- The accounting principle of matching is best demonstrated by:
(a) Not recognizing any expenses unless some revenue is realized
(b) Associating effort (cost) with accomplishment (revenue)
(c) Recognizing prepaid rent received as revenue
(d) Establishing a reserve for possible future market decline in inventory account - Choose the correct code for the following statements being correct or incorrect.
Statement I: Punctuality and team spirit among employees of an organisation has great contribution in enhancing profits of the business but they do not appear as asset in the balance sheet.
Statement II: Financial statements do not reflect the correct financial position of a business.
Code:
(a) Both the Statement I and II are correct.
(b) Both the Statement I and II are incorrect.
(c) Statement I is correct, but II is incorrect.
(d) Statement I is incorrect, but II is correct. - The traditional accounting practice of resolving uncertainty by choosing then solution that leads to the lower amount of income being recognized in the current accounting period is based on which of the following accounting principles?
(a) Realization
(b) Matching
(c) Conservatism
(d) Materiality - Arrange in sequence the following accounting constructs and principles in order of their precedence.
(a) Conservation
(b) Full disclosure
(c) Separate entity and going concern
(d) Matching principle
(e) Revenue recognition
Choose the correct answer from the options given below:
(a) a-b-d-c-e
(b) c-a-e-d-b
(c) c-d-e-b-a
(d) a-d-c-e-b - Accounting principles are generally based on:
(a) Practicability
(b) Subjectivity
(c) Convenience in recording
(d) Legal framework - The Basic concept related to Balance Sheet are
(a) Cost Concept (Purchase Price)
(b) Business Entity Concept
(c) Accounting Period Concept
(d) Both Cost Concept (Purchase Price) and Business Entity Concept - Revenue is generally recognized being earned at the point of time when-
(a) Order is received.
(b) Production is completed.
(c) Goods are delivered.
(d) Cash is received. - The Basic concept related to profit & loss account
(a) Realization Concept
(b) Matching Concept
(c) Cost Concept
(d) Both Realization Concept and Matching Concept - Policy of ‘Playing safe’ followed by the accounted is based on which one of the following concept.
(a) Dual Aspect Concept
(b) Conversation Conventions
(c) Money Measurement Concept
(d) Realization Concept - Revenue from sale of products, ordinarily is reported as part of the earning in the period when:
(a) The sales made
(b) The cash is collected
(c) The products are manufactured
(d) The profit is computed - Which of the following is ‘true’ regarding the prudence principle of Accounting?
(a) Taking care of the future losses
(b) Taking care of bad debts
(c) Taking care of the future profits
(d) Taking care of inventory and depreciation - Which of the following are key features of prudent accounting concepts and conventions?
(A) It includes revenues and profits in the accounts when they are realized.
(B) It prevents profits from being overstated.
(C) It prevents a trader from more withdrawing from the business then is wise.
(D) Managerial efficiency and expertise.
(E) Good customer relations.
Choose the most appropriate answer from the option given blow:
(a) (C), (D) and (E) only
(b) (A), (D) and (E) only
(c) (B), (C) and (D) only
(d) (A), (B) and (C) only - Match the following:
List-I List-II (A) Matching Principle (i) Ignores future profit estimations (B) Materiality Principle (ii) Normal basis for valuing assets (C) Conservation Principle (iii) Revenues and expenses of a particular period (D) Cost Principle (iv) Relates to relative size or importance of item or event Codes:
(a) (A)-(i), (B)-(iv), (C)-(ii), (D)-(iii)
(b) (A)-(ii), (B)-(iii), (C)-(iv), (D)-(i)
(c) (A)-(iii), (B)-(iv), (C)-(i), (D)-(ii)
(d) (A)-(iv), (B)-(iii), (C)-(ii), (D)-(i) - Match List – I with List-II and select the correct answer:
List-I List-II (A) Measurement of income (i) Accrues to the equity of owners (B) Recognition of expense (ii) Recognition of revenue (C) Basis of Realization (iii) Matching revenue with expenses (D) Identification of revenue (iv) Accounting period Codes:
(a) (A)-(i), (B)-(ii), (C)-(iii), (D)-(iv)
(b) (A)-(ii), (B)-(i), (C)-(iii), (D)-(iv)
(c) (A)-(iii), (B)-(i), (C)-(iii), (D)-(iv)
(d) (A)-(iii), (B)-(iv), (C)-(ii), (D)-(i) - Match the items in Columns-1 with the items in Column-2.
Column-I Column-II (A) Materiality Concept (i) The same accounting method used by a firm from one period to another (B) Going Concern Concept (ii) An inappropriate assumption of a firm being bankrupt (C) Historical Cost concept (iii) A normal basis used for accounting assets (D) Consistency Concept (iv) Relates to the importance of an item or event Codes:
(a) (A)-(iv), (B)-(ii), (C)-(iii), (D)-(i)
(b) (A)-(i), (B)-(ii), (C)-(iii), (D)-(iv)
(c) (A)-(ii), (B)-(iii), (C)-(iv), (D)-(i)
(d) (A)-(iv), (B)-(ii), (C)-(i), (D)-(iii)