Tag: basic accounting principles and concepts

Questions Related to basic accounting principles and concepts

Which of the following is not valuation principle?

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Historical cost 

  2. Present value

  3. Gross value

  4. Realisable value

Show answer
Correct Option: C
Explanation:

In economics, gross value added is the measure of the value of goods and services produced in an area, industry or sector of an economy. In national accounts GVA is output minus intermediate consumption; it is a balancing item of the national accounts' production account.

Accounting Principle is general law or rule followed in the preparation of financial statements.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. True

  2. False

Show answer
Correct Option: A

In cash accounting system __________________________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Revenues of assets are shown only when cash is received irrespective of the period

  2. Revenues of assets are shown only of the cash received for the transactions of the financial year

  3. Revenues of assets are shown only of the cash received for the current year

  4. None of the above

Show answer
Correct Option: A

The characteristic feature of dual aspect concept of accounting is?

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. The total amount debited is always equal to total amount credited

  2. All the transactions are settled in cash

  3. Cost of the various asset is taken on the basis of actual amount spent on it

  4. None of the above

Show answer
Correct Option: A

Which of the following statements is correct?

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Accounting profit is the difference between cash receipts and cash paid in a period

  2. Accounting profit is the total of cash sales in the year less the expenses for the period

  3. Accounting profit is the difference between revenue income and expenses for the period

  4. Accounting profit is the difference between revenue income and cash payments for the period

Show answer
Correct Option: C

Select the odd one in relation to users of accounting information's.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Officers

  2. Managers

  3. Debtors

  4. Board of directors

Show answer
Correct Option: C

Accounts which represent a certain person or group of persons are termed as ___________________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Artificial or legal persons account

  2. Natural persons personal account

  3. Representative personal accounts

  4. Any of the above

Show answer
Correct Option: C
Explanation:

Representative Personal Accounts are accounts which represent a certain person or group of people. Accounts relating to outstanding and prepaid items are called representative personal accounts. For example, prepaid insurance, outstanding rent, outstanding wages/salaries etc. Outstanding salaries is one such account.

A change in accounting policy is justified ______________________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. To comply with accounting standard

  2. To ensure more appropriate presentation of the financial statement of the enterprise.

  3. To comply with law

  4. All of the above.

Show answer
Correct Option: D

All of the following are limitations of Accounting Standards except ______________________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. The choice between different alternative accounting treatments is difficult.

  2. There may be trend towards rigidity.

  3. Accounting Standards cannot override the statute.

  4. None of the above.

Show answer
Correct Option: D

Mr. Nachiket, owner of Furniture Shop, owns a personal residence that cost Rs. 6,00,000, but has a market value of Rs.9,00,000. During preparation of the financial statement for the business, the entire value of property was ignored and was not shown in the financial statements. The principle that was followed was _________________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. The concept of the business entity

  2. The concept of the cost principle

  3. The concept of going concern principle

  4. The concept of duality principle

Show answer
Correct Option: A