3. Theory Base Of Accounting


25 Questions MCQ Test Financial Accounting | 3. Theory Base Of Accounting


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This mock test of 3. Theory Base Of Accounting for Finanace & Accounting helps you for every Finanace & Accounting entrance exam. This contains 25 Multiple Choice Questions for Finanace & Accounting 3. Theory Base Of Accounting (mcq) to study with solutions a complete question bank. The solved questions answers in this 3. Theory Base Of Accounting quiz give you a good mix of easy questions and tough questions. Finanace & Accounting students definitely take this 3. Theory Base Of Accounting exercise for a better result in the exam. You can find other 3. Theory Base Of Accounting extra questions, long questions & short questions for Finanace & Accounting on EduRev as well by searching above.
QUESTION: 1

To see how a firm has performed as compared to the other firms is known as 

Solution:

Inter firm comparison means a comparison of two or more similar business units with the objective of finding the competitive position to improve the profitability and productivity of those business units.

QUESTION: 2

Which is the regulatory body for standardization of accounting policies in the country which has issued Accounting Standards which are expected to be uniformly adhered to, in order to bring consistency in the accounting practices?

Solution:

The Institute of Chartered Accountants of India (ICAI), which is the regulatory body for standardisation of accounting policies in the country has issued Accounting Standards which are expected to be uniformly adhered to, in order to bring consistency in the accounting practices.

QUESTION: 3

What is the full form of GAAP

Solution:

Generally Accepted Accounting Principles (GAAP) refers to the rules or guidelines adopted for recording and reporting of business transactions, in order to bring uniformity in the preparation and the presentation of financial statements.

QUESTION: 4

A general law or rule adopted or professed as a guide to action, a settled ground or basis of conduct or practice is known as 

Solution:

An accounting principle is defined by the American Institute of Certified Public Accountants (AICPA), as “a general law or rule adopted or proposed as a guide to action; a settled ground or basis of conduct or practice.

QUESTION: 5

What is the full form of AICPA

Solution:

The American Institute of Certified Public Accountants (AICPA) is the world's largest member association representing the accounting profession, with a history of serving the public interest since 1887

QUESTION: 6

A method of bookkeeping relying on a one-sided accounting entry to maintain financial information is known as 

Solution:

Single-entry bookkeeping or single-entry accounting or single entry system is a method of bookkeeping relying on a one sided accounting entry to maintain financial information. It is known as an incomplete or unscientific method for recording transaction. Most businesses maintain a record of all transactions using double-entry bookkeeping.

QUESTION: 7

Under which basis of accounting, entries in the book of accounts are made when cash is received or paid and not when the receipt or payment becomes due.

Solution:

Under the cash basis, entries in the book of accounts are made when cash is received or paid and not when the receipt or payment becomes due. E.g.  if office rent for the month of December 2019, is paid in January 2020, it would be recorded in the book of account only in January 2020.

QUESTION: 8

Total number of Accounting Standards issued by Institute of Chartered Accountants of India (ICAI) as on 01.04.2019 is

Solution:

Total number of Accounting Standards issued by Institute of Chartered Accountants of India (ICAI) as on 01.04.2019 are 27.

QUESTION: 9

Which English alphabet is similar to the shape of an account?

Solution:

A T-account is an informal term for a set of financial records that uses double-entry bookkeeping.

QUESTION: 10

_____________________ are written policy documents covering the aspects of recognition, measurement, treatment, presentation, and disclosure of accounting transactions in financial statements.

Solution:

Accounting standards are written policy documents covering the aspects of recognition, measurement, treatment, presentation, and disclosure of accounting transactions in financial statements.

QUESTION: 11

Which of the System of Accounting is used for recording transactions in the book of account?

Solution:

The systems of recording transactions in the book of accounts are generally classified into two types, viz. Double entry system and Single entry system.

QUESTION: 12

Which of the following is/are the objective of accounting standards 

Solution:

The objective of accounting standards is to bring uniformity in different accounting policies in order to eliminate the non-comparability of financial statements for enhancing the reliability of financial statements. Secondly, the accounting standard provides a set of standard accounting policies, valuation norms, and disclosure requirements. In addition to improving credibility of accounting data, the accounting standard enhances the comparability of financial statements, both intra and inter enterprises. Such comparisons are very effective and widely used for assessment of firms’ performance by the users of accounting.

QUESTION: 13

________________ is based on the principle of “Dual Aspect” which states that every transaction has two effects, viz. receiving of a benefit and giving of a benefit.

Solution:

Double entry system is based on the principle of “Dual Aspect” which states that every transaction has two effects, viz. receiving of a benefit and giving of a benefit.

QUESTION: 14

Which of the following is the Limitation of Accounting Standards

Solution:

Limitations of Accounting Standards
1. Accounting standard makes choice between different alternate accounting treatments difficult to apply.
2. It is rigidly followed and fails to extend flexibility in applying accounting standards.
3. Accounting standard cannot override the statue. The standards are required to be farmed within the ambit of prevailing status.

QUESTION: 15

Under which basis of accounting,  revenues, and costs are recognized in the period in which they occur rather when they are paid. 

Solution:

Under the accrual basis, revenues and costs are recognised in the period in which they occur rather when they are paid. A distinction is made between the receipt of cash and the right to receive cash and payment of cash and legal obligation to pay cash. Thus, under this system, the monitory effect of a transaction is taken into account in the period in which they are earned rather than in the period in which cash is actually received or paid by the enterprise. This is a more appropriate basis for the calculation of profits as expenses are matched against revenue earned in relation thereto. E.g.  raw material consumed are matched against the cost of goods sold.

QUESTION: 16

___________________ connotes customs or traditions as a guide to the preparation of accounting statements.

Solution:

Accounting convention connotes customs or traditions as a guide to the preparation of accounting statements.

QUESTION: 17

IFRS stands for

Solution:

International Financial Reporting Standards, commonly called IFRS, are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board

QUESTION: 18

From the point of view of the timing of recognition of revenue and costs, accounting approaches can be

Solution:

From the point of view the timing of recognition of revenue and costs, there can be two broad approaches to accounting. These are:
(i) Cash basis; and
(ii) Accrual basis.

QUESTION: 19

______________ refers to the necessary assumptions and ideas which are fundamental to accounting practice

Solution:

Accounting concept refers to the necessary assumptions and ideas which are fundamental to accounting practice

QUESTION: 20

GST stands for

Solution:

GST stands for Goods and Services Tax

QUESTION: 21

GST was implemented in India from

Solution:

GST was implemented in India from 1st July 2017

QUESTION: 22

GST is a consumption of goods and service tax based on

Solution:

GST is a consumption of goods and service tax based on destination

QUESTION: 23

Which of the following is not the component of GST

Solution:

There are three main components of GST which are CGST, SGST, IGST.
CGST - Central Goods and Services Tax
SGST - State Goods and Services Tax
IGST - Integrated Goods and Services Tax

QUESTION: 24

Which of the following Tax has not been subsumed under GST

Solution:

Following Taxes has been subsumed under GST
1. Service Tax
2. Excise Duty
3. Customs Duty
4. Central Sales Tax
5. VAT
6. Entry Tax
7. Octroi
8. Luxury Tax

QUESTION: 25

Comparison of two or more departments or divisions of the same business unit with the objective of meaningful analysis in order to improve the operational efficiency of all the departments or divisions is known as 

Solution:

Intra-firm comparison means comparison of two or more departments or divisions of the same business unit with the objective of meaningful analysis in order to improve the operational efficiency of all the departments or divisions. 

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