Online Test — Theory Base of Accounting
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
GAAP stands for:
General Accounts And Profit
Generally Accepted Accounting Principles
Government Approved Accounting Policy
Global Accounting And Profit
Explanation: GAAP = Generally Accepted Accounting Principles.
Question 2 of 15
The business is treated as separate from its owner under the:
Cost concept
Business entity concept
Matching concept
Materiality convention
Explanation: The business entity concept separates the firm from the owner.
Question 3 of 15
Only transactions measurable in money are recorded under the:
Money measurement concept
Going concern concept
Dual aspect concept
Accrual concept
Explanation: The money measurement concept records only money-measurable items.
Question 4 of 15
Assets are shown at cost less depreciation because of the:
Conservatism convention
Going concern concept
Materiality convention
Realisation concept
Explanation: Going concern assumes continuation, so assets are valued for use, not forced sale.
Question 5 of 15
Every transaction has two aspects of equal amount under the:
Dual aspect concept
Cost concept
Money measurement concept
Disclosure convention
Explanation: Dual aspect is the basis of double entry: Assets = Liabilities + Capital.
Question 6 of 15
The accounting equation is:
Assets = Liabilities − Capital
Assets = Liabilities + Capital
Capital = Assets + Liabilities
Assets + Capital = Liabilities
Explanation: Assets = Liabilities + Capital, from the dual aspect concept.
Question 7 of 15
Recording revenue when goods are sold rather than when cash is received is the:
Matching concept
Revenue recognition concept
Cost concept
Consistency convention
Explanation: Revenue recognition (realisation) records income when earned.
Question 8 of 15
Matching a period's expenses with its revenues is the:
Matching concept
Materiality convention
Entity concept
Objectivity concept
Explanation: The matching concept matches expenses to the revenues of the same period.
Question 9 of 15
'Anticipate no profit but provide for all possible losses' is the convention of:
Consistency
Conservatism
Full disclosure
Materiality
Explanation: This is conservatism (prudence).
Question 10 of 15
Following the same methods year after year is the convention of:
Consistency
Conservatism
Objectivity
Disclosure
Explanation: Consistency requires the same methods each year for comparability.
Question 11 of 15
Closing stock is valued at cost or net realisable value, whichever is:
Higher
Lower
Average
Doubled
Explanation: Prudence requires the lower of cost and NRV.
Question 12 of 15
The three fundamental accounting assumptions (AS-1) are going concern, accrual and:
Cost
Consistency
Materiality
Dual aspect
Explanation: Going concern, consistency and accrual.
Question 13 of 15
Indian accounting standards converged with IFRS are called:
GAAP
Ind AS
GST
ICAI
Explanation: India's IFRS-converged standards are Ind AS.
Question 14 of 15
Under the cash basis of accounting, an expense is recorded when:
It is incurred
Cash is actually paid
Goods are sold
The year ends
Explanation: Cash basis records on actual payment of cash.
Question 15 of 15
The basis of accounting required by the Companies Act is the:
Cash basis
Accrual (mercantile) basis
Hybrid basis only
No basis
Explanation: Companies must use the accrual basis, which shows true profit.