Chapter 8: Accounting for Current Liabilities and Contingencies

Very Short Question Answer Write down the meaning of contingent liabilities. Liabilities that may come into existence depending upon the outcome of some other event are known as contingent liabilities. Outstanding lawsuits and product warranties are common examples of contingent liabilities. A contingent liability should be accrued and presented on the balance sheet if it […]

Chapter 7: Accounting for Receivables

Very Short Question Answer Define receivables. Receivable can be defined as a monetary claim from debtors for sale of goods on credit, providing services on credit and providing loans and advances. It includes accounts receivable/debtors, notes receivable, bills receivable and other receivables such as interest receivable, rent receivable, etc. Write any two differences between accounts […]

Chapter 6: Accounting for Cash and Internal Control

Very Short Question Answer Write about Not Sufficient Fund (NSF) cheque. A cheque that a bank refuses to honor because there is not enough money in the payer’s checking account to cover the amount of the check is written as not sufficient fund (NSF) cheque. A NSF cheque is an overdraft. It is also called […]

Chapter 5: Accounting for Inventories and Cost of Good Sold

Very Short Question Answer What is inventory? An inventory is a merchandise of goods or other items owned by a firm and held for sale or for processing before being sold, as part of a firm’s ordinary operations. What is cost of goods sold? An inventory accounting, which determining the cost of merchandise that has […]

Chapter 4: Accrual Basis of Accounting

Very Short Question Answer The financial position of Kalika & Bros. on Baishakh 01, 2076 is as below: Cash in hand: Rs.20,000 Furniture: Rs.50,000 Accounts receivable: Rs.74,000 Outstanding expenses: Rs.4,000 Cash at bank: Rs.36,000 Accounts payable: Rs.34,000 Stock of goods: Rs.26,000 Prepaid expenses: Rs.8,000 Required: Opening entry SOLUTION   The following information is provided to […]

Chapter 3: Accounting Process

Very Short Question Answer Define source of document with suitable example. The source documents are the piece of papers, which are required to keep record of any transaction with full evidence. All accounting records have to be based on facts and carefully supported by documentary proof. These documents provide the authenticity of happening of transaction […]

Chapter 2: Conceptual Framework of Accounting

Very Short Question Answer What is materiality convention of accounting? Materiality concept of accounting is an accounting convention that refers the relative” importance or significance of an item to a decision maker. The materiality concept of accounting guides about recognition of a transaction. It means that transactions which is of insignificance importance should not be […]

Chapter 1 : Basic Understanding of Financial Accounting

Very Short Question Answer What is cash basis of accounting? When transactions are recorded on the basis of actual flow of cash in and out of the business, it is known as cash basis of accounting. Under this method, incomes are recorded when they are received and expenses are recorded when they are paid. Define […]

Chapter 8: Theory of Factor Pricing

Very Short Question Answer What is rent? Rent is defined as the reward of land for its services in the production process. According to modern theories of rent, rent is the difference between the actual earning and transfer earning. Define transfer earning with an example. Transfer earning is defined as the minimum payment required to […]