Ram and Sam are two friends who both have just attended their first class of accountancy. The friends were intrigued by the different branches of accounting and their widespread application. Ram personally liked the branch of accounting in which fund flow statement and budgetary control is used and that branch helps in planning and controlling of operations. As the concept of accounting was further explored, they began discussing the different users of accounting. Ram said that he finds it interesting that even the employees demand information relating to business. Sam said he finds more interesting the fact that even competitors want information on the relative strengths and weaknesses of the enterprise and for making comparisons, Sam further said that even accounting helps owners to compare one years costs, expenses, and sales with those of other years. However, they were quite shocked by the fact that the management-worker relations were not taken into consideration in the accounting. Meanwhile, Ram and Sam had an argument at the end of the discussion. Ram was saying that accounting is an art whereas Sam was saying that accounting is a science.

Their teacher came in and said something to them which made them stop the argument.

Q1. What might their teacher have said to solve their argument?

(a) Ram, please understand, Shetty is correct in this situation

(b) Sam, please understand, Ram is correct In this situation.

(c) Both are correct

(d) None is correct

Q2. Sam talked about which type of users of accounting?

(a) Internal users

(b) External users

(c) Both (a) and (b)

(d) None of these.

Q3. Which limitation of accounting is being talked about by them?

(a) Influenced by personal judgment

(b) Omission of qualitative information.

(c) Incomplete information

(d) Based on historical costs

Q4. Which advantage of accounting is being talked about by Sam in the last part of the first para?

(a) Provides information regarding profit and loss

(b) Provides completes and systematic record

(c) Enables comparative study

(d) Evidence in legal matters

Q5. Which branch of accounting is liked by Ram?

(a) Financial accounting

(b) Cost accounting

(c) Management accounting

(d) Tax accounting

Case 2:

ACCT1130: Classroom Discussion case: Recording of Transactions

Sam and Jay started with Cash 10,000 and Machinery 1,00,000. They decided to set up a production line for PPE kits for. the protection from Covid 19 virus. As their demand rose, they decided to buy one more piece of machinery. For the same, they took bank overdraft and purchased the machinery. The quality of the companys product was extremely high and therefore, it could develop a reputation for itself in the market and business was flourishing. After 1.5 years, their old machinery turned obsolete so they decided to sell the same. They sold it and got some cash proceeds. To further increase the brand presence among the concerned stakeholders, they decided to run advertisements from the cash proceeds of machinery sold. As more and more customers demanded their product, they decided to launch a discount for bulk purchases. The discount was not to be recorded in the books of accounts. This campaign was successful and they earned a lot of profits from the same.

Q1. Which type of discount is being discussed in the last part of the passage?

(a) Trade discount (Given on MRP)

(b) Cash discount (Given only if cash is paid within a specified period)

(c) Both (a) and (b)

(d) Cant be determine

Q2. Which asset is discussed in the line, The quality of the companys product was very high and therefore, it could develop a reputation for itself in the market and business was flourishing?

(a) Tangible

(b) Intangible

(c) Current.

(d) Both (a) and (c)

Q3. Which type of liability is discussed in the passage?

(a) Non-current

(b) Current

(c) Both (a) and (b)

(d) Cant be determined

Q4. What was the capital initially invested?

(a) 10,000

(b) 1,00,000

(c) 1,10,000

(d) Cant be determined

Q5. The passage involves capital receipts (Non-recurring apart from initial capital invested).

(a) True

(b) False