Describe the role of accounting in the modern world.
The role of accounting has been changing over the period of time. In the modern world, the role of accounting is not only limited to record financial transactions but also to provide a basic framework for various decision making, providing relevant information to various users and assists in both short run and long run planning. The role of accounting in the modern world are given below.
1. Assisting management− Management uses accounting information for short term and long term planning of business activities, to predict the future conditions, prepare budgets and various control measures.
2. Comparative study− In the modern world, accounting information helps us to know the performance of the business by comparing current year’s profit with that of the previous years and also with other firms in the same industry.
3. Substitute of memory− In the modern world, every business incurs large number of transactions and it is beyond human capability to memorise each and every transaction. Hence, it is very necessary to record transactions in the books of accounts.
4. Information to end user− Accounting plays an important role in recording, summarising and providing relevant and reliable information to its users, in form of financial data that helps in decision making.
Popular Questions of Class Accountancy
- Q:- Explain the qualitative characteristics of accounting information.
- Q:-
Differentiate between source documents and vouchers.
- Q:-
Define accounting and state its objectives.
- Q:-
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 can not take this into account while preparing book of accounts because of ________ concept. - Q:-
Giving examples, explain each of the following accounting terms:
* Fixed assets * Revenue * Expenses
* Gain * Profit * Capital
* Short-term liabilities - Q:-
Discuss the concept-based on the premise do not anticipate profits but provide for all losses.
- Q:-
When should revenue be recognised? Are there exceptions to the general rule?
- Q:- What do you mean by an asset and what are different types of assets?
- Q:-
'Accounting information should be comparable'. Do you agree with this statement? Give two reasons.
- Q:-
Enumerate informational needs of management.
Recently Viewed Questions of Class Accountancy
- Q:-
Record the rectification entry for the following transactions:
Credit sales to Rajni 5,000 recorded in Purchases book:
This is an error of ..........................................
State the wrong entry recorded in the book of accountsCorrect effect should have been:
The rectification entry will be:
- Q:-
What is Accounting Information System?
- Q:-
When information about two different enterprises have been prepared presented in a similar manner the information exhibits the characteristic of :
(a) Verifiability
(b) Relevance
(c) Reliability
(d) None of the above - Q:-
Explain errors of principle and give two examples with measures to rectify them.
- Q:-
Fill in the Correct Words :
(a) Cash book is a ......... journal.
(b) In Journal proper, only......... discount is recorded.
(c) Return of goods purchased on credit to the suppliers will be entered in ...... Journal.
(d) Assets sold on credit are entered in .........
(e) Double column cash book records transaction relating to ......... and .........
(f) Total of the debit side of cash book is ......... than the credit side.
(g) Cash book does not record the ......... transactions.
(h) In double column cash book ......... transactions are also recorded.
(i) Credit balance shown by a bank column in cash book is .........
(j) The amount paid to the petty cashier at the beginning of a period is known as ......... amount.
(k) In purchase book goods purchased on ......... are recorded. - Q:-
Differentiate between source documents and vouchers.
- Q:-
Explain the development and role of accounting.
- Q:-
State the nature of accounting information required by long-term lenders.
- Q:-
Give a specimen of an account.
- Q:- Explain the meaning of gain and profit. Distinguish between these two terms.
6 Comment(s) on this Question
Soo plzzz tell about the 'factors which nesnecessited systematic accounting..'
can you pls also explain the role of accounting in the modern times
Answers of test your understanding
Please post the other lessons exercise questions and answers
Answers are pretty impressive. I would appreciate if this website becomes more compatible with some extra questions.
This is useful for my next exam .Thank you so much for sharing...
- NCERT Chapter