Introduction to Accounting and Accounting Concepts Quiz

Which of the following statement is incorrect?

• Under sole proprietorship, the owner is not responsible for the liabilities of the business when the business goes bankrupt

• The minimum number of members of a partnership is 2

• The partners of a partnership are responsible for the partnership liabilities if the partnership is bankrupt

• The liability of shareholders of a limited company is limited to their investment in the company

……………. Need accounting information to determine the firm's ability to repay loans. It may help them to decide whether to approve the loan application applied by the business.

• Employees

• Managers

• Investors

• Financial institution

An accountant should take a figure, which will understate rather than overstate the profit. This is to comply with:

• Materiality concept

• Prudence concept

• Historical cost concept

• Entity concept

The following are external users of accounting information except:

• Government

• Employees

• Financial institutions

• Creditors

The main difference between bookkeeping and accounting is:

• Recording of transactions

• Classifying of transactions

• Interpretation of financial results

• Summarising of transactions

One of the following statements about users of accounting information is incorrect. The incorrect statement is:

• Management is considered as internal users

• Taxing authorities are considered as external users

• Present creditors are considered as external users

• Regulatory authorities are considered as internal users

Based on …………………….., capital contributed by the owner is considered as a liability to the business.

• Going concern concept

• Entity concept

• Prudence concept

• Accrual concept

Which of the following are external users of financial statements of a business?

i. Employees of a business

ii. The public

iii. Government organizations

iv. The owner of the business

• i and ii only

• ii and iii only

• iii and iv only

• i and iv only

Bookkeeping differs from accounting. Bookkeeping primarily involves which part of the accounting process?

• Classifying

• Summarizing

• Recording

• Interpreting

Inventory is valued at the lower of cost or net realisable value. This is in line with the:

• Accrual concept

• Historical cost concept

• Prudence concept

• Materiality concept