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WorksheetsAccounting Concepts and Conventions
Total questions: 25
Worksheet time: 20mins
The cost of a tape dispenser has been charged to an expense account although it will still be in use in 10 years time.
Which accounting concept is being applied?
materiality concept
prudence concept
going concern concept
accrual concept
A sole trader has sold his private house but has not recorded anything about it in the business records.
What accounting concept is being applied?
confidentiality
historical cost
business entity
prudence
A debt has been written off as bad even if there is still a chance that debtor may eventually pay it.
What concept is being applied?
prudence
going concern
materiality
substance over form
A machine has been bought for $5 000 and entered in the machine account at that amount even though it is worth $12 000.
What accounting concept is being applied?
historical cost
dual aspect
prudence
realisation
An expert says that the value of the management team of the company is worth well over a million dollars yet nothing is entered for it in the books.
What accounting concept is being applied?
money measurement
materiality
substance over form
dual aspect
A motor van broke down in December 2017. The repair bill was not paid until 2018, yet it was treated as a 2017 expense.
What accounting concept is being applied?
accruals
historical cost
realisation
materiality
A customer saw a carpet in 2017 and said she might well buy it. She telephoned in 2018 and asked for the carpet to be delivered. The item was not treated as a sale in 2017 but was treated as a sale in 2018.
What accounting concept is being applied?
realisation
accruals
prudence
going concern
The final day of the financial year saw the passing of a new law which rendered the goods that we sell illegal and the business would have to close down. The accountant says that the assets in the financial statements cannot be shown at cost.
What accounting concept is being applied?
going concern
historical cost
realisation
substance over form
We have been told that we cannot show our asset of motor car at cost in one year and market value in the next year.
What accounting concept is being applied?
consistency
going concern
historical cost
prudence
We have shown all items of machinery costing less than $100 as machinery operating expenses.
What accounting concept is being applied?
materiality
going concern
prudence
historical cost
Electricity consumed during the accounting period is still unpaid at year end.
Name the accounting concept you should follow to deal with this.
(a)
The owner of the business has invested his private asset in the business.
Name the accounting concept that should be followed to deal with this.
(a)
The organisation has suffered large losses in the last financial year and is extremely uncertain whether it can continue to operate next year.
Name the accounting concept that should be followed.
(a)
Emily works for a firm of accountants and one of the clients is her parents' friend. Emily's father asked her how his friends business was doing and how much profit it made last year.
What accounting concept should Emily apply.
(a)
Identify the type of expenditure.
Purchase of a motor van
Capital
Revenue
Identify the type of expenditure.
Cost of rebuilding warehouse wall which had fallen down
Capital
Revenue
Identify the type of expenditure.
Building extension to warehouse
Capital
Revenue
Identify the type of expenditure.
Painting extension to warehouse when it is first built.
Capital
Revenue
Identify the type of expenditure.
Repainting extension to warehouse three days after
Capital
Revenue
Identify the type of expenditure.
Transportation cost on materials for new warehouse
Capital
Revenue
Identify the type of expenditure.
Transportation costs on purchases
Capital
Revenue
Identify the type of expenditure.
Transportation costs on sales
Capital
Revenue
Identify the type of expenditure.
Legal costs of collecting debts
Capital
Revenue
Identify the type of expenditure.
Legal charges on acquiring new building for office
Capital
Revenue
Identify the type of expenditure.
Cost of installing a new machine
Capital
Revenue
