CHAPTER: Accounting Concepts And Principles

Assignment:

Q:1 Purchase of stationery even if it is kept in use for more than one year is shown as an expense but not shown as an asset. Which Accounting Principle does it relate to?

i)             Matching Principle

ii)            Historical Cost concept

iii)          Revenue Recognition Concept

iv)          Accrual Principle

Q:2 In cash basis of accounting, Machinery is shown in the books of accounts when it is paid for at the time of its purchase. It is not depreciated over its life. Which Accounting principle is ignored?

i)             Historical Cost concept

ii)            Accrual Principle

iii)          Going Concern Concept

iv)          Revenue Recognition Concept

Q:3 Salary of the current year is paid in the next financial year but it is recorded in the profit and Loss A/c of the current year and is used in calculating profit and loss. It adheres to the requirement of which accounting principle.

i)             Matching Principle

ii)            Accrual Principle

iii)          Double Entry Concept

iv)          Revenue Recognition Concept

Q:4 According thich principle, Closing stock is shown on the credit side of Trading A/c, as a deduction from purchase.

i)               Historical Cost concept

ii)            Accrual Principle

iii)          Matching Principle

iv)          Revenue Recognition Concept

Q:5 A Jeweler is left with a stock of gold at the end of the financial year which has a cost of Rs 50,000 but a market value of Rs 70,000. At what value the closing stock be shown and in adherence to which principle?

i)             Rs 70,000 & Principle of conservatism and prudence

ii)            Rs 70,000 and Matching Principle

iii)          Rs 50,000 and & Principle of conservatism and prudence

iv)          Rs 50,000 and Matching Principle

Q:6 Income tax paid by the owner on the firm’s income is treated as drawings. Which principle is followed?

i)             Going Concern Principle

ii)            Business Entity Concept

iii)          Double Entry Concept

iv)          Revenue Recognition Concept

Q:7 Mr X buys a TV set from an electronics showroom. He pays the amount immediately but agrees to take its delivery only after 15 days. The bill is made and given to buyer. After one week, the fire occurred in the godown causing complete damage to the TV set kept by Mr X. Can Mr X recover the money from the showroom owner.

i)             Yes, Revenue Recognition

ii)            No , Revenue Recognition

iii)          Yes, Going Concern

iv)          No , Going Concern

Q:8 Income received in advance is not treated as income but is shown as a liability. It is according to which accounting Principle?

i)             Accrual Principle

ii)            Historical Cost

iii)          Going Concern

iv)          Business Entity

Q:9 The principle that leads to the equality of Debit and Credit balances in Trial balance

i)             Accrual Principle

ii)            Dual Aspect

iii)          Accounting Period

iv)          Business Entity

Q:10 Apple files a suit against Samsung for infringement of patent laws. Apple is quite sure of receiving Rs 120 crore out of it. But the verdict has not been given by the court yet. Can Rs 120 crore be shown as an income.

i)             Yes Accrual principle

ii)            No, Prudence principle

iii)          Yes, Prudence principle

iv)          No, Accrual principle

Q:11 Purchase of machinery Rs 1,00,000 having a life of 10 years wrongly debited to purchase A/c. Which Accounting principle is violated?

i)             Matching Principle

ii)            Accrual Principle

iii)          Going Concern

iv)          Business Entity Concept

Q:12 Which Accounting principle is violated if an Account of Rs 400 withdrawn by the proprietor for his personal use has been debited to repairs A/c.

i)             Consistency

ii)            Going Concern

iii)          Business Entity

iv)          Dual Aspect

Q:13 According to which accounting principle Prepaid expenses is shown in the Balance Sheet not in Profit and Loss A/c.

i)             Accrual

ii)            Matching

iii)          Accrual and matching both

iv)          Revenue Recognition

Q: 14 Value of machine purchased on 1/4/2015 was Rs 1,00,000. The fair value of the machine is Rs 80,000 as on 31/03/2016. The life of the machine is 10 years. What is the amount of depreciation to be charged to P&L A/c as per a) Indian GAAP, b) IFRS

i)             20,000; 10,000

ii)            20,000; 10,000

iii)          10,000; 10,000

iv)          10,000; 20,000

Q: 15 Different Accountants may follow different accounting methods for same items like depreciation. This violates the Accounting principle of  i)Prudence  

ii) Objectivity

iii) Consistency

v)           Objectivity & Consistency.