1. Define what is a balance sheet?

Hint: A balance sheet is a statement consisting of all the assets, liabilities, and capital of a company
at certain point.

2. What is the difference between capital and revenue transaction?

Hint: Revenue transaction refers to the transactions relating to the day to day activities. A capital
transaction refers to the transaction for long term objective such as the purchase of a fixed asset.

3. What is the meaning of working capital?

Hint: Working capital refers to the value of current assets minus current liabilities that are used in day-
to-day trading.

4. What is the meaning of premises in terms of accounting?

Hint: In terms of accounting, the word premises refer to the number of fixed assets that are shown in
the balance sheet.

5. What is the basic accounting equation?

Hint: Assets = Liabilities + Owners Equity

6. How are accounting and auditing different?

Hint: Accounting and auditing are two different terms. Accounting means recording the daily financial
activities of a business, whereas, auditing is checking whether these events are noted correctly or
not.

7. What are trade bills?

Hint: Trade bills are simply the documents generated against each transaction.

8. What is double entry bookkeeping ?

Hint: Double entry bookkeeping follows the principle by which every debit has a corresponding credit
due to which the value of the debit is equal to the total of all credits.

9. What is debit and credit note?

Hint: Debit note is nothing but an intimation note sent to an individual dealing with the business
stating that his account will be debited for the purpose indicated therein. Whereas, credit note is an
intimation note sent to an individual dealing with the business stating that his account will be credited
for the purpose indicated therein.

10. Can you name the different branches of accounting?

Hint: Different major branches of accounting are:

• Financial accounting

• Management accounting

• Cost accounting

11. What does the term dual aspect mean in terms of accounting?
Hint: The term dual aspect means every transaction that you carry out has two aspects, i.e., it affects
two accounts in their respective opposite sides.

12. What are compound journal entries ?

Hint: A compound journal entry is an accounting entry in which there is more than one debit, more
than one credit, or more than one of both debits and credits.

13. What is inactive and dormant account?

Hint: Inactive accounts are the accounts that are closed and will not be used anytime in the future.
Dormant accounts are accounts that are not functional but can be used in the future.

14. What are fictitious assets?

Hint: Fictitious assets are assets that cannot be shown or touched, but can only be felt such as rights,
good will, etc.

15. What is marginal cost?

Hint: Marginal cost is the estimated cost of additional inputs that are required to produce the output.

16. What is the meaning of the term overhead in accounting?

Hint: In terms of accounting, overhead means the value of indirect expenditures of a company i.e. the
rent dues, salaries, etc.

17. What does deferred tax liability stand for?

Hint: It stands for the fact that a company will be required to pay more tax in the future due to its
transactions in the current period.

18. What is GST?

Hint: It is good and service tax; a type of indirect tax that is charged by the seller to the customer on
the value of the goods or service availed.

19. What is bank reconciliation?

Hint: It is a process done by companies to ensure that their records i.e. the balance sheet, general
ledger account details, etc. are in accordance with the bank's records.

20. What is the meaning of GAAP?

Hint: GAAP stands for Generally Accepted Accounting Principles that are issued by the Institute of
Chartered Accountants of India (ICAI) and the provisions of the Companies Act, 1956.

21. What is cost objective and why is it done?

Hint: Cost objective is the process of recording all the cost incurred by the company in running the
usual business. This is done to ascertain the cost of loss and profit ratio of the company and to find
ways to control the cost.

22. Define departmental accounting?

Hint: It is a type of accounting in which a separate account is created for departments. It is managed
solely as well as shown independently in the balance sheet.