Answers To Questions on True Or False-Accounting Concepts

January 17th, 2009 Comments off
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QUESTIONS on ACCOUNTING CONCEPTS & DOUBLE ENTRY SYSTEM

True

False

1.

Accounting Principle is general law or rule followed in the preparation of financial statements

X

2.

Usefulness, objectivity and feasibility are the three basic norms generally found in accounting principles

X

3.

The entity concept considers the business and the proprietor as distinct from each other

X

4.

In accountancy, all business transactions are recorded as having dual aspect

X

5.

It is on the basis of going concern concept that the asset are always valued at market value

X

6.

Since the life of the business is assumed to be indefinite, the financial statement of the business should be prepare only when it goes into liquidation

X

7.

According to money measurement concept, the efficiency of the top management of the business must be clearly recorded in the books of accounts

X

8.

According to periodic matching of cost and revenue concept, a business man is not only to measure revenues in a particular accounting period but also has to calculate expenses which can be assigned in earning such revenues

X

9.

Cash basis considers the revenue as realized when the goods are produced

X

10.

The losses from sale of capital assets need not be deducted from revenue to ascertain the net income

X

11.

The convention of disclosure implies that all material information should be disclosed in the accounts

X

12.

In keeping with the principle of materiality, important items must be recorded instead of being left out or merged with other items

X

13.

The comparison of the results of one accounting period with that in the past is possible when the convention of consistency is adhered to by the business

X

14.

The convention of conservation takes into account all prospective profits and all prospective losses.

X

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