Accounting Concepts and Conventions MCQs | Financial Accounting MCQs Part 2 | Multiple Choice Questions and Answers

 Accounting Concepts and Conventions MCQs
Financial Accounting MCQs
Multiple Choice Questions and Answers

1. Accounting principles are divided into:

a)    Accounting Concepts

b)   Accounting Conventions

c)    Fundamental Accounting Assumptions

d)   All of the above

2. According to which of the following accounting principles, the owners of business are considered as creditors?

a)    Money Measurement.

b)   Cost.

c)    Dual Aspect.

d)   Separate Legal Entity.                 (Business and owners are two separate entities)

3. Which accounting principle differentiates between owners and management?

a)    Going Concern

b)   Dual Aspect

c)    Separate Entity

d)   Conservatism

4. Which of the following is not an Accounting concept?

a)    Matching concept

b)   Dual  Aspect concept

c)    True and Fair concept

d)   Going concern concept

5. According to going concern, a business is assumed as having:

a)    a limited life

b)   a indefinite life

c)    a very long life

d)   None of the above

6. Accounting concepts are based on:

a)    Certain assumptions

b)   Certain facts and figures

c)    Certain accounting records

d)   Government guidelines

7. According to money measurement concept, which of the following will not be recorded in the books of accounts?

a)    extra profits arising out of revaluation of assets

b)   commission payable to a salesman

c)    quality of the products

d)   all of these

8. Non-financial quantitative information is not recorded in accounts due to:

a)    dual concept

b)   accrual concept

c)    money measurement concept

d)   entity concept.

9. Which of the following is related with money measurement concept?

a)    All business transaction should be expressed in money

b)   The transactions which cannot be expressed in money, will not be recorded in accounting books

c)    Business is treated as separate from proprietor

d)   All of the above

10. Which of the following is an example of money measurement concept?

a)    Dispute between management and labour union

b)   Loss of material Rs. 5,000

c)    Sales promotion policy

d)   Advertisement for fresh appointment

11. Contingent liability is shown in the balance sheet because of:

a)    Convention of consistency

b)   Convention of materiality

c)    Convention of full disclosure

d)   Convention of conservatism

12. In accounting, all business transactions are recorded as having dual aspect due to:

a)    Money measurement concept

b)   Dual aspect concept

c)    Going concern concept

d)   Matching concept

13. Accounting equation is an expression of:

a)    Money measurement concept

b)   Business entity concept

c)    Going concern concept

d)   Matching concept

14. Prepaid expenses are shown as an asset due to:

a)    Money measurement concept

b)   Business entity concept

c)    Going concern concept

d)   Matching concept

15. According to which assumption assets are shown in the accounting records at cost less depreciation:

a)    Money measurement concept

b)   Business entity concept

c)    Going concern concept

d)   Matching concept

16. Fixed assets are recorded at cost less depreciation not at a realisable value because of:

a)    Money measurement concept

b)   Business entity concept

c)    Going concern concept

d)   Matching concept

17. Point out the correct accounting equation:

a)    Assets = Liabilities – Capital

b)   Liabilities = Capital + Assets

c)    Capital = Assets + Liabilities

d)   Liabilities = Assets – Capital

18. According to which of the following concepts, even the proprietor of the business is treated as a creditor of the business?

a)    Money measurement concept

b)   Cost concept

c)    dual aspect concept

d)   Business Entity concept

19. Final accounts must be prepared on a periodic basis rather than waiting till the business is terminated:

a)    Money measurement concept

b)   Cost concept

c)    dual aspect concept

d)   Accounting Period Concept

20. Revenue is considered as being earned on the date at which it is realised:

a)    Money measurement concept

b)   Realisation concept

c)    dual aspect concept

d)   Accounting Period Concept

21. Entries in accounting records and data reported in financial statements must be based on objectively determined evidence.

a)    Money measurement concept

b)   Cost concept

c)    dual aspect concept

d)   Objective evidence concept

22. The concept of conservatism takes into account:

a)    All future profits and all future losses

b)   All future profits but leaves all future losses

c)    All future losses but leaves all future profits

d)   All of the above

23. According the concept of conservatism, the stock is trade is valued at:

a)    market price

b)   cost price

c)    market price or cost price, whichever is lower

d)   market price or cost price, whichever is lower

24. Accounting rules, practices and conventions should be observed continuously and applied:

a)    Convention of consistency

b)   Convention of full disclosure

c)    Convention of Conservatism

d)   Convention of materiality

25. Revenue is considered to be earned when:

a)    Cash is received

b)   Production is done

c)    Sale is effected

26. The concept of conservatism will have the effect of:

a)    Over-statement of assets

b)   Understatement of assets

c)    Understatement of provision for bad and doubtful debts.

d)   Overstatement of stock

27. According to which of the following concepts, for determining the net income from business, all costs which are applicable to revenue of the period should be charged against that revenue?

a)    matching concept

b)   cost concept

c)    money measurement concept

d)   dual aspect concept

28. Which one of the following is not a fundamental accounting assumption?

a)    Going concern

b)   Consistency

c)    Accrual

d)   Matching

29. An accounting concept according to which all relatively important and relevant items are disclosed in the financial statements is:

a)    Materiality

b)   Going concern

c)    Accrual concept

d)   Matching

30. Which convention is also known as doctrine of prudence?

a)    Convention of consistency

b)   Convention of full disclosure

c)    Convention of Conservatism

d)   Convention of materiality

Fill in the blanks:

31. Principle is objective if the accounting information is not influenced by the personal bias.

32. Principle is Feasible if it can be applied without unnecessary complexity or cost.

33. Accounting concepts are the Basics upon which the science of accounting is founded.

34. Conventions denote Tradition which guides the accountant in the preparation of financial statements. Business entity concept implies that business is different from the owner.

35. Relevance and Reliability are the characteristics which make the accounting information useful for decision making.

36. The Consistency principle requires that the same accounting methods should be used from year to year.