Commerce Exam  >  Commerce Notes  >  Accountancy Class 11  >  Worksheet: Theory Base of Accounting

Worksheet: Theory Base of Accounting | Accountancy Class 11 - Commerce PDF Download

Multiple Choice Questions 


Q1: What is the primary objective of accounting?
(a)
Profit Maximization
(b)
Wealth Maximization
(c)
Asset Preservation
(d)
Information Disclosure

Q2: Which accounting principle assumes that a business entity will continue to operate indefinitely?
(a)
Going Concern
(b)
Consistency
(c)
Materiality
(d)
Prudence

Q3: Which financial statement represents the financial position of a business at a specific point in time?
(a)
Income Statement
(b)
Cash Flow Statement
(c)
Balance Sheet
(d)
Statement of Changes in Equity

Q4: What is the purpose of the 'Matching Principle' in accounting?
(a)
To match revenues with expenses
(b)
To match assets with liabilities
(c)
To match cash inflows with outflows
(d)
To match capital with drawings

Q5: Under which accounting assumption are assets and liabilities assumed to be valued at their original cost?
(a)
Going Concern
(b)
Consistency
(c)
Historical Cost
(d)
Materiality

True or False


Q1: The accrual basis of accounting records transactions only when cash changes hands.

Q2: Depreciation is a process of valuation and not allocation.

Q3: A credit transaction increases both assets and liabilities.

Q4: In double-entry accounting, every transaction has both a debit and a credit entry.

Q5: The concept of materiality suggests that insignificant items should be ignored in financial statements.

Very Short Answers 


Q1: Define the 'Conservatism Principle' in accounting.

Q2: What is the significance of the 'Dual Aspect Concept' in accounting?

Q3: Explain the term 'Accrual Accounting.'

Q4: Define 'Going Concern Assumption' in accounting.

Q5: Briefly describe the 'Money Measurement Concept' in accounting.

Short Answers


Q1: Explain the difference between cash basis and accrual basis accounting.

Q2: Discuss the importance of the 'Consistency Principle' in financial reporting.

Q3: What is the 'Matching Principle,' and how does it impact the calculation of net income?

Q4: Describe the relevance of the 'Materiality Concept' in preparing financial statements.

Q5: Explain the role of the 'Prudence Principle' in accounting decision-making.

Long Answers


Q1: Discuss the ethical considerations in financial reporting and how they align with accounting principles.

Q2: Examine the challenges of applying the 'Historical Cost Concept' in an inflationary economy.

Q3: Evaluate the impact of the 'Going Concern Assumption' on long-term decision-making for businesses.

Q4: Describe the process of preparing a Cash Flow Statement and its significance in financial analysis.

Q5: Discuss the role of technology in shaping modern accounting practices and its implications for financial reporting.

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