Here are 25 Accounting Questions and Answers All WASSCE Accounting students must know. Read this to the end and find answers to questions that most accounting students do not know inside out. Prepare for the WASSCE Accounting examination with confidence using these questions and answers provided.
25 Accounting Questions and Answers All WASSCE Accounting students
Question 01: What is accounting?
Answer: Accounting is the process of collecting, putting together, and keeping track of all financial transactions, as well as making, analyzing, and giving a clear explanation of financial results.
Accounting is a system of information that lets an organization find, measure, record, and report to both internal and external users any economic events or transactions.
Question 02: What are the objectives of accounting?
Answer: The followings are the most important objectives of accounting:
Permanently keep accounts.
Determining financial results.
Determine the financial situation.
Policy making and decision making.
To verify mathematical accuracy.
To control expenses.
Detect and prevent fraud.
Assist in tax assessment.
Establishing values and ensuring accountability.
Question 03: What is the importance or benefit of accounting?
Answer: The importance or benefit of accounting is as follows:
Permanent recording of financial transactions.
Calculating the correct profit-loss of the organization
Determining the actual financial situation.
Maintaining a balance of income and expenditure.
Formulation of a financial plan.
Correcting mistakes and verifying mathematical accuracy.
Question 04: What are the four (4) accounting activities?
Answer: The four accounting activities are as follows:
Identifying: This is the process of figuring out what events or economic activities have to do with money and how they affect a company’s finances.
Measurement: Assigning numerical or symbolic values to events.
Documentation: The events or transactions that are considered to be financial are written down so that a history of the organization’s financial activity can be made.
Reporting: The information should be sent to the people who need it so that the activities that have been identified and written down have more meaning.
Question 05: What are the functions of accounting?
Answer: The most important functions of accounting are as follows:
Monitoring and identification of economic events.
Measurement and recording of financial events in monetary terms.
Classification and permanent accounting of transactions.
Determining the balance of accounts and preparing a trial balance.
Record the adjustment of accounts.
Preparation of financial statements and reports and
Analysis and interpretation of financial statements.
Question 06: Why is accounting referred to as “Business Language”?
Answer: Language is the medium of expression. Every human being expresses his thoughts, feelings, and desires through language. In the same way, accounting is used to create an organization’s financial results and show the financial position of the accounting process.
Modern accounting is called the language of business. because any kind of information in a business organization is available through accounting. All the parties involved in the organization—debtors, creditors, investors, lenders, research institutes, etc.—can easily get any information about the institution.
Question 07: What is the brief history of accounting?
Answer: The brief history of accounting is as follows:
People have kept records of important events on the bark of trees and by drawing lines on cave stones since the dawn of civilization.
Later, they learned to keep track of stocks at home by making marks on the walls and tying knots with creepers.
Over time, the number of people grows, the size of the civilization grows, an exchange system develops, money is made, and trade and commerce start.
Mathematically, purchase sales, income expenses, and other transactions were recorded.
In 1494, an Italian mathematician wrote a book called “Summa de arithmetica, geometria, proportioniet proportionalita” (The Collected Knowledge of Arithmetic, Geometry, Proportion, and Proportionality). In it, he explained the basics of bookkeeping by using the double-entry method.
Science, technology, and business have also changed over time, which has led to changes in accounting. The size of the company grew from small to massive. Accounting is used in personal and family life, as well as in business, government, non-government, and for-profit and non-profit organizations.
Accounting progress is linked to the advancement of science and technology. Accounts are now held on machines rather than by hand. It saves time and labor while also assisting the company in making the best decision possible.
Question 08: What is the nature of accounting?
Answer: The nature of accounting is as follows:
Accounting is a service-oriented profession. Its goal is to give quantitative information, mostly about money, about economic entities to help people make economic decisions, like choosing between different ways to act.
Accounting is a profession in its own right. A profession is a type of work that requires formal education in a specific field before anyone can do it.
Accounting is a way of putting together information in a way that makes sense. It has changed over the last century as trade and industry have grown.
The accounting information would be used to solve issues that affect the general public, such as price determination and regulation. So, accounting information that is correct, adequate, and reliable can make it easier to protect the public interest, which is good for society as a whole.
Accounting is referred to as the “language of business” for good reason. It’s a way of reporting and disseminating information about a business.
Accounting is a science because it follows its own set of rules, such as the double-entry system, which states that any transaction has two sides, debit, and credit.
Accounting is an art because it requires intelligence, interest, and expertise in order to keep the books of accounts in order.
Accounting is regarded as a data processing system. Accounting provides relevant business information to all parties involved.
Question 09: What is the scope of accounting?
Answer: The scope of the field of accounting is discussed below:
In personal and family life:
Every person earns money from various activities and transactions and spends it on family welfare. Accounting principles and methods are required to maintain these income-expenditure accounts.
In business organizations:
The main purpose of a business organization is to make a profit. Using accounting is the only way to know if a business has made a profit and what its financial situation is. Aside from that, accounting is also needed to help make decisions about how to evaluate, control, and grow the business.
In non-business organizations:
Financial transactions take place in schools, colleges, madrasas, associations, hospitals, public libraries, and cooperative societies. As a result, these institutions also need accounting.
For government institutions:
Accounting principles and methods are used to keep accurate records for the government’s many departments, ministries, offices, courts, state bodies, corporations, autonomous bodies, etc.
Professionals like chartered accountants, doctors, engineers, tax advisors, advocates, etc. apply accounting to keep accurate accounts of income and expenditure and assess taxes.
Question 10: What is the difference between accounting and accountancy?
Answer: The top 4 differences between accounting and accountancy are as follows:
Accounting starts where bookkeeping ends, while accountancy is the knowledge of how to do accounting.
Accounting summarizes financial statements and communicates the results to those who are concerned, while accountancy explains how to keep different books of records in order.
Accounting is the science of tracking and classifying business transactions, while accountancy is the practice of preparing and communicating accounting information to those who need it.
Accounting makes it easier to run a business. Like other academic subjects like finance, physics, and chemistry, accountancy is a formal body of knowledge.
Question 11: Is accounting an art or a science?
Answer: Accounting is seen as an art because it requires skills and creative thinking. One must be trained in accounting in order to be able to do accounting tasks well.
Accounting, as a body of knowledge, is also regarded as a science. On the other hand, accounting isn’t a precise science because the laws and principles are continually changing.
Question 12: What is an accounting information system (AIS)?
Answer: An accounting information system (AIS) is a way to collect data, turn it into information, and send it to users in a structured way.
An accounting information system (AIS) is used by internal users to collect, store, and process financial and accounting data so that investors, creditors, and tax authorities can get the information they need. It’s a computer-based tool for monitoring accounting activity using information technology.
Question 13: What is the goal or objective of accounting information systems?
Answer: The goal of an accounting information system (AIS) is to collect, store, process, and report financial and accounting data so that managers and other interested parties, such as accountants, auditors, consumers, lenders, trade unions, vendors, business analysts, and the government, can make smart business decisions.
Question 14: Who are the users of accounting information?
Answer: Accounting’s main goal is to provide information that is valuable to both people within and outside the organization.
Accounting is the process of gathering data that outside and inside users can use to make decisions that affect how economic resources are shared in society. Accounting information is used by owners, investors, creditors, customers, managers, tax authorities, governments, the general public, security exchange commissions, and many other groups.
Question 15: Who are the internal users of accounting information?
Answer: Internal users are people who are directly involved in running and managing a business.
Internal users include:
Question 16: Who are the external users of accounting information?
Answer: External users are people or groups that are not directly involved in how the organization works.
External users include:
Academicians and researchers
Question 17: Why is accounting called an information system?
Answer: We all know that accounting is called an information system. But why is accounting called an information system? Before we can get to the precise answer, we must first understand what an information system is.
Information systems are often described as a set of hardware, software, data, people, and processes that work together to produce high-quality data.
So, like any other information system, accounting systems are used to collect and organize data, entities, and processes into data that can be used and, ideally, is of high quality. Accounting system functionality encapsulates the core of what information systems are all about.
Accounting data is useful for both for-profit and non-profit organizations. The accounting system of a business that wants to make money is a way to keep track of financial information about a business’s resources and how their use affects the business. Information is important and useful if decision-makers can use it to figure out how much different options will cost.
Accounting doesn’t usually produce basic information, like raw financial data. Instead, the day-to-day operations of the business create the raw financial data. Accounting is an information system that links a source of information (the accountant), a way to send and receive information (financial statements), and a group of people who use the information (external users).
Question 18: What’s the difference between accounting and accounting information systems?
Answer: The two key differences between accounting and accounting information systems is as follows:
Accounting is the process of sorting data into pre-determined accounts. On the other hand, an accounting information system is a whole system that examines where accounting data is obtained, how it is passed on, and how it reaches the users.
The accounting system is just a small part of the overall information system.
Question 19: What are the disadvantages or limitations of accounting information systems?
Answer: The most common disadvantages or limitations of accounting information systems are as follows:
It is also difficult and time-consuming to learn an accounting information system.
People need to be taught how to use a framework, which can cost businesses both time and manpower.
A computerized accounting information system is made up of a variety of components. Some individuals can find them difficult to use due to their sophistication.
An accounting system can take weeks or months to learn, and most people still don’t know what it can do. If an employee leaves the company, retraining another employee can take weeks or months.
The majority of accounting information systems are computerized. As a result, there is always the possibility of losing data due to power outages or device crashes. There’s a risk that all of the data in the system will be lost if this happens.
To keep up with the latest developments, businesses often change their business practices. In order to compete in a business environment, these changes can have an impact on an accounting system.
Setting up an accounting information system is hard because each organization is different in its own way.
Question 20: What does an accountant do?
Answer: An accountant is a professional who deals with financial matters such as taxes, budgeting, and financial planning. The work is most often done in an office or accounting firm.
Accountants keep track of the money that a company takes in and the assets they have on hand to help them decide how much tax to pay.
They also keep track of the income from any investments and organize all the different expenses for their clients.
They can prepare annual reports or quarterly updates on how well a company has been doing that provide insight into what kind of profits it’s making and where they’re headed in the future.
Accountants can work for a company as external accountants and monitor its business, or they can be internal and help a company with its accounting needs.
Some accountants specialize in tax preparation, and others work in auditing, where they are hired by the government to make sure that companies are paying the right amount of tax on their money.
There are many career options for accountants in various sectors, fields, industries, and more. Accountants help people who need help setting up a portfolio of investments or keeping track of their costs by giving them financial advice and planning services.
Question 21: What is bookkeeping?
Answer: Bookkeeping is the process of writing down and organizing all of a company’s business transactions.
Bookkeeping is mostly about keeping track of the business transactions that happen every day in a company.
Question 22: What are the differences between bookkeeping and accounting?
Answer: The 5 important differences between bookkeeping and accounting are as follows:
Bookkeeping is the process of recording financial transactions. Whereas accounting is the process of interpreting, classifying, analyzing, reporting, and summarizing financial data.
The main goal of bookkeeping is to keep accurate and organized records of all financial transactions. The main goal of accounting, on the other hand, is to assess the financial situation and then tell the right people about it.
Financial statements are not made as part of the bookkeeping process. Instead, they are made as part of the accounting process.
Bookkeeping doesn’t require any special skills, but accounting does because it’s analytical and hard to understand.
The data from bookkeeping can’t be used to make important business decisions. On the other hand, the data from accountants can be used to make important business decisions.
Question 23: How does accounting create relationships with other subjects?
Answer: In the following ways, accounting creates relationships with other subjects:
Accounting and Computer Science
Computer science has opened the door to a new era of data collection, storage, and presentation, which helps accounting reach its basic goals.
Accounting and Management
The accountant’s job is to keep track of the organization’s financial transactions in a way that makes sense and to present the necessary information based on the rules set by the management.
Accounting and Finance & Banking
Institutional finance and banking science have a close relationship with the subject of accounting. The information, data, and instructions that one person gives to the other help the other person carry out the information, data, and goals.
Accounting and Statistics
Quantitative data is collected, put together, and sorted in both accounting and statistics. This information is then given to different users.
Accounting and Mathematics
Knowledge of mathematics is essential for smooth and accurate calculation. Accounting benefits from mathematics at every stage.
Accounting and Law
Accounting and law are closely related. Accounting tasks can’t be done right if you don’t know the law.
Accounting and Engineering
Through technical knowledge, the main goal of engineering is to find and make new things that meet the needs of society. An engineer has to have a comprehensive idea of accounting so that budgeting can be used to control spending and figure out how much will be spent on building physical infrastructure and products.
Accounting and Economics
Economics and accounting are deeply involved. Accounting and economics are interdependent. Appropriate economic ideas about value, income, and production costs help an accountant to better understand accounting.
Accounting and Marketing
Accounting data is used to market a product or service correctly and helps reach the marketing goal. Accounting data also helps keep the marketing process in balance.
Accounting and Social Science
In this age of globalization, accounting and social science are inextricably linked. Using accounting data, many countries in the developed world think about how building industrial plants will hurt the environment and climate and then take the steps needed for proper waste management.
Question 24: What are the Branches or Types of Accounting?
Answer: The branches of accounting are as follows:
Specialized Accounting: includes
Human Resource Accounting
Question 25: How does accounting create accountability and values?
Answer: Accounting creates accountability following ways:
Cost accountability is ensured by implementing a standard costing and budgetary control system. The standard cost system determines the standard cost for a particular program.
If the actual expenditure is more than that, the concerned officer or employee is held accountable. In the budgetary control system, the budget is made at the start of the year, and different departments or units get their share.
The concerned officer or employee is held accountable for spending more or less of the budget.
Accountability for responsibilities is ensured using responsibility accounting techniques.
In modern times, different people are asked to do different jobs for the government, private, independent businesses, and non-business organizations.
Responsibility accounting is a way to look at and judge how well different people have done their jobs.
The main goal of the accounting process is to show people at different levels of the organization who is responsible for what and to encourage them to do their jobs well.
Accounting creates value in the following ways:
It is a person’s religious duty to make good use of the things the Creator gives them and to keep track of their money. Accounting encourages people to perform such duties through accounting techniques and practices.
Accounting makes people responsible by having them record transactions correctly and figure out results based on dates. as well as helping to acquire invaluable characteristics such as discipline, devotion, and conservatism.
The practice of thrift and saving brings prosperity to the people. Accounting encourages people to be frugal and thrifty by making them accountable.
The technique of accounting makes people accountable. And account-conscious people are confident and self-reliant, which motivates people to be developmental.
Accounting helps to consider and verify the ability to borrow and repay. The borrower knows that he or she might not pay back the loan, which indirectly helps to create value.
If the books are kept correctly, the person who did something wrong can be found through an audit and punished. On the other hand, the person doesn’t do anything illegal or dishonest that creates value because they are afraid of getting caught and getting known.
I hope that by the end of this post, you have a good understanding of the “Introduction to Accounting” chapter.
You will gain a better understanding of the “Introduction to Accounting” chapter if you read these 25 important “Introduction to Accounting” questions and answers on a regular basis.
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