Sage Computerised Accounting - Qp1

Explanation
The given statement is true because accounting involves keeping track of all the financial transactions that occur in a business. This includes recording and analyzing the money that comes into the business as well as the money that goes out of the business. By accurately accounting for these transactions, businesses can track their financial performance, make informed decisions, and ensure compliance with financial regulations.

Explanation
Following an accounting framework is necessary to produce a true and fair view of the business. An accounting framework provides a set of rules and guidelines that ensure consistency, accuracy, and transparency in financial reporting. It helps in recording and presenting financial information in a standardized manner, making it easier for stakeholders to understand and compare the financial performance of different businesses. By adhering to an accounting framework, businesses can enhance the reliability and credibility of their financial statements, which is crucial for making informed decisions and maintaining trust with investors, creditors, and other interested parties.

Explanation
Accounting information must be reliable, meaning it is accurate and can be trusted. This ensures that the information is free from errors or biases. It must also be relevant, meaning it is useful and applicable to the decision-making process. This helps users of the information to make informed decisions. Lastly, accounting information must be consistent, meaning it is presented in a uniform manner over time and across different entities. This allows for comparability and facilitates meaningful analysis.

Explanation
The Profit and Loss Account is not concerned with only the sales made during that year. It is a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time, typically a year. It includes all the income and expenses, not just sales, to calculate the net profit or loss for the period. Therefore, the statement "The Profit and Loss Account is concerned with only the sales made during that year" is false.

Explanation
A source document serves as evidence that a transaction has taken place. It provides details such as the date, amount, parties involved, and nature of the transaction. These documents can include invoices, receipts, purchase orders, bank statements, and contracts. By having source documents, businesses can maintain accurate and reliable records of their financial transactions, which is essential for proper bookkeeping and auditing purposes. Therefore, the statement that a source document is proof that a transaction has occurred is true.

Explanation
The Day Books are not sometimes called the Books of Secondary Entry. This statement is false. The Day Books are actually known as the Books of Original Entry, as they are where transactions are first recorded before being transferred to the general ledger. The Books of Secondary Entry, on the other hand, refer to subsidiary books such as the Cash Book, Sales Book, and Purchase Book, where specific types of transactions are recorded before being summarized and posted to the general ledger.

Explanation
The Nominal Ledger is a part of the accounting system that contains separate accounts for everything else, meaning accounts that do not relate to an individual. It is used to record all financial transactions that do not fall under the Sales Ledger or Purchase Ledger. This includes accounts such as expenses, revenues, assets, and liabilities. The Nominal Ledger helps in organizing and summarizing financial information for reporting and analysis purposes.

Explanation
At the end of a financial year, it is standard practice to balance all accounts within the Ledgers. This process ensures that the yearend figures, known as "balances," are produced. Balancing the accounts involves reconciling the debits and credits and ensuring that all transactions are accurately recorded. Therefore, the statement "True" is correct as it accurately reflects the common practice of balancing accounts at the end of a financial year.

Explanation
The Profit and Loss Account is a financial statement that provides information about the organization's financial performance during a specific period, usually a year. It shows the revenues, expenses, and resulting profit or loss. Therefore, it is the most appropriate choice to inform the user about how well the organization has performed in the last financial year. The Balance Sheet, on the other hand, presents the organization's financial position at a specific point in time, while the Trial Balance is a list of all the general ledger accounts with their respective debit or credit balances.

Explanation
The explanation for the given correct answer is that gross profit is indeed calculated by subtracting the cost of sales from the sales amount. After deducting expenses from the gross profit, a net profit figure is obtained. Therefore, the statement is true.