Theory Base of Accounting Test

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Theory Base of Accounting Test - 31

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Weekly Quiz Competition

Question 1
1 / -0

The accounting standards are issued for the purpose of____________.

A
Harmonizing accounting policies

B
Elimination of non-comparability between financial statements

C
For improving the reliability of financial statements

D
All of the above

Solution

The basic objective of accounting standards set to make financial statement more meaningful and comparable. Accounting standards provides a standards set of accounting policies, procedures, valuation methods and disclosure requirements on the basis of which financial statements are prepared.
Question 2
1 / -0

Which of the following is one of the objectives of accounting standard?

A
To standardize diverse accounting practices and policies

B
To improve financial performance of business enterprises

C
To minimize tax liabilities

D
All the three

Solution

Accounting standards set to make financial statement more meaningful and comparable. Accounting standards provides a standards set of accounting policies, procedures, valuation methods and disclosure requirements on the basis of which financial statements are prepared.
Question 3
1 / -0

The disadvantage of accounting standard is _________.

A
It facilitates the comparison of non-comparable accounts

B
Sometime the principles of AS are against the tradition

C
It leads to rigidity and eliminates flexibility

D
It flouts the law of the land.

Solution

Accounting standards are issued by the Institute of Chartered Accountants of India.
The limitations/disadvantages of accounting standards:-
1. Accounting standards are very rigid.
2. Accounting standards cannot override the statute.
3. The standards are required to be farmed within the ambit of prevailing status.
Question 4
1 / -0

Select the correct statement.

A
Representative of political parties also is a member of ASB in India

B
Accounting standards issued by ICAI are mandatory in India

C
Accounting Standards are true copy of International Accounting Standards.

D
Accounting standard once issued cannot be withdrawn

Solution

Indian Accounting Standards issued by the the Institute of Chartered Accountants of India are followed by the Indian companies. This is governed by Accounting Standard Board which was set up in 1977.
Question 5
1 / -0

Generally Accepted accounting principles can be applied to the financial statements in which of the following ________.

A
Sole proprietor

B
Partnership firm

C
Corporate body

D
All the three

Solution

Accounting is based on the certain principles which are known as Generally Accepted Accounting Principles. These are applicable to all kind of ownership.
Question 6
1 / -0

_________ is an Accounting Convention.

A
Consistency

B
Accrual

C
Realization

D
Going Concern

Solution

There are four main conventions in practice in accounting: conservatism; consistency; full disclosure; and materiality.
Question 7
1 / -0

________ is not an accounting convention.

A
Business entity

B
Disclosure

C
Conservatism

D
Materiality

Solution

Business entity is not an accounting convention. Its an accounting concept. An accounting concept is a principle that ensures true and fair view of statements, where as, accounting conventions are practices that are generally accepted and followed by accountants.
There are four main conventions in practice in accounting: conservatism; consistency; full disclosure; and materiality.
Question 8
1 / -0

Anticipate all losses and ignore anticipated profits is an application of _______ concept/convention.

A
Conservatism

B
Dual concept

C
Going concern

D
Materiality

Solution

The convention of conservatism mean that the convention of caution, or the policy of playing safe. This principle requires that in the situation of uncertainty and doubt, the business transactions should be recorded in such a manner that the profits and assets are not overstated and losses and liabilities are not understated. The following are some examples:

1. Closing stock is valued at cost price or Net realisable value, whichever is lower.

2. Joint life insurance policy is shown only at surrender value as against the amount paid.

3. Provision for doubtful debt is created in anticipation of bad debts etc.

4. Provision for pending law suit against the firm, which may either be decided in its favour.
Question 9
1 / -0

The Accounting standards are mandatory for _________.

A
Charitable organization

B
Government departments

C
Companies

D
Central Government

Solution

The Institute of Chartered Accountants of India has issued various accounting standards. It is mandatory for all the companies to follow these.
Question 10
1 / -0

Accounting policies followed by the companies are __________.

A
Different from year to year

B
Frequently changed as per the situation

C
The same as notes to accounts

D
Consistently followed from year to year

Solution

The accounting information provided by the financial statements would be useful in drawing conclusions regarding the working of an enterprise only when it allows comparisons over a period of time as well as with the working of other enterprises.
Thus, both inter-firm and inter-period comparisons are required to be made. This can be possible only when accounting policies and practices followed by enterprises are uniform and are consistent over the period of time.

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Re-Attempt Weekly Quiz Competition

Theory Base of Accounting Test - 31

Result

Theory Base of Accounting Test - 31

Score

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SHARING IS CARING

Question 1

Harmonizing accounting policies

Elimination of non-comparability between financial statements

For improving the reliability of financial statements

All of the above

Solution

Question 2

To standardize diverse accounting practices and policies

To improve financial performance of business enterprises

To minimize tax liabilities

All the three

Solution

Question 3

It facilitates the comparison of non-comparable accounts

Sometime the principles of AS are against the tradition

It leads to rigidity and eliminates flexibility

It flouts the law of the land.

Solution

Question 4

Representative of political parties also is a member of ASB in India

Accounting standards issued by ICAI are mandatory in India

Accounting Standards are true copy of International Accounting Standards.

Accounting standard once issued cannot be withdrawn

Solution

Question 5

Sole proprietor

Partnership firm

Corporate body

All the three

Solution

Question 6

Consistency

Accrual

Realization

Going Concern

Solution

Question 7

Business entity

Disclosure

Conservatism

Materiality

Solution

Question 8

Conservatism

Dual concept

Going concern

Materiality

Solution

Question 9

Charitable organization

Government departments

Companies

Central Government

Solution

Question 10

Different from year to year

Frequently changed as per the situation

The same as notes to accounts

Consistently followed from year to year

Solution

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