Accounting Equation Effects Test 36

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Accounting Equation Effects Test 36

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Weekly Quiz Competition

Question 1
1 / -0

______ is used by business entities for keeping records of their monetary or financial transaction.

A
Accounting

B
Cost accounting

C
Costing

D
Budgetary Control
Question 2
1 / -0

Book value & Market value of machinery on 31.3.2019 was Rs.1,00,000 & Rs.1,10,000 respectively. As on 31.3.2019, if the company values the machinery at Rs. 1,10,000, which of the following principle is not being followed _________________.

A
Historical Cost

B
Present Value

C
Realisable value

D
Current Cost

Solution

The historical cost concept states that an asset should be recorded at its purchase price.
Here, the Purchase price of the Machinery is Rs, 100,000 and the Machinery should be recorded at 100,000.
But it is valued at market value therefore, the Historical Cost Concept is being violated.
Question 3
1 / -0

As per _____ concepts in order to determine the profit earned or loss suffered by the business in a particular defined accounting period, it is necessary that expenses of the period should be matched with the revenues of that period.

A
Accrual concept

B
Realization concept

C
Accounting period concept

D
matching concept
Question 4
1 / -0

The value of human resources is generally not shown in the Balance Sheet as per _______________.

A
Going concern concept

B
Accrual concept

C
Prudence concept

D
Money Measurement concept

Solution

The value of human resources is generally not shown in the balance sheet as per money measurement concept. Money measurement concept means only those transactions will be recorded in the books of accounts which can be measured in monetary terms. Accounting ignore the qualitative aspects it records only quantitative aspects.
Question 5
1 / -0

Materiality in accounting is decided __________________.

A
By the size of an item

B
By the knowledge as to whether an individual item is having a significant influence on financial statement

C
Solely by the discretion of the accountant

D
By the physical volume of the transaction

Solution

Materiality in accounting is decided by the knowledge as to whether an individual item is having a significant influence on financial statement
Question 6
1 / -0

Land on lease should be shown in balance sheet contrary to fact that company doesn't own this piece of land. This is the statement of what accounting concepts?

A
Matching concept

B
Accrual concept

C
Prudence concept

D
Substance over form

Solution

Land on lease should be shown in the Balance sheet contrary to the fact that the company does not own that piece of land is the implementation of Substance over form concept.
Substance over form in accounting refers to a concept that transactions recorded in the financial statements must reflect their economic substance rather than their legal form.
Question 7
1 / -0

Capital is the __________________.

A
excess of external liabilities over the assets

B
excess of assets over the external liabilities

C
excess of external liabilities over fixed assets

D
excess of assets of over internal liabilities

Solution

Total assets - external liabilities = capital of the company (paid - up capital)
This should not be confused with the net worth of the company.
Question 8
1 / -0

Which accounting principle is followed in adopting accounting policy of treating the cost of calculator as an expense ?

A
Prudence

B
Substance over from

C
Materiality

D
All of these

Solution

Materiality accounting principle is followed in adopting accounting policy of treating the cost of calculator as an expense
Question 9
1 / -0

Which of the following accounting equation is correct?

A
Assets + Capital = Liabilities

B
Assets + Liabilities = Capital

C
Assets + Liabilities + Capital = Nil

D
None of the above

Solution

Accounting Equation is Total Assets = Liabilities + Capital
Accounting equation is double entry system of accounting.
It is also known as Balance Sheet Equation. It represents a relationship between Assets, liabilities and capital of the business.
Question 10
1 / -0

A cooperative store having a turnover of Rs 10 lakh and profit of Rs 50,000 purchased locks costing Rs 12,000 for use in the shop. The accountant charged it in the P & L A/c or current year but auditor raised an objection saying that it should be capitalised. On which one of the following conventions could the accountant be defended?

A
Disclosure

B
Materiality

C
Conservatism

D
Consistency

Solution

Materiality is a convention of that relates to the importance and significance of any amount or transaction. Whether a transaction is material or not is determined by the concept of materiality. In the given question the auditor has to determine the materiality of the amount and check if correct treatment is done for the same.

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Re-Attempt Weekly Quiz Competition

Accounting Equation Effects Test 36

Result

Accounting Equation Effects Test 36

Score

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Rank

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SHARING IS CARING

Question 1

Accounting

Cost accounting

Costing

Budgetary Control

Question 2

Historical Cost

Present Value

Realisable value

Current Cost

Solution

Question 3

Accrual concept

Realization concept

Accounting period concept

matching concept

Question 4

Going concern concept

Accrual concept

Prudence concept

Money Measurement concept

Solution

Question 5

By the size of an item

By the knowledge as to whether an individual item is having a significant influence on financial statement

Solely by the discretion of the accountant

By the physical volume of the transaction

Solution

Question 6

Matching concept

Accrual concept

Prudence concept

Substance over form

Solution

Question 7

excess of external liabilities over the assets

excess of assets over the external liabilities

excess of external liabilities over fixed assets

excess of assets of over internal liabilities

Solution

Question 8

Prudence

Substance over from

Materiality

All of these

Solution

Question 9

Assets + Capital = Liabilities

Assets + Liabilities = Capital

Assets + Liabilities + Capital = Nil

None of the above

Solution

Question 10

Disclosure

Materiality

Conservatism

Consistency

Solution

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