MCQ of Accounting Principles Class 11 with answers

MCQ of Accounting Principles Class 11 with answers of CBSE, ISC and State Boards

Accounting Principles are:

(a) Made by Government
(b) Made by Man
(c) Made by Law
(d) None of the above

Ans – (b)

Fundamental Accounting Assumptions as per AS-! are

(a) Going Concern, Consistency, Prudence or Conservatism
(b) Going Concern, Consistency, Accrual
(c) Going Concern, Money Measurement, Prudence or Conservatism
(d) Going Concern, Accounting Period, Accrual

Ans – (b)

Accounting principles mean:

(a) The rules which are adopted while recording the accounting transactions
(b) The rues which are adopted while preparing Profit & Loss Account
(c) The rules which are adopted while preparing balance sheet
(d) The rules which are adopted while preparing Director’s Report

Ans – (a)

According to the Business Entity Concept

(a) transactions between the business and its owners are not recorded
(b) transactions between the business and its owners are recorded considering them to be one single entity
(c) transactions between the business and its owners are recorded from the business point of view
(d) None of the above

Ans – (c)

Various names of accounting principles are:

(a) Assumptions
(b) Conventions
(c) Concepts
(d) All of the above

Ans – (d)

According to Business Entity Concept:

(a) Business is treated as a separate unit from its owner
(b) Business is not treated as a separate unit from its owner
(c) Personal transactions of owner are not distinguished from business transactions
(d) None of the above

Ans – (a)

The Concept of Conservatism takes into account

(a) all prospective profits and all prospective losses
(b) all prospective profits and leaves all prospective losses
(c) all prospective losses but not the prospective profits
(d) all prospective incomes but not prospective losses

Ans – (c)

According to Money Measurement Concept only those transactions are recorded in accounting:

(a) Which are capable of being expressed in terms of money
(b) Which cannot be expressed in terms of money
(c) both of the above transactions
(d) None of the above

Ans – (a)

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

Ans – (c)

As per Going Concern Concept business will continue to exist:

(a) For a limited period
(b) For 10 Years
(c) For 25 Years
(d) For a long period in the future

Ans – (d)

Which of the following statements correctly describes the Cost Concept?

(a) Assets are shown in the books at the price at which it was purchased plus cost of improvement minus depreciation till date
(b) Assets are shown in the books at the price it was purchased
(c) Assets are shown in the books at the price it was purchased plus cost of improvement
(d) Assets are shown in the books at the price it was purchased or market price whichever is lower.

Ans – (a)

As per Income Tax Act, accounting period is:

(a) From 1st January to 31st December
(b) From 1st April to 31st March
(c) From 1st July to 30th June
(d) From Diwali to Diwali

Ans – (b)

A concept that a business enterprise will not be sold or liquidated in the near future is known as

(a) Going concern
(b) Economic Entity
(c) Monetary Unit
(d) None of these

Ans – (a)

As per Cost Concept, as asset is recorded in the books

(a) At market value
(b) At going concern value
(c) At the price at which it was acquired
(d) At liquidation value

Ans – (c)

As per Dual Aspect Concept

(a) Assets = Liabilities – Capital
(b) Assets = Capital – Liabilities
(c) Assets = Liabilities + Capital
(d) Capital = Assets + Liabilities

Ans – (c)

Accounting period concept means:

(a) A period of 12 months
(b) A period of 6 months
(c) Indefinite period
(d) Period fixed by management

Ans – (a)

According to Dual Aspect Concept, the system of recording transactions is called:

(a) Double Account System
(b) Double Entry System
(c) Double Book System
(d) All of the above

Ans – (b)

According to the Accrual Concept

(a) transactions and events are recorded in the books at the time of their settlement in cash
(b) transactions and events are recorded in the books at the time when they are entered into
(c) transactions and events may be recorded either at the time of the settlement or when they are entered into
(d) None of the above

Ans – (b)

As per Revenue recognition Concept, revenue is deemed to be realised:

(a) When purchase order is received from the purchaser
(b) When goods are delivered to the purchaser
(c) When the title of the goods has been transferred to the purchaser
(d) when cash is received from the purchaser

Ans – (c)

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

Ans – (a)

Cost concept means:

(a) Sale of goods at cost price
(b) Sale of goods at market price
(c) Sale of goods at cost plus percentage of cost
(d) Recording of asset in the books at cost price

Ans – (d)

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

Ans – (c)

According to Objectivity Concept:

(a) There should be proper vouchers for checking every transaction.
(b) There should be proper vouchers for checking every cash transaction
(c) there should be proper vouchers for checking every purchase-sale transaction.
(d) There is no need of vouchers for checking of transactions.

Ans – (a)

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

Ans – (d)

According to Convention of Full Disclosure

(a) All secrets of the business must be disclosed
(b) All significant information should be completely disclosed
(c) All accounts should be maintained honestly
(d) All accounts should be prepared quickly

Ans – (b)

According to which of the following concepts, in determining the net income from business, all cost 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

Ans – (a)

Convention of Consistency means:

(a) All the firms in the same industry should use identical accounting principles and procedures
(b) All principles and procedures of accounting are utilised
(c) Accounting principles and methods should remain consistent from one year to another
(d) All of the above

Ans – (c)

Convention of conservatism takes into account:

(a) All future profits and losses
(b) All future profits and not losses
(c) All future losses and not profits
(d) Neither profits nor losses of the future

Ans – (c)

‘Anticipate no profit and provide for all possible losses’ is followed due to

(a) Accounting Entity Principle
(b) Prudence Principle
(c) Cost Concept
(d) Matching Concept

Ans – (b)

According to Convention of Conservatism closing stock is valued at:

(a) At cost price
(b) At Realisable value
(c) Cost price or realisable value whichever is less
(d) At Real value

Ans – (c)

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

Ans – (b)

Which of these is not fundamental accounting assumption?

(a) Consistency
(b) Accrual
(c) Going Concern
(d) Business Entity

Ans – (d)

According to Convention of Conservatism:

(a) Provision is made for bad and doubtful debts
(b) Depreciation is charged on assets
(c) Recording is made of outstanding expenses
(d) All of the above

Ans – (a)

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

Ans – (c)

the concept that a business enterprise will not be sold or liquidated in the near future is known as:

(a) Business Entity Concept
(b) Money Measurement Concept
(c) Matching Concept
(d) Going Concern Concept

Ans – (d)

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

Ans – (c)

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

Ans – (c)

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

Ans – (b)

Accrual concept is based on:

(a) Matching Concept
(b) Dual Aspect Concept
(c) Cost Concept
(d) Going Concern Concept

Ans – (a)

‘Asset is accounted at the price paid to purchase them’ is based on

(a) Accrual Concept
(b) Cost Concept
(c) Money Measurement Concept
(d) Realisation concept

Ans – (b)

Cost price on realisable value, whichever is less, is used for the valuation of:

(a) Current Assets
(b) Closing Stock
(C) Fixed Assets
(d) All Assets

Ans – (b)

At the end of the accounting period, provision is made for the amount of outstanding bill for the electricity that has been consumed during the period. The statement is based on

(a) Accrual Concept
(b) Matching Concept
(c) Realisation Concept
(d) Money Measurement Concept

Ans – (a)

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

Ans – (c)

According to which of the following, a business is considered to run for indefinite period:

(a) Business Entity Concept
(b) Money Measurement Concept
(c) Historical Cost Concept
(d) Going Concern Concept

Ans – (d)

Due to which of the following window dressing is prohibited:

(a) convention of Consistency
(b) Accounting Period Concept
(c) Convention of full Disclosure
(d) Money Measurement Concept

Ans – (c)

Annual fee of a student for the next two years (i.e., ₹ 1,00,000) was received by the school in the year of admission itself. What wil be the accounting treatment as per Revenue Recognition Principle?

(a) ₹ 1,00,000 shall be recognised as revenue in the year of admission
(b) ₹ 1,00,000 shall be recognised as revenue in the year subsequent to the year of admission
(c) ₹ 50,000 shall be recognised as revenue in the first subsequent year and remaining ₹ 50,000 shall be recognised in the second subsequent year
(d) None of the above

Ans – (c)

According to which concept the same accounting methods should be used each year:

(a) Prudence
(b) Full Disclosure
(c) Materiality
(d) Consistency

Ans – (d)

A company does not include value of skills gained by its employees from training programmes in its financial statements, which accounting concept is being applied?

(a) Consistency
(b) Materiality
(c) Money measurement
(d) Substance Over Form

Ans – (c)

Of which concept the Writing off bad debt is and example?

(a) Going Concern
(b) Matching
(c) Prudence
(d) Substance Over Form

Ans – (c)

Everything a firm owns, it also owes out to somebody. This is explained by which concept:

(a) Dual Aspect
(b) Going Concern
(c) Money Measurement
(d) Accounting Period

Ans – (a)

The __ convention states that the method of providing depreciation adopted in one year should be adopted each year:

(a) Full Disclosure
(b) Consistency
(c) Prudence
(d) Materiality

Ans – (b)

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

Ans – (b)

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

Ans – (a)

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

Ans – (c)

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) and (ii)
(b) (ii) & (iii)
(c) (i) & (iii)
(d) All the three

Ans – (a)

The owner of the firm records his medical expenses in the firm’s income statement. Indicate the principle that is violated.

(a) Cost Concept
(b) Prudence
(c) Full disclosure
(d) Entity Concept

Ans – (d)

M/s Future Ltd. has invested ₹ 10,000 in the shares of Relicam Industries Ltd. Current market value of these shares is ₹ 10,500. Accountant of Future Ltd. wants to show ₹ 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

Ans – (c)

Which of these is not a fundamental accounting assumption?

(a) Going Concern
(b) Consistency
(c) Accrual
(d) Materiality

Ans – (d)

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

Ans – (c)

Income is measured on the basis of:

(a) Matching Concept
(b) Consistency Concept
(c) Cost Concept
(d) None of the above

Ans – (a)

Under which accounting concept the personal transactions of the owner are not recorded in the books of the business, unless it involves inflow or outflow of business funds.

(a) Business Entity
(b) Dual Aspect
(c) Materiality
(d) Money Measurement

Ans – (A)

Identify the concept that requires the documentary evidence for the accounting transaction which is supported by verifiable documents or vouchers.

(a) Materiality
(b) Objectivity
(c) Full Disclosure
(d) Consistency

Ans – (b)

The concept that states the revenue and the expenses incurred to rearn the revenue must belong to the same accounting period for ascertaining profit/loss for that year.

(a) Revenue Recognition
(b) Matching
(c) Full Disclosure
(d) Cost

Ans – (b)

Life of the business is divided into small periods of generally 12 months, known as:

(a) Calendar year
(b) Financial Year
(c) Accounting Period
(d) Fiscal Year

Ans – (c)

The accounting concept that is used to prepare Profit & Loss A/c is known as _ .

(a) Cost
(b) Revenue Realisation
(c) Matching
(d) Full Disclosure

Ans – (c)