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WorksheetsBasis of Accounting - Chapter 2
Total questions: 18
Worksheet time: 9mins
According to the accrual concept of accounting, financial or business transaction is recorded
when cash is received or paid
when transaction occurs
when profit is computed
when balance sheet is prepared
ABC Trading provides services to Zee Enterprise in the year 2017 but the fees were received in the year 2018. In which year ABC trading Trading should recognize the income.
(a)
Concept: The revenue from business activities and the expenses associated with earning that revenue are recorded in the same accounting period
adequate disclosure
unit of measurement
historical cost
matching expenses with revenue
The Matching Concept states that expenses should only be recognized when it is incurred and not when paid. If a company purchases goods on credit in March and gives payment in May, this would be shown in the sales figure for?
The month the goods were purchased.
The month the goods were produced.
The month the cash is paid to the creditors.
None of the above.
Expenses which have been paid in advance are called:
accrued expenses
prepaid expenses
outstanding expenses
general expenses
Accounting rules and procedures require that revenue and expenses be recorded in the accounting period in which revenue is earned and expenses are incurred.
True
False
It represents advanced payments from customers which requires settlement through delivery of goods or services in the future.
Sales Revenue
Service Revenue
Unearned Income or Income received in advance
Accrued Revenue
Under the accrual basis of accounting, expenses are reported in the accounting period when the
Cash is Paid
Expense Matches the Revenues of that accounting period
Correct Cash overview is shown by:
Accrual Basis of Accounting
Cash Basis of Accounting
Accrue Basis of Accounting
Both Cash and Accrual Accounting
This is the simplest bases for recording business transactions.
Depriciation Accounting
Cash Accounting
Accrued Accounting
Accrual Accounting
Accrual Bases of Accounting is recognized by:
Partnership Act, 1932
Companies Act, 1913
Partnership Act,1930
Companies Act,2013
Mark the limitations of Cash Basis of Accounting:
Elaborate process
Expensive
Records only cash transactions
Simple
Which of the following are merits of Accrual Accounting:
Shows correct picture of Cash revenues and expenses
Shows true and fair picture of Income
Scientific basis of recording transactions
Elaborate process
Income that has been accrued but not yet received is called:
Income received in advance
Accrued Income
Outstanding Income
Prepaid Income
