Advanced Accounting Theory Quiz

Which of the following best explains the "Money Measurement" concept?

• Only cash transactions are recorded.

• Business records only transactions measurable in monetary terms.

• All valuable business resources are recorded, even if not quantifiable.

• Profit is calculated only on cash receipts.

A company's policy of treating small fixed assets (costing below ₹5,000) as an expense follows which principle?

• Accrual

• Prudence

• Materiality

• Consistency

Under which accounting assumption are prepaid expenses recorded as assets?

• Accrual

• Consistency

• Matching

• Dual Aspect

The full disclosure principle requires businesses to disclose:

• Only legal obligations

• Only numerical figures

• All material financial information in financial statements

• Internal management discussions

Which of the following transactions does NOT affect the accounting equation?

• Purchasing goods on credit

• Paying off a loan

• Owner introducing capital in cash

• Signing a contract to buy assets in the future

If the total assets of a business increase by ₹50,000 and liabilities remain unchanged, the capital must:

• Increase by ₹50,000

• Decrease by ₹50,000

• Remain the same

• Increase by ₹25,000

Revenue should be recognized when:

• Goods are produced

• Cash is received

• Goods are delivered, and risk is transferred

• The contract is signed

Which method of depreciation results in a uniform charge over an asset’s life?

• Written Down Value (WDV) Method

• Straight-Line Method

• Annuity Method

• Machine Hour Method

Why are provisions created?

• To increase net profits

• To account for potential liabilities/expenses

• To reduce taxable income

• To maintain reserves

A provision for doubtful debts is created under which concept?

• Prudence

• Consistency

• Matching

• Money Measurement