CA Foundation Accounts

Bills of Exchange and Promissory Notes – CA Foundation Q1. A bill of exchange is drawn by the ___.a) Creditorb) Debtorc) Bankd) BuyerAnswer: a) Creditor Q2. Promissory Note is made by the ___.a) Payeeb) Drawerc) Debtord) EndorseeAnswer: c) Debtor Q3. The person to whom the bill is payable is known as ___.a) Drawerb) Draweec) Payeed) […]

Ledgers – Questions and Answers Q1. What is a ledger?A1. A ledger is a principal book of accounts that contains all the accounts (personal, real, and nominal) where transactions are posted from the journal in a classified manner. Q2. Why is a ledger called the “book of final entry”?A2. The ledger is called the book […]

Depreciation – CA Foundation Accounts  Question 1.Meaning of depreciation.Answer:Meaning of depreciation:An expenditure which results into enduring benefit (long-term benefit) are treated as capital expenditure/fixed assets. Fixed assets are those assets which are held for use in the business and not for sale or consumption in the course of production. Fixed assets which have a limited […]

Inventory Valuation – CA Foundation Accounts Question 1.Periodic inventory systemAnswer:Periodic/Physical inventory system      No records of inventory are maintained. Inventory is ascertained by physical counting at the end of the year and then valued. It is simple and commonly followed by small organisations. Unless otherwise specified, we can always assume that inventory/closing stock for […]

Bank Reconciliation Statement – CA Foundation Accounts Question 1.Meaning of Bank Reconciliation StatementAnswer:Meaning of Bank Reconciliation Statement:A bank a/ c or bank book is maintained by us to record the transactions with bank. Similarly Bank maintains our a/c in their books. A copy of which is given to us known as Bank statement or passbook. […]

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) Question 1.Double Entry System.Answer:Double Entry System: This system was invented by an Italian merchant named Fra Luco Pacioli in 1494 A.D. According to this system, every transaction has got a two-fold aspect (dual aspect), i.e. one party giving the benefit and the other receiving the […]

Accounting Standards – CA Foundation Accounts Question 1.Need of Accounting StandardsAnswer:Need of Accounting Standards: Accounts gives information to various groups. The financial statement can serve the interest of different interest groups only if there is uniformity and full disclosure of relevant information. There are various alternatives regarding accounting treatment and valuation norms which may be […]

Accounting as a Measurement Discipline-Valuation Principles, Accounting Estimates Question 1.Historical CostAnswer:Historical Cost: It means acquisition price. According to this base, assets are recorded at an amount of cash or cash equivalent paid or the fair value of consideration given at the time of acquisition. Liabilities are recorded at the amount of proceeds received in exchange […]

Accounting Policies – CA Foundation Accounts Question 1.What do you mean by Accounting policies? What are the basis of their selection? What are the different areas in which different accounting policies are possible?Answer:Meaning of Accounting Policy:→ The accounting policies refers to the specific accounting principles and the methods of applying those principles → Adopted by […]

Contingent Assets and Contingent Liabilities – CA Foundation Accounts Question 1.Contingent liability.Answer:Contingent liability:(a) A contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. Possible […]