Theory Base of Accounting Test

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Theory Base of Accounting Test - 15

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Weekly Quiz Competition

Question 1
1 / -0

According to which of the following concepts even the owner of the business who provides capital is treated as a creditor of the business?

A
Entity concept.

B
Cost concept.

C
Money measurement concept.

D
Convention of disclosure.

Solution

The concept of business entity assumes that business has a distinct and separate entity from its owners. It means that for the purposes of accounting, the business and its owners are to be treated as two separate entities. Keeping this in view, when a person brings in some money as capital into his business, in accounting records, it is treated as liability of the business to the owner.
Here, one separate entity (owner) is assumed to be giving money to another distinct entity (business unit).
Similarly, when the owner withdraws any money from the business for his personal expenses(drawings), it is treated as reduction of the owner’s capital and consequently a reduction in the liabilities of the business.
Question 2
1 / -0

According to the going concern concept, a business entity is assumed to have ______.

A
A long life

B
A very short life

C
An indefinite life

D
A medium life

Solution

The concept of going concern assumes that a business firm would continue to carry out its operations indefinitely, i.e. for a fairly long period of time and would not be liquidated in the foreseeable future. This is an important assumption of accounting as it provides the very basis for showing the value of assets in the balance sheet.
Question 3
1 / -0

What does GAAP represents?

A
Generally Accepted Audit Procedure

B
Generally Accepted Accounting Principles

C
Generally Agreement on Audit Principles

D
General Agreement on Accounting Principles

Solution

Financial accounting is based on certain concepts and conventions. These are called as Generally Accepted Accounting Principles.
Question 4
1 / -0

An expenditure is treated as capital nature, when it ________________.

A
receiver of the amount is going to use it for the purchase of fixed assets

B
increases the quantity of fixed assets

C
is paid for meeting the normal expenses of the business

D
decreases the quantity of other assets

Solution

Expenditure incurred for normal day to day business activity are revenue expenditure. An expense incurred to enhance the capacity and gives the benefits to the business for longer duration is a capital expenditure. This will increase the value of fixed assets.
Question 5
1 / -0

Double entry principle means ___________.

A
having debit for every credit and similarly credit for each debit

B
writing all the entries twice in the book

C
maintaining the double account for all business transactions

D
writing two times the same entry

Solution

Double entry system of accounting is based on the dual concept. Every business transaction will have its two effects i.e one effect reflecting its debit and one effect reflecting its credit. For every debit there will be a credit and vice versa.
Question 6
1 / -0

The system of recording transactions based on dual aspect concept is called __________.

A
Double Account System

B
Double Entry System

C
Single Entry System

D
Single Account System

Solution

Dual aspect is the foundation or basic principle of accounting. It provides the very basis for recording business transactions into the book of accounts. This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places. In other words, at least two accounts will be involved in recording a transaction.

The double-entry system also requires that for all transactions, the amounts entered as debits must be equal to the amounts entered as credits.
Question 7
1 / -0

Accounting for amalgamation is given in _________.

A
AS 14

B
AS 16

C
AS 20

D
None of these

Solution

Ans :- AS 14
Question 8
1 / -0

Qualitative transactions are not recorded in accounts due to _________.

A
Dual Concept

B
Accrual Concept

C
Money Measurement Concept

D
None of the Above

Solution

The money measurement concept states that business should record only those transactions which can be expressed in terms of money. Only quantitative transactions are recorded. To be a financial record, a transaction should be capable of being expressed in terms of money.
Question 9
1 / -0

Contingent liability is taken due to ___________.

A
Convention of Full Disclosure

B
Convention of Conservatism

C
Convention of Materiality

D
Dual Aspect Concept

Solution

The principle of full disclosure requires that all material and relevant facts concerning financial performance of an enterprise must be fully and completely disclosed in the financial statements and their accompanying footnotes.
This is to enable the users to make correct assessment about the profitability and financial soundness of the enterprise and help them to take informed decisions.
Contingent liability is a potential liability which may occur depending on the outcome of an uncertain future event. This has to be shown as notes to accounts.
Question 10
1 / -0

Added value is the change in ____________.

A
Market Value

B
Cost

C
Income

D
None of the Above

Solution

Added Value can be defined as the difference between a particular product's final selling price and the direct and indirect input used in making that particular product.This will effect the market value and help in more customer recognition.

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Re-Attempt Weekly Quiz Competition

Theory Base of Accounting Test - 15

Result

Theory Base of Accounting Test - 15

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SHARING IS CARING

Question 1

Entity concept.

Cost concept.

Money measurement concept.

Convention of disclosure.

Solution

Question 2

A long life

A very short life

An indefinite life

A medium life

Solution

Question 3

Generally Accepted Audit Procedure

Generally Accepted Accounting Principles

Generally Agreement on Audit Principles

General Agreement on Accounting Principles

Solution

Question 4

receiver of the amount is going to use it for the purchase of fixed assets

increases the quantity of fixed assets

is paid for meeting the normal expenses of the business

decreases the quantity of other assets

Solution

Question 5

having debit for every credit and similarly credit for each debit

writing all the entries twice in the book

maintaining the double account for all business transactions

writing two times the same entry

Solution

Question 6

Double Account System

Double Entry System

Single Entry System

Single Account System

Solution

Question 7

AS 14

AS 16

AS 20

None of these

Solution

Question 8

Dual Concept

Accrual Concept

Money Measurement Concept

None of the Above

Solution

Question 9

Convention of Full Disclosure

Convention of Conservatism

Convention of Materiality

Dual Aspect Concept

Solution

Question 10

Market Value

Cost

Income

None of the Above

Solution

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