Tag: commercial applications

Quizzes (170) Questions (1551)

Questions Related to commercial applications

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

Accounting policy for inventories of X ltd. states that inventories are valued at the lower of cost or net realizable value. Which accounting principle in followed in adopting the above policy?

  1. Materiality

  2. Prudence

  3. Substance over form

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The principle of prudence (or conservatism) dictates that you should anticipate no profit but provide for all possible losses, which is why inventory is valued at the lower of cost or net realizable value.

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

The other name of merchantile system of accounting is _________.

  1. cash system of accounting

  2. receipts & expenditure accounts

  3. accrual system of accounting

  4. all of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The mercantile system of accounting is the same as the accrual system, where transactions are recorded when they occur, regardless of when cash is received or paid.

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

GAAP tells _________.

  1. Accounting policies

  2. Accounting procedures

  3. Accounting statements

  4. Both a & b
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

GAAP provides the framework for both accounting policies (the specific principles chosen) and accounting procedures (the methods used to implement those principles).

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

If rights and beneficial interest in a property is transferred but documentation and legal formalities are pending then seller & purchaser should record in their accounts sale & purchase. Which principle is applied here?

  1. Prudence

  2. Substance over from

  3. Materiality

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The principle of substance over form dictates that the economic reality of a transaction should take precedence over its legal form. If the beneficial interest is transferred, it should be recorded as a sale even if legal paperwork is pending.

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

The notion that the life of a business is divisible into equal time periods of equal length is known as the _________.

  1. Continuing concern principle

  2. Time-period principle

  3. Business entity principle

  4. Recognition principle
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The time-period principle (or periodicity concept) assumes that the indefinite life of a business can be divided into shorter, equal time intervals for reporting purposes.

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

Goodwill should be tested for value impairment at which of the following levels?

  1. Each identifiable long-term asset.

  2. Each reporting unit.

  3. Each acquisition unit.

  4. Entire business as a whole
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under accounting standards like ASC 350, goodwill is tested for impairment at the reporting unit level, which is an operating segment or one level below an operating segment.

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

Bank overdraft account is a _____________.

  1. Personal account

  2. Real account

  3. Nominal account

  4. Representative personal account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A bank overdraft represents a liability to a specific person or entity (the bank). Therefore, it is classified as a personal account.

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

Which one of the following statements correctly explain the term 'doctrine of Indoor Management? 

  1. The doctrine seeks to protect the outsiders against the company

  2. Every person dealing with the company is presumed to have read and understood the contents of company's Memorandum and Articles of association

  3. If a person enters into a contract with the company which is contrary to the provisions of Memorandum and Articles of Association, he will not get any right under such contract

  4. It protects the company against the outsiders.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option B is correct.

Doctrine of indoor management is an exception to rule of constructive notice. According to this doctrine, persons dealing with company are entitled to presume that internal requirements prescribed in the memorandum and articles have been properly observed. 
They can assume that the members of the company are performing their acts within the scope of their apparent authority. 

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

Comparative financial statements are prepared at the end of __________ .

  1. Each financial year

  2. Every six months

  3. Every quarter of a year

  4. At the will of management
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Comparative financial statements are the complete set of financial statements that an entity issues, revealing information for more than one reporting period. The financial statements that may be included in this package are: The income statement (showing results for multiple periods)


These statements can be prepared anytime at the will of management.

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

Latest generation of personal computers (PCs) being used in an office setup is _____________.

  1. PC XT

  2. PC Pentium

  3. PC AT

  4. PC 486
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the context of historical computer generations, the Pentium processor represented a significant leap in performance over the 486 and earlier PC architectures.