Question 1

The concept of conservatism ensures that the reported profit is not:

Accepted Answer

The concept of conservatism in accounting ensures that profits are not overstated. This principle guides accountants to choose the less optimistic estimate when faced with uncertainty, to avoid presenting an overly positive financial position.

Question 2

In accounting revenue is generally treated to be realized when goods or services are:

Accepted Answer

Revenue is generally considered to be realized when goods or services are furnished, or delivered, to the customers, indicating the completion of a sale or service transaction from which the revenue is generated.

Question 3

Capital expenditures are the expenditures incurred for the:

Accepted Answer

Capital expenditures are investments in assets that will provide benefit to a business over a long period of time, thus they are for the long-term advantage of the business.

Question 4

The principle of recognizing revenue proportionately on the basis of work actually done is generally followed in case of:

Accepted Answer

The principle of recognizing revenue proportionately based on the work actually done is typically followed in long-term contracts. This method, often referred to as the percentage-of-completion method, allows revenue and expenses to be recognized as the contract progresses, rather than waiting until the contract is fully completed. This approach is more reflective of the economic reality of long-term projects, where work is performed and value is created over time.

Question 5

The process of recording financial data up to trial balance is:

Accepted Answer

Bookkeeping involves the process of recording financial transactions and is the initial step in the accounting process, leading up to the preparation of the trial balance.

Question 6

Which accounting concept specifies the practice of crediting closing stock to the trading account?

Accepted Answer

The matching concept in accounting specifies that expenses should be matched with the revenues they help to generate within the same accounting period. Crediting closing stock to the trading account is a practice that aligns with this concept, as it ensures that the cost of goods sold (an expense) is matched with the revenue generated from those goods within the period.

Question 7

An asset was purchased for Rs.1000000 with the down payment of Rs.200000 and bills accepted for Rs.800000/-. What would be the effect on the total asset and total liabilities in the balance sheet?

Accepted Answer

The answer of An asset was purchased for Rs.1000000 with...

Question 8

In which of the following cases, accounting estimates are needed?

Accepted Answer

Accounting estimates are necessary in all the given options because they involve judgments or uncertainties that affect financial statements. Employee benefit schemes may require estimates for obligations, impairment of assets involves estimating recoverable amounts, and inventory obsolescence requires estimating the value of inventory that may not be sold.

Question 9

The purpose of final accounts is to ascertain. …

Accepted Answer

Final accounts are prepared at the end of the accounting period to ascertain the profit or loss made by the business and to show its financial position through the preparation of the Profit and Loss Account and the Balance Sheet.

Question 10

Final accounts are prepared…….

Accepted Answer

Final accounts are prepared at the end of the accounting year, which is the period for which the accounts are being prepared and may not necessarily align with the calendar year or assessment year.

Question 11

Errors of carry forward from one year to another year affect:

Accepted Answer

Errors of carry forward from one year to another year affect both personal and real accounts because these errors can alter the balance of assets, liabilities, and equity, which are represented in personal and real accounts.

Question 12

The manufacturing account is prepared

Accepted Answer

The manufacturing account is prepared to ascertain the cost of manufactured goods. It includes all the costs directly associated with the production of goods, such as raw materials, labor, and overheads.

Question 13

Sales made to Mahesh fir cash should be debited to

Accepted Answer

When sales are made for cash, the Cash Account is debited because cash is received, increasing the cash balance.

Question 14

The amount salary paid to Suresh should be debited to

Accepted Answer

Salaries paid to employees, including Suresh, are recorded as an expense in the Salaries Account. This account is debited to reflect the increase in expense due to the payment of salaries.

Question 15

The cash discount allowed to a debtor should be credited to

Accepted Answer

The answer of The cash discount allowed to a debtor...

Question 16

In case of a debt becoming bad, the amount should be credited to

Accepted Answer

When a debt becomes bad, the amount is credited to the Debtor's Account to remove the debtor's balance from the books, as the amount is no longer expected to be collected.

Question 17

When goods are purchased for cash, the entry will be recorded in the?

Accepted Answer

The cash book is used to record all transactions involving cash, including the purchase of goods for cash. The purchases book, on the other hand, is used for recording credit purchases, not cash transactions.

Question 18

The balance of petty cash is?

Accepted Answer

Petty cash is considered an asset because it is a small amount of cash on hand that is used for paying small expenses. It represents a current asset on the balance sheet.

Question 19

All of the following are not considered cash except?

Accepted Answer

The answer of All of the following are not considered...

Question 20

Entry representing the reversal or cancellation of an entry on the other side is called?

Accepted Answer

Contra entry is a term used in double-entry bookkeeping to describe an entry that is made to offset or reverse another entry. This is typically done to reflect the movement of cash or funds between accounts, ensuring that the books remain balanced.

Quiz 43: Fundamentals of Accounting: Objectives, Concepts, and Principles