1. Ques (i): All the following items are classified as fundamental accounting assumptions except
(b) Business entity.
(c) Going concern.
Ques (ii): Two primary qualitative characteristics of financial statements ar
(a) Understandability and materiality.
(b) Relevance and reliability.
(c) Neutrality and understandability.
Ques (iii): Kanika Enterprises follows the written down value method of depreciating machinery year after year due to
Ques (iv): A purchased a car for Rs 5,00,000, making a down payment of Rs 1,00,000 and signing a Rs 4,00,000 bill payable due in 60 days. As a result of this transaction
(a) Total assets increased by Rs 5,00,000.
(b) Total liabilities increased by Rs 4,00,000.
(c) Total assets increased by Rs 4,00,000 with corresponding increase in liabilities by Rs 4,00,000.
Ques (v): Mohan purchased goods for Rs 15,00,000 and sold 4/5th of the goods amounting Rs 18,00,000 and met expenses amounting Rs 2,50,000 during the year, 2015. He counted net profit as Rs 3,50,000. Which of the accounting concept was followed by him?
Ques (vi) A businessman purchased goods for Rs 25,00,000 and sold 80% of such goods during the accounting year ended 31st March, 2017. The market value of the remaining goods was Rs 4,00,000. He valued the closing Inventory at cost. He violated the concept of
(a) Money measurement.
Ques (vii): Capital brought in by the proprietor is an example of
(a) Increase in asset and increase in liability.
(b) Increase in liability and decrease in asset.
(c) Increase in asset and decrease in liability.
2. Ques (i): Assets are held in the business for the purpose of
(b) Conversion into cash.
(c) Earning revenue.
Ques (ii): Revenue from sale of products, is generally, realized in the period in which
(a) Cash is collected.
(b) Sale is made.
(c) Products are manufactured.
Ques (iii): The concept of conservatism when applied to the balance sheet results in
(a) Understatement of assets.
(b) Overstatement of assets.
(c) Overstatement of capital.
Ques (iv) Decrease in the amount of trade payables results in
(a) Increase in cash.
(b) Decrease in bank over draft account.
(c) Decrease in assets.
Ques (v): The determination of expenses for an accounting period is based on the principle of
Ans: (c )
Ques (vi): Economic life of an enterprise is split into the periodic interval to measure its performance is as per
3.Ques (i): If an individual asset is increased, there will be a corresponding
(a) Increase of another asset or increase of capital.
(b) Decrease of another asset or increase of liability.
(c) Decrease of specific liability or decrease of capital.
Ques (ii): Purchase of machinery for cash
(a) Decreases total assets.
(b) Increases total assets.
(c) Retains total assets unchanged.
Ques (iii): Consider the following data pertaining to Alpha Ltd.:
Rs Cost of machinery purchased on 1st April, 2016 10,00,000
Installation charges 1,00,000
Market value as on 31st March, 2017 12,00,000
While finalizing the annual accounts, if the company values the machinery at Rs 12,00,000. Which of the following concepts is violated by the Alpha Ltd.?