Theory Base of Accounting Test

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Theory Base of Accounting Test - 48

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Question 1
1 / -0

The transaction recorded through accounting equation are based on _______________.

A
Money measurment

B
Cost concept

C
Going concern concept

D
Dual aspect concept

Solution

Accounting equation is based on Dual Aspect Concept. It States that
Assets = Liabilities + Capital
Question 2
1 / -0

As per ________ business transactions are recorded on the assumption that the business will continue for a long-time.

A
Money Measurment

B
Cost concept

C
Dual aspect concept

D
Going concern concept

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.
Conversely, this means the entity will not be forced to halt operations and liquidate its assets in the near term at what may be low fire-sale prices.
Question 3
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______ concept is based on double entry book-keeping which means that accounting system is set up in such a way that a record is made of the two aspects of each transaction that affects the records.

A
Money measurment

B
Cost concept

C
Going concern concept

D
Dual aspect concept

Solution

The dual aspect concept is based on double-entry book-keeping which means that the accounting system is set up in such a way that a record is made of the two aspects of each transaction that affects the records.
Question 4
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Accounting is a measurement and communication process of the activities of the firm that are measurable in monetary terms.

A
Money Measurement

B
Cost concept

C
Going Concern Concept

D
Dual Aspect Concept

Solution

The concept of money measurement states that only those transactions and happenings in an organisation which can be expressed in terms of money such as sale of goods or payment of expenses or receipt of income, etc. are to be recorded in the book of accounts.
All such transactions or happenings which can not be expressed in monetary terms, for example, the appointment of a manager, do not find a place in the accounting records of a firm.
Question 5
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Business is treated as an entity separate from its owners, creditors, managers and others. This is as per _________________.

A
Money measurement

B
Business Entity Concept

C
Going Concern Concept

D
Dual Aspect Concept

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 6
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As per convention of conservatism, if the accountant is faced with the choice between two methods of valuing _____, the accountant should choose a method which leads to the lesser value.

A
An asset

B
A liability

C
Expenses

D
Revenue

Solution

The concept of conservatism requires that profits should not to be recorded
until realised but all losses, even those which may have a remote possibility,
are to be provided for in the books of account.
Question 7
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Revenue is recognized only when a sale is made. This is as per ___________________.

A
Accrual concept

B
Realization concept

C
Accounting periods concept

D
Revenue match concept

Solution

Revenue is recognized only when a sale is made. This is as per Realization concept.
Question 8
1 / -0

Mr. N purchased a furniture costing Rs. 13,000 on 1st October, 2018. Transportation and installation charges were incurred amounting Rs. 1,300 and Rs. 520 respectively. Dismantling charges of the old furniture in place of which new furniture was purchased amounted Rs. 1,300. Market value of the furniture was estimated at Rs. 15,600 on 31st March 2019. While finalizing the annual accounts, Mr. N values the furniture at Rs. 15,600 in his books. Which of the following concepts was violated by Mr. N?

A
Realization concept

B
Cost concept

C
Matching concept

D
Periodicity concept

Solution

As per the Cost Concept, An asset shall be recorded at its historical cost. Here it is recorded at its Market price. Therefore, the cost concept is being violated.
Here, the cost is 13000+1300+520+1300 = 16120
Market price = 15,600.
The asset should be recorded in 16,120.
Question 9
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State the case where the going concern concept is applied?

A
When an enterprise was set up for a particular purpose, which has been achieved , or to be achieved shortly

B
When a receiver or liquidator has been appointed in case of as a company which is to be liquidated

C
Fixed assets are acquired for use in the business for earning revenues and are not meant for resale

D
When an enterprise is declared sick

Solution

Going Concern Concept states that the operations of the business will continue and will not stop in near future.
It means that the business has no intention to liquidate in near future.
Due to this concept, Fixed assets are acquired for use in the business for earning revenues and are not meant for resale.
Question 10
1 / -0

Which of the following is not an accounting convention?

A
Consistency

B
Disclosure

C
Going concern

D
Conservatism

Solution

Accounting conventions are a set of industry best practices that are adopted by the company to serve as guidelines to record financial transactions of the company.
The four main accounting Conventions are
1. Consistency
2. Conservatism
3. Full disclosure
4. Materiality

Whereas Going Concern is an accounting Concept. which states that the business will not stop in near future.

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Theory Base of Accounting Test - 48

Result

Theory Base of Accounting Test - 48

Score

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Rank

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SHARING IS CARING

Question 1

Money measurment

Cost concept

Going concern concept

Dual aspect concept

Solution

Question 2

Money Measurment

Cost concept

Dual aspect concept

Going concern concept

Solution

Question 3

Money measurment

Cost concept

Going concern concept

Dual aspect concept

Solution

Question 4

Money Measurement

Cost concept

Going Concern Concept

Dual Aspect Concept

Solution

Question 5

Money measurement

Business Entity Concept

Going Concern Concept

Dual Aspect Concept

Solution

Question 6

An asset

A liability

Expenses

Revenue

Solution

Question 7

Accrual concept

Realization concept

Accounting periods concept

Revenue match concept

Solution

Question 8

Realization concept

Cost concept

Matching concept

Periodicity concept

Solution

Question 9

When an enterprise was set up for a particular purpose, which has been achieved , or to be achieved shortly

When a receiver or liquidator has been appointed in case of as a company which is to be liquidated

Fixed assets are acquired for use in the business for earning revenues and are not meant for resale

When an enterprise is declared sick

Solution

Question 10

Consistency

Disclosure

Going concern

Conservatism

Solution

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