Accounting Principles and Standards Quiz

What is the primary focus of accounting?

• To conduct market research

• To manage human resources

• To record financial transactions

• To prepare tax returns

Which of the following is an example of revenue expenditure?

• • Purchase of land

• • Repair costs for machinery

• • Cost of acquiring patents

• • Purchase of a building

Income earned but not yet received is known as:

• • Accrued Income

• • Prepaid Income

• • Deferred Revenue

• • Revenue Reserve

An increase in sales revenue and a decrease in expenses will most likely result in:

• • Lower Net Profit

• • No Change in Profit

• • Higher Net Profit

• • Increase in Assets

The purpose of a trading account is to calculate:

• • Net Profit

• • Capital Employed

• • Cash Flow

• • Gross Profit

In the final accounts of a sole trader, the net profit calculated in the Profit and Loss Account is transferred to the:

• • Trading Account

• • Cash Flow Statement

• • Balance Sheet

• • Capital Account

According to GAAP, which principle requires that all anticipated losses are recognized, but anticipated gains are not?

• • Matching Principle

• • Revenue Recognition Principle

• • Conservatism Principle

• • Consistency Principle

What is included in the preparation of final accounts?

• Trading account

• Market analysis report

• Sales forecast

• Employee performance review

Which depreciation method allocates the same amount each year over the useful life of an asset?

• • Straight-line Method

• • Declining Balance Method

• • Units of Production Method

• • Sum-of-the-Years-Digits Method

What is the difference between tangible and intangible assets?

• Tangible assets are physical, intangible are not

• Both are non-physical assets

• Intangible assets are physical, tangible are not

• Both are physical assets