Accounting- Basics

According to accrual concept of accounting, financial or business transaction is recorded:

• When cash is received or paid

• When transaction occurs

• When profit is computed

• When balance sheet is prepared

The John Marketing Company provides advertising services to an investment company in year A but receives advertising fee in year B. The John Marketing Company recognizes this revenue in year A. This action of John Marketing Company is justified by:

• Business entity concept

• Revenue recognition principle

• Economic entity concept

• Going concern concept

Which accounting concept or principle states that the transactions of a business must be recorded separately from those of its owners or other businesses?

• Materiality concept of accounting

• Time period concept of accounting

• Matching principle of accounting

• Business or economic entity concept of accounting

Balance Sheet of a firm indicates which of the following?

• (a) Profit or Loss over a period.

• (b) Financial position of the unit over a period.

• (c) Financial position of the unit as on a particular date.

• (d) Position of assets and liabilities over a period of time.

What standards are used to prepare financial statements by most of the countries and companies

• (A) International Financial Reporting Standards

• (B) International Financial Accounting Standards

• (C) International Accounting & Auditing Standards

• (D) International Risk Reporting Standards

The correct form of Accounting equation is

• (A) Assets + Liabilities = Equity

• (B) Assets – Liabilities = Equity

• (C) Assets – Receivable = Equity

• (D) Assets + Receivable = Equity

What from the following is NOT a current asset?

• (A) Patent rights

• (B) Inventory

• (C) Cash

• (D) Trade receivables

What from the following is/are NOT tangible asset(s)?

I. Patent rights

II. Goodwill

III. Land

• (A) I only

• (B) II only

• (C) I and II only

• (D) I, II and III

The process of recording Financial Data up to trial balance is

• (A) Classifying

• (B) Summarizing

• (C) Analysing

• (D) Book Keeping

When money is withdrawn from the bank, the bank will ------- the account of customer

• (a) Credit

• (b) Debit and Credit

• (c) Debit

• (d) None of the above