Accounting Concepts Quiz! Trivia Knowledge

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Questions: 10 | Attempts: 551 | Updated: Mar 21, 2023

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Accounting Concepts Quiz! Trivia Knowledge - Quiz

Welcome to the Accounting Concepts Knowledge Quiz. There are different guidelines to follow when it comes to bookkeeping, and they include accounting concepts, principles, and laws. Revenue is only recognized when there is a certainty that it will be realized, whereas expenses are recognized when a reasonable possibility is incurred. In this quiz, you will test how well you know the different concepts and what they mean.

Questions and Answers

1.

Accrual concept is based on
- A.
  
  Matching concept
- B.
  
  Cost concept
- C.
  
  Dual aspect concept
- D.
  
  Going concern concept
Correct Answer
A. Matching concept

Explanation
The accrual concept is based on the matching concept. This means that revenues and expenses are recognized in the accounting period in which they are earned or incurred, regardless of when the cash is received or paid. The matching concept ensures that the expenses incurred to generate revenue are matched with the corresponding revenue in the same period, providing a more accurate representation of the financial performance of a business. This concept helps in determining the true profitability of a business by considering both the revenues and expenses associated with a particular accounting period.

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2.

According to convention conservatism
- A.
  
  Provision is made for bad and doubtful debts
- B.
  
  Depreciation is charged on assets
- C.
  
  Recording is made of outstanding expenses
- D.
  
  All of above
Correct Answer
A. Provision is made for bad and doubtful debts

Explanation
The correct answer is "Provision is made for bad and doubtful debts." In convention conservatism, it is customary to make provisions for bad and doubtful debts to account for potential losses in the future. This ensures that the financial statements reflect a more realistic and conservative view of the company's financial position. Making provisions for bad debts helps to anticipate potential non-payment by customers and allows for a more accurate estimation of the company's assets and liabilities.

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3.

According to money measurement concept:
- A.
  
  All events and transactions are recorded
- B.
  
  All transaction and events which can be estimated in money are recorded in the books of account
- C.
  
  All transaction and events which can be measured in money terms are recorded in the books of accounts
- D.
  
  None of these
Correct Answer
C. All transaction and events which can be measured in money terms are recorded in the books of accounts

Explanation
According to the money measurement concept, only those transactions and events that can be measured in monetary terms are recorded in the books of accounts. This means that any event or transaction that cannot be expressed in monetary value will not be recorded. The concept ensures that only quantifiable and measurable information is included in the financial statements, providing a more objective and reliable representation of the organization's financial position and performance.

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4.

According to going concern concept,a business is viewed as having
- A.
  
  A limited life
- B.
  
  A very long life
- C.
  
  An indefinite life
- D.
  
  None of these
Correct Answer
C. An indefinite life

Explanation
According to the going concern concept, a business is viewed as having an indefinite life. This means that the business is expected to continue operating in the foreseeable future, without any intention of liquidation or cessation of operations. The concept assumes that the business will continue to generate revenue, incur expenses, and fulfill its obligations. It is based on the belief that the business will be able to meet its financial commitments and achieve its objectives in the long term. Therefore, the correct answer is an indefinite life.

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5.

According to which concept the same accounting methods should be used each year
- A.
  
  Prudence
- B.
  
  Full disclosure
- C.
  
  Cost concept
- D.
  
  Consistency
Correct Answer
D. Consistency

Explanation
Consistency is the concept that states that the same accounting methods and principles should be applied consistently from one accounting period to another. This ensures that financial statements are comparable and allows users to make meaningful comparisons and decisions based on the information provided. By using consistent accounting methods, companies can avoid misleading or confusing financial statements and provide a clear and accurate representation of their financial performance and position over time.

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6.

Income is measured on the basis of:

Correct Answer
matching concept

Explanation
The matching concept is a fundamental accounting principle that states that expenses should be matched with the revenues they generate in the same accounting period. This means that income is measured based on the matching of expenses incurred to generate that income. By matching expenses and revenues, the matching concept ensures that the financial statements accurately reflect the financial performance of a business for a given period. Therefore, income is measured on the basis of the matching concept.

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7.

Which of these is not a fundamental accounting assumption?
- A.
  
  Going concern
- B.
  
  Consistency
- C.
  
  Accrual
- D.
  
  Materiality
Correct Answer
A. Going concern

Explanation
The going concern assumption is a fundamental accounting assumption that assumes a company will continue to operate in the foreseeable future. This assumption allows accountants to prepare financial statements under the assumption that the company will not liquidate or cease operations. Consistency, accrual, and materiality are also fundamental accounting assumptions.

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8.

Assets will be equal to capital if there are no liability.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
If there are no liabilities, it means that the company does not owe any debts or obligations to external parties. In this case, all the company's assets would be owned by the shareholders or owners of the company, which is represented by the capital. Therefore, if there are no liabilities, the total value of assets would indeed be equal to the capital.

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9.

Recognition of cost in the same period associated revenues is called

Correct Answer
matching concept

Explanation
The matching concept is the principle in accounting that states that expenses should be recognized in the same period as the revenues they help generate. This concept ensures that the financial statements accurately reflect the expenses incurred to generate the revenues reported. By matching expenses with the related revenues, it provides a more accurate representation of the profitability and financial performance of a company. This principle helps in making informed decisions and assessing the overall financial health of the business.

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4
10.

During the lifetime of an entity, accounting produces financial statements in accordance with which of the following accounting concept.
- A.
  
  Matching
- B.
  
  Conservatism
- C.
  
  Accounting period
- D.
  
  Cost
Correct Answer
C. Accounting period

Explanation
Accounting period is the correct answer because this concept states that the economic activities of an entity should be divided into specific time periods, usually one year, in order to provide meaningful and comparable financial information. This allows for the measurement and reporting of financial performance and the assessment of the entity's financial position at regular intervals. By following the accounting period concept, financial statements can be prepared and presented in a systematic and consistent manner, enabling users to make informed decisions based on the entity's financial information.

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Accounting Concepts Quiz! Trivia Knowledge

Accrual concept is based on

According to convention conservatism

According to money measurement concept:

According to going concern concept,a business is viewed as having

According to which concept the same accounting methods should be used each year

Income is measured on the basis of:

Which of these is not a fundamental accounting assumption?

Assets will be equal to capital if there are no liability.

Recognition of cost in the same period associated revenues is called

During the lifetime of an entity, accounting produces financial statements in accordance with which of the following accounting concept.