Which of the following statement is true?

Q: Which of the following statement is true ?

Which of the following statement is true ?

Question

Accepted Answer

The correct option is 3:
The core process of accounting involves recording, classifying, and summarizing financial transactions. The **Ledger** is formally defined as the principal book of accounts into which all transactions, initially recorded in the Journal, are sorted and transferred. The Ledger is essentially the permanent home for every account of the business—be it a Real Account (for assets), a Personal Account (for debtors, creditors, etc.), or a Nominal Account (for incomes and expenses). By grouping all related transactions under a specific head, the ledger provides a complete picture of each item and is the direct source for preparing the Trial Balance and Final Accounts, making it accurate to describe it as a complete set of accounts.

The incorrect option is 1:
The statement "Accrual concept implies accounting on Cash basis" is fundamentally incorrect as these are opposing concepts. The **Accrual Concept** is a core accounting assumption that dictates that revenues must be recognized when they are *earned* and expenses when they are *incurred*, irrespective of when cash is actually received or paid. This method aims to show the true profitability of a business for a given period. In contrast, the **Cash Basis** of accounting only records revenues upon cash receipt and expenses upon cash payment. Since the Accrual Concept deliberately separates the timing of a transaction from the flow of cash, it is the opposite of accounting on a cash basis.

The incorrect option is 2:
The statement "Bank Account is Real Account" is incorrect according to the traditional Golden Rules of Accounting. Accounts are classified into Personal, Real, and Nominal. A **Real Account** relates to assets and properties, such as the Cash Account or Machinery Account. However, the **Bank Account** is classified as an **Artificial Personal Account** because it represents a legal institution, which is an artificial person in the eyes of the law. The transactions in this account reflect the business's dealings *with* the bank, making it subject to the Personal Account rule: Debit the Receiver, Credit the Giver.

The incorrect option is 4:
The statement "Accounting is concerned with monetary and non-monetary transaction" is incorrect because one of the most critical accounting principles is the **Money Measurement Concept**. This principle mandates that only those transactions or events that can be reliably measured and expressed in terms of money can be recorded in the books of account. Non-monetary events, such as changes in employee morale, management efficiency, or the quality of a product line, are not recorded in financial statements. While these qualitative factors are vital to a business, accounting's scope is strictly limited to financial, or monetary, transactions.