(OR) Explain two objectives of Accounting.

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Q. (OR) Explain two objectives of Accounting.

Madhya Pradesh MpbseMP Board (MPBSE) Higher Secondary Class 11 (Commerce) 2020Subjective· 2mImportance★★★★★est

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Concept understanding — Nature Of Accounting Information

Nature of Accounting Information

Think about your monthly pocket money. You know roughly how much you get, what you spend on snacks, and what's left. But if your parents asked you exactly where the money went, you'd need a record. That record — organised, verifiable, and useful for decisions — is what accounting information is.

The Everyday Intuition

Imagine you run a small chai stall. Every day you buy milk, sugar, tea leaves, and sell cups of chai. At the end of the month, you want to know: Did I make a profit? How much do I owe the milkman? Can I afford to buy a bigger stove?

Your memory won't cut it. You need accounting information — a structured, reliable record of your financial transactions. It's not just numbers; it's numbers that tell a story about your business's financial health.

The Precise Meaning

Accounting information is the output of the accounting process. It is financial data that has been identified, measured, recorded, classified, summarised, and interpreted to help users make economic decisions.

The key characteristics that make it accounting information (and not just random numbers) are:

Reliability — It must be verifiable and free from material error or bias.
Relevance — It must influence decisions by helping predict the future or confirm the past.
Comparability — You should be able to compare it across time periods or with other businesses.
Understandability — It must be presented clearly for users who have reasonable knowledge of business and accounting.

Important

Accounting information is not the same as raw data. A pile of receipts is data. A Profit & Loss Account that shows net profit of Rs 50,000 is accounting information — it has been processed, classified, and given meaning.

Why It Matters

Accounting information serves two broad groups of users:

Internal users (owners, managers) use it to decide whether to expand, cut costs, or change prices. Without reliable accounting information, they'd be flying blind.

External users (banks, investors, government) use it to decide whether to lend money, buy shares, or assess tax liability. A bank won't give a loan without seeing the business's financial statements — that's accounting information in action.

Note

For a sole proprietor, accounting information helps answer: "Should I continue this business or shut it down?" For a company, it helps shareholders decide: "Should I hold or sell my shares?"

Accounting Treatment — How It's Recorded

Here's the crucial point: Accounting information itself is not a transaction. You don't "debit" or "credit" accounting information. Instead, accounting information is the result of recording transactions.

But the process of generating accounting information involves recording every transaction using the double-entry system. For example:

When you buy goods for cash:

Debit: Purchases Account (expense increases)
Credit: Cash Account (asset decreases)

When you sell goods on credit:

Debit: Debtors Account (asset increases)
Credit: Sales Account (revenue increases)

These individual entries, when summarised, produce accounting information in the form of financial statements.

The Formats That Present Accounting Information

The accounting information is presented in standard formats. Here are the two most important ones for a Class 12 student:

1. Trading and Profit & Loss Account (for a sole proprietorship)

Particulars	Amount (Rs)	Particulars	Amount (Rs)
To Opening Stock	xxx	By Sales	xxx
To Purchases	xxx	By Closing Stock	xxx
To Direct Expenses	xxx	By Gross Loss (if any)	xxx
To Gross Profit (transferred)	xxx
Total	xxx	Total	xxx
To Administrative Expenses	xxx	By Gross Profit (brought down)	xxx
To Selling Expenses	xxx	By Other Incomes	xxx
To Financial Expenses	xxx

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Accounting aims to keep systematic records and to ascertain profit/loss and financial position.

Two objectives of accounting:

Systematic records: To keep a complete and systematic record of all business transactions, which human memory cannot retain. …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

Showing the 12 most recent of 15 on this concept.

CBSE 2022Set MARCH1 markMCQ
$Q. Which of the following is not an element of a computer system?$
(a) Hardware
(b) Software
(c) Reports
(d) Connectivity
›Reveal solutionSolution

Reports is not an element of a computer system — option (c). Kerala Plus One (DHSE) Accountancy, Computers in Accounting.

A computer system is made up of the following elements: hardware (the physical machine), software (programs), people/liveware (users), procedure (the steps followed), data (raw facts input) and connectivity (the way the machine links to networks/other devices).

…

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CBSE 2022Set ANNUAL1 markMCQ
$Q. Which of the following is not a branch of accounting?$
(a) Management Accounting.
(b) Cost Accounting.
(c) Financial Accounting.
(d) Book-keeping.
›Reveal solutionSolution
Financial, cost and management accounting are recognised branches of accounting; book-keeping is merely the recording stage. The correct option is (d) Book-keeping.

(a) Management Accounting — supplies information to management for planning and control; a branch.

(b) Cost Accounting — ascertains and controls the cost of products/services; a branch. …
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CBSE 2022Set ANNUAL1 markMCQ
$Q. A primary function of accounting is$
(a) audit of accounts.
(b) legal requirement.
(c) maintenance of capital.
(d) determination of financial results.
›Reveal solutionSolution
Accounting's basic purpose is to record transactions and ascertain the financial results (profit/loss) of the business, so the primary function is (d).

(a) Audit of accounts — an independent check done after accounts are prepared; not a function of accounting itself.

(b) Legal requirement — a reason for keeping accounts, not a function.

(c) Maintenance of capital — a financial-management concern, not accounting's primary function. …
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CBSE 2022Set ANNUAL1 markMCQ
$Q. RAM is$
(a) permanent memory.
(b) temporary memory.
(c) human memory.
(d) None of these.
›Reveal solutionSolution
RAM stores data only while power is on and loses it when switched off, so it is temporary/volatile memory. The answer is (b).

(a) permanent memory — this describes ROM/secondary storage, not RAM. …
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CBSE 2022Set ANNUAL1 markMCQ
$Q. Which of the following is not an Operating System?$
(a) DOS.
(b) LINUX.
(c) WINDOWS 2,000
(d) MS WORD.
›Reveal solutionSolution
DOS, LINUX and Windows are operating systems; MS WORD is an application program, so it is not an operating system. The answer is (d).

(a) DOS — a disk operating system.

(b) LINUX — an operating system.

(c) WINDOWS 2000 — a Microsoft operating system. …
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CBSE 2022Set ANNUAL1 mark
$Q. What is Software? Or What is the full form of CPU?$
›Reveal solutionSolution

Software = the programs (instructions) that make a computer work; it is intangible, unlike hardware, and is of two types: system and application software.

Software means the set of programs, procedures and coded instructions that direct a computer to carry out specific tasks. Unlike hardware (the physical machine), software is intangible. It is broadly of two types: system software (which runs and manages the computer, e.g. operating systems such as Windows/Linux) and application software (which performs user tasks, e.g. a Tally accounting package, MS Word).

…

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CBSE 2021Set MARCH1 markMCQ
$Q. Find the odd one:$
(a) Cost of training
(b) Staff Opposition
(c) System Failure
(d) Quality Report
›Reveal solutionSolution
The odd one out is Quality Report — option (d).

This question, in the Kerala Plus One (DHSE) computerised-accounting context, groups items by whether they are drawbacks or benefits of a computerised accounting system:

(a) Cost of training, (b) Staff opposition and (c) System failure are all limitations / problems of a computerised accounting system. …
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CBSE 2020Set MARCH1 markMCQ
$Q. A series of operation in a certain order to achieve a desired result is known as _____.$
(a) Procedure
(b) Data
(c) Connectivity
(d) Decisions
›Reveal solutionSolution

A series of operations in a certain order to achieve a desired result is a procedure. Correct option: (a).

Computerized accounting is part of the Kerala Plus One (DHSE) Accountancy syllabus. The terms mean:

Term Meaning
Procedure A defined sequence of steps/operations to reach a result
Data Raw facts and figures that are processed

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CBSE 2020Set MARCH1 markMCQ
$Q. Multiple types of taxes in goods and services were abolished through the introduction of _____.$
(a) VAT
(b) GST
(c) Octroi
(d) Income tax
›Reveal solutionSolution

Multiple indirect taxes on goods and services were abolished by introducing GST. Correct option: (b).

GST (Goods and Services Tax), introduced in India in 2017, is a comprehensive, destination-based indirect tax that replaced a large number of earlier central and state indirect taxes:

Option Note
VAT Was itself one of the taxes subsumed into GST
GST The single tax that abolished the multiplicity of indirect taxes

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CBSE 2020Set MARCH1 markMCQ
$Q. Which among the following is not an advantage of computerized accounting system?$
(a) Speed
(b) Cost of training
(c) Reliability
(d) Accuracy
›Reveal solutionSolution

Speed, accuracy and reliability are advantages of computerized accounting; cost of training is a disadvantage. Correct option: (b).

Computerized accounting is covered in the Kerala Plus One (DHSE) Accountancy syllabus. Its features fall into advantages and limitations:

Feature Advantage / Limitation
Speed Advantage — faster processing of large volumes
Accuracy Advantage — arithmetic done without errors

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CBSE 2020Set MARCH1 markMCQ
$Q. The database element which enables to retrieve data and information:$
(a) Tables
(b) Queries
(c) Forms
(d) Report
›Reveal solutionSolution

The database element used to retrieve data and information is the query. Correct option: (b).

Database management is part of the computerized-accounting portion of the Kerala Plus One (DHSE) Accountancy syllabus. The main database objects are:

Object Function
Table Stores data in rows and columns
Query Retrieves/extracts and filters data based on conditions

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CBSE 2020Set MARCH1 markMCQ
$Q. [Rectangle symbol] This symbol represents a _____ in entity relationship model.$
(a) Entity
(b) Weak entity
(c) Relationship
(d) Attribute
›Reveal solutionSolution

A rectangle in an ER model represents an entity. Correct option: (a).

The Entity-Relationship (ER) model, part of the database/computerized-accounting content in the Kerala Plus One (DHSE) Accountancy syllabus, uses standard shapes:

Symbol Represents
Rectangle Entity
Double rectangle Weak entity

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Term	Meaning
Procedure	A defined sequence of steps/operations to reach a result
Data	Raw facts and figures that are processed

Option	Note
VAT	Was itself one of the taxes subsumed into GST
GST	The single tax that abolished the multiplicity of indirect taxes

Feature	Advantage / Limitation
Speed	Advantage — faster processing of large volumes
Accuracy	Advantage — arithmetic done without errors

Object	Function
Table	Stores data in rows and columns
Query	Retrieves/extracts and filters data based on conditions

Symbol	Represents
Rectangle	Entity
Double rectangle	Weak entity

Q.(OR) Explain two objectives of Accounting.

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