Principles of Accounts

What is a balance sheet?

• A final account

• A snapshot of the business' financial position of at a particular point in time.

• It shows the business' assets, liabilities and capital

Identify the categories of accounts found on the balance sheet.

• Assets, liabilities, capital

• Expenses, liabilities, income

• Financed by, expenses, revenue

All are examples of current assets except

• bank

• debtors

• loans

• inventory

The term current assets refer to assets that are likely to change

• 6 months

• 2 years

• 3 months

• 1 year

What is the correct order for current assets in the balance sheet?

• cash, bank, debtors, stock

• stock, debtors, bank, cash

• stock, bank, cash, debtors

• debtors, stock, bank, cash

Accrual concept is based on :

• matching principle
• dual aspect principle
• cost principle
• going concern concept

According to which principle the same accounting methods should be used each year :

• prudence
• full disclosure materiality
• materiality
• consistency

The cost of a small calculator is accounted as an expense and not shown as an asset in financial statement of a business entity due to…..

• materiality concept
• matching concept
• periodicity concept
• principle of full disclosure

Accounting information is important and relevant for decision making process. Some examples of the users of the information are:

• bank loan officer

• Sales Vice-president

• investors

• regulatory agencies

Which one is right?

• Asset = Owner's equity + Liability

• Asset = Owner's equity - Liability

• Asset + Owner's equity = Liability

• Asset + Owner's equity = expense