Accounting Equation Effects Test 35

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Accounting Equation Effects Test 35

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Weekly Quiz Competition

Question 1
1 / -0

Which convention implies that the accounting practices should remain same from one year to another year?

A
Going Concern

B
Materiality

C
Accrual

D
Consistency

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.
Question 2
1 / -0

Monthly and quarterly time periods are called ______________.

A
Fiscal period

B
Calendar period

C
Quarterly period

D
Interim period

Solution

Monthly and quarterly time periods are called Interim Periods.
The time period assumption states that the economic life of a business can be divided into artificial time periods.
Whereas the Calender period starts from 1st January and ends on 31st December.
Question 3
1 / -0

Accounting transactions are recorded in terms of ________.

A
money

B
purpose

C
characteristics

D
none of the above

Solution

In accounting we can communicate only those business transactions and other events which can be expressed in monetary units. This is called monetary unit assumption. Therefore, only money or money's worth transactions are recorded in the books of account.

Non monetary events like death, dispute etc. may have a great influence on the organization but these factors will not form the part of accounts as they can be calculated on monetary basis.

We may simply say " wherever there is money, there is an accounting, no money, no accounting".
Question 4
1 / -0

Which of the following practices is not in consonance with the convention of conservatism?

A
Creating provision for bad debts

B
Creating provision for discount on creditors

C
Creating provision for discount on debtors

D
Creating provision for tax

Solution

According to Conservatism, provision for discount on creditors is not created.
Question 5
1 / -0

Which of the following accounting concepts or principles require the calculation of depreciation of the fixed assets?

A
Prudence Concept

B
Accrual Concept

C
Consistency Concept

D
Matching Concept

Solution

Depreciation of Assets is charged to profit and loss account due to matching Concept.
Question 6
1 / -0

Mohan purchased a machinery amounting Rs.10,000 on 1.4.2010.
On 31.3.2019, similar machinery could be purchased for Rs.20,000 but the realizable value of the machinery (purchased on 1.4.2010) was estimated at Rs.15,000. The present discounted value of the future net cash inflows that the machinery was expected to generate in the normal course of business, was calculated as Rs 12,000.
The historical cost of machinery is ____________.

A
Rs.10,000

B
Rs.20,000

C
Rs. 15,000

D
Rs. 12,000

Solution

The historical cost of machinery is 10,000 as historical cost means that cost at which the asset was purchased.
Question 7
1 / -0

A specific accounting policy refers to _______________.

A
Principles

B
Methods of applying those principals

C
Both (A) & (B)

D
None of the above

Solution

Accounting policies means principles and methods of applying those principles.
It helps in preparing the financial statements of the business in a systematic manner.
Accounting policies include various accounting methods, procedures and principles used for preparing and presenting financial statements.
Question 8
1 / -0

Non-monetary events like, death, dispute, sentiments, efficiency etc. are _______ in the books, even though these may have a great effect.

A
Not recorded

B
Recorded

C
Recorded if suggested by external auditors

D
Recorded if suggested by internal auditors

Solution

As per Money Measurement Concept only those transactions shall be recorded in the books of accounts which can be measured in terms of money. Therefore, non monetary events and transactions are not recorded in the books of books.
Question 9
1 / -0

Accounting records only those transactions and events which are of -
X. Social character
Y. Financial character
Select the correct answer from the options given below:

A
X only

B
Y only

C
Both X and Y

D
None of above

Solution

Money Measurement Concept states that Accounting shall records only those transactions and events which are of financial character i.e,. can be measured in money.
Social character transactions and events cannot be recorded.
Question 10
1 / -0

The notion that the life of a business is divisible into equal time periods of equal length is known as the _______________.

A
continuing concern principle

B
time-period principle/ Accounting Period Concept

C
business entity principle

D
recognition principle

Solution

As per Accounting Period Concept the notion that the life of a business is divisible into equal time periods of equal length.
It states that the business should prepare the financial statement after a certain period of time to access the performance of the operations of the business.

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Accounting Equation Effects Test 35

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Accounting Equation Effects Test 35

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SHARING IS CARING

Question 1

Going Concern

Materiality

Accrual

Consistency

Solution

Question 2

Fiscal period

Calendar period

Quarterly period

Interim period

Solution

Question 3

money

purpose

characteristics

none of the above

Solution

Question 4

Creating provision for bad debts

Creating provision for discount on creditors

Creating provision for discount on debtors

Creating provision for tax

Solution

Question 5

Prudence Concept

Accrual Concept

Consistency Concept

Matching Concept

Solution

Question 6

Rs.10,000

Rs.20,000

Rs. 15,000

Rs. 12,000

Solution

Question 7

Principles

Methods of applying those principals

Both (A) & (B)

None of the above

Solution

Question 8

Not recorded

Recorded

Recorded if suggested by external auditors

Recorded if suggested by internal auditors

Solution

Question 9

X only

Y only

Both X and Y

None of above

Solution

Question 10

continuing concern principle

time-period principle/ Accounting Period Concept

business entity principle

recognition principle

Solution

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