CBSE Class 11 Accountancy Theory Base Of Accounting MCQs

Question. When information about two difference enterprises have been prepared presented in a similar manner the information exhibits the characteristic of:
a) Verifiability
b) Relevance
c) Reliability
d) None of the above

Answer : D

Question. The primary qualities that make accounting information useful for decision-making are
a) Relevance and freedom from bias
b) Reliability and comparability
c) Comparability and consistency
d) None of the above

Answer : B
 

Fill in the blank with correct word

Question. Recognition of expenses in the same period as associated revenues is called ________ concept.
Answer : Matching

Question. Revenue is generally recognised at the point of sale denotes the concept of ______
Answer : Revenue Realisation

Question. The ____________ concept requires that accounting transaction should be free from the bias of accountants and others.
Answer : Objectivity.

Answer : IAS 38

Question : Which of the following is the title of AS-3 (Revised)?
a) Cash Flow Statement
b) Valuation of Inventories
c) Intangible Assets
d) Revenue Recognition

Answer : Cash Flow Statement

Question : Which of the following is NOT a utility of Accounting Standards?
a) None of the options
b) Help auditors
c) Ensure uniformity
d) Ensure uniformity

Answer : None of the options

Question : According to which concept, the proprietor of the business is treated as the creditor to the extent of his capital?
a) Business Entity Concept
b) Accounting period concept
c) Cost Concept
d) Money measurement concept

Answer : Business Entity Concept

Question : Which of the following accounting concept says that asset is to be recorded at their original cost and depreciated in a systematic manner without reference to its market value?
a) Going Concern concept
b) Cost Concept
c) Accrual Assumption
d) Consistency Concept

Answer : Going Concern concept

Question : Valuation of stock at lower of cost or net realizable value is an example of:
a) Conservatism
b) Realization Concept.
c) Matching concept
d) Consistency

Answer : Conservatism

Question : When goods are sold on credit to RameshRameshs account is debited and Sales account is credited. Which accounting concept is involved?
a) Dual Aspect Concept
b) Cost Concept
c) Accounting Period Concept
d) Materiality Concept

Answer : Dual Aspect Concept

Question : International Accounting Standards adopted by International Accounting Standards Board and still in force are
a) 29
b) 41
c) 9
d) 10

Answer : 29

Question : The convention of Conservatism takes into account -
a) All prospective losses but leaves out prospective profits.
b) All prospective profits and leaves out prospective losses.
c) All prospective profits and prospective losses.
d) None of the options

Answer : All prospective losses but leaves out prospective profits.

Question : Abacus Ltd. follows Written down value Method of depreciating machinery year after year due to -
a) Consistency
b) All the above
c) Convenience
d) Comparability

Answer : Consistency

Question : According to which of the following concepts, in determining the net income from business, all costs which are applicable to the revenue of the period should be charged against that revenue?
a) Matching Concept
b) Money Measurement Concept
c) Cost Concept
d) Dual Aspect Concept

Answer : Matching Concept

Question : An investment company has valued its inventory at its current market price, which is higher than its cost. Which accounting principle is violated?
a) Prudence Concept
b) Materiality Concept
c) Cost Concept
d) Full disclosure Concept

Answer : Prudence Concept

Question : A Company lost vital machinery in an accident on 2nd March, 2011 which will have adverse impact on its production capacity. As a result, it is likely to lose business to its competitors. The company needs to disclose this fact in its annual report for the year ended March 31, 2011 because of which principle?
a) Materiality Concept
b) Money Measurement Concept and Full Disclosure Concept
c) Money Measurement Concept
d) Full Disclosure Concept

Answer : Materiality Concept

Question : Capital is a liability for the business. This statement is true because of which principle?
a) Business Entity Concept
b) Accounting Period Concept
c) Materiality Concept
d) Consistency Concept

Answer : Business Entity Concept

Question : Rent for the month of March 2011 is not paid. Under which accounting concept it should be recorded as expense for the year ended March 31, 2011?
a) Accrual Concept
b) Revenue Recognition Concept
c) Dual Aspect Concept
d) Both Revenue Recognition Concept and Dual Aspect Concept

Answer : Accrual Concept

Question : Under which concept if advance is received against sale of goods, the advance received is recorded as Advance against Sale and not Sales?
a) Accrual Concept, Revenue Recognition Concept
b) Accrual Concept
c) Revenue Recognition Concept
d) Dual Aspect Concept

Answer : Accrual Concept, Revenue Recognition Concept

Question : Guneet purchased 1000 sq. yards land to build a factory and paid Rs. 15 lakhs towards its cost including registration charges. At the end of the financial year, the value of the land came down to RS. 13 lakhs. Guneet recorded the land at Rs. 13 lakhs and booked a loss of Rs. 2 lakhs. Which principle has been violated?
a) Cost Concept
b) Money Measurement Concept
c) Materiality Concept
d) Consistency Concept

Answer : Cost Concept

Question : Which accounting principle requires that life of a business be broken into smaller parts?
a) Accounting Period Concept
b) Business Entity Concept
c) Going Concern Concept
d) Consistency Concept

Answer : Accounting Period Concept

Question : Production of a factory had to stop for a week due to a labour strike. The owner estimated the loss of production and the likely loss of profit arising out of the situation. He directed the accountant to record the loss in the books of accounts. The accountant did not agree. Which principle directed him?
a) Money Measurement Concept
b) Verifiable Objective Concept
c) Business Entity Concept
d) Both Verifiable Objective Concept and Business Entity Concept

Answer : Money Measurement Concept

Question :  Rahul, the proprietor of M/s. R. K. & Co. purchased an air conditioner and installed it at his residence. The payment was made by issuing a cheque from the account of M/s. R. K. & Co. The accountant debited the Drawings account. Which principle of accounting did he apply?
a) Business Entity Concept
b) Going Concern Concept
c) Materiality Concept
d) Money Measurement Concept

Answer :  Business Entity Concept