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Financial Accounting-I
Notes (b) Recording, communicating, and identifying.
(c) Identifying, communicating, and recording.
(d) Identifying, recording, and communicating.
(e) None of the above
10. Which one of the following users of accounting information is considered to be an external
user of accounting information rather than an internal user of accounting information?
(a) Sales staff
(b) Company managers
(c) Company customers
(d) Officers and directors
(e) Budget offi cers
11. All of the following people can properly be called managers. Which one of the following
individuals is not considered an internal user of accounting information?
(a) Service manager
(b) Research and development manager
(c) Production manager
(d) Partner in CA firm charged with conducting the company’s external audit
(e) Human resources manager
12. A college student pays ` 150 cash for her textbook. In the student’s opinion, the textbook
is worth ` 50. In accounting, however, the value of the textbook is assumed to be and is
recorded at the ` 150 amount. The accounting principle that is most demonstrated by this
example is:
(a) The cost principle
(b) The going-concern principle
(c) The business entity principle
(d) The monetary unit principle
(e) The conservatism principle
3.6 Review Questions
1. “Accounting is the process of recording, classifying and summarizing of accounting
transactions.” Explain.
2. The entire accounting system is governed by the practice of accountancy. What are the key
principles used in accounting?
3. Discuss dual entry concept.
4. What are the key assumptions of going concern concept?
5. “Every debit transaction is appropriately equated with the transaction of credit.” Defi ne.
6. Classify the various kinds of values in accounting process.
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