QUESTIONS

Technical English II
Cristina Edith Eyzaguirre Rejas
IV A

TACNA- PERU
2016
 Answers
1. WHAT IS BOOK-KEEPING?

Book-keeping is that branch of knowledge which tells us how to keep a record of

business transactions. It is often routine and clerical in nature.
Bookkeeping is the recording, on a day-to-day basis, of the financial transactions and
information pertaining to a business. It ensures that records of the individual financial
transactions are correct, up-to-date and comprehensive.

2. DEFINE BOOK-KEEPING.

Book-keeping is the science and art of correctly recording in the books of account all
those business transactions that result in the transfer of money or moneys worth.

3. WHAT ARE THE OBJECTIVES OF BOOK-KEEPING?

The objectives of book-keeping are:

a) To have permanent record of all the business transactions.
b) To keep records of income and expenses in such a way that
c) The net profit or net loss may be calculated.
d) To keep records of assets and liabilities in such a way that
e) The financial position of the business may be ascertained.
f) To keep control on expenses with a view to minimise the same in order to
maximise profit.
g) To know the names of the customers and the amount due from them.
h) To know the names of suppliers and the amount due to them.
i) To have important information for legal and tax purposes.

4. WHAT ARE THE ADVANTAGES OF BOOK-KEEPING?

From the above objectives of book-keeping, the following advantages can be noted:
a) Permanent and Reliable Record
b) Arithmetical Accuracy of the Accounts
c) Net Result of Business Operations
d) Ascertainment of Financial Position
e) Ascertainment of the Progress of Business
f) Calculation of Dues
g) Control over Assets
h) Control over Borrowings
i) Identifying Dos and Donts
j) Fixing the Selling Price
 k) Taxation
l) Management Decision-making
m) Legal Requirements

5. WHAT INFORMATION CAN A BUSINESSMAN OBTAIN FROM HIS BOOK-

KEEPING?

Book-keeping provides permanent record for all business transactions, replacing the
memory which fails to remember everything. Bookkeeping provides the information
from which accounts are prepared. It is a distinct process, that occurs within the
broader scope of accounting.

6. WHAT DO YOU MEAN BY ACCOUNTING?

For me accounting is the systematic and comprehensive recording of financial

transactions pertaining to a business, and it also refers to the process analyzing and
reporting these transactions to oversight agencies and tax collection entities.
Accounting is the measurement, processing and communication of financial
information about economic entities.

7. DEFINE ACCOUNTING.

Accounting is the process of identifying, measuring and communicating economic

information to permit informed judgements and decision by users of the information.

8. WHAT IS ACCOUNTING PROCESS?

The accounting process is:

Input Process Output

Identifying
Rrecording
Business Classifying Information
transactions Summarising to
(monetary
value) Analysing Users
Interpreting
Communicating
9. WHAT ARE THE DIFFERENCES BETWEEN BOOK-KEEPING AND
ACCOUNTING?

SL. BASIS OF BOOK-KEEPING ACCOUNTING

NO. DISTINCTION
1 Scope Recording and It is not only recording and
maintenance of books of maintenance of books of
accounts accounts but also includes
analysis, interpreting and
communicating the
information.

2 Stage Primary stage Secondary stage

3 Objective To maintain systematic
records of business
transactions
4 Nature Often routine and clerical in
nature.
5 Responsibility A book-keeper is
responsible for recording
business transactions.
6 Supervision The book-keeper does not
supervise and check the
work of an Accountant.
7 Staff involved Work is done by the junior
staff of the organisation.
To ascertain the net result
of the business operation.
Analytical and executive in
nature.
An accountant is also
responsible for the work of
a book-keeper.
An accountant supervises
and checks the work of the
book-keeper.
Senior staff performs the
accounting work.

10. EXPLAIN THE INTER-RELATIONSHIP BETWEEN BOOK-KEEPING,

ACCOUNTING AND ACCOUNTANCY.

Book-keeping provides the basis for accounting and it is complementary to accounting

process.
Accounting begins where book-keeping ends.
Accountancy includes accounting and book-keeping. The terms Accounting and
Accountancy are used synonymously.

11. BRIEFLY EXPLAIN THE USERS AND THEIR NEED FOR ACCOUNTING
INFORMATION.

The users and their need for information are as follows:

 Users Need for Information
INTERNAL
Owners To know the profitability and financial soundness of the
business.
Management To take prompt decisions to manage the business efficiently.
Employees and To form judgement about the earning capacity of the
Trade unions business
EXTERNAL
Creditors, banks To determine whether the principal and the interest thereof
and other lending will be paid in when due.
institutions
Present investors To know the position, progress and prosperity of the
business
Potential To decide whether to invest in the
investors business or not
Government and To know the earnings in order to assess authorities the tax
Tax authorities liabilities of the business
Regulatory To evaluate the business operation under the regulatory
agencies legislation.
Researchers To use in their research work

12. WHAT ARE THE BRANCHES OF ACCOUNTING?

Increased scale of business operations has made the management function more
complex. This has given raise to specialised branches in accounting. The main
branches of accounting are Financial Accounting, Cost Accounting and Management
Accounting.

13. WRITE SHORT NOTES ON: A) DEBTORS B) CREDITORS C) STOCK

A. DEBTORS

A person who receives a benefit without giving money or moneys worth immediately,
but liable to pay in future or in due course of time is a debtor.

The debtors are shown as an asset in the balance sheet.

B. CREDITORS

A person who gives a benefit without receiving money or moneys worth immediately
but to claim in future, is a creditor.

The creditors are shown as a liability in the balance sheet.

C. STOCK
 Stock includes goods unsold on a particular date. Stock may be opening and closing
stock.

14. BRIEFLY EXPLAIN THE FOLLOWING TERMS A) VOUCHER B) INVOICE C)

ACCOUNT

A. VOUCHER

Written instrument that serves to confirm or witness for some fact such as a
transaction.

B. INVOICE

Invoice is a business document which is prepared when one sell goods to another.
It contains the information relating to name and address of the seller and the
buyer.

C. ACCOUNT

Account is a summary of relevant business transactions at one place relating to a

person, asset, expense or revenue named in the heading.

15. WRITE SHORT NOTE ON A) REVENUE B) PURCHASE C) ASSETS

A. REVENUE

Revenue means the amount receivable or realised from sale of goods and
earnings from interest, dividend, commission, etc.

B. PURCHASE

Purchases refers to the amount of goods bought by a business for resale or for use
in the production.

C. ASSETS

Assets are the properties of every description belonging to the business. Assets
can be classified into tangible and intangible.