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Worksheetsaccounting Principles
Total questions: 72
Worksheet time: 36mins
The requirement that only transaction data capable of being expressed in terms of money be included in the accounting records relates to the ______________.
economic entity assumption
monetary unit assumption
cost principle
both b and c
Communication of economic events is the part of the accounting process that involves
identifying economic events.
quantifying transactions into dollars and cents.
preparing accounting reports.
recording and classifying information
According to (a) concept, all expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.
Only cash transactions are recorded in (a) basis of accounting.
Cash as well as credit transactions are recorded in (a) basis of accounting.
The (a) assumption of accounting states that if straight line method of depreciation is followed in one accounting year, then it should be continued in the next year also.
. Everything a firm owns, it also owns out of somebody. This co – incidence is explained by the (a) concept.
. Salary to manager will be recorded in the books of accounts but appointment of manager is not recorded due to (a) concept.
Outstanding and prepaid expenses are adjusted according to (a) basis of accounting.
The closing stock is valued at cost price or market price whichever is (a) .
5. (a) concept assumes that business would not be liquidated in the foreseeable future.
True value of profit and loss is identified in (a) basis of accounting.
X Ltd. produces its financial statements on 31st March every year in accordance to (a) concept.
Ghanshyam and co. purchased machinery worth Rs 12,00,000. It further incurred transportation cost of Rs 2,00,000 and installation cost of Rs 5,00,000. The market price of the machinery at the end of the accounting year was Rs 25,00,000. Ghanshyam and co. should record the machinery price as Rs (a) in the books.
Rajawat Furnishing House purchased 10 tables @ Rs 2,000, 20 chairs @Rs 800 and 2 Sofa Set. He was not able to record the transaction of Sofa Set as it does not fulfil the condition of (a) concept.
Rent is to be paid Rs 6,000 recorded as Outstanding Rent due to (a) concept.
Aman and Raman are creating 5% provision for doubtful debts keeping in mind (a) principle of accounting.
Karan started business with cash of Rs 3,50,000 which is borrowed from Dev. On one hand he has an asset of Rs 3,50,000 (cash) while on other hand, he has a liability towards Dev. Thus we can say accounting is done by (a) entry system.
XYZ Ltd. Received an advance on sale in the month of January, 2019 for the sale made in May, 2019. The revenue should be recognised on (a) .
. Devdhar keeps record of his assets according to market value, probably he does not know about (a) concept.
Ajit is running a small shop and keeping record of cash inflow and outflow only. He is maintaining his books on (a) basis of accounting.
Somya and Komal are manager in a company. Somya is more organised and systematic, but employer cannot record her Quality of work as her efficiency cannot be measured in terms of (a) .
Depreciation is charged under (a) basis of accounting.
Bhushan is unaware about (a) concept and preparing his books on quarterly basis.
XYZ Ltd. Received an advance on sale in the month of January, 2019 for the sale made in May, 2019. The revenue should be recognised on (a) .
Purchase goods of Rs 50,000 and purchase machinery of Rs 5,00,000 are classified under different expenditure category due to going concern concept. Carriage of Rs 1,000 is added to capital expenditure, in this Rs (a) amount is to be debited in purchase A/c.
A Ltd. had shown a contingent liability of Rs 2,00,000 as footnote after it’s Balance Sheet. After analysing Balance Sheet of A Ltd., B Ltd. purchased this running business without any further enquiry. A Ltd. had prepared it’s books by strictly following (a) convention.
Anant charged depreciation on his Fixed Assets of Rs 8,50,000 @ 10% p.a. in year 2018. He then charged depreciation in year 2019 at the rate of 12% p.a. Management is facing problem in comparing the data in consecutive years. To solve this problem, Anant should learn about (a) Assumption of accounting.
A business purchased goods for Rs 2,00,000 and sold 75% of the goods during accounting year ended 31st March, 2019. The market value of remaining goods was Rs 48,000. He valued closing stock at cost. While recording he violated (a) concept.
Salary paid Rs 55,000 and outstanding Rs 5,000. At the time of passing journal entry Rs (a) amount will be debited in Salary A/c due to accrual concept.
Ram made cash sales of Rs 2,50,000 and credit sales of Rs 1,50,000. His expenses for the year were Rs 50,000, out of which Rs 10,000 is yet to be paid. Ram’s income on the base of cash basis of accounting will be Rs (a) .
A Ltd. Purchased goods of Rs 5,20,000 during a financial year. His sales for the year were 6,00,000 and closing stock at the end was Rs 1,20,000. According to matching concept his profit during the year is Rs (a) .
Rent paid Rs 85,000 out of which Rs 15,000 is related to next year. In the Cash Basis of accounting Rs (a) amount will be debited in Rent A/c.
. Shyam made cash sales of Rs 3,20,000 and credit sales of Rs 1,80,000. His expenses for the year were Rs 50,000, out of which Rs10,000 is yet to be paid. Ram’s income on the base of accrual basis of accounting will be Rs (a) .
Anant charged depreciation on his Fixed Assets of Rs 8,50,000 @ 10% p.a. in year 2018. He then charged depreciation in year 2019 at the rate of 12% p.a. Management is facing problem in comparing the data in consecutive years. To solve this problem, Anant should learn about (a) Assumption of accounting.
Purchase goods of Rs 50,000 and purchase machinery of Rs 5,00,000 are classified under different expenditure category due to going concern concept. Carriage of Rs 1,000 is added to capital expenditure, in this Rs (a) amount is to be debited in purchase A/c.
A Ltd. Purchased goods of Rs 5,20,000 during a financial year. His sales for the year were 6,00,000 and closing stock at the end was Rs 1,20,000. According to matching concept his profit during the year is Rs (a) .
Rent paid Rs 85,000 out of which Rs 15,000 is related to next year. In the Cash Basis of accounting Rs (a) amount will be debited in Rent A/c.
accounting Rs __________ amount will be debited in Rent A/c. (Rs 85,000) 49. Accounting period may be either a calendar year (from January 01 to December 31) or the _________ year (from April 01 to March 31) of the government.
(a)
As per Dual Aspect Principle Capital = Assets + Liabilities.
True
False
ICAI stands for Institute of Company Accounts.
True
False
Accounting Standards signifies Uniformity, Transparency and Consistency in Accounting.
True
False
Accounting Principles, concepts and conventions commonly known as GAAPs.
True
False
Under Accrual Basis of Accounting, Only cash transactions are recorded.
True
False
The financial affairs of a business are treated separately from those of owner.
Which principle does this define?
(a) Business entity
(b) Matching
(c )Money measurement
(d) Prudence
Prior to completing the financial statements for a local retails store, the accountant has asked the owner, Lisa, to confirm that her business is likely to continue for many years to come.
Which principle is the accountant applying?
(a) Business entity
(b) Matching
(c ) Going concern
(d) Prudence
1. Hafeji retail stores has purchased a pair of curtains costing Rs.15. The curtains are expected to last for ten years. The retail store owner feels that they should record the curtains under non-current assets in the financial statements.
Which of the following principles prevents the curtains being recorded in this manner?
Consistency
Matching
Materiality
Prudence
1. A business values its inventory at the ‘lower of cost and net realisable value’. Which accounting principle is being applied?
Consistency
Business entity
Prudence
Going concern
1. At the end of the financial year, a business makes a charge against the profit for insurance purchased, paid for but not yet consumed. Which accounting principle is being applied?
(a) Accruals
(b) Business entity
(c )Going concern
(d) Prudence
1. When preparing financial statements, accountants need to ensure that a business will continue to operate for the foreseeable future. Which accounting principle is being defined?
Business entity
Going concern
Materiality
Prudence
Which accounting principle is being applied when a business produces its trial balance?
Business entity
Consistency
Duality
Prudence
Which accounting principle states that a business transaction always has two effects on a business?
Consistency
Duality
Matching
Prudence
A limited company depreciates fixtures and fittings at 20% per annum. The policy has not changed since the company was founded. Which accounting principle is being applied?
(a) Consistency
(b) Duality
(c ) Matching
(d) Prudence
When preparing an income statement, irrecoverable debts are included in the expenses. Which accounting principle is being applied?
(a) Business entity
(b) Matching
(c )Money measurement
(d) Prudence
Which of the following defines the historic cost principle?
Financial accounts contain only items that a have a monetary value.
Financial transactions are maintained on a double entry basis.
Non-current assets are valued at cost less depreciation.
Profit for the year is calculated by deducting expense from gross profit.
Which accounting principle is applied when accounting for a provision for doubtful debts?
Materiality
Realisation
Matching
Prudence
This principle states that revenue should be recognised when the exchange of goods or services take place,
Duality
Realisation
Matching
Prudence
Noah started a bakery, Grace and Evelyn are his employees. They have baked several batches of cookies and cakes, stocked them in the inventory, and sold many of them to their customers. They have also paid their suppliers for the raw materials and paid salaries to their employees. What would be the last step in their business operating cycle?
Collect payment for credit sales
Sell the baked goods from the inventory
Pay suppliers or employees
Stock baked goods into the inventory
Henry, Ava, and Grace are partners in a cafe. They are interested in understanding the cafe's financial health over the past year. Which of the following would they examine to assess the cafe's profits and losses?
Net worth ledger
Liability statement
Income statements
Transaction ledger
Avery, Michael, and David are working on a group project for their accounting class. During their study session, they encounter a practical question: 'Which of the following financial statements shows any changes which have occurred in the numerical balances of a company?'
Profit and loss statement
Balance sheet
Net worth ledger
Transaction ledger
Nora, Noah, and Arjun are studying accounting. They are working on a project for their accounting class where they have to analyze the financials of a real company. They are unsure about which document would show the numerical balances determined by the company's chart of accounts. Can you help them?
Profit and loss statement
Balance sheet
Net worth ledger
Transaction ledger
Ethan, Evelyn, and Nora are participating in a business simulation game. They are managing a virtual company and are trying to understand the impact of debits and credits on their simulated balance sheet. Which of the following statements is TRUE?
When Ethan debits the virtual company's bank account, it decreases their assets
When Evelyn credits the virtual company's expense account, it increases their expenses
When Nora debits the virtual company's loan account, it decreases their liabilities
When Evelyn credits the virtual company's equipment account, it increases their assets
Nora started a small business and Benjamin is helping her with the accounts. They came across a term 'Accounts payable'. Can you help Aiden understand whether 'Accounts payable' is classified as which of the following?
Fixed assets
Current liabilities
Owner’s equity
Net income
Samuel, Ethan, and Mason are running a small business. They are trying to understand their financials. Which of the following is NOT considered a current asset in their business?
Checking accounts
Accounts receivable
Money market accounts
Land
Mason, Rohan, and David are discussing their investments. Mason believes that the most liquid asset among the ones they own is real estate, Rohan thinks it's stocks, and David says it's cash. Who is correct?
Mason with Real estate
Rohan with Stocks
David with Cash
None of them
Anika and Mason have started a lemonade stand, and Aiden is assisting them with the finances. As they review their earnings and expenses, they need to understand a basic accounting principle. Which of the following represents the equation they should use to assess their financial position?
Assets = Liabilities + Owner’s Equity
Assets = Expenses - Revenue
Assets = Net income - Revenue
Assets = Liabilities + Net income
Scarlett and Abigail started a lemonade stand. To understand their business performance, they need to calculate their profit. Which of the following equations should they use?
A. Revenue - Expenses = Profit
B. Revenue + Expenses = Profit
C. Revenue - Net income = Profit
D. Revenue - Sales costs = Profit
James, Charlotte, and Benjamin started a cafe together. After a bustling year, they are reviewing their financial statements. Which of the following represents the amount of money their cafe has earned after paying income taxes?
A. The total sales figures for the year
B. The costs of goods they sold throughout the year
C. Their gross profit for the year
D. Their net income for the year
Luna, Anika, and Scarlett run a small bakery together. They are trying to understand their business expenses. Which of the following would directly relate to the costs they incur for baking goods, such as the flour, sugar, and other ingredients they purchase from their suppliers?
A. The total sales figures of their bakery
B. The costs of goods sold in their bakery
C. The gross profit of their bakery
D. The net income of their bakery
Abigail, Grace, and Nora are reviewing the financial statements of their school's bake sale. They look at the net sales figures and the cost of goods sold for the event. Which of the following would they get if they subtract the cost of goods sold from the net sales figures?
A. Sales figures
B. Costs of goods sold
C. Gross profit
D. Net income
Avery, Oliver, and Ava started a car wash service during the summer. Which of the following represents the amount of revenue they generated from their business?
A. The number of cars they washed
B. The cost of soap and water they used
C. The profit they made after deducting the cost of soap and water
D. The money they had left after paying for all their expenses
Samuel, Zoe, and Elijah run a small bakery together. They have to pay Luna, their flour supplier. When they make a payment to Luna, which of the following occurs in their accounting books?
Accounts payable is increased by a debit
Accounts payable is decreased by a debit
Accounts payable is decreased by a credit
Accounts payable is increased by a credit
