Introduction to Accounting

Which concept state asset should be recorded at the original cost of purchase

• Periodicity concept

• Substance over form

• Accrual concept

• Historical cost concept

The following are elements of a financial statement except

• Asset

• Statement of financial position

• Equity

• Income

Answer explanation

Statement of financial position is a component of financial statement not element

The withdrawal of an asset for personal use by the business owner from the business will ____

• Increase the owner's capital

• Have no effect on the owner's capital

• Decrease the owner's capital

• Increase the economic benefit of the business to the owner

Which concept prevents the financial statement of an entity from bias

• Money measurement

• Materiality concept

• Objectivity concept

• Realization concept

___ concept brought about the provision for doubtful debts

• Materiality

• Historical cost

• Money measurement

• Conservatism

Which of the following is not a component of financial statement

• Statement of affairs

• Statement of financial position

• Statement of cash flow

• Statement of profit or loss

Which of the following can be used for the purpose of original entry of all kind of business transactions and adjustments

• Sales journal

• Cash book

• Journal proper

• Purchase journal

The accounting basis an entity will adopt if its going concern is in doubt is known as

• Accrual basis

• Modified cash basis

• Cash basis

• Break-up basis

___ concept divide the financial performance of a business entity into 12 months

• Objectivity

• Periodicity

• Substance over form

• Consistency

Which of the following is not a qualitative characteristic of financial statements

• Relevance

• Materiality

• Understandability

• Reliability