Accounting Equation Effects Test 6

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Accounting Equation Effects Test 6

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Weekly Quiz Competition

Question 1
1 / -0

Which concept is not related to identification, measurement and recording of financial transactions __________________.

A
Entity concept

B
Dual aspect concept

C
Cost concept

D
Going concern concept

Solution

These are the fundamental concepts of accounting.

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.

The concept of money measurement states that only those transactions and happenings in an organisation which can be expressed in terms of money, are to be recorded in the book of accounts.

The cost concept requires that all assets are recorded in the book of accounts at their purchase price, which includes cost of acquisition, transportation, installation and making the asset ready to use.

However, 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.
Question 2
1 / -0

The fundamental accounting equation, Assets = Equities + Liabilities is the formal expression of ____________.

A
Dual aspect concept

B
Matching concept

C
Going - concern concept

D
Money measurement concept

Solution

As per dual aspect concept, every transaction affects two accounts. One account must be debit and other account must be credit. Dual aspect concept has been made on the basis of accounting equation. In accounting equation, there are two sides. One side are total assets and other side is total liabilities. Assets always equal to liabilities.
Question 3
1 / -0

Concepts related to income measurement and preparation of financial statements ___________.

A
Going concern concept

B
Accounting Period concept

C
Matching concept

D
All of the above

Solution

Accounting concepts basically are the rules to be followed by a firm while preparing the financial statements. These concepts basically are going concern concept, accouting period concept, matching concept, accrual concept, etc.
Question 4
1 / -0

Double entry system was invented by __________.

A
Luca Pacioli

B
J. Batty

C
H.J,. Wheldon

D
Vanskicle

Solution

Double entry system operates on the basis of dual aspect concept which states that every transaction has a debit and its corresponding credit. Iuca pacioli invented this system and gave the rule as stated above . He was also follower of Leo da vinci.
Question 5
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Revenue is generally recognised as being earned at that point of time when ____________.

A
Sale is effected

B
Cash is received

C
Production is completed

D
Debts are collected

Solution

Accounting is based on certain concept, realization concept is one of these. This concept assumes that the revenue is recognized only when there is sale or transfer of the goods or assets. Sale is complete when the title of the goods is passed on to the buyer.
Question 6
1 / -0

Money measurement concept of accounting theory is based on the assumption that the value of money will____________.

A
Remain constant

B
Fluctuate

C
Decrease

D
Go up

Solution

Money Measurement concept of accounting theory is based on the assumption that the value of money will remain constant.
Money Measurement also known as measurability concept means that only transactions and events that are capable of being measured in terms of money are recorded in the books of accounts.
Question 7
1 / -0

Which of the following is/ are fundamental concepts?

A
The entity concept

B
The money measurement

C
Both (A) and (B)

D
None of these.

Solution

1. 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.

2. 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.
Both are fundamental concepts of accounting.
Question 8
1 / -0

Match the following:
1. Small firms a) subsidiary books system
2. Bigger firms b) journal system
3. Basis for accounting c) money measurement
4. Balance sheet d) financial position of the business

A
a, c, d, b

B
b, a, c, d

C
a, b, c, d

D
d, b, c, a
Solution
1. Small firms basically deal with transactions of low amount. There is no need for them balance sheet. They are satisfied by recording day to day transactions. Hence they follow journal system.
2. On the other hand, bigger firms deal with large transactions. Hence, they follow subsidiary system of accounting.
3. The fundamental concept of accounting which is money measurement states that all accounting transactions must be measured in terms of money only. Hence, the basis for accounting is money measurement.
4. Balance sheet represents the financial position of the company because it contains information about the assets, liabilities and capital of the company.
Question 9
1 / -0

The accounting entity may be _________.

A
The business unit itself or a defined part of business

B
An amalgamation of related business

C
Both (A) and (B)

D
None of the above

Solution

An accounting entity is an economic unit that isolates the accounting of certain transactions from other subdivisions or accounting entities. It provides information to the management for decision making. It may be the business unit itself or a defined part of business or an amalgamation of related business.
Question 10
1 / -0

The term 'Realization' implies __________.

A
The legal liability to pay by the user

B
The legal liability to pay by the buyer

C
The legal liability to pay by the customer

D
Any one of the Above

Solution

Realisation being one of the fundamental principle of accouting states that revenue is recognised by the seller when it is earned irrespective of whether the cash from the transaction has been received or not. It implies legal liability to pay by the user, buyer as well as the customer to whom the goods and services has been provided.

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1. Small firms	a) subsidiary books system
2. Bigger firms	b) journal system
3. Basis for accounting	c) money measurement
4. Balance sheet	d) financial position of the business

Accounting Equation Effects Test 6

Result

Accounting Equation Effects Test 6

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Rank

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SHARING IS CARING

Question 1

Entity concept

Dual aspect concept

Cost concept

Going concern concept

Solution

Question 2

Dual aspect concept

Matching concept

Going - concern concept

Money measurement concept

Solution

Question 3

Going concern concept

Accounting Period concept

Matching concept

All of the above

Solution

Question 4

Luca Pacioli

J. Batty

H.J,. Wheldon

Vanskicle

Solution

Question 5

Sale is effected

Cash is received

Production is completed

Debts are collected

Solution

Question 6

Remain constant

Fluctuate

Decrease

Go up

Solution

Question 7

The entity concept

The money measurement

Both (A) and (B)

None of these.

Solution

Question 8

a, c, d, b

b, a, c, d

a, b, c, d

d, b, c, a

Solution

Question 9

The business unit itself or a defined part of business

An amalgamation of related business

Both (A) and (B)

None of the above

Solution

Question 10

The legal liability to pay by the user

The legal liability to pay by the buyer

The legal liability to pay by the customer

Any one of the Above

Solution

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