D. Information should be recorded in chronological order
Answer: C. Information should be pertinent to the decision-making needs of users
Relevance means that accounting information should be appropriate and useful for users' decision-making purposes.
Relevance means that accounting information should be appropriate and useful for users' decision-making purposes.
A company incurred office rent of ₹10,000 but hasn't paid it yet. According to accounting principles, this transaction should be:
- A. Ignored because payment hasn't been made
- B. Recorded because an economic event has occurred regardless of payment
- C. Partially recorded
- D. Recorded only after payment
Answer: B. Recorded because an economic event has occurred regardless of payment
Accounting records economic events when they occur (accrual basis), not when cash is exchanged. The liability exists when the service is received.
Accounting records economic events when they occur (accrual basis), not when cash is exchanged. The liability exists when the service is received.
A bank lending officer reviews a company's financial statements to decide on a loan application. Which qualitative characteristic is MOST critical for this decision?
- A. Understandability
- B. Relevance and Reliability
- C. Comparability only
- D. Relevance only
Answer: B. Relevance and Reliability
Both relevance (information must be pertinent to loan assessment) and reliability (information must be trustworthy) are essential for a creditor's critical financial decision.
Both relevance (information must be pertinent to loan assessment) and reliability (information must be trustworthy) are essential for a creditor's critical financial decision.