Tag: commercial applications

Questions Related to commercial applications

Which one of the following is not a generally accepted accounting principle?

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

  1. Sales, revenues and incomes should not be anticipated or materially overstated.

  2. There must be proper cut off accounting for inventories and liabilities for cost and expenses.

  3. Non-recurring and extraordinary gains and losses should be recognized in the period they accrue, but should be shown separately from the usual operations.

  4. Long-term investments in securities should ordinarily be carried at inflated market values.

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Correct Option: D

Accounting principles and policies are to be standardised to achieve __________.

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

  1. Transparency

  2. Consistency

  3. Comparability

  4. All of the above

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Correct Option: D
Explanation:

Accounting principles and policies are to be standardised to achieve transparency, consistency and comparability. 

Transparency means, the extent to which the financial users of statement have access to the financial statements. 
Consistency is a quality that enables the comparison of financial statements from one accounting period to another by using the same accounting treatments for similar transactions. 

Comparability means financial statements that help in easy inter-firm and intra-firm comparison.

Generally accepted accounting principles ___________.

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

  1. define accounting practice at a point in time

  2. are similar in nature to the principles of chemistry or physics

  3. are rarely changed

  4. are not affected by changes in the way business operates

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Correct Option: A
Explanation:

GAAP (generally accepted accounting principles) is a collection of commonly-followed accounting rules and standards for financial reporting. The acronym is pronounced "gap." GAAP specifications include definitions of concepts and principles, as well as industry-specific rules.

These "principles" are not like the unchangeable laws of nature in chemistry or physics.
They encompass conventions ,rules,and procedures,necessary to define accepted accounting practice at a particular time.

It is essential to standardize the accounting principles and policies in order to ensure _____________.

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

  1. Transparency

  2. Consistency

  3. Comparability

  4. All of these

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Correct Option: D

Which of the following statements describes GAAP properly?

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

  1. Generally accepted accounting principles (GAAP) compries a set of rules, concepts and guidelines used in preparing financial accounting reports

  2. Generally accepted accounting principles (GAAP) incorporate the consensus at any time as to which economic resources and obligations should be recorded as assets and liabilities

  3. What information should be disclosed and how it should be disclosed, and which financial statements should be prepared

  4. None of the above

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Correct Option: A

According to which of the following conventions, secret reserves are not permitted?

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

  1. Consistency

  2. Disclosure

  3. Conservatism

  4. All of these

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Correct Option: D

A general law adopted as a guide is called _____________ .

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

  1. Accounting System

  2. Accounting Principles

  3. Accounting Process

  4. Accounting Plan

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Correct Option: B

State with reasons whether the following statement is true or false.
Transaction and events are guides by generally accepted accounting principles and the transactions and events are guided by those principles. 

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

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Correct Option: A

State with reasons whether the following statement is true or false:
Loss of stock is said to be abnormal loss, which is due to inherent characteristics of the commodity.

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

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Correct Option: B

State with reasons whether the following statement is true or false:
Accounting principle is general rule followed in 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

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Correct Option: A