Chapter2.docx

ACCOUNTING CYCLE , ACCOUNTING PRINCIPLES & ACCOUNTING EQUATION MULTIPLE MULTIPLE CHOICE QUESTIONS

Q.1 Q.1

Q.2 Q.2

Q.! Q.!

Q.#

Q.% Q.%

Q.' Q.'

When When there there is no no questi question on of meeti meeting ng the the value value of a trans transac actio tion, n, it will be known as: (a)

Credit transaction

(b)

Cash transaction

(c)

Paper transaction

(d)

Internal transaction

Accoun Accountin ting g princ principl iples es are gener generall ally y base base on: (a)

Practicability

(b)

Theory only

(c)

Subjectivity

(d)

Everyday life

A transac transactio tion n taking taking plac place e with with an outsie outsie pers person on or organi organi"at "ation ion is calle: (a)

Internal transaction

(c)

Credit transaction

(b) (d)

Cash transaction

External transaction

$f the there is a chan hange in to tota tall valu value e of ass assets an an liab iabili ilitie ties of a business concern, it will be: (a)

Qualitative change

(b)

Quantitative ch change

(c)

Political change

(d)

Econoic change

&vents &vents which which are relate relate  with with money money are are call calle e:: (a)

!onetary events

(b)

Social events

(c)

Political events

(d)

"on#onetary events

&ver &very y tra trans nsac acti tion on e(e e(ect cts: s: (a)

$ne ite

(b)

Three ites

(c)

%our ites

(d)

T&o ites

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Q.) Q.)

Q.* Q.*

Q.+ Q.+

$f there there is increa increase se or ecre ecreas ase e in i(ere i(erent nt eleme elements nts of asse assets ts an an liab liabil ilit itie ies, s, but but the the to tota tall valu value e of asse assets ts an an liab liabil ilit itie ies s rema remain ins s unchange, it will be known as: (a)

Quantitative change

(c)

Qualitative change

(b) (d)

Econoic Change

!onetary change

When When cash cash is is pai pai to to cre creito itors rs it it will will ec ecrea rease se to: to: (a)

Cash

(b)

Creditors

(c)

'ebtors

(d)

oth Cash and Creditors

urc urcha hase se  fur furni nitu ture re for for cas cash, h, is: is: (a)

Quantitative change

(c)

Econoic Change

(b) (d)

Qualitative change

!onetary change

Q.1- ought ought furniture furniture on on creit creit will increa increase: se: (a)

ssets

(b)

ssets and *iabilities

(c)

*iabilities

(d)

E+uity

Q.11 /alaries /alaries pai will ecreas ecrease: e: (a)

ssets

(b)

ssets and *iabilities

(c)

Cash and capital

(d)

Capital

Q.12 Accorin Accoring g to accountin accounting g equation equation capital capital is equal equal to: (a)

ssets , *iabilities

(b)

*iabilities # ssets

(c)

ssets # *iabilities

(d)

"one of these

Q.1! /ol goos goos costing costing 0s. 1--- for for 0s. 12%- will will increase increase the owners equity by: (a)

-s. /000

(b)

-s. 120

(c)

-s. /120

(d)

-s. 1120

Q.1# he equit equity y of the the owner owner is calle: calle:

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Q.1% 3arket 3arket value of an investment investment is shown shown as foot foot note accoring to: (a)

Convention of consistency

(b)

Convention of conservatis

(c)

Convention of full disclosure

(d)

"one of these

Q.1' 4onventi 4onvention on of conserva conservatism tism is appli applie e to: (a)

Current ssets

(c)

Intangible ssets

(b) (d)

%ixed ssets

E+uity

Q.1) Accounti Accounting ng equat equation ion is is base base on: on: (a)

3oing concern concept

(c)

'ual aspect concept

(b)

Separate entity concept (d)

Cost concept

Q.1* &5penses &5penses pai pai by a busine business ss ecrea ecrease: se: (a)

Capital

(c)

Cash and Capital

(b) (d)

Cash

"one of these

Q.1+ 4ash pai to Aleem Aleem will will e(ect: e(ect: (a)

Cash and 'ebtors

(b)

(c)

Cash and $&ner4s E+uity (d)

Cash and Creditors "one of these

Q.2- he e5cess e5cess of assets assets over over liabilit liabilities ies is calle: calle: (a)

E+uities

(c)

Incoe

(b)

Pro5t (d)

Capital

Q.21 0eceive 0eceive  cash cash from 6arim 6arim will will e(ect: e(ect: (a)

Cash and 'ebtors

(b)

(c)

Cash and $&ner4s E+uity (d)

Cash and Creditors "one of these

Q.22 7urniture 7urniture purchase purchase for omestic omestic use will e(ect: e(ect: (a)

Cash and %urniture

(b)

%urniture and 'ra&ings

(c)

Cash and 'ra&ings

(d)

Cash and Capital

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(c)

Cash Syste

(d)

'ouble Entry Syste

Q.2# he cost cost conce concept pt is helpfu helpfull in making: making: (a)

True ccounts

(c)

Incoplete records

(b) (d)

6nreal ccounts

"one of these

Q.2% All the events relevant relevant to business must be measurable in terms of: (a)

3oods

(b)

6nits

(c)

Ethics

(d)

!oney

(b)

The 'elivery of the order

Q.2' 0eali"at 0eali"ation ion concept concept implies: implies: (a)

The receipt of the order

(c)

The re receipt of of ca cash fro the cu custoer (d)

"one of these

Q.2) rovision rovision for for oubtful oubtful ebts ebts is create create on the basis basis of: (a)

Convention of ateriality (b)

Convention of disclosure

(c)

Convention of conservatis

(d)

Convention of consistency

Q.2* bligation of business business towars towars the owner is treate as liability liability in balance sheet, accoring to: (a)

3oing concern concept

(b)

'ual aspect concept

(c)

Separate entity concept

(d)

"one of the above

Q.2+ he conven convention tion of conse conservati rvatism sm a(ects a(ects as: as: (a)

6nderstateent of *iabilities

(b)

(c)

oth (a) and (b)

6nderstateent of assets

(d)

$verstateent of assets

Q.!- 3oern 3oern accoun accounting ting is base base on: (a)

'ual spect Concept

(b)

!atching Concept

(c)

Cost Concept

(d)

-ealisation Concept

Q.!1 Accoring to this convention anticipate no pro;t, but provie provie for all

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 Q.!2 Accoring to this convention convention accounting practice practice shoul remain remain unchange from one perio to another. (a)

%ull 'isclosure

(c)

Conservatis

(b)

!ateriality (d)

Consistency

Q.!! Accoring to this concept, revenues shoul be recognise, recognise, when goos are sol or services are renere. (a)

'ual spect Concept

(b)

!atching Concept

(c)

Cost Concept

(d)

-ealisation Concept

Q.!# Accoring to this concept, concept, an asset asset is recore recore at at a price at which it is acquire. (a)

'ual spect Concept

(b)

!atching Concept

(c)

Cost Concept

(d)

-ealisation Concept

Q.!% he equit equity y of the cre creitors itors is is known known as: (a)

Capital

(b)

ssets

(c)

Incoe

(d)

*iabilities

Q.!' Assets Assets < liabi liabilitie lities s equal equal to: to: (a)

Capital

(b)

Expenses

(c)

Incoe

(d)

*oss

Q.!) oth assets assets an an owners equity equity woul woul be increas increase e by: = (a)

Proprietor4s dra&ings

(b)

Purchase of !achinery on credit

(c) Payent to creditors business.

(d)

Pro5t earned retained in

Q.!* Any amount amount taken taken out as rawings rawings will will reuce reuce the: (a)

Capital

(c)

-evenue

(b) (d)

Purchases

Expenses

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Q.#- >iabiliti >iabilities es plus plus owners owners equity equity is equal equal to: (a)

Creditors

(b)

E+uities

(c)

ssets

(d)

*iabilities

Q.#1 $f the assets assets of business business are 0s. 1--,--1--,--- 4apital is 0s. %-,--%-,--- then the amount of liabilities will be: =>ahore oar 2--#, 2--%? (a)

-s. 207000

(b)

-s. /207000

(c)

-s. /007000

(d)

-s. 807000

(b)

Entry in t&o sets of boo9s

(d)

Entry for t&o aspects of the

Q.#2 Q.#2 8ouble 8ouble entry entry mean means: s: (a)

Entry at t&o dates

(c) oth (a) and (b) transaction

ANSWERS

/ (c)

1 (a)

: (d)

; (b)

2 (a)

< ( d)

= (c)

8 (d)

> (b)

/0 (b)

// (c)

/1 (c)

/: (b)

/; (b)

/2 (c)

/< (a)

/= (c)

/8 (c)

/> (b)

10 (d)

1/(a)

11 (d)

1: (d)

1; (a)

12 (d)

1< (b)

1= (c)

18 (c)

1> (d)

:0 (a)

:/ (c)

:1 (d)

:: (d)

:; (c)

:2 (d)

:< (a)

:=(d)

:8 (a)

:> (b)

;0 (c)

;/ (a)

;1 (d)