Accounting Principle and Concepts MCQs Test

1. Accounting cycle does not include:

Recording

Decision making

Classification

Interpreting

2. One of the following is not the characteristic of Accounting Principles:

Result Oriented

Factual

Practical

Summarizing

3. Which is not a feature of separate entity concept?

Business and owner are treated as separate entities

Personal affairs of the owner should not be considered

Business should not be dissolved in the near future

This concept is followed in all types of business organizations

4. Going concern may be defined best as:

This concept provides the basis for the formation of the accounting equation.

This concept refuses allocation of cost on different accounting periods.

This concept discusses the issue of the realization of profit.

This concept assumes that the business will operate for a long period of time and will not be dissolved in near future.

5. Matching concept does not include one of the following:

The revenues of a particular period must match with the expenses of that period.

This concept also required allocation of cost on different accounting periods.

Revenues should only be recorded if there is reasonable certainty about its realization.

The comparison of incomes and expenses of a period gives the net profit or loss for that, particular period.

6. Accounting conventions do not include:

Depreciation conventions

Conservatism convention

Consistency convention

Full disclosure convention

7. Realization Concept does not include one of the following features:

This concept requires proper care while calculating revenue.

This concept stresses that only those revenues should be recorded if there is reasonable certainty about its realization.

This concept describes the problems that may arise in the calculation of incomes and expenses.

This concept explains that the comparison of incomes and expenses of a particular period can give net result of that period.

8. According to consistency convention accounting principles should be:

Consistent

Variable

Flexible

Factual

9. One of the following is not the example of materiality concept:

Purchase of pencil recorded as an expense instead of including in stock

Purchase of car for private use

Purchase of plant for business

Purchase of building to extend the business

10. Disclosure convention requires:

Full disclosure of all material facts which can affect the financial statement.

That when should profit be realized.

Matching of incomes and expenses of a particular period.

That business will not be dissolved in the near future.

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