Chapter MCQ Test 2 — Theory Base of Accounting

A proprietor uses business cash to pay his son's school fees and records it as a business expense. Which concept has he violated?

A firm values its building at the current market price of Rs 90 lakh instead of its Rs 60 lakh cost. This breaches the:

A trader treats a credit sale of 28 March as income of the next year because cash came in April. The concept ignored is:

Why does the matching concept require us to add outstanding salaries while preparing final accounts?

A company creates a provision for doubtful debts even though no debtor has yet failed to pay. This reflects:

A firm changes its depreciation method every year to show whatever profit it likes. Which convention does this defeat?

Recording a Rs 40 stapler as an expense at once instead of depreciating it over years is justified by:

Which statement about the going concern concept is correct?

Under the cash basis, a business that sold heavily on credit but received little cash would report:

If a firm does NOT follow one of the fundamental accounting assumptions, AS-1 requires that it: