Which of the following statements about accounting procedures is not correct?

Posting is the process of transferring information from ledger accounts to the journal.

The journal shows in one place all the information about specific transactions arranged in chronological order.

A ledger account shows in one place all the information about changes in a specific asset or liability or owner's equity.

The product of the accounting cycle is the formal financial statements such as balance sheet and income statement.

Accounting is called the "language of business" because:

It helps to organize and communicate financial information to end users

It communicates the financial information to the Management only

In order to run a business one must have knowledge about accounting

Different business accounts are involved in financial statements

Which of the following explains the debit and credit rules relating to recording revenues and expenses?

The effect of revenues and expenses in the owner's equity

Realization and matching principle

Expenses appear on the left side of the income statement

Liabilities are recorded as debit on the balance sheet

For purpose of measuring business income, the life of a business is divided into which of the following?

Divided into discrete accounting periods

Divided into specific points in time

Considered to be a continuous cycle

Which of the following statements is associated with the accrual basis of accounting?

Revenues are recognized in the period they are earned, regardless of the time period the cash is received.

The timing of cash receipts and disbursements is emphasized.

A minimum amount of record keeping is required.

This method is used less frequently by businesses than the cash method of accounting.

An accounting system is used by a business to:

Handle routine bookkeeping tasks

Which of the following is not normally required for revenue to be recognized according to the revenue principle for accrual basis accounting?

Cash that has already been collected

The price is fixed or determinable

Evidence of an arrangement for customer payment exists

Which of the following statements is (are) not consistent with generally accepted accounting principles relating to asset valuation:

Accountant assumed that assets such as office supplies, land and buildings will be used in business operations rather than sold at current market prices.

Many assets are originally recorded in accounting record at their cost to the business entity.

Subtracting total liabilities from total assets indicates what the owner equity in the business is worth under current market condition.

Accountants prefer to base the valuation of assets upon objective, verifiable evidence rather than upon appraisals or personal opinion.

The concept of materiality (indicate wrong answer):

Permits accountants to ignore generally accepted accounting principles in certain situations.

Requires that financial statements be accurate to the nearest dollar, but need not show cents.

Is based upon what users of financial statements are thought to consider important.

Permits accountants to use the easiest and most convenient means of accounting for events that are immaterial.

Which of the following best describes the application of generally accepted accounting principles to the valuation of accounts receivable?

Realization principle-Accounts receivables are shown at their net realizable value in the balance sheet.

Matching principle-The loss due to an uncollectible account is recognized in the period in which the sale is made, not in the period in which the account receivable is determined to be worthless.

Cost principle-Accounts receivables are shown at the initial cost of the merchandise to customers, less the cost the seller must pay to cover uncollectible accounts.

Principle of conservatism-Accountants favors using the lowest reasonable estimate for the amounts of uncollectible accounts.

Which of the following true with respect to provision?

It is a liability of uncertain timing or amount

It is a liability of certain timing or amount

It is an asset of uncertain timing or amount

It is an income of uncertain timing or amount

Which of the following is true with respect to the measurement of revenue?

Revenue shall be measured at the fair value of the consideration received or receivable

Revenue shall be measured at the future value of the consideration received or receivable

Revenue shall be measured at the discounted value of the consideration received or receivable

Revenue shall not be measured at the fair value of the consideration received or receivable

Which of the following is related to the qualitative characteristics that make financial information useful?

Both reliability and relevancy.

Which of the following statement is true regarding going concern concept?

The business will continue for indefinite period

The assets of the business are valued at market value

The business will continue until the directors decide to close it

Under which of the following assumptions, the financial statements are to be prepared?

Accrual basis and going concern basis

Revenue is most commonly recognized at the time when:

The order is received from customers

For each transaction, double-entry accounting requires which of the following:

Total debits must equal total credits

Debits to asset accounts must create credits to liability or equity accounts

A debit to a liability account must create a credit to an asset accounts

Which of the following is an important reason for studying accounting?

Accounting information is useful in making economic decisions

Accounting plays an important role in society

The study of accounting can lead to a challenging career

The prime function of accounting is to:

Provide the informational basis for action

Classifying and recording business transactions

Accounting Principles Quiz

Authored by Muhammad Mubeen Ansari

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Professional Development

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Rules and guidelines that company must follow when reporting financial data is called:

Accounting principles

Accounting procedures.

Accounting assumptions.

None of the above.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following principle provides the definite and factual basis for assets valuation?

Stable Currency principle.

Objectivity Principle

Matching Principle.

Cost Principle

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following principle states that the assets are purchased for the use and not for resale purpose?

Stable Currency principle.

Objectivity Principle

Going-concern principle.

Cost Principle

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following principles assumes that a business will continue for a long time?

Historical cost.

Periodicity

Objectivity.

Going concern

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The accounting principle that states companies and owners should be account for separately:

Business entity concept.

Going concern concept

Monetary unit assumption.

Periodicity assumption

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

According to the personal expenses paid by Mr. A from his own pocket would not be recorded in business books of account:

Realization principle.

Separate entity principle

Matching principle.

Materiality principle

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following principle deals with the valuation and recording of the assets at cost?

Entity principle.

Matching principle

Cost principle.

Stable currency principle

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Accounting Principles Quiz

Rules and guidelines that company must follow when reporting financial data is called:

Which of the following principle provides the definite and factual basis for assets valuation?

Which of the following principle states that the assets are purchased for the use and not for resale purpose?

Which of the following principles assumes that a business will continue for a long time?

The accounting principle that states companies and owners should be account for separately:

According to the personal expenses paid by Mr. A from his own pocket would not be recorded in business books of account:

Which of the following principle deals with the valuation and recording of the assets at cost?

Which of the following principle is used for recording an expense?

Companies not disclosing an imminent bankruptcy would violate the:

The assumption that states that businesses can divide up their activities into artificial time periods:

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