Theory Base of Acounting

According to the Business Entity Concept.

• transactions between the business and its owners are not recorded

• transactions between the business and its owners are recorded considering them to be one single entity

• transactions between the business and its owners are recorded from the business point of view.

• None of the above

According to the Money Measurement Concept.

• All transactions and events are recorded

• All transactions and events which can be estimated in money terms are recorded in the books of account.

• All transactions and events which can be measured in money terms are recorded in the books of account.

• None of the above

Which of the following statements correctly describe the Cost Concept?

• Assets are shown in the books at the price at which it was purchased plus cost of improvement minus depreciation till date.

• Assets are shown in the books at the price it was purchased.

• Assets are shown in the books at the price it was purchased plus cost of improvement.

• Assets are shown in the books at the price it was purchased or market price whichever is lower.

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

• Going Concern

• Economic Entity

• Monetary Unit

• None of the above

According to the Accrual Concept

• transactions and events are recorded in the books at the time of their settlement in cash

• transactions and events are recorded in the books at the time when they are entered into.

• transactions and events may be recorded either at the time of the settlement or when they are entered into

• None of the above

According to the Convention of Consistency

• accounting policies and practices once adopted should be consistently followed

• accounting policies and practices adopted may be changed as per the management decision

• accounting policies and practices once adopted cannot be changed under any circumstances.

• None of the above

According to Going Concern Concept, a business is viewed as having

• a limited life

• a very long life

• an indefinite life

• None of these

According to which of the following concepts, in determining the net income from the business, all costs which are applicable to the revenue of the period should be charged against the revenue?

• Matching Concept

• Money Measurement Concept

• Cost Concept

• Dual Aspect Concept

According to which of the following concepts, even the proprietor of a business is treated as creditor to the extent of his capital?

• Money Measurement Concept

• Dual Aspect Concept

• Cost Concept

• Business Entity Concept

Valuation of stock at lower cost or net realisable value is an example of:

• Consistency Concept

• Conservatism Concept

• Realisation Concept

• Matching Concept