BBFA 1043 T5 Accounting concept part 1

1. 1. The accounting concept that requires all transactions to be recorded at their original cost to the business is called

• A. Entity concept

• B. Prudence concept

• C. Historical cost concept

• D. Going concern concept

2. 2. ____ supports that allowance for doubtful debts should be provided to write down the value of trade receivables

• A. Entity concept

• B. Going concern concept

• C. Historical cost concept

• D. Conservatism concept

3. 3. Affairs of the business should be alienated from the personal affairs of the owner(s).

• A. Conservatism concept

• B. Going concern concept

• C. Historical cost concept

• D. Entity concept

4. 4. Which accounting concept is being applied when unrecorded accrued rent at the end of the accounting period is adjusted into rent expenses in the Statement of Profit or Loss?

• A. Accounting period

• B. Historical cost

• C. Consistency

• D. Matching

5. 5. Which of the following assumptions facilitates the comparison of performance of the business from one period to another?

• A. Accounting period

• B. Consistency

• C. Historical cost

• D. Prudence

6. 6. Which accounting concept is being applied when Mr Singh's new retail clothes business is assumed to be able to continue operating for the next one year?

• A. Going concern

• B. Prudence

• C. Consistency

• D. Accounting period

7. 7. Inventories should be valued at the lower of cost and net realisable value. Which one of the following accounting concept governs this?

• A. Going concern concept

• B. Consistency concept

• C. Prudence concept

• D. Accounting period

8. 8. Sales revenue will be recognised when goods and services have been supplied, while costs related to the goods and services supplied will be recognised too.

9. The accounting concept which governs this is

• A. Matching concept

• B. Consistency concept

• C. Prudence concept

• D. Entity concept