Deck 28: Accounting Concepts and Systems

Question 1

Under ______ system , the buyer gets ownership of goods immediately

A)Installment
B)HP
C)Installment and HP
D)None of these

Answer 1

Installment

Question 2

When an asset is acquired on hire purchase system, the asset account is debited with _______ of the assets in the books of the hire purchaser.

A)Hp price
B)Cash price
C)Installment price
D)None of these

Answer 2

Cash price

Question 3

In order to deal with the re possession the hire vendor operates an account called _______

A)Asset account
B)Goods account
C)Goods repossessed account
D)None of these

Answer 3

Goods repossessed account

Question 4

Under _____ system , the hire vendor has a right to take back the goods

A)Installment
B)HP
C)Installment and HP
D)None of these

Question 5

Single entry system of accounts is maintained by ______

A)Partnership
B)Company
C)Sole trader
D)None of these

Question 6

The statement of profit or loss is prepared according to _______ method to calculate profit or loss under single entry system

A)Conversion method
B)Statement of affairs method
C)Conversion and statement of affairs method
D)None of these

Question 7

Under single entry system , drawings is _____ to know gross profit

A)Added
B)Deducted
C)Added and deducted
D)None of these

Question 8

Receipts and payment account is a summary of ______

A)Income and expenditure
B)Profit and loss
C)Cashbook
D)Balance sheet

Question 9

Excess of income over expenditure of non trading concern is called _______

A)Profit
B)deficit
C)Surplus
D)Loss

Question 10

Income and expenditure account is a type of ______

A)Balance sheet
B)Receipts and payment
C)Profit and loss account
D)None of these

Question 11

The amount of money owed by a business to outsider is called _____

A)Capital
B)Asset
C)Liabilities
D)None of these

Question 12

The properties and possession of a business are termed as ________

A)Asset
B)Capital
C)Liabilities
D)None of these

Question 13

Prepaid expenses appearing in trial balance will appear in _____

A)Profit and loss account debit side
B)Profit and loss account credit side
C)Balance sheet asset side
D)Balance sheet liability side

Question 14

Net profit / loss is transferred to the ______ account

A)Asset account
B)Liabilities account
C)Capital account
D)None of these

Question 15

All ________ expenses are recorded in the trading account

A)Indirect
B)Direct
C)Direct and indirect
D)None of these

Question 16

________ expenses are shown in the profit and loss account

A)Indirect
B)Direct
C)Direct and indirect
D)None of these

Question 17

Which English alphabet is similar to the shape of an account?

A)I .
B)T .
C)H .
D)None

Question 18

Gross Profit is the difference between

A)Net Sales and Cost of goods sold .
B)PAT and Dividends .
C)Net Sales and Cost of production .
D)Net Sales and Direct costs of productions

Question 19

The basic concepts related to Balance Sheet are

A)Cost Concept
B)Business Entity Concept
C)Accounting Period Concept
D)Both (a) and (b) above

Question 20

The basic concepts related to P & L Account are

A)Realization Concept
B)Matching Concept
C)Cost Concept
D)Both (a) and (b) above

Question 21

Which of the following is (are) characteristic(s) of Bad Debt?

A)It is a definite loss to the business .
B)It must be shown in Profit & loss account .
C)No provision is necessary for it .
D)All of the given options

Question 22

Only the significant events which affect the business must be recorded as per the principle of

A)Separate Entity
B)Accrual
C)Materiality
D)Going Concern

Question 23

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 Earnings 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

Question 24

Under which of the following concepts are shareholders treated as creditors for the amount they paid on the shares they subscribed to?

A)Cost Concept
B)Duality Concept
C)Business Entity Concept
D)Since the shareholders own the business, they are not treated as creditors

Question 25

The underlying accounting principle(s) necessitating amortization of intangible asset(s) is/are

A)Cost Concept
B)Realization Concept
C)Matching Concept
D)Both (a) and (c) above

Question 26

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

Question 27

The accounting measurement that is not consistent with the Going Concern concept is

A)Historical Cost
B)Realization
C)The Transaction Approach
D)Liquidation Value

Question 28

Recording of Fixed Assets at cost ensures adherence of

A)Conservatism Concept
B)Going Concern Concept
C)Cost Concept
D)Both (a) and (b) above

Question 29

Omission of paise and showing the round figures in financial statements is based on

A)Conservatism Concept
B)Consistency Concept
C)Materiality Concept
D)Realization Concept

Question 30

X Ltd., purchased goods for ` 5 lakh and sold 9/10th of the value of goods for ` 6 lakh. Net expenses during the year were ` 25, 000. The company reported its net profit as ` 75,000. Which of the following concept is violated by the company?

A)Realization
B)Conservation
C)Matching
D)Accrual

Question 31

Accounting does not record non- financial transactions because of

A)Entity Concept
B)Accrual Concept
C)Cost Concept
D)Money Measurement Concept

Question 32

Mr. Rohit, owner of Rohit Furniture Ltd., owns a personal residence that cost ` 6,00,000, but has a market value of ` 9,00,000. During preparation of the financial statement for the business, the entire value of property was ignored and was not shown in the financial statements. The principle that was followed was

A)The concept of the Business Entity
B)The concept of the Cost Principle
C)The concept of Going Concern Principle
D)The concept of Duality Principle

Question 33

Provision for bad debt is made as per the

A)Entity Concept
B)Conservatism Concept
C)Cost Concept
D)Going Concern Concept

Question 34

Fixed Assets and Current Assets are categorized as per concept of

A)Separate Entity
B)Going Concern
C)Consistency
D)Time period

Question 35

Which of the following is NOT a revenue expenditure?

A)Petrol consumed in motor vehicles .
B)Cost of saleable goods .
C)Bad debts .
D)Premium given on lease

Question 36

Which of the following statements is true?

A)Going Concern Concept assumes that business will be carried on for a definite period
B)The Capital Losses need not be deducted to ascertain net income
C)Provision for bad and doubtful debts is created in recognition of conservatism concept
D)Materiality concept states that all business transactions are to be recorded however insignificant they may be

Question 37

The expenses and incomes pertaining to full trading period are taken to the Profit and Loss Account of a business, irrespective of their payment or receipt. This is in recognition of

A)Time period Concept
B)Going Concern Concept
C)Accrual Concept
D)Duality Concept

Question 38

Which of the following is an example of Capital Expenditure?

A)Insurance Premium
B)Taxes and Legal expenses
C)Discount allowed
D)Customs duty on Import of Machinery

Question 39

In the creditors control account, all of the below exist except:

A)Credit purchases .
B)Purchase returns .
C)Cash purchases .
D)Cash/cheques paid

Question 40

Ledger contains various ___________ in it

A)Transactions .
B)Entries .
C)Accounts .
D)None of these

Question 41

Which of the following concepts assumes that a business will last indefinitely?

A)Business Entity
B)Going Concern
C)Periodicity
D)Consistency

Question 42

Which of the following is an example of Personal Account?

A)Machinery
B)Rent
C)Cash
D)Creditor

Question 43

Payment received from Debtor

A)Decreases the Total Assets
B)Increases the Total Assets
C)Results in no change in the Total Assets
D)Increases the Total Liabilities

Question 44

The ____________ in a ledger helps in locating the accounts contained in it

A)Folio .
B)Pages .
C)Serial Number .
D)None of these

Question 45

In which of the following statement opening stock is shown?

A)Profit and loss account (Right Answer) .
B)Balance sheet .
C)Cash flow statement .
D)Owner's equity

Question 46

The process of transfer of entries from day book to ledgers is called _______________

A)Simple posting .
B)Journal posting .
C)Transaction .
D)Ledger posting

Question 47

Goods returned from X is entered as

A)Debit X A/c. Credit Purchase Return A/c
B)Debit X A/c. Credit Cash A/c
C)Debit Sales Return A/c. Credit X A/c
D)Debit X A/c. Credit Sales A/c