1)

We can say that the business is in profit, when:

A) Assets exceed Expenditure

B) Income exceeds Liabilities

C) Income exceeds Expenditure

D) Income exceeds Liabilities

2)

According to the double entry system of accounting, an account that obtains benefit is:

A) Credit

B) Debit

C) Income

D) No need to show as accounting record

3)

Term "Credit" means_______ by the business.

A) Receiving of benefits

B) It has no effect on business

C) Providing of benefits

D) It depends upon items

4)

When a Liability is reduced or decreased, it is recorded on the:

A) Left or credit side of the account

B) Right or debit side of the account

C) Right or credit side of the account

D) Left or debit side of the account

5)

When Capital is increased by an amount, it is recorded on the:

A) Right or debit side of the account

B) Left or credit side of the account

C) Left or debit side of the account

D) Right or credit side of the account

6)

What type of expenses are paid out of Gross Profit?

A) General Expenses

B) Financial Expenses

C) Selling Expenses

D) All of the given options

7)

Which of the following shows summary of a company's financial position at a specific date?

A) Profit & Loss Account

B) Cash Flow Statement

C) Balance Sheet

D) Income & Expenditure Account

8)

Which of the following is NOT an example of intangible assets?

A) Franchise rights

B) Goodwill
C) Patents

D) Land

9)

Which of the following is an example of business liability?

A) Land

B) Building

C) Cash

D) Creditors

10)

The unfavorable balance of Profit and Loss account should be:

A) Added in liabilities

B) Subtracted from current assets

C) Substracted from capital

D) Subtracted from liabilities

11) Which of the following is not regarded as the fundamental concept that is identified by IAS-1

A) The going concern concept

B) The septate entity concept

C) The prudence concept

D) Correction concept

2)

Using "lower of cost and net realisable value" for the purpose of inventory valuation is the
implementation of which of the following concepts?
A) The going concern concept

B) The septate entity concept

C) The prudence concept

D) Matching concept

3)

The concept of separate entity is applicable to which of following types of businesses?

A) Sole proprietorship

B) Corporation

C) Partnership

D) All of them

4)

Does Prudence concept allow a business to build substantially higher reserves or provisions than
that are actually required?

A) Yes

B) No

C) To some extent

D) It depends on the type of business

5)

The revenue recognition principal dictates that all types of incomes should be recorded or
recognized when

A) Cash is received

B) At the end of accounting period

C) When they are earned

D) When interest is paid

6)

The matching concept matches which of the following?

A) Asset with liabilities

B) Capital with income

C) Revenues with expenses

D) Expenses with capital

7)

The allocation of owner's private expenses to his/her business violates which of the following?

A) Accrual concept

B) Matching concept

C) Separate business entity concept

D) Consistency concept

8)

The going concern concept assumes that

A) The entity continue running for foreseeable future

B) The entity continue running until the end of accounting period

C) The entity will close its operating in 10 years

D) The entity can't be liquidated

9)

American companies prepare their their financial statement in dollars whereas Japanese
companies produce financial statements in yens. Ths is an example of:

A) Stable monetary unit Concept

B) Unit of measurement Concept

C) Money value concept

D) Current swap concept

10)

Which of the following is time span into which the total life of a business is divided for the
purpose of preparing financial statements?

A) Fiscal year

B) Calendar year

C) Accounting period

D) Accrual period

Showing purchased office equipments in financial statements is the application of which

accounting concept?

A) Historical cost convention

B) Materiality

C) Prudence

D) Matching concept

12)

Assets can't be offset against liabilities. This the dictation of which of the following accounting
concepts?

A) Matching concept

B) Accrual concept

C) Prudence concept

D) Offsetting concept

13)

Information about an item is ________ if its omission or misstatement might influence the
financial decision of the users taken on the basis of that information

A) Concrete

B) Complete

C) Immaterial

D) Material

14)

Exercising a degree of caution in the case of judgments needed under the condition of uncertainty
is assumption of which of the following accounting concepts?

A) Matching concept

B) Timeliness concept

C) Accrual concept

D) Prudence concept

15)

Which one of the following concepts states that the publication or presentation financial
statements should not be delayed?

A) Objectivity Concept

B) Timing concept

C) Timeliness Concept

D) Reliability Concept

16)

land on lease should be shown in balance sheet contrary to fact that company doesn't own this
piece of land. This is the statement of what accounting concepts?

A) Matching concept

B) Accrual concept

C) Prudence concept
D) Substance over form Concept

17)

"Financial information should be neutral and bias free" is the dictation of which one of the
following?

A) Completeness concept

B) Faithful representation Concept

C) Objectivity Concept

D) Duality Concept

18)

A business was commenced on 1st January and it purchased 5 vehicles, each costing $5000.
During the year the business managed to sell 2 vehicles at the price of $12000. How should the
remaining 3 vehicles be valued if the business is going to continue its operations in the next
year?

A) At the breakup value

B) On the basis of going concern

C) Liquidation value

D) More than market value

19)

A company received cash $1000 in advance for auditing service. However, the company neither
earned this revenue nor made any adjusting entry in its books. Identify the effect of this
omission?

A) Total liabilities to be understated

B) Total expenses to be overstated

C) Total income to be overstated

D) Total assets to be understated

20)

Depreciation is charged on fixed asse to comply with which of the following accounting principles
or concepts?

A) Matching concept

B) Prudence concept

C) Timeliness concept

D) Reliability concept