Assume That a Business Will Continue Forever

Accounting Principles and Concepts MCQs

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

Test your knowledge with this multiple choice question (MCQ) test on accounting principles and concepts. If you're unsure about any questions, you can read about this topic in detail in the explanation section.

We have prepared a multiple choice questions quiz for the students to check their knowledge about Accounting Principles and Concepts chapter. The quiz consists of 10 multiple choice questions. Go through all the questions and then click the submit button to get the result.

1. The accounting cycle does not include:

Recording

Decision-making

Classification

Interpreting

2. One of the following is not a characteristic of accounting principles:

Results-oriented

Factual

Practical

Summarizing

3. Which of the following is not a feature of the separate entity concept?

Business and owner are treated as separate entities

Personal affairs of the owner should not be considered

Business should not be dissolved in the near future

This concept is followed in all types of businesses

4. Going concern can be defined best as:

The concept provides the basis for the formation of the accounting equation.

This concept refuses allocation of cost on different accounting periods.

This concept discusses the issue of the realization of profit.

This concept assumes that the business will operate for a long period of time and will not be dissolved in the near future.

5. Matching concept does not include one of the following:

The revenues of a particular period must match with the expenses of that period.

This concept also required allocation of cost on different accounting periods.

Revenues should only be recorded if there is reasonable certainty about its realization.

The comparison of incomes and expenses of a period gives the net profit or loss for that particular period.

6. The accounting conventions do not include:

Depreciation convention

Conservatism convention

Consistency convention

Full disclosure convention

7. The realization concept does not include one of the following features:

The concept requires proper care when calculating revenue.

The concept stresses that revenues should only be recorded if there is reasonable certainty about their realization.

The concept describes the problems that may arise in the calculation of incomes and expenses.

The concept explains that the comparison of incomes and expenses for a particular period can give the period's net result.

8. According to consistency convention, accounting principles should be:

Consistent

Variable

Flexible

Factual

9. One of the following is not an example of the materiality concept:

Purchase of pencil recorded as an expense instead of including in stock

Purchase of car for private use

Purchase of plant for business

Purchase of building to extend the business

10. The disclosure convention requires:

Full disclosure of all material facts that can affect the financial statement.

That profit should be realized.

Matching of incomes and expenses for a particular period.

The business to avoid being dissolved in the near future.

11. To assess audit risk more effectively, an auditor investigates all the different groups within an organization apart from:

Board of governance and top-level management

Legal counsel

Middle-level management

Stakeholders

12. Which of the following is of the least concern to an auditor regarding a client's internal control system?

Efficiency and effectiveness of operations

Controls related to the reliability of financial reporting

Controls over classes of transactions

Auditors are equally concerned about each of the issues

13. When testing control procedures, the design can easily be tested using:

ICQs and walkthrough tests

ICQs and judgment samples

ICQs and random samples

ICQs and ICEC

14. Which of the following is true?

The audit profession is unregulated

The audit profession is regulated by its own professional body

Outside bodies sometimes become involved in the regulation of the audit profession

The audit profession is regulated only by the government

15. Small audit firms provide the following services apart from:

Liquidation and receivership work, fraud auditing

Financial management and system consultancy

Financial system planning and preparation

Tax management and statutory form filling

16. Which of the following is not included in the category of cash?

Bank deposits

Checks

Postdated checks

Money orders

17. Which of the following letters should be included in the letter of representation?

Existence of immaterial mistake in the statement

Existence of any fraud or any error in the statement

Company's growth trend in the future in figures

Market value of the company's stock

18. When should cash sales be recorded by companies to achieve control objectives?

When a purchase order is received from a customer

At the point cash sales are made

After some period

Weekly

19. Auditors conduct auditing in accordance with:

International Financial Reporting Standards

Local Pronouncements/Legislations

Financial Accounting Standards Board

All of the above

20. Which of the following is a series of constant cash flows that occur at the end of each period for some fixed number of periods?

Ordinary annuity

Annuity due

Perpetuity

None of the above

21. During the accounting period, sales revenue is $25,000 and accounts receivable increases by $8,000. How much cash is received from customers for the period?

$33,000

$25,000

$17,000

$8,000

22. Which of the following ratios addresses a firm's financial leverage?

Liquidity Ratios

Long-term Solvency Ratios

Asset Management Ratios

Profitability Ratios

23. Balance sheets are based on which of the following formulas?

Assets = Liabilities - Stockholder's equity

Assets + Liabilities = Stockholder's equity

Assets + Stockholder's equity = Liabilities

Assets = Liabilities + Stockholder's equity

24. The Quick Ratio is also known as the:

Current Ratio

Acid-test Ratio

Cash Ratio

None of the above

25. Which of the following is a special case of an annuity, where the stream of cash flows continues forever?

Ordinary annuity

Special annuity

Annuity due

Delayed perpetuity

Frequently Asked Questions

What are the Accounting Conventions?

There are four widely recognized Accounting Conventions: conservatism, consistency, full disclosure, and materiality.

What are the three major principles of accounting?

Accounting Principles are the rules that an organization follows when reporting financial information. Some basic Accounting Principles have been developed through common usage. They form the basis upon which the complete suite of accounting standards has been built.

What are the three major principles of accounting?

What is the Consistency Principle?

The Consistency Principle requires that once a company adopts an accounting method, it continue to use that method in all future periods.

What is Full Disclosure Principle?

Full Disclosure Principle states that a buyer has the right to know the exact condition of a product or service before agreeing to buy it.

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Source: https://learn.financestrategists.com/quiz/multiple-choice/accounting-principles-and-concepts/

Assume That a Business Will Continue Forever

Accounting Principles and Concepts MCQs

Frequently Asked Questions

What are the Accounting Conventions?

What are the three major principles of accounting?

What are the three major principles of accounting?

What is the Consistency Principle?

What is Full Disclosure Principle?

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