Accounting Concepts Test Quiz! Trivia
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Bank overdraft is an asset.
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True
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False
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Accounting concepts are out in place to ensure that accounting processes are uniform. An accountant must have a good understanding of these concepts. Did you know that once a business chooses to use a specific accounting method, it should continue using it on a go-forward basis? Do take up this quiz and see how well you understand the many concepts. All the best!
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- 2.
Which one of the following is not an internal user of accounting information?
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Owner
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Government
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Employees
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Management
Correct Answer
A. GovernmentExplanation
The government is not considered an internal user of accounting information because it is an external entity that regulates and monitors the activities of businesses. Internal users, on the other hand, are individuals or groups within the organization who use accounting information for decision-making and planning purposes, such as owners, employees, and management.Rate this question:
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- 3.
According to which assumption it is assumed that a business will continue for a foreseeable period.
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Prudence
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Consistency
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Money measurement
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Going concern
Correct Answer
A. Going concernExplanation
The assumption of going concern is based on the belief that a business will continue to operate in the foreseeable future. This assumption is important because it allows the financial statements to be prepared on the basis that the business will not be liquidated or forced to cease operations. It assumes that the business will continue to generate revenue, meet its financial obligations, and operate in the normal course of business. This assumption is crucial for accurate financial reporting and decision-making by stakeholders.Rate this question:
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- 4.
Income can be calculated as
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Revenue+expenditure
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Revenue-expenditure
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Revenue-expense
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Revenue+expense
Correct Answer
A. Revenue-expenseExplanation
The correct answer is "Revenue-expense" because income is typically calculated by subtracting expenses from revenue. This calculation allows for determining the net profit or loss of a business or individual. By subtracting expenses from revenue, it provides a clearer picture of the actual income generated after deducting all necessary costs.Rate this question:
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- 5.
Which one of the following is a current liability?
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Debtor
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Creditor
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Advertisement
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Debentures
Correct Answer
A. CreditorExplanation
A creditor is a person or entity to whom a company owes money or has a financial obligation. They are considered a current liability because the debt or obligation is expected to be settled within a short period, usually within one year. In contrast, debtors owe money to the company and are considered an asset. Advertisement and debentures are not current liabilities as they do not represent a financial obligation or debt owed by the company.Rate this question:
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- 6.
Debentures are short term liabilities.
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True
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False
Correct Answer
A. FalseExplanation
Debentures are not short term liabilities, but rather long term liabilities. Debentures are a type of loan taken by a company from the public, where the company promises to repay the loan amount along with interest at a specified future date. These loans typically have a maturity period of more than one year, making them long term liabilities for the company. Therefore, the correct answer is False.Rate this question:
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- 7.
Accounting begins when bookkeeping ends.
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True
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False
Correct Answer
A. TrueExplanation
Accounting and bookkeeping are closely related but distinct processes. Bookkeeping involves recording financial transactions, while accounting involves analyzing, interpreting, and summarizing those transactions to generate financial reports and make informed decisions. Therefore, it can be said that accounting begins when bookkeeping ends, as bookkeeping provides the data necessary for accounting processes to take place.Rate this question:
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- 8.
Capital is considered to be an internal_________
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Asset
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Revenue
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Liability
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Benefit
Correct Answer
A. LiabilityExplanation
Capital is considered to be an internal liability because it represents the owner's investment in the business. It is the amount of money or assets that the owner contributes to the business to start or expand its operations. The owner has a claim on the capital and can withdraw it from the business if necessary. Therefore, capital is a liability to the business as it represents the amount owed to the owner.Rate this question:
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- 9.
The ______ principle in accounting requires that expenses be recognized in the same period as the revenues they generate.
Correct Answer
matching, MatchingExplanation
The matching principle is a fundamental concept in accrual accounting. It ensures that expenses are not arbitrarily assigned to a period but are instead linked to the revenue they help generate. This provides a more accurate picture of a company's profitability and performance during a specific period.Rate this question:
- 10.
The other name of prudence principle is_______
Correct Answer
Conservatism principleExplanation
The prudence principle is also known as the conservatism principle. This principle suggests that when there are uncertainties or doubts about the future outcomes, it is better to be cautious and record transactions and events in a way that understates assets, revenues, gains, and overstates liabilities, expenses, and losses. This approach ensures that financial statements are not overly optimistic and provides a more realistic view of the entity's financial position and performance. Therefore, the correct answer is the conservatism principle.Rate this question:
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Current Version
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Jan 13, 2025Quiz Edited by
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Jun 12, 2020Quiz Created by
Sujal.tandon27
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