Theory Base of Accounting Test

Result

Theory Base of Accounting Test - 62

Score
-
out of -
Rank
-
out of -

TIME Taken - -

SHARING IS CARING

If our Website helped you a little, then kindly spread our voice using Social Networks. Spread our word to your readers, friends, teachers, students & all those close ones who deserve to know what you know now.

Weekly Quiz Competition

Question 1
1 / -0

Accounting rules, procedures and methods should be observed alike and should not be changed from year to year. This is called accounting convention of __________.

A
Consistency

B
Full disclosure

C
Conservatism

D
Going concern

Solution

Consistency Concept: 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. This can be possible only when accounting policies and practices followed by enterprises are uniform and are consistent over the period of time.
Question 2
1 / -0

Apart from statutory requirements good accounting practice also demands all significant information should be fully and fairly disclosed in the financial statements. This is as per _________________.

A
Convention of disclosure

B
Convention of materiality

C
Convention of consistency

D
Convention of conservatism

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.
Hence, the convention of disclosure is a good accounting practice for the firm.
Question 3
1 / -0

Change in accounting estimate means ______________.

A
differences arising between certain parameters estimated earlier and re-estimated during the current period.

B
differences arising between certain parameters estimated earlier and actual results achieved during the current period.

C
differences arising between certain parameters re-estimated during the current period and actual results achieved during the current period.

D
Both (a) and (b).

Solution

An accounting estimate is an approximation of the amount of a business transaction for which there are no precise means of measurement.
Change in accounting estimate can be measured by deducting the amount estimated earlier from the Amount re-estimated during the current period.
Question 4
1 / -0

Mohan purchased goods for Rs. $$15,00,000$$ and sold $$4/5^{th}$$ of the goods amounting Rs. $$18,00,000$$ and paid expenses amounting Rs. $$2,70,000$$ during the year, $$2005$$. He paid Rs. $$5000$$ for an electricity bill of Dec. $$2004$$ and advance salaries amounting Rs. $$15,000$$ was paid for the month of Jan. $$2006$$. He counted net profit as Rs. $$3,50,000$$.
The profit calculated by him is correct according to ___________.

A
Entity concept

B
Periodicity concept

C
Matching concept

D
Conservatism concept

Solution

As per Matching Concept, While calculating the net profit, expenses of the particular duration should be deducted from the respective revenue.
Here, the revenue = 18,00,000
and Purchase for the year = 15,00,000 x 4 / 5 = 12,00, 000
Expenses for the year = 270000 - 15000 (adv. salaries) - 5000 (electricity) = 250000
Therefore, Net Profit = 18,00,000 - 12,00,000 - 250000
= 3,50,000
Question 5
1 / -0

If the Going Concern concept is no longer valid, which of the following is true?

A
All prepaid assets would be completely written-off immediately

B
Total contributed capital and retained earning would remain unchanged

C
Intangible assets would continue to be carried at net amortized historical cost

D
Land held as an investment would be valued at its realizable value

Solution

Going Concern Concept assumes that the business will go on indefinitely. Due to this assumption, the whole asset is not charged to the profit and loss account. But if there is no such assumption then it implies that business may close at any time. Therefore, Land held as an investment would be valued at its realizable value
Question 6
1 / -0

Which principle has important bearing on the capital-revenue classification?

A
Principle of materiality

B
Principle of conservation

C
Principle of consistency

D
Principle of full disclosure

Solution

Any fact would be considered as material if it is reasonably believed that its knowledge would influence the decision of informed user of financial statements. when the amount involved is very small, strict adherence to accounting principles is not required. For example, stock of erasers, pencils, scales, etc. are not shown as assets, whatever amount of stationery is bought in an accounting period is treated as the expense of that period, whether consumed or not.
Question 7
1 / -0

Reserve for Bad Debts is created in accordance with ____________.

A
going concern concept

B
conservative concept

C
dual aspect concept

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 8
1 / -0

If a machinery is purchased for Rs. 1,00,000, the asset would be recorded in the books at Rs. 1,00,000 even if its market value at that time happens to be Rs. 1,40,000. In case a year after, the market value of this asset comes down to Rs. 90,000, it will ordinarily continue to be show at Rs. 1,00,000 and not at Rs. 90,000 due to _______________.

A
Realization concept

B
Present value concept

C
Cost concept

D
Money measurement concept

Solution

Cost Concept states that an asset should be recorded at its cost price. Therefore, in this case, The assets shall be recorded at 100,000 as it is the cost price of the asset and the market price shall not be taken into consideration.
Question 9
1 / -0

As per which concept, a clear distinction is made between assets and expenses?

A
Money measurment

B
Cost concept

C
Dual aspect concept

D
Going concern concept

Solution

As per Going Concern Concept, a clear distinction is made between assets and expenses as it is not fair to charge the whole amount of asset to the current accounting year as benefits from that assets will also be received in future years.
Question 10
1 / -0

According to the conservation concept, which of the following is recommended?

A
Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount

B
Valuing the stock-in-trade at market price or cost whichever is less

C
Charging of small capital items, like crockery to revenue

D
All of the above

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. Charging of small capital items, like crockery to revenue.

User

Question Analysis

Correct -
Wrong -
Skipped -

My Perfomance

Score
-
out of -
Rank
-
out of -

Re-Attempt Weekly Quiz Competition

Theory Base of Accounting Test - 62

Result

Theory Base of Accounting Test - 62

Score

-

Rank

-

SHARING IS CARING

Question 1

Consistency

Full disclosure

Conservatism

Going concern

Solution

Question 2

Convention of disclosure

Convention of materiality

Convention of consistency

Convention of conservatism

Solution

Question 3

differences arising between certain parameters estimated earlier and re-estimated during the current period.

differences arising between certain parameters estimated earlier and actual results achieved during the current period.

differences arising between certain parameters re-estimated during the current period and actual results achieved during the current period.

Both (a) and (b).

Solution

Question 4

Entity concept

Periodicity concept

Matching concept

Conservatism concept

Solution

Question 5

All prepaid assets would be completely written-off immediately

Total contributed capital and retained earning would remain unchanged

Intangible assets would continue to be carried at net amortized historical cost

Land held as an investment would be valued at its realizable value

Solution

Question 6

Principle of materiality

Principle of conservation

Principle of consistency

Principle of full disclosure

Solution

Question 7

going concern concept

conservative concept

dual aspect concept

materiality

Solution

Question 8

Realization concept

Present value concept

Cost concept

Money measurement concept

Solution

Question 9

Money measurment

Cost concept

Dual aspect concept

Going concern concept

Solution

Question 10

Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount

Valuing the stock-in-trade at market price or cost whichever is less

Charging of small capital items, like crockery to revenue

All of the above

Solution

User

Question Analysis

My Perfomance

Score

-

Rank

-

Results Announcement on: coming Monday

Stay Tuned: We’ll update you on your result via email or SMS.