Accounting Concepts MCQ -

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Accounting Policies is based on
(a) Materially.
(b) Prudence.
(c) Substance over Form.
(d) All of these.
The main considerations in the selections of Accounting Policies are i) Prudence, ii) Substance over Form and iii) Materiality. So, option (d) is correct.

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Who is the profounder of Double Entry System?
(a) Henry Fayol
(b) Lucas Pacilio
(c) Henry Ford
(d) Adam Smith
Double entry system is developed by Lucas Pacioli of Italy So, option (b) is correct.

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The system of recording of transactions based on dual aspect is called
(a) Single entry .
(b) Double entry
(c) Double account system
(d) All of the above
Double entry system is based on Dual aspect of accounting which recognizes and records both the aspects of transactions. So, option (b) is correct

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Accounting policies refer to specific accounting __
(a) Principles.
(b) Methods of applying those principles.
(c) Both (a) and (b).
(d) None of the above.
Accounting policies refer to Principle and Methods of applying those principles. So, option (c) is correct

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Using “lower of cost and net realisable value” for the purpose of inventory valuation is the implementation of which of the following concepts?

A) The going concern concept
B) The septate entity concept
C) The prudence concept
D) Matching concept
Inventory is valuable and useful asset for the organisation. The organisation will continue to use the Inventory Valuation for its smooth and uninterrupted operation. So, its valuation is done according to Going Concern Concept. So, it would be valued at Cost Realisable value, whichever is lower, on the principle of conservatism. So, option (a) is correct

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The concept of separate entity is applicable to which of following types of businesses?
A) Sole Proprietorship
B) Corporation
C) Partnership
D) All of them

The concept of separate entity is applicable to (Sole Proprietorship), Corporation & Partnership, as business is a separate entity from its owners. Hence option (d) is correct.

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The revenue recognition principle dictates that all types of incomes should be recorded or recognized when …….
A) Cash is received
B) At the end of accounting period
C) When they are earned
D) When interest is paid
The revenue recognition principal dictates that all types of incomes should be recorded or recognized when they are earned. Hence option (c) is correct.

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The matching concept matches which of the following?
A) Asset with liabilities
B) Capital with income
C) Revenues with expenses
D) Expenses with capital

The matching concept matches Revenue with Expenses. Hence option (c) is correct.

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Accounting rules, practices and conventions should remain same from one year to another as per the —————-
(a) Convention of consistency
(b) Convention of full disclosure
(c) Convention of conservatism
(d) All of the above.
Under convention of consistency concept, Accounting rules, practices and conventions should remain same and not change from one year to another year. Hence (a) is correct option.