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INTRODUCTION TO ACCOUNTING (Remembering Based And HOTS Questions)

Remembering based Question 1. Define accounting. Ans. A ccounting  may be defined as the process of recording, classifying, summarizing  and communicating the financial information to the users of accounting service for making rationale decisions about the entity. 2. What do you mean by accounting? Ans . Accounting is the art of recording, classifying, summarizing and interpreting the results of money transactions of the entity. 3. Name any two functions of accounting. Ans. (i) Business transactions are recorded either in the journal or in the subsidiary books depending upon the size of the business and the volume of transactions. (ii) After recording of transactions in the journal or in the subsidiary books, these are posted to ledger date wise. 4. Name three branches of accounting. Ans . Financial accounting , Cost accounting , and Management accounting. 5. Define Book-keeping. Ans. Book-keeping is the art of recording and classifying t...
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INCOME FROM HOUSE PROPERTY

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INCOME FROM HOUSE PROPERTY (Sections 22 to 27) Basis of charge :- The annual value of any property is assessable under the head 'Income from House Property' if : (1) Assessee is the owner of property. (2) Property means building and attached land. (3) Property should not be used by the owner for his business or profession. Fully Exempted Incomes :- (1) Income from farm house. [Sec.2(1A)(c)] (2) Annual Value of one palace of ex-Indian Rular. [Sec.10(19A)] (3) Income from property owned by :   (i) Local Authority;  (ii) Scientific Research Association;  (iii) Trade Union;  (iv) Charitable Trust;  (v) Political Party;  (vi) University or other educational institution existing for educational purposes and not for purposes of profit;  (vii) Hospital or medical institution existing for philanthropic and not for purposes of profits. (4) Income from property used for assessee's own business or profession. (5) Income f...
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INCOME FROM SALARIES (RETIREMENT)

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INCOME FROM SALARIES (RETIREMENT) When an employee retires from service or leaves a job and joins the other or he is retrenched, he receives some special payments from the employer, e.g. : Gratuity [Sec.10(10)] Pension and Commuted Value of pension [Sec. 10(10A)] Earned leave salary [Sec. 10(10AA)] Compensation on retrenchment [Sec. 10(10B)] Compensation on voluntary retirement [Sec. 10(10C)] Amount from provident fund [Sec. 10(11)(12)]    GRATUITY :-      For exemption of death-cum-retirement gratuity, employees have been classified into three categories : (A) Government employee [Sec. 10(10)(i)] . Any death-cum retirement gratuity received by all categories of Government employees of a local authority is exempt from income tax in full. Even if after retirement he takes up an appointment in a private organisation the gratuity received by him from the government will be exempt from tax.  (B) Non-Government employees cove...
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INCOME FROM SALARIES

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INCOME FROM SALARIES (sections 15 to 17) SALARIES -  Meaning : Any remuneration   paid by an employer to his employee in consideration of his service is called salary. It includes the monetary value of those benefits and facilities provided by the employer which are taxable. Salary includes: (i) wages; (ii) any annuity or pension;  (iii) any gratuity; (iv) any fees, commission, perquisites or profit in lieu of or in addition to any salary or wages; (v) any advance or salary, but not loan for purchasing a car, scooter or a house, etc. (vi) any payment received by an employee in respect of any period of leave not availed of by him;   [Note : Encashment of earned leave at the time of retirement  whether on superannuation or otherwise is exempt subject to the provision of Sec. 10(10AA).]   (vii) the annual accretion to the balance at the balance at the credit of any employee participating in a recognised provident fund i...
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INCOME TAX ACT 1961

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INCOME TAX ACT 1961 1. Direct ( a. Income tax , b. Corporate tax) 2. Indirect    (G.S.T. July 2017)                    Meaning:   Income tax is an important direct tax. It is a prominent and most significant source of revenue of the government. The government needs money to maintain law and order in the country; safeguard the security of the country from foreign powers and promote the welfare of the people.  Every person, whose taxable income for the previous financial year exceeds the minimum taxable limit is liable to pay income tax during the current financial year on the income of the previous financial year at the rates applicable during the current financial year.   In India this tax was introduced for the first time in 1860, by Sir James Wilson in order to meet the losses sustained by the government on account of the Military Mutiny of 1857. The Income Tax Act 1961. (1) Tax-Ex...
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