NIOS Class 10 Accountancy Chapter 3 Accounting Terms

NIOS Class 10 Accountancy Chapter 3 Accounting Terms Solutions to each chapter is provided in the list so that you can easily browse through different chapters NIOS Class 10 Accountancy Chapter 3 Accounting Terms and select need one. NIOS Class 10 Accountancy Chapter 3 Accounting Terms Question Answers Download PDF. NIOS Study Material of Class 10 Accountancy Notes Paper 224.

NIOS Class 10 Accountancy Chapter 3 Accounting Terms

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Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 10 Accountancy Chapter 3 Accounting Terms, NIOS Secondary Course Accountancy Solutions for All Chapters, You can practice these here.

Accounting Terms

Chapter: 3

Intext Questions 3.1

I. Fill in the blanks with suitable words: 

(i) Outsider’s and owner’s claim against the assets of the firm is called __________. 

Ans: Liability.

(ii) Liabilities are classified into two categories _______ and ______. 

Ans: External and internal.

(iii) Owner’s claim is __________ liability. 

Ans: Internal.

(iv) Outsider’s claim is __________ liability. 

Ans: External.

(v) Owner’s claim against the assets of the business is also called as __________. 

Ans: Owner’s equity/ capital.

II. Classify the following items into external and internal liabilities: 

(i) Bank loan. 

Ans: External.

(ii) Interest on capital (unpaid). 

Ans: Internal.

(iii) Capital. 

Ans: Internal.

(iv) Sundry Creditors. 

Ans: External.

(v) Outstanding rent. 

Ans: External.

(vi) Undistributed Profits.

Ans: Internal.

(vii) Bills Payable. 

Ans: External.

(viii) Bank Overdraft. 

Ans: External.

(ix) Salaries due but not paid. 

Ans: External.

(x) Reserves.

Ans: Internal.

Intext Questions 3.2

I. Fill in the blanks with suitable words: 

(i) Inflow of money from sale of goods is called __________. 

Ans: Revenue.

(ii) Outflow of money to earn profit is called as __________. 

Ans: Expense.

(iii) Expense is incurred in order to earn __________. 

Ans: Profit.

(iv) Money spent in order to purchase assets is called __________. 

Ans: Expenditure.

II. From the following identify revenues, expenses and expenditure. 

(i) Rent Received.

Ans: Revenue.

(ii) Salaries Paid. 

Ans: Expense.

(iii) Cost of Raw Material. 

Ans: Expense.

(iv) Furniture Purchased. 

Ans: Expenditure.

(v) Commission Received. 

Ans: Revenue.

(vi) Insurance Premium Paid. 

Ans: Expense.

(vii) Machines Purchased. 

Ans: Expenditure.

(viii) Advertising. 

Ans: Expense.

III. Classify the given items into assets, liabilities, capital, revenue and expense. 

(i) Stock-in-hand. 

Ans: Asset.

(ii) Rent Paid. 

Ans: Expense.

(iii) Advertising. 

Ans: Expense.

(iv) Creditors. 

Ans: Liability.

(v) Outstanding Expense (rent). 

Ans: Lability.

(vi) Interest Received. 

Ans: Revenue.

(vii) Capital Introduced. 

Ans: Capital. 

(viii) Furniture and Fittings. 

Ans: Asset.

(ix) Insurance Premium Prepaid. 

Ans: Asset.

(x) Commission Received in Advance. 

Ans: Liability.

(xi) Debtors. 

Ans: Asset.

(xii) Dividend Received. 

Ans: Revenue.

(xiii) Cash at bank.

Ans: Asset.

(xiv) Salaries Paid. 

Ans: Expense.

(xv) Discount Received. 

Ans: Revenue.

(xvi) Land and Building. 

Ans: Asset.

IV. 

(i) Capital is the 

(a) Amount invested in business by people other than the owner. 

(b) Amount invested by the owners in the business. 

(c) Loan obtained by the business from the bank. 

(d) Loan obtained by business from the government. 

Ans: (b) Amount invested by the owners in the business.

(ii) The accounting equation states that 

(a) Assets are equal to capital plus liabilities. 

(b) Assets are equal to capital minus liabilities. 

(c) Liabilities are equal to capital plus assets. 

(d) Capital minus liabilities is equal to assets. 

Ans: (a) Assets are equal to capital plus liabilities.  

(iii) Out of the following which is not an external liability of the business: 

(a) Outstanding rent. 

(b) Bank loan. 

(c) Capital.

(d) Outstanding salary.

Ans: (c) Capital.

(iv) Out of the following which is an item of expenditure. 

(a) Rent paid. 

(b) Commission paid. 

(c) Goods purchased. 

(d) Furniture purchased. 

Ans: (d) Furniture purchased.

(v) Out of the following which is not an item of revenue: 

(a) Sale of goods. 

(b) Rent received. 

(c) Sale of old furniture. 

(d) Commission received.

Ans: (c) Sale of old furniture.

1. Define the following terms:

(i) Capital.

Ans: This is the amount invested by the owners in the business. It is also called owner’s equity. Owner’s equity is the owner’s stake in the business. It shows how much is his investment in the assets of the business. 

(ii) Drawings.

Ans: It is the amount of cash or goods drawn by the proprietor from the business for his personal or domestic use.

(iii) Debtors.

Ans: A debtor is a person who owes money. A person becomes a debtor when he receives some benefit. It may be in the form of money, goods, or services.

(iv) Creditors.

Ans: A creditor is a person to whom money is owing. A person becomes a creditor when he yields (gives) some benefit.

2. Define liability, revenue & expense.

Ans: (i) Liability: The assets of a business concern are financed by the funds supplied by the proprietors and outsiders. Money is invested by the proprietor to start his business. Money is also borrowed from others and invested in business. With this money assets are purchased. So the proprietor and outsiders have a claim against the assets of the business. This claim of the proprietor and outsiders is termed as ‘Liabilities’.

(ii) Revenue: Revenue refers to the inflow of money or other assets that results from the sale of goods or services or from the use of money. It is the amount realised or receivable from the sale of goods. Amount received from sale of assets or borrowing loan is not revenue. In a broader sense, revenue is also used to mean receipt of rent, commission, discount, etc.

(iii) Expenses: It refers to the cost which is incurred in acquiring an asset or service, e.g. transportation cost incurred in transferring the raw cotton from the village to the factory. It is the amount spent in order to produce and sell the goods and services to earn the revenue, for example, cost of raw material, carriage, wages, insurance premium, rent paid for office, etc.  

3. What is meant by Double Entry Book Keeping?

Ans: The debit amounts are equal to credit amounts. This practice of having equal debits and credits is called Double Entry Book-keeping. Under this system every transaction has two aspects – as debit aspect and credit aspect and at the time of recording a transaction, both these aspects are recorded.

4. Give any five examples of external liabilities.

Ans: The following are the five examples of external liabilities:

(i) Taxes.

(ii) Debt.

(iii) Accounts payable.

(iv) Bank loans.

(v) Wage.

5. With the help of examples give the meaning of internal and external liabilities.

Ans: (i) Internal liabilities: Internal liabilities are those liabilities which the business owe to the owners or proprietors. It is the proprietor’s claim against the assets of the business. The Business Entity Assumption states that business is separate from its owners.Examples of internal liabilities include capital, profits, salaries, etc.

(ii) External liabilities: External liabilities are those liabilities which the business owes to the outsiders for goods purchased on credit, for expenses or for loans taken. 

For example: 

(a) Creditors for goods: Sundry creditors, bills payable.

(b) Creditors for expenses: Expenses yet to be paid like outstanding salaries, wages outstanding, rent due but not yet paid.

6. Give two examples each of the following:

(i) Creditors for goods.

Ans: The example of creditors for goods are: Sundry creditors and bills payable.

(ii)  Creditors for expenses.

Ans: The example of creditors for expenses are: Expenses yet to be paid like outstanding salaries and wages outstanding.

(iii) Creditors for loans.

Ans: The example of creditors for loans are: Bank loan and Bank overdraft.