20 + Interview Questions in ACCOUNTING-PRINCIPLES IN GENERAL AWARENESS Page 1 InterviewSolution

1.	A company purchased goods for ₹5,00,000 and sold 80% of such goods during the year. The market value of remaining goods was ₹90,000. The company valued the closing stock at cost. Which principle is being violated?
Answer» Convention of conservation or prudence.

Discussion

2.	During the year the company purchased ballpoint pens of ₹500. These were issued to employees and were still in use at the end of the year. Which accounting concept you would follow in dealing with this item?
Answer» Materiality Convention will be followed in dealing with this item. As per this concept, items having an insignificant effect or being irrelevant to the users of financial statements need not be disclosed. Hence, it will be treated as expense and will debited to Stationery Account.

Discussion

3.	Omission of paise and showing the round figures in financial statements is based on ……………..A. Conservation conventionB. Consistency conceptC. Materiality conventionD. Money measurement concept
Answer» Correct Answer - C

Discussion

4.	Accural concept is based on :A. Matching conceptB. Dual Aspect ConceptC. Cost ConceptD. Going concern Concept
Answer» Correct Answer - A

Discussion

5.	According to which Concept the same accounting methods should be used each year :A. PrudenceB. Full DisclosureC. MaterialityD. Consistency
Answer» Correct Answer - D

Discussion

6.	As per Dual Aspect Concept :A. Assets = Liabilities - CapitalB. Asset = Liabilities + CapitalC. Assets = Capital - LiabilitiesD. Capital = Assets + Liabilities
Answer» Correct Answer - C

Discussion

7.	According to which Concept even the proprietor of the business is treated as a creditor of the business :A. Going concern ConceptB. Cost ConceptC. Business Entity ConceptD. Accounting Period Concept
Answer» Correct Answer - C

Discussion

8.	According to Convention of conservation :A. Provision is made for bad and doubtful debtsB. Depreciation is charged on assetsC. Recording is made of outstanding expensesD. All of the above
Answer» Correct Answer - A

Discussion

9.	The cost of a small calculator is accounted as an expense and not shown as an asset in a financial statement of a business entity due to ……………..A. Materiality ConventionB. Matching conceptC. Periodicity conceptD. Convention of full disclosure
Answer» Correct Answer - A

Discussion

10.	State one limitation of historical cost.
Answer» During periods of inflation, the figure of net profit will be distorted because depreciation based on historical cost will be charged against revenues at current prices.

Discussion

11.	Convention of conservation takes into account :A. All future profits and lossesB. All futures profits and not lossesC. All future losses and not profitsD. Neither profits nor losses of the future
Answer» Correct Answer - C

Discussion

12.	According to Convention of Conservation closing stock is valued at :A. At cost priceB. At Realisable valueC. Cost price or realisable value whichever is lessD. At Real value
Answer» Correct Answer - C

Discussion

13.	Concept of Consistency means :A. All the firms in the same industry should use identical accouting principles and proceduresB. All principles and procedures of accounting are utilisedC. Accounting principles and methods should remain consistent from one year to anotherD. All of the above
Answer» Correct Answer - C

Discussion

14.	According to the Cost ConceptA. 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» Correct Answer - C

Discussion

15.	Give two characteristics of accounting principles.
Answer» (i) Accounting principles are man made. (ii) Accounting principles are flexible.

Discussion

16.	Income is measured on the basis of :A. Matching ConceptB. Consistency ConceptC. Cost ConceptD. None of the above
Answer» Correct Answer - A

Discussion

17.	Which accounting principle states that all anticipated losses should be recorded but all anticipated profits should be ignored?
Answer» Convention of Prudence.

Discussion

18.	Due to which Concept qualitative transactions are not recorded in the books :A. Business Entity ConceptB. Money Measurement ConceptC. Historical cost ConceptD. Dual Aspect Concept
Answer» Correct Answer - B

Discussion

19.	As per Income Tax Act, accounting period is :A. From 1st January to 31st DecemberB. From 1st April to 31st MarchC. From 1st July to 30th JuneD. From Diwali to Diwali
Answer» Correct Answer - B

Discussion

20.	Which of these is not a fundamental accounting assumption?A. Going concern ConceptB. ConsistencyC. AccuralD. Materiality
Answer» Correct Answer - D

Discussion

Explore topic-wise InterviewSolutions in .

A company purchased goods for ₹5,00,000 and sold 80% of such goods during the year. The market value of remaining goods was ₹90,000. The company valued the closing stock at cost. Which principle is being violated?

During the year the company purchased ballpoint pens of ₹500. These were issued to employees and were still in use at the end of the year. Which accounting concept you would follow in dealing with this item?

Omission of paise and showing the round figures in financial statements is based on ……………..A. Conservation conventionB. Consistency conceptC. Materiality conventionD. Money measurement concept

Accural concept is based on :A. Matching conceptB. Dual Aspect ConceptC. Cost ConceptD. Going concern Concept

According to which Concept the same accounting methods should be used each year :A. PrudenceB. Full DisclosureC. MaterialityD. Consistency

As per Dual Aspect Concept :A. Assets = Liabilities - CapitalB. Asset = Liabilities + CapitalC. Assets = Capital - LiabilitiesD. Capital = Assets + Liabilities

According to which Concept even the proprietor of the business is treated as a creditor of the business :A. Going concern ConceptB. Cost ConceptC. Business Entity ConceptD. Accounting Period Concept

According to Convention of conservation :A. Provision is made for bad and doubtful debtsB. Depreciation is charged on assetsC. Recording is made of outstanding expensesD. All of the above

The cost of a small calculator is accounted as an expense and not shown as an asset in a financial statement of a business entity due to ……………..A. Materiality ConventionB. Matching conceptC. Periodicity conceptD. Convention of full disclosure

State one limitation of historical cost.

Convention of conservation takes into account :A. All future profits and lossesB. All futures profits and not lossesC. All future losses and not profitsD. Neither profits nor losses of the future

According to Convention of Conservation closing stock is valued at :A. At cost priceB. At Realisable valueC. Cost price or realisable value whichever is lessD. At Real value

Concept of Consistency means :A. All the firms in the same industry should use identical accouting principles and proceduresB. All principles and procedures of accounting are utilisedC. Accounting principles and methods should remain consistent from one year to anotherD. All of the above

According to the Cost ConceptA. 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

Give two characteristics of accounting principles.

Income is measured on the basis of :A. Matching ConceptB. Consistency ConceptC. Cost ConceptD. None of the above

Which accounting principle states that all anticipated losses should be recorded but all anticipated profits should be ignored?

Due to which Concept qualitative transactions are not recorded in the books :A. Business Entity ConceptB. Money Measurement ConceptC. Historical cost ConceptD. Dual Aspect Concept

As per Income Tax Act, accounting period is :A. From 1st January to 31st DecemberB. From 1st April to 31st MarchC. From 1st July to 30th JuneD. From Diwali to Diwali

Which of these is not a fundamental accounting assumption?A. Going concern ConceptB. ConsistencyC. AccuralD. Materiality