Lakshya Education MCQs

Question: Under which concept, recognition of expenses must be made in the same period as associated revenue?
Options:
A.Matching
B.Going concern
C.Objectivity
D.None of the above
Answer: Option A
: A

As per matching concept, all the expenses must be recorded in the same period as associated revenue.

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Question 1. Which of the following shall not be recorded if the entity is following cash basis of accounting?
  1.    Amount of interest Mr. X has promised to pay in the next year
  2.    Amount of interest Mr. X has paid in this year
  3.    Sale of goods for cash in the year
  4.    Amount received from bank in form of loan
Answer: Option A
: A

Cash accounting is an accounting method in which receipts are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid. Hence, out of the above interest promised to paid by Mr. X shall be recorded in the year of payment & not in this year.
Question 2. Anticipate no profits and provide for all possible losses. This is essence of which of the following accounting principles:
  1.    Materiality Principle
  2.    Timeliness Principle
  3.    Consistency Principle
  4.    Conservatism Principle
Answer: Option D
: D

Anticipate no profits and provide for all possible losses. This is essence of Conservatism Principle.
Question 3. Year that begins from 1st of January and ends on 31st of December, is known as _____ The year that begins from 1st of April and ends on 31st of March of the following year, is known as _____
  1.    Financial Year & Calendar Year
  2.    Financial Year
  3.    Calendar Year
  4.    Calendar Year & Financial Year
Answer: Option D
: D

Year that begins from 1st of January and ends on 31st of December, is known as Calendar Year. The year that begins from 1st of April and ends on 31st of March of the following year, is known as Financial Year.
Question 4. A business firm creates provisions against doubtful debt under which of the following conventions
  1.    Convention of Full Disclosure
  2.    Convection of Materiality
  3.    Convention of Conservatism
  4.    Convention of Consistency
Answer: Option C
: C

According to Convention of conservatism, you should record expenses and liabilities as soon as possible, but to record revenues and assets only when you are sure that they will occur.
Question 5. Amount invested by the owner in the firm is known as capital. It can be in form of:
  1.    Cash Only
  2.    Assets Only
  3.    None of the above
  4.    Both A & B
Answer: Option D
: D

Amount invested by the owner in the firm is known as capital. It may be brought in the form of cash or assets by the owner.
Question 6. Which of the following equation is related with Dual Aspect Concept?
  1.    Total Assets = Total Liabilities
  2.    Total Assets = Capital + Outsider`s Liabilities
  3.    Capital= Total Assets - Outsider`s Liabilities
  4.    All of the above
Answer: Option D
: D

The dual aspect concept states that every business transaction requires recordation in two different accounts. This concept is the basis of double entry accounting, which is required by all accounting frameworks in order to produce reliable financial statements. The concept is derived from the accounting equation, which states that:
Assets = Capital + Liabilities

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