CBSE Class 11 Accountancy Theory Base Of Accounting Worksheet

Question  According to the Money Measurement Concept  
(a) all transactions and events are recorded.
(b) all transactions and events which can be estimated in money terms are recorded in the books of account.
(c) all transactions and events which can be measured in money terms are recorded in the books of account.
(d) None of the above. 
Answer :  C

Question  According to the Cost Concept  
(a) assets are recorded at the value paid for acquiring them.
(b) assets are recorded by estimating the market value at the time of purchase.
(c) assets are recorded at lower of cost or market value.
(d) None of the above. 
Answer :  A

Question  According to the Convention of Consistency  
(a) accounting policies and practices once adopted should be consistently followed.
(b) accounting policies and practices adopted may be changed as per the management's decision.
(c) accounting policies and practices once adopted cannot be changed under any circumstances.
(d) None of the above. 
Answer :  C

Question  According to Going Concern Concept, a business is viewed as having  
(a) a limited life.
(b) a very long life.
(c) an indefinite life.
(d) None of these. 
Answer :  D

Question Valuation of stock at lower of cost or net realisable value is an example of   
(a) Consistency Convention.
(b) Conservatism Convention.
(c) Realisation Concept.
(d) Matching Concept. 
Answer :  B

Question During the life-time of an entity, accounting produces financial statements in accordance with which of the following accounting concept?   
(a) Matching
(b) Conservatism
(c) Accounting period
(d) Cost 
Answer :  C

Question  X Ltd. follows the Written Down Value Method of depreciating machinery year after year due to   
(a) comparability.
(b) convenience.
(c) consistency.
(d) All of these. 
Answer :  C 

Question . M/s Future Ltd. has invested Rs. 10,000 in the shares of Relicam Industries Ltd. Current market value of these shares is Rs. 10,500. Accountant of Future Ltd. wants to show Rs. 10,500 as value of investment in the books of accounts, which accounting convention restricts him from doing so?  
(a) Full disclosure 
(b) Consistency
(c) Conservatism
(d) Materiality 
Answer :  C

Question . Which of these is not a fundamental accounting assumption?  
(a) Going concern
(b) Consistency
(c) Accrual
(d) Materiality 
Answer :  D

Question  The Convention of Conservatism takes into account  
(a) all prospective profits and prospective losses.
(b) all prospective profits and leaves out prospective losses.
(c) all prospective losses but leaves out prospective profits.
(d) None of the above. 
Answer :  A

Question  IASB upon coming into existence has adopted   
(a) all IAS and SIC.
(b) some IAS and SIC.
(e) none of the IAS and SIC.
(d) None of these. 
Answer :  B

Question  Assets (except Securities) may be valued under Ind-AS on.  
(a) historical cost.
(b) fair value.
(c) both historical cost and fair value.
(d) None of these. 
Answer :  A

Question  Accrual Basis of Accounting recognises
(а) Outstanding and Prepaid Expenses.
(b) Accrued Incomes and Incomes Received in Advance.
(c) Both (a) and (b).
(d) None of the above.
Answer :  C

Question Under the Cash Basis of Accounting, expenses are recorded
(a) on payment.
(b) on being incurred.
(c) either (a) or (b).
(d) None of these. 
Answer :  A

Question. The proforma and contents of balance sheet and profit and loss account are prescribed by Companies Act so that companies show all the relevant information while preparing the financial statements. This is done to ensure that ……… is followed.
(a) accrual concept
(b) dual aspect principle
(c) principle of full disclosure
(d) principle of materiality
Answer : C

Question. Pick the odd one out.
(a) Accounting period principle
(b) Financial period principle
(c) Periodicity principle
(d) Time period principle
Answer : B

Question. Which of the following is correct about value of investments of a firm?
(a) Market value of investments are not shown anywhere and only book value is shown in balance sheet
(b) Both market value and book value is shown in balance sheet and the higher of the two is accounted for
(c) Market value of investments is shown in balance sheet and book value is not shown anywhere
(d) Market value of investments is shown in footnote and book value of investment is reflected in balance sheet
Answer : D

Question. Due to which principle, contingent liabilities are shown in the balance sheet?
(a) Dual aspect principle
(b) Principle of full disclosure
(c) Principle of materiality
(d) Going concern concept
Answer : B

Question. An item is considered to be material if there is a reason to believe that knowledge of it would influence the decision of an informed investor.
(a) True
(b) False
(c) Partially true
(d) Partially false
Answer : A

Question. For a large manufacturing, the costs of small tools used in not relevant whereas it is very relevant for a small roadside workshop. This fallacy can be explained by which principle?
(a) Principle of conservation
(b) Principle of full disclosure
(c) Principle of materiality
(d) Matching principle
Answer : C

Question. All anticipated losses and gains should be recorded in the books of accounts.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer : B

Question. As per principle of conservatism, which of the following is incorrect?
(a) Provision for doubtful debts is created in anticipation of actual bad debts
(b) Closing stock is always valued at the realisable value
(c) Joint life insurance policy is shown at the surrender value
(d) None of the above
Answer : B

Question. According to principle of prudence,
(a) outstanding expenses are accounted for
(b) provision for bad debts is created
(c) depreciation is charged on assets
(d) All of the above
Answer : B

Question. The junior accountant in a fortune 500 company decided to omit the ‘paisa’ in certain figures and showed the rounded off figures in financial statements. The act was found to be correct by senior accountant because of
(a) principle of full disclosure
(b) going concern concept
(c) materiality principle
(d) consistency concept
Answer : C

Question. Principle of …… is an exception to the principle of full disclosure
(a) money measurement
(b) materiality
(c) matching
(d) None of the above
Answer : B

Question. Central GST and Union Territory GST is applicable in such a way that if the prescribed rate is 18%, …… GST will be levied by centre and …… GST will be levided by the union territory.
(a) 10%, 8%
(b) 8%, 10%
(c) 9%, 9%
(d) Can’t be determined
Answer : C

Question. In how many categories is GST divided?
(a) 2
(b) 4
(c) 3
(d) 6
Answer : D

Question. Which of the following is/are objectives of GST?
(a) To maximise tax rate slabs
(b) To restrict the movement of goods across the country
(c) To eliminate classification dispute between goods and services
(d) All of the above
Answer : C

CBSE Class 11 Accountancy Chapter 2 Theory Base of Accounting Case Based MCQs

Direction Read the following case study and answer questions on the basis of the same.

Olly and Robin are two friends graduated from a top college of the country. After the college, they decide to build a start up in their hometown, Bengaluru. They decided to start a subscription service of fruits in the nearby cities.
For obtaining high-quality fruits, they made 5-year contracts with farmers in and around Karnataka. They also decided to purchase machinery for cleansing and quality check of the fruits. The business of the company started booming.
Two years down the line, they had built a strong brand and reputation. To leverage the same, the company decided to venture into other states as well with the similar service line.
They first expanded to Tamil Nadu and got great demand. While accounting, company usually booked a normal loss to account for spoiled fruits that they might get. Moreover, they charged depreciation on the machinery to ensure that expenses are distributed over the years.
With all these good practices, after four more years of operations, the company attained a unicorn status.

Question. Which concept is highlighted in the fact that company made long-term contracts with the farmers?
(a) Going concern concept
(b) Accrual concept
(c) Consistency concept
(d) Both (a) and (b)
Answer : A

Question. Which AS will be applicable to evaluate the reputation and brand value of firm?
(a) AS-20
(b) AS-26
(c) AS-30
(d) AS-2
Answer : B

Question. “They first expanded to Tamil Nadu and got great demand.” Which type of GST is applicable on this supply to Tamil Nadu?
(a) Centre GST
(b) State GST
(c) Integrated GST
(d) Both (a) and (b)
Answer : C

Question. Which principle is highlighted in the line, “While accounting, company usually booked a normal loss to account for spoiled fruits that they might get”?
(a) Business entity principle
(b) Prudence principle
(c) Materiality principle
(d) Full disclosure principle
Answer : B

Question. The principle highlighted in the line, “Moreover, they charged depreciation on the machinery to ensure that expenses are distributed over the years” is matching principle.
(a) True
(b) False
(c) Partially false
(d) Can’t say
Answer : A

BASIC PRINCIPLES/CONCEPTS OF ACCOUNTING

1. ENTITY CONCEPT

• Business is considered as a separate entity different from that of the owner.

• All transactions are analyzed from the point of view of business only

• Distinction is made only to differentiate the private transactions of the owner from that of the business.

• This principle is applicable to all forms of business organizations.

2. GOING CONCERN CONCEPT

• Business is said to be having an indefinite life.

• On the basis of the assumption transactions are classified into capital and revenue items.

• If this assumption is not made people will not enter into long-term contracts as they fear that the business can wind up at any time.

3. MONEY MEASUREMENT CONCEPT

• Only transactions that are measured in terms of money are recorded in the books oh accounts.

• Non-monetary transactions like quality of a product, labour unrest, competent management, even though are important are not recorded in the book of accounts.

4. ACCOUNTING PERIOD CONCEPT

• For the purpose of reporting the entire life of a firm is divided into time intervals. Each time interval is known as accounting period.

• It is usually for a year.

• The accounting year can be a calendar year, fiscal year or natural year.

ACCOUNTING PRINCIPLES

5. REVENUE PRINCIPLE

• Revenue is the amount, which as a result of operations is added to the capital.

• It is realized when the goods have been transferred or the services have been rendered to a customer.

• It can be realized on the basis of (1) sales (2) cash (3) production

6. EXPENSE PRINCIPLE

• Expense is the cost of the use of things or services for the purpose generating revenue.

• It is useful for the purpose of estimating profits or losses. Because only expenses are matched with revenue.

• It is recognized when assets or services are used to produce revenue during a period.

7. MATCHING PRINCIPLE

• This principle indicates the procedures / rules to be followed while matching revenue and expenditure.

• Revenue should be matched with the expense if the benefit is likely to accrue in the same year. Otherwise it should not be matched.

• Certain expenses are shown in the P/L a/c and certain expenses are shown in the B/S due to operation of matching principle.

8. FULL DISCLOSURE PRINCIPLE

• All material (significant) informations should be disclosed in financial statements.

• Assets, expenses & revenues should be clearly stated along with their methods of valuation and grouping.

• The legal requirements if any must also be followed.

• Examples. : a] stating the methods of valuation of stock ( b) stating contingent liability (c) stating the method of depreciation.

9. VERIFIABLE OBJECTIVE PRINCIPLE

• All accounting transactions should be supported and evidenced by business documents (like voucher, cash memos, invoices etc.,)

• Such documents help in conducting audit.

• This principle also states that accounting should be free from personal bias of the person who is recording the transactions.

10. DUAL ASPECT PRINCIPLES

• Every business transaction has two-fold aspect as it affects two parties.

• Every financial transaction involves (a) yielding of a benefit and (b) giving of that benefit. Every debit has a corresponding credit.

• That is why it is always said that ASSETS = LIABILITIES + CAPITAL. Hence any increase or decrease in total assets must simultaneously produce a corresponding increase or decrease in total equities.

11. HISTORICAL COST

• All business transactions must be recorded in the books of accounts at Their monetary cost of acquisition.

• B. The balance of assets and liabilities is carried forward from year to year At its acquisition cost, irrespective of increase or decrease in the market Value of assets.

• The use of Historical cost provides verifiable and objective Accounting information.

MODIFYING PRINCIPLES

12. MATERIALITY

• Accounting statements should disclose all items, which are material enough to affect evaluations or decisions.

• Only those transactions, which are significant from the point of view of income determination, should be recorded.

• Insignificant matters can be ignored.

13. CONSISTENCY

• Accounting procedures or practices should remain the same from one year to another.

• This will enable the business to compare it results from year to year.

• If any change of method is effected it should be disclosed in that year’s financial statement.

14. CONSERVATISM (PRUDENCE)

• “ANTICIPATE NO PROFIT BUT PROVIDE FOR ALL POSSIBLE LOSSES”

• Valuing stock at cost or market price whichever is lower, providing for bad and doubtful debts are the examples of the application of this principle.

• This principle tries to prevent window dressing (painting a better picture of the business when it actually not)

15. TIMELINESS

• IT MEANS APPROPRIATE RECORDING OF TRANSACTIONS AT APPROPRIATE TIME.

• All accounting information’s must be made available at the earliest time possible

• The delay in recording might encourage fraud, embezzlement manipulation.

• BETTER TO HAVE LEES INFORMATION IN TIME RATHER THAN MORE RELIABLE INFORMATION VERY LATE.

16. INDUSTRY PRACTICE (VARIATIONS IN ACCOUNTING PRACTICES)

• Each industry has to adopt accounting assumptions, basic principles and practice that are prevailing in that industry.

• Even though they are not in consonance with the established principles and assumptions it is accepted as industry practice.

• Example: (a) valuing stock at market price instead of cost or market price whichever is lower.

17. SUBSTANCE OVER FORM

• Accounting Must communicate the material, use and substantial information to all those who are directly or indirectly interested in its information.

• B. Transactions and events recorded in the books should be governed by substance of such transaction or event and not the legality of such transaction.

• Example: In the case of financial lease the lessee has no legal right on the leased assets. How ever, leased assets are shown in the books of lessee in accordance with this principle.

Important Questions for NCERT Class 11 Accountancy Theory Base Of Accounting

Question . According to which Concept even the proprietor of the business is treated as a creditor of the business;  
(a) Going concern Concept
(b) Cost Concept
(c) Business Entity Concept
(d) Accounting Period Concept
Answer :  C

Question . According to which Concept the same accounting methods should be used each year : 
(a) Prudence
(b) Full Disclosure
(c) Materiality
(d) Consistency
Answer :  D

Question . Due to which of the following, contingent liabilities are shown in the Balance Sheet:  
(a) Dual Aspect Concept
(b) Convention of Full Disclosure
(c) Convention of Materiality
(d) Going Concern Concept
Answer :  B’

Question . The cost of a small calculator is accounted as an expense and not shown as an asset in a financial statements of a business entity due to …… .  
(a) Materiality Convention
(b) Matching concept
(c) Periodicity concept
(d) Convention of full disclosure
Answer :  A

Question  According to which of the following accounting concepts, even the proprietor of a business is treated as creditor to the extent of his capital?   
(a) Money Measurement Concept
(b) Dual Aspect Concept
(c) Cost Concept
(d) Business Entity Concept
Answer :  A

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 :  A

Question . According to the Cost Concept  
(a) Assets are recorded at lower of cost and market value.
(b) Assets are recorded by estimating the market value at the time of purchase.
(c) Assets are recorded at the value paid for acquiring it.
(d) Assets are not recorded
Answer :  C

Question . Providing depreciation on fixed asset is in accordance with which of the following principles/concepts.  
(i) Going concern (ii) Matching Concept (iii) Materiality
(a) (i) & (ii)
(b) (ii) & (iii)
(c) (i) & (iii)
(d) All the three
Answer :  A

Question . The owner of the firm records his medical expenses in the firms’ income statement. Indicate the principle that is violated.  
(a) Cost Concept
(b) Prudence
(c) Full disclosure
(d) Entity concept
Answer :  D

Question . Due to which Concept qualitative transactions are not recorded in the books :  
(a) Business Entity Concept
(b) Money Measurement Concept
(c) Historical cost Concept
(d) Dual Aspect Concept
Answer :  B

Question  Accrual concept is based on :  
(a) Matching Concept
(b) Dual Aspect Concept
(c) Cost Concept
(d) Going concern Concept
Answer :  A

Question . Omission of paise and showing the round figures in financial statements is based on …… .  
(a) Conservatism convention
(b) Consistency concept
(c) Materiality convention
(d) Money measurement concept
Answer :  C

Question  Under Accrual Basis of Accounting
(a) both Cash and Credit transactions are recorded.
(b) only cash transactions are recorded.
(c) only credit transactions are recorded.
(d) None of the above.
Answer :  A

Question  Under the Accrual Basis of Accounting, expenses are recorded
(a) on payment.
(b) on being incurred.
(c) either (a) or (b).
(d) None of these. 
Answer :  B

Question. When there are different alternatives for recording a transaction, the one having least favourable immediate effect on profits or capital should be adopted.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer : A

Question. According to the cost principle, an asset bought is recorded in books at price ……… .
(a) at which it was acquired
(b) which is prevailing in market
(c) higher of (a) and (b)
(d) lower of (a) and (b)
Answer : A

Question. Cost/Historical cost principle means that assets will be continuously shown at their acquisition cost, even if the asset is depreciable.
(a) True
(b) False
(c) Partially false
(d) Can’t say
Answer : C

Question. During periods of inflation, the figure of net profit disclosed by profit and loss account will be distorted because of ……… .
(a) matching principle
(b) historical cost principle
(c) principle of prudence
(d) dual apsect principle
Answer : B

Question. Which of the following transactions/ events/entries can be attributed to matching principle?
(i) Outstanding expenses, though not paid in cash are shown in profit and loss account.
(ii) When insurance premium is paid partly for next year also, the part relating to next year will be shown as expense only next year and not this year.
(iii) Depreciation is charged as per straight line method each and every year.
(a) Only (i)
(b) Only (ii)
(c) (i) and (ii)
(d) All of these
Answer : C

Question. Recognition of cost in the same period as associated revenues is called ……… .
(a) Cost principle
(b) Dual aspect principle
(c) Full disclosure principle
(d) Matching principle
Answer : D

Question. Incomes receivables must be …… in revenues and income received in advance must be …… from revenues as per matching principle.
(a) deducted, added
(b) ignored, added
(c) added, deducted
(d) None of these
Answer : C

Question. ‘Double entry system’ is based on which accounting principle concept?
(a) Going concern concept
(b) Business entity principle
(c) Matching principle
(d) Dual aspect principle
Answer : D

Question. Everything a firm owns, it also owes to somebody. This co-existence is explained by ……… .
(a) accrual concept
(b) dual aspect principle
(c) consistency concept
(d) matching principle
Answer : B

Question. Match the columns.
Column I                                 Column II
A. Quality of                         (i) Full disclosure
management is not                   principle
recorded in books
B. Change in method          (ii) Consistency
of valuation of                           concept
stock is shown in
footnotes
C. Making provision            (iii) Money
for likely bad debts                   measurement principle
should remain                  
consistent with
previous years
D. Provision should             (iv) Principle of
be made for                                conservation
pending law suit
against firm
Codes
       A   B   C  D 
(a) (iii) (ii) (i) (iv)
(b) (i) (ii) (iii) (iv)
(c) (iii) (ii) (iv) (i)
(d) (iii) (i) (ii) (iv)
Answer : D

Question. Cash basis of accounting does not require the use of estimates and personal judgements.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer : A

Question. In ………, unpaid expenses are recorded in books of accounts.
(a) cash basis of accounting
(b) accrual basis of accounting
(c) Both (a) and (b)
(d) Can’t be determined
Answer : B

Question. Which of the followingmethods of accounting is/are recognised by Companies Act, 2013?
(a) Cash basis of accounting
(b) Accrual basis of accounting
(c) Both (a) and (b)
(d) Can’t be determined
Answer : B

Question. Which basis of accounting makes a distinction between revenue and capital items?
(a) Cash basis of accounting
(b) Accrual basis of accounting
(c) Both (a) and (b)
(d) Can’t be determined
Answer : B

Question. Which of these is/are the objectives of accounting standards?
(a) Better understanding of financial statements
(b) Minimise diverse accounting policies and practices with an aim to eliminate them to possible extent
(c) Enhance reliability of financial statements
(d) All of the above
Answer : D

Question. Which AS deals with ‘Financial Instruments: Disclosures’?
(a) AS-29
(b) AS-30
(c) AS-31
(d) AS-32
Answer : D

Question.AS does not apply to purely charitable organisations.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer : A

Question. International Financial Reporting Standards (IFRS) are issued by ……… .
(a) IFRS Committee
(b) International Accounting Standards Board
(c) international Accounting Committee
(d) None of the above
Answer : D

Question. Accounting Standard-26 deals with
(a) inventories valuation
(b) plant, property and equipment
(c) consolidated financial statements
(d) intangible assets
Answer : B 

Question. Serial number of AS and Ind-AS correspond with each other with respect to title.
(a) True
(b) False
(c) Partially false
(d) Can’t say
Answer : B

Question. Ind-AS 1 deals with
(a) statement of cash flows
(b) disclosure of accounting policies
(c) plant, property and equipment
(d) None of the above
Answer : D

Question. Consolidated financial statement is dealt under which IFRS?
(a) IFRS - 1
(b) IFRS -5
(c) IFRS - 10
(d) IFRS - 15
Answer : C

Question. Match the columns.
Column I                               Column II
A. Cash flow statement   (i) AS-10
B. Plant, property and     (ii) AS-3
equipment
C. Valuation of                (iii) AS-2
inventories
D. Accounting for            (iv) AS-13
investments
Codes
      A   B   C   D 
(a) (i) (ii) (iv) (iii)
(b) (i) (ii) (iii) (iv)
(c) (ii) (i) (iii) (iv)
(d) (ii) (i) (iv) (iii)
Answer : C

Question. On which of these items, GST is not applicable?
(a) Sanitary pads
(b) Medicines
(c) Alcoholic liquor
(d) Books
Answer : C

Question.  ……… is levied in the course of interstate supply of goods and services.
(a) Central GST
(b) State GST
(c) Union Territory GST
(d) Integrated GST
Answer : D

Question. Identify the GST applicable in case X Ltd. sells goods from Naisk to a vendor in Mumbai.
(a) Central GST
(b) State GST
(c) Both (a) and (b)
(d) Integrated GST
Answer : C

CBSE Class 11 Accountancy Chapter 2 Theory Base of Accounting Case Based MCQs

Direction Read the following case study and answer questions on the basis of the same.

Golu Plastic Ltd (GPL) is a leading plastic articles manufacturing company. It was listed on Indian stock market in 1999. The founders and promoters of the company hold the highest number of shares of the company, approximately around 55%. All these founders belong to a single family. Unfortunately, all of them died in a car accident recently. However, the company continued to exist and grow.
In the year 2004, the company imported multiple machines for producing low-cost plastic sheets. The machines were recorded at the price prevailing in 2004 and have been subjected to depreciation year on year based on written down value method. The depreciation is treated as a non-cash expense while preparing the cash flow statement. When GST was implemented in 2017, it benefitted the company by streaming the processes. A single rate of GST was charged on the supply of the goods and the process of filing was very simple.

Question. Which principle is highlighted in the fact that the company continued even after death of the founders?
(a) Business entity principle
(b) Money measurement principle
(c) Duality principle
(d) Historical cost principle
Answer : A

Question. Which principle is highlighted in the line, ‘‘The machines were recorded at the price prevailing in 2004”?
(a) Full disclosure principle
(b) Conservatism principle
(c) Duality principle
(d) Historical cost principle
Answer : D

Question. Which principle/concept is highlighted in the line,” … and have been subjected to depreciation year on year based on written down value method.”?
(a) Full disclosure principle
(b) Business entity principle
(c) Consistency concept
(d) Accrual concept
Answer : C

Question. Which AS is required to be followed to prepare cash flow statements?
(a) AS-1
(b) AS-2
(c) AS-3
(d) AS-4
Answer : C

Question. “A single rate of GST was charged on the supply of the goods …”. Who levy GST on this common base?
(a) Centre government
(b) State government
(c) Union territory government
(d) Both (a) and (b)
Answer : D

Direction Read the following case study and answer questions on the basis of the same.

Dukuma is an MSME business in the Alwar district of Rajasthan. It is 40 years old business of selling hardware parts to local traders of the district and some other retailers of Rajasthan. The company has multiple SKUs and the inventories are valued by their accountant.
The accountant of the enterprise also happens to be a good friend of the owner of the enterprise. Therefore, the fees of the accountant was not paid in the year when pandemic set in as the firm was going through cash-crunch. However, the accountant entered the amount of his fees as expense even though cash was not paid. He justified his act by stating some accounting concepts. The accountant further completed the books of accounts for the year ended 31st December, 2020. Over the years, the company has developed a reputation in market by supplying high quality products and customer-friendly service. The owner of the firm asked the accountant to enter this fact but accountant denied and gave the correct reasons. The owner was contended.

Question. The supplies of the company would be subjected to Integrated GST.
(a) True
(b) False
(c) Partially true
(d) Can’t say
Answer : B

Question. Which AS would have been followed by accountant to value inventories?
(a) AS-1
(b) AS-2
(c) AS-3
(d) AS-4
Answer : B

Question. Which principle/concept of accounting is highlighted in the line, “Therefore, the fees of the accountant was not paid in the year when pandemic set in as the firm was going through cash-crunch. However, the accountant entered the amount of his fees as expense even though cash was not paid”?
(a) Dual aspect principle
(b) Accrual concept
(c) Consistency concept
(d) Cost principle
Answer : B

Question. The company follows the calendar year as accounting year. Which principle is highlighted in the fact that firm divided the whole life of firm into small financial years?
(a) Dual aspect principle
(b) Materiality principle
(c) Prudence principle
(d) Accounting period principle
Answer : D

Question. “The owner of the firm asked the accountant to enter this fact but accountant denied and gave the correct reasons.” Which principle was used by accountant to explain the owner?
(a) Dual aspect principle
(b) Money measurement principle
(c) Full disclosure principle
(d) Accounting period principle
Answer : B