Accounting Principles and Concepts MCQs Test - Multiple choice questions (MCQs)

Now its time to assess how much you learned about Accounting principles and concepts. We have prepared the MCQs quiz for this chapter. Go and take the quiz to clear your concepts about Accounting principles and concepts. If you face any difficulty to answer the question we advise you to read this topic thoroughly from the explanation section.

We have prepared a multiple choice questions quiz for the students to check their knowledge about Accounting Principles and Concepts chapter. The quiz consists of 10 multiple choice questions. Go through all the questions and then click the submit button to get the result.

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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:

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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.

11. For better assessing the audit risk, auditor inquires different groups in the organizations EXCEPT:

Board of governance and top level management

Legal counsel

Middle level management

Stakeholders

12. Which of the following is the least concern to an auditor regarding the client’s internal control system?

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Efficiency and effectiveness of operations

Controls related to the reliability of financial reporting

Controls over classes of transactions

Auditors are equally concerned with each of the given issues.

13. During test of control procedure its design can easily tested with the help of:

ICQs and walk through tests

ICQs and judgment sample

ICQs and random sample

ICQs and ICEC

14. Which of the following is true?

The audit profession is unregulated

The audit profession is regulated by its own professional body

Outside bodies sometimes become involved in the regulation of audit profession

The audit profession is regulated only by the government

15. The small audit firms provide the following service EXCEPT:

Liquidation and receivership work, fraud auditing

Financial Management and system consultancy

Financial system planning and preparation

Tax management and statutory form filling

16. Which of the following is not included in the category of cash?

Deposit with banks

Checks

Postdated checks

Money orders

17. Which of the following letter should be included in the letter of representation?

Existence of immaterial mistake in the statement

Existence of any fraud or any error in the statement

Company’s growth trend in the future in figures

Market value of the company’s stock

18. When cash sales should be recorded by the companies in order to achieve control objectives?

Record the cash sales when the purchase order is received from the customer

Record the cash sales at the point they are made

Record the cash sales after some period

Record the cash sales weekly

19. Auditors conduct auditing in accordance with:

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International Financial Reporting Standards

Local Pronouncements/Legislations

Financial Accounting Standards Board

All of the given options

20. Which of the following is a series of constant cash flows that occur at the end of each period for some fixed number of periods?

Ordinary annuity

Annuity due

Perpetuity

None of the given options

21. During the accounting period, sales revenue is $25,000 and accounts receivable increases by $8,000. What will be the amount of cash received from customers for the period?

$33,000

$25,000

$17,000

$8,000

22. Which of the following ratios are intended to address the firm’s financial leverage?

Liquidity Ratios

Long-term Solvency Ratios

Asset Management Ratios

Profitability Ratios

23. Balance Sheet is based upon which of the following formula?

Assets = Liabilities – Stockholder’s equity

Assets + Liabilities = Stockholder’s equity

Assets + Stockholder’s equity = Liabilities

Assets = Liabilities + Stockholder’s equity

24. Quick Ratio is also known as:

Current Ratio

Acid-test Ratio

Cash Ratio

None of the given options

25. Which of the following is a special case of an annuity, where the stream of cash flows continues forever?

Ordinary Annuity

Special Annuity

Annuity Due

Delayed Perpetuity

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