Question
State the objective and utility of accounting standards.
✓
Answer
- $1)$ The objective of setting accounting standards is to bring uniformity in accounting policiesand practices and to ensure transparency, consistency and comparability.
- $2)$ It is also an objective of accounting standard to allow flexibility of adopting a particularpractice or method with suitable disclosure to entities out of various acceptable accountingmethods or practices available.
- $3)$ Accounting standards have objective to enhance the reliability of financial statementsamong their users.
- $4)$ Accounting standards provide rules and guiding principles for preparation andpresentation of financial statements.
- $5)$ When financial statements are prepared in compliance with accounting standards andauditors have certified such compliance, it enhances the reliability of financial statements.
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Similar questions
Classify the following accounts:
$1.$ Interest on share investment account
$2.$ Discount allowed account
$3.$ Debtor’s account
$4.$ Creditor’s account
$5.$ Government of India account
$6.$ Drawings account
→$1.$ Interest on share investment account
$2.$ Discount allowed account
$3.$ Debtor’s account
$4.$ Creditor’s account
$5.$ Government of India account
$6.$ Drawings account
Accounting Information System (AIS):
To commence business with the name Radhika Help Line, brought in business $20,000$ in cash, Machineries of $10,000$ and stock of $15,000.$
→Explain the difference between Trading Account and Profit and Loss Account.
Prepare trading account for the year ended on $31-03-2015$ from the following balances of Bhavesh :
Cost price of closing stock of goods as on $31-03-2015$ was $₹ 44,000,$ whereas its market value is $₹ 50,000.$
→Cost price of closing stock of goods as on $31-03-2015$ was $₹ 44,000,$ whereas its market value is $₹ 50,000.$
Hetansh sold goods $Rs.60,000$ on two months credit to Hiren on $1-6-2016$. On $2-6-2016$,Hetansh drew a bill of the necessary amount on Hiren, which Hiren accepted and returned.Hiren paid the money of the bill on the maturity date. Pass necessary journal entriesin the books of the both parties.
→Pass adjustment entry for the following and also show its effect in final accounts: Closing stock of $Rs. 1,00,000$ out of which $Rs. 2000$ stationery stock. Out of total goods, goods of $Rs.50,000$ required repairing expense of $Rs.2,000.$
→Make classification of account type for the following:
(Stationery expense account, Brokerage received account, Frenchise account, Mumbai University account, Jagdishbhai's account, Excell Company's share account, Calico Mill's account ,Factory building account, Rent received account, Wages account, Prepaid insurance premium account, Repairing expense account)
(Stationery expense account, Brokerage received account, Frenchise account, Mumbai University account, Jagdishbhai's account, Excell Company's share account, Calico Mill's account ,Factory building account, Rent received account, Wages account, Prepaid insurance premium account, Repairing expense account)
From the following transactions, prepare a purchase book and sales book in the books of Kohli Traders. Prepare subsidiary books on the basis of total rate of $GST$ at $12 \%$. $GST$ is not included in the amount of following transactions. Prepare subsidiary books by adding applicable amount of $GST$.
$2018$
April $1$ Goods of $₹ 65,000$ are purchased from Dhawan Traders at $10 \%$ trade discount. Railway freight of $₹ 900$. Invoice no. $501.$
$4$ Purchased goods of $₹ 52,000$ from Sharma stores; railway freight of $₹ 620$ and wages of $300$ paid by Sharma Stores. Invoice no. $502.$
$6$ Sold goods of $₹ 40,000$ to Bhuneshwar Traders at $10\%$ trade discount. Wages of $₹ 200$ and railway freight of $₹ 300$ are also included. Invoice no. $351.$
$8$ Sold entire goods purchased from Sharma stores fo Bumrah Traders at $20\%$ profit on cost, on $2$ month's credit. Railway freight ₹ $900$ and wages of $₹ 300$ are included. Invoice no. $352.$
In the above all transactions, purchases and sales are in the respective state (intra state) only.
→$2018$
April $1$ Goods of $₹ 65,000$ are purchased from Dhawan Traders at $10 \%$ trade discount. Railway freight of $₹ 900$. Invoice no. $501.$
$4$ Purchased goods of $₹ 52,000$ from Sharma stores; railway freight of $₹ 620$ and wages of $300$ paid by Sharma Stores. Invoice no. $502.$
$6$ Sold goods of $₹ 40,000$ to Bhuneshwar Traders at $10\%$ trade discount. Wages of $₹ 200$ and railway freight of $₹ 300$ are also included. Invoice no. $351.$
$8$ Sold entire goods purchased from Sharma stores fo Bumrah Traders at $20\%$ profit on cost, on $2$ month's credit. Railway freight ₹ $900$ and wages of $₹ 300$ are included. Invoice no. $352.$
In the above all transactions, purchases and sales are in the respective state (intra state) only.
Pass adjustment entry for the following and also show its effect in final accounts: The following expenses are outstanding at the end of the year, Rent-rate $Rs. 5,000$ salary $Rs.3,000.$
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