Daily Quiz & Practice- Theoretical Framework

Fundamental accounting assumption as per AS 1 are:

• Going concern, Conservatism, Accrual

• Going concern, Matching, Consistency

• Going concern, Consistency, Accrual

• Going concern, Entity, Periodicity

Cost of machinery          Rs.10,00,000

Installation charges          Rs.1, 00,000

Market value on 31.03.06  Rs. 12, 00, 000

While finalizing the account if the company values the machinery at Rs.12, 00,000, which concept is violated by the company?

• Cost

• Matching

• Materiality

• Periodicity

 Mohan purchased good for Rs. 15,00,000 and sold 4/5th of the good amounting Rs.18,00,000 and met expenses amounting Rs.2,50,000 during the year , 2005 he counted net profit as Rs.3,50,000. Which of the following concept was followed by him?

• Entity

• Periodicity

• Matching

• Conservatism

A businessman purchased goods for Rs. 25, 00,000 and sold 80% of such goods during the year ended 31st March 2005. The market value of remaining goods was Rs.4, 00,000. He valued the stock @ Rs. 5,00,000. He violated concept of

• Money measurement

• Conservatism

• Cost

• Periodicity

Materiality principle is an exception to the:

• Consistency Principle

• Accounting Period Assumption

• Cost

• Full Disclosure Principle

Mr. X Purchased goods for Rs. 40,000 of which 25 % for Cash, incurred expenses Rs. 10,000 of which Rs. 2,000 still outstanding & sold all goods for Rs. 80,000 of which 75 % on credit. He calculated his profit at Rs. 2,000 without any specific disclosure. He has violated

• Prudence Principle

• Accrual Principle

• Cost Principle

• Accounting period

The owner of a company included his personal medical expenses in the company’s home income statement. Indicate the principal that is violated:

• Cost Principle

• Conservatism

• Disclosure

• Entity concept

Subsidy of Rs. 40,000 received from the government for working capital by a manufacturing concern is

• Capital receipt

• Revenue receipt

• Capital expenditures

• Capital receipt

Interest on investments received will be

• Capital receipt

• Revenue receipt

• Capital expenditures

• Capital receipt

Present liability of uncertain amount, which can be measured reliably by using a substantial degree of estimation is termed as

• Provision

• Liability

• Contingent liability

• Obligation