Tag: meaning and purposes of accounting

Quizzes (0) Questions (49)

Questions Related to meaning and purposes of accounting

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 of the following is not valuation principle?

  1. Historical cost

  2. Present value

  3. Gross value

  4. Realisable value
Reveal answer Fill a bubble to check yourself
C Correct answer
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.

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

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Accounting principles are the fundamental rules and guidelines that provide a framework for consistent financial reporting and preparation of financial statements.

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

In cash accounting system __________________________.

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The cash basis of accounting records transactions only when cash is actually received or paid, regardless of the accounting period to which they relate.

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 characteristic feature of dual aspect concept of accounting is?

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The dual aspect concept states that every financial transaction has two sides, meaning that for every debit entry, there must be a corresponding credit entry of equal 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

Which of the following statements is correct?

  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
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Accounting profit is defined as the difference between total revenue earned and the total expenses incurred during a specific accounting period.

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

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

  1. Officers

  2. Managers

  3. Debtors

  4. Board of directors
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Managers, board members, and officers are internal users of accounting information. Debtors are external parties who owe money to the business and are not primary users of internal accounting reports.

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

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

  1. Artificial or legal persons account

  2. Natural persons personal account

  3. Representative personal accounts

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

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

A change in accounting policy is justified ______________________.

  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.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting policies can be changed if required by new accounting standards, by law, or to provide a more accurate and fair presentation of the financial position of the enterprise.

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

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

  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.
Reveal answer Fill a bubble to check yourself
D Correct answer
Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

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 _________________.

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The business entity concept dictates that the business and its owner are separate legal and financial entities. Personal assets of the owner are excluded from business financial statements.