Accounting Concepts Quiz! Trivia Knowledge

2.

According to convention conservatism

Provision is made for bad and doubtful debts
Depreciation is charged on assets
Recording is made of outstanding expenses
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:

All events and transactions are recorded
All transaction and events which can be estimated in money are recorded in the books of account
All transaction and events which can be measured in money terms are recorded in the books of accounts
None of these

Correct Answer

A. 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 limited life
A very long life
An indefinite life
None of these

Correct Answer

A. 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

Prudence
Full disclosure
Cost concept
Consistency

Correct Answer

A. 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?

Going concern
Consistency
Accrual
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.

True
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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10.

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

Matching
Conservatism
Accounting period
Cost

Correct Answer

A. 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

Quiz Preview

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.