Accounting Principles and Concepts MCQ Quiz

Which of the following is not a characteristic of accounting principles?

• Results-oriented

• Factual

• Practical

• Summarizing

Which of the following is not a feature of the separate entity concept?

• Business and owner are treated as separate entities

• This concept is followed in all types of businesses

• Personal affairs of the owner should not be considered

• Business should not be dissolved in the near future

Going concern can be defined best as:

• This concept refuses allocation of cost on different accounting periods.

• This concept discusses the issue of the realization of profit.

• This concept assumes that the business will operate for a long period of time and will not be dissolved in the near future.

• The concept provides the basis for the formation of the accounting equation.

Matching concept does not include one of the following:

• The revenues of a particular period must match with the expenses of that period.

• This concept also required allocation of cost on different accounting periods.

• Revenues should only be recorded if there is reasonable certainty about its realization.

• The comparison of incomes and expenses of a period gives the net profit or loss for that particular period.

The accounting conventions do not include:

• Consistency convention

• Conservatism convention

• Depreciation convention

• Full disclosure convention

The realization concept does not include one of the following features:

• The concept stresses that revenues should only be recorded if there is reasonable certainty about their realization.

• The concept requires proper care when calculating revenue.

• The concept describes the problems that may arise in the calculation of incomes and expenses.

• The concept explains that the comparison of incomes and expenses for a particular period can give the period's net result.

According to consistency convention, accounting principles should be:

• Consistent

• Factual

• Variable

• Flexible

One of the following is not an example of the materiality concept:

• Purchase of building to extend the business

• Purchase of plant for business

• Purchase of car for private use

• Purchase of pencil recorded as an expense instead of including in stock

The disclosure convention requires:

• Matching of incomes and expenses for a particular period.

• The business to avoid being dissolved in the near future.

• That profit should be realized.

• Full disclosure of all material facts that can affect the financial statement.

To assess audit risk more effectively, an auditor investigates all the different groups within an organization apart from:

• Board of governance and top-level management

• Legal counsel

• Middle-level management

• Stakeholders