WorksheetsAccounting Concepts and Principles Quiz
Total questions: 57
Worksheet time: 29mins
What is the primary objective of financial accounting and reporting?
To calculate taxes
To provide information useful for decision-making
To maintain employee records
To measure inflation
The common set of rules used in accounting is known as:
IFRS
GAAP
Ind-AS
IAS
GAAP stands for:
General Accounting & Auditing Principles
Generally Accepted Accounting Principles
Global Accounting & Audit Practices
Government Approved Accounting Policies
Why are GAAP important?
To avoid taxation
To maintain uniformity in accounting practices
To increase profits
To promote international trade
Accounting principles are:
Methods of preparing tax returns
Rules and procedures of recording transactions
Government regulations only
Standards for auditing only
Accounting principles are classified into:
Concepts and Laws
Concepts and Conventions
Conventions and Practices
Rules and Standards
Which of the following is NOT an accounting concept?
Business Entity
Going Concern
Conservatism
Accrual
Which of the following is NOT an accounting convention?
Materiality
Consistency
Double-entry
Conservatism
Accounting concepts are:
Assumptions and fundamental propositions
Guidelines issued by RBI
Rules made by SEBI
Taxation norms
The practice of recording business transactions in a common language is ensured by:
IFRS
GAAP
Conventions
ASB
The business entity concept treats business and owner as:
Same
Separate
Government-owned
Temporary
Amount invested by the proprietor is shown as:
Asset
Liability
Expense
Income
Which concept assumes that business will continue in the foreseeable future?
Going Concern
Periodicity
Cost
Accrual
Under Going Concern, fixed assets are recorded at:
Market Value
Liquidation Value
Historical Cost
Current Replacement Cost
Which of the following is ignored under Money Measurement Concept?
Cash transactions
Sales made on credit
Employee efficiency
Purchase of machinery
Dual aspect concept forms the basis of:
Balance Sheet
Double Entry System
Trial Balance only
Cost Accounting
Accounting Equation states:
Assets = Liabilities - Equity
Assets = Equity + Liabilities
Assets = Expenses + Revenue
Assets = Income + Reserves
The accounting period concept divides the life of a business into:
10 years
Indefinite years
Accounting Periods
Calendar months only
Under Cost Concept, assets are recorded at:
Market Value
Historical Cost
Liquidation Value
Replacement Value
A major limitation of Cost Concept is:
Too complex
Irrelevant during inflation
Ignores original cost
Allows subjective values
Realization concept determines:
When to record revenue and its amount
When to record expenses
How to value assets
The method of depreciation
Revenue is recognized when it is:
Earned and Realized
Received in advance
Guaranteed by government
Approved by management
Matching principle matches:
Assets with liabilities
Revenue with Expenses
Cost with Purchases
Capital with Drawings
According to Matching Concept, adjustments are made for:
Prepaid expenses
Outstanding expenses
Accrued incomes
All of the above
Accrual concept recognizes income and expenses:
Only when cash is received or paid
When they are earned or incurred
Only at year-end
Only when profits arise
Which basis of accounting matches revenue and expenses better?
Cash Basis
Accrual Basis
Hybrid Basis
None of these
Cash Basis of accounting recognizes revenue when:
Earned
Service provided
Cash received
Invoice prepared
Which Act in India mandates accrual concept?
Companies Act, 1956
Income Tax Act, 1961
SEBI Act
RBI Act
Reliability concept emphasizes:
Accuracy and Objectivity
Profitability
Liquidity
Timeliness only
Invoices, vouchers, and bank statements are examples of:
Subjective evidence
Objective evidence
Hidden information
Provisions
The concept ensuring information is free from bias is:
Matching
Reliability
Periodicity
Conservatism
Provision for doubtful debts is based on:
Matching Concept
Conservatism
Reliability (with judgment)
Consistency
Accrual basis requires adjusting entries for:
Outstanding expenses
Prepaid expenses
Accrued incomes
All of the above
Without reliability concept, users of financial statements:
Would gain confidence
Would not trust them
Could make better decisions
Would ignore accounting standards
The concept most closely related to depreciation is:
Matching Concept
Cost Concept
Periodicity
Going Concern
Convention of Full Disclosure requires:
Concealing profits
Disclosing significant information
Showing only cash transactions
Ignoring liabilities
Which Act prescribes forms for financial statements in India?
Companies Act, 1956
Income Tax Act, 1961
SEBI Act
Partnership Act
Convention of Conservatism means:
Anticipate profits and ignore losses
Anticipate no profits but provide for losses
Ignore all future events
Show maximum possible profit
Closing stock is valued at:
Cost only
Market price only
Cost or Market Price whichever is less
Average price
Convention of Consistency requires:
Changing policies every year
Using same methods unless justified
Ignoring previous year's results
Following government policies only
Consistency ensures:
Comparability over periods
Increase in profit
Tax benefits
Depreciation is avoided
Convention of Materiality focuses on:
Insignificant details
Material details affecting decisions
Ignoring liabilities
Overstating profits
An item is material if:
It influences investor decisions
Its omission misleads users
Both a and b
None
Which convention justifies using round figures in accounts?
Materiality
Conservatism
Consistency
Periodicity
The principle 'Do not anticipate profits, but provide for all possible losses' relates to:
Consistency
Conservatism
Materiality
Reliability
The convention helping in comparability across enterprises:
Consistency
Reliability
Materiality
Conservatism
Footnotes in financial statements disclose:
Contingent Liabilities
Market Value of Investments
Basis of Valuation
All of the above
Provisions for doubtful debts are made under:
Conservatism
Consistency
Reliability
Materiality
The significance of materiality depends on:
Size of organization
Purpose
Amount involved
All of the above
Materiality leaves discretion to:
Auditor
Accountant
Investor
Government
IFRS is developed by:
SEBI
IASB
ICAI
NACAS
IFRS aims at:
Common accounting language globally
Only Indian reporting standards
Avoiding taxation
Preparing audit reports
IAS stands for:
Indian Accounting Standards
International Accounting Standards
Institute of Accounting Standards
International Audit Standards
How many IAS exist currently?
17
41
35
21
How many IFRS are currently issued?
17
41
21
35
Which financial statement is also known as Balance Sheet?
Statement of Cash Flow
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Retained Earnings is also known as:
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to Accounts
