Theory Base of Accounting Test - 1

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Home / All Test / Theory Base of Accounting Test - 1
Theory Base of Accounting Test - 1
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
Result
Theory Base of Accounting
Test - 1
Score Rank
8.00 300
out of 10 out of 900
 TIME Taken - 01 minutes 36

seconds
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Question 1 1 / -0
The ___________ Assumption of accounting states that if

straight line method of depreciation is followed in one
accounting year, then it should be continued in the next year

also.
A Dual aspect concept
Correct
B Consistency
C Prudence
D Cost concept
Solution
Explanation: Consistency concept states that accounting
principlea and methods should remain consistent from one
year to another. These should not change from year to year,
in order to enable the management to compare the Profit &
loass account and Balance Sheet of different periods and
draw important conclusion about working of the enterprise.
Thus Straight Line method used in one year should be
followed next year also.
Question 2 1 / -0
Everything a firm owns, it also owns out to somebody. This

co-incidence is explained by the ___________ concept.
A Consistency
B Prudence
C Cost concept
Correct
D Dual aspect concept
Solution
Explanation: Dual Aspect concept states that every business
transaction is recorded as having a dual aspect. Thus
everything firm owns i.e. assets of the firm will also be owed
out to somebody that may be liabilities and capital. Thus
Assets= capital + liabilities.
Question 3 1 / -0
Full form of IASB

Wrong
A Indian Accounting Standard Board
B International Accounting Standard Board
C International Accepted Standard Board
D International Accounting Statements Board
Solution
Explanation: The IFRS refers to the Interantional Financial
Reporting Standards' which are issued by IASB i.e
International Accounting Standard Board.
Question 4 1 / -0
Salary to Manager will be recorded in the books of accounts

but appointment of manager is not recorded due to______
Correct
A Money measurement
B Business entity
C Full disclosure
D Accounting period
Solution
Explanation: Only those transactions and events are
recorded in the accounting which are capable of being
expressed in terms of money. An event, even though it may
be very important for the business, will not be recorded in the
books of the business unless its effect can be measured in
terms of money with a fair degree of accuracy. Thus
appointment of Manager though important will not be
recorded in the books of accounts as it cannot be measured
in terms of money.
Question 5 1 / -0
Full form of GAAP
A Generally Accepted Accounting prudence
B Journal Accepted Accounting principles
C Generally Accounting Accepted principles
Correct
D Generally Accepted Accounting principles
Solution
Explanation: Over a period of time, a number of Generally
Accepted Accounting Principles (GAAP) in the form of
concepts and conventions have been developed and
accepted to bring comparibility and uniformity in the financial
statments of various business entities.
Question 6 1 / -0
According to Business Entity concept

Correct
A
Transactions between the business and its owner
are recorded from the business point of view
B
are not recoded
C None of these
D
are recoded considering it single entity
Solution
Explanation: The proprietor is treated as a creditor of the

business to the extent of the capital invested by him in the
busniess. Thus we record the transactions between the
business and its owner from the point of view of business i.e.
capital is treated as liability of the business and any personal
withdrawals are treated as withdrwal of capital or as good as
payment is made to the owner.
Question 7 1 / -0
Under which accounting concept fixed assets are recorded

at cost without considering the market price (whether low or
high).
Correct
A Historical Cost Principle
B Matching concept Metali

Mahajan
C Revenue concept Question Analysis

Correct Wrong Skipped
-8 -2 -0
D Prudence concept
1 2 3 4 5
Solution
6 7 8 9 10
Explanation: According to Historical cost concept, assets are My Perfomance

recorded in the books of accounts at the price at which it was
acquired. As market value keeps changing and it is very Score Rank
difficult and costly affair to determine the market value of the
assets every year. therefor assets are recorded at cost and
not market value whether low or high.
8.00 300
out of 10 out of 900
Question 8 1 / -0
Re-Attempt
Which accounting principle requires that life of a business be
broken into smaller parts Solution
A Prudence
B Accounting entity
Wrong
C Going concern concept
D Accounting period
Solution
Explanation: As the busniess is intended to continue
indefinitely for a long period, the true results of the business
operations can be ascertained only when the busines is
completely wound up. But ascertainement of profit after a

very long period will be of little use to the proprietors. The
users of financial statements need to know the results of the
business at ferquent intervals. Thus, the entire life of the firm
is divided into time-intervals for the measurement of the
profits.
Question 9 1 / -0
The fact that a business is separate and distinguishable from

its owner is best exemplified by the ___________ concept
A Prudence
B Dual aspect concept
C Cost concept
Correct
D Business entity concept
Solution
Explanation: According to this concept, business is treated
as a unit separate and distinct from its owners, creditors,
managers, and others. In other words, the owner of a
business is always considered as distinct and separate from

the business he owns. business unit should have a
completely seprate set of books and we have to record
business transaction's from firm's point of view and not from
the point of view of the proprietor.
Question 10 1 / -0
Do not anticipate any profit but provide for all possible losses
according to the ____
A Business entity
B Accounting period
C Full disclosure
Correct
D Prudence cocept
Solution
Explanation: According to prudence concept, all anticipated
losses should be recorded in the books of accounts, but all
anticipated or unrealised gains should be ignored. in other
words it is the policy of playing safe. Provision is made for all
known liabilities and losses even though the amount cannot

be determined with certainty.
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5/10/24, 3:16 PM Theory Base of Accounting Test - 1

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