Test: Accounting Concepts, Principles And Conventions - 1


30 Questions MCQ Test Fundamentals of Accounting for CA CPT | Test: Accounting Concepts, Principles And Conventions - 1


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QUESTION: 1

The accounts that records expenses, gains and losses are

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QUESTION: 2

Money owed from an Outsider is a : 

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QUESTION: 3

 No inference of profit and the provision making policy for all possible losses is due to: 

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QUESTION: 4

The Accounting Equation is based on: 

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QUESTION: 5

 During life- time of an entity accountants prepare financial statements at arbitrary points of time as per:

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QUESTION: 6

The owner of a company included his personal medical expenses in the company’s income statement. Indicate the principle that is violated. 

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QUESTION: 7

Capital as on 1-4-05: Rs. 90,000
Capital introduced: Rs. 25,000
Drawings made: Rs. 35,000
Capital as on 31-3-06: Rs. 1,25,000
What is the amount of profit added to the Capital? 

Solution:

Net Profit= Closing Capital+ Drawings- Capital Introduced- Opening Capital 

= 1,25,000+ 35,000- 25,000- 90,000

= Rs. 45,000

QUESTION: 8

“Holding gains in relation to stocks should not be used for payment of dividend.” Which one of the following accounting principle is involved in this?

Solution:

The correct option is D.

The realization principle is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively. Thus, revenue can only be recognized after it has been earned. So since the amount is not realised and dividends are paid out of profits that are realised in cash, it cannot be paid by the gains in holdings.

QUESTION: 9

________refer to the general agreement on the usage and practices in social or economic life: 

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QUESTION: 10

 Fundamental Accounting Assumptions are: 

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Fundamental Accounting Assumptions.So unless specified otherwise, it will be assumed that such principles were implemented in the final accounts of the company. The three main assumptions we will deal with are – going concern, consistency, and accrual basis.

QUESTION: 11

Recording of capital contributed by the owner as liability ensures adherence of principle of 

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QUESTION: 12

Ram starts business with Rs. 90,000 and then buys goods from Shyam on credit for Rs. 23,000. The accounting equation based on Assets= Capital + Liabilities will be:

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Description: Accounting Equation as per the dual aspect concept is:
Assets= Capital + Liabilities
When Ram starts business:
A= C + L
Cash= Capital+ Liability
90,000= 90,000+ Nil
When gods are bought on Credit:
A= C+ L
Cash+ Goods= Capital+ Creditors
90,000+ 23,000= 90,000+ 23,000
1,13,000= 90,000+ 23,000

QUESTION: 13

Which financial statement represents the accounting equations

ASSETS=LIABILITIES + OWNER’S EQUITY 

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QUESTION: 14

Which of these is not fundamental accounting assumption?

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QUESTION: 15

 Accounting does not record non-financial transactions because of : 

Solution:

The concept of money measurement states that only those transactions and happenings in an organisation which can be expressed in terms of money such as sale of goods or payment of expenses or receipt of income, etc. are to be recorded in the book of accounts. 

All such transactions or happenings which can not be expressed in monetary terms, for example, the appointment of a manager, capabilities of its human resources or creativity of its research department or image of the organisation among people in general do not find a place in the accounting records of a firm.

QUESTION: 16

Kanika Enterprises follows the written down value method of depreciating machinery year after year due to 

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QUESTION: 17

Cash of Rs. 2,000 is withdrawn for personal expenses. This will be debited to which account: 

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QUESTION: 18

 If nothing is written in the financial statements about the three fundamental assumptions, then it could be pressured that:

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QUESTION: 19

A trader stated retail business. During the year he sold goods worth Rs. 60,000 and for Rs. 1,20,000 out of which only Rs. 1,00,000 was collected during the year. He had a closing stock of Rs. 10,000. His other business expenses for the period were Rs. 20,000 out of which Rs. 5,000 was outstanding at year end His total profit for the year 2008-09 as per the terms of accrual concept was:

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QUESTION: 20

Which of the following is not regarded as the fundamental concept that is identified by IAS-1

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QUESTION: 21

 What is the effect on the Net Assets if cash is received from debtors of Rs. 50,000?

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QUESTION: 22

According to which concept the owner of an enterprise pays the “interest on drawings”?

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QUESTION: 23

Which of the following does not follow Dual Aspect?

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QUESTION: 24

According to accrual concept of accounting, financial or business transaction is recorded:

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QUESTION: 25

 An asset was purchased for Rs. 6,60,000. Cash was paid Rs. 1,20,000 and for the balance a bill was drawn for 60 days. What will be the effect on fixed assets?

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QUESTION: 26

What is the objective of conservatism ?

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QUESTION: 27

 All the following items are classified as fundamental accounting assumption except

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QUESTION: 28

Unpaid expenses are: 

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QUESTION: 29

The obligations of an enterprise other than owner’s fund are known as: 

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QUESTION: 30

Cost concept basically recognizes

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