MCQ on GAAP(Generally Accepted Accounting Principles)
Financial Accounting MCQ on GAAP
Here you will get the MCQ on GAAP(Generally Accepted Accounting Principles) for 12th commerce students and also B.com commerce students of all university.
Also Read Financial Accounting MCQ
1. According to the going concern concept, a business entity should assumed to have
(a) a very short life
(b) an indefinite life
(c) a long life
(d) None of the above
Answer (c) a long life
2. In the balance sheet, Contingent liability is shown because of
(a) Convention of disclosure
(b) Convention of materiality
(c) Convention of consistency
(d) None of the above
Answer (a) Convention of disclosure
3. Revenue is considered as earning, when
(a) Sale is effected
(b) Production is done
(c) Cash is received
(d) None of the above
Answer (a) Sale is effected
4. Accounting does not record non-financial transactions because of which accounting principle
(a) Accrual concept
(b) Entity concept
(c) Measurement concept
(d) None of the above
Answer (c) Measurement concept
5. Which concepts states that even the owner of the capital may be treated as a creditor of the business?
(a) Money measurement concept
(b) Cost concept
(c) Business Entity concept
(d) None of the above
Answer (c) Business Entity concept
6. Appending notes to the financial statements as per …… convention
(a) Convertism
(b) Disclosure
(c) Consistency
(d) Materiality
Answer (b) Disclosure
7. Accounting of a pen as an expense and not as an asset is due to
Convention
(a) Materiality
(b) Conservatism
(c) Consistency
(d) Disclosure
Answer (a) Materiality
8. Following the written down value method of depreciation on particular is because of ……… convention
(a) Conservatism
(b) Consistency
(c) Materiality
(d) Disclosure
Answer (b) Consistency
9. Valuation of stock is done at lower of cost or market value because
(a) Consistency
(b) Conservatism
(c) Disclosure
(d) Materiality
Answer (b) Conservatism
10. Making provision for doubtful debts is as per …… convention
(a) Consistency
(b) Disclosure
(c) Conservatism
(d) Materiality
Answer (c) Conservatism
11. Contingent liability shown in the balance sheet, arises
(a) Consistency
(b) Materiality
(c) Conservatism
(d) Disclosure
Answer (d) Disclosure
12. Accounting principles are generally based on
(a) Subjectivity
(b) Practicability
(c) Objectivity
(d) Convenience in Recording
Answer (b) Practicability
13. According to money measurement concept the following will be recorded in the books
accounts of the business:
(a) Value of Plant and Machinery
(b) Quality of Company Goods
(c) Utility of Managers
(d) Health of Director
Answer (a) Value of Plant and Machinery
14. The convention of Prudence when applied to the balance sheet results
(a) Overstatement of Assets
(b) Understatement of Liability
(c) Understatement of Assets
(d) Overstatement of Liabilities
Answer (c) Understatement of Assets
15. Accounting concepts include those assumptions upon which the science of ………… is based.
(a) Book-keeping
(b) Accounting
(c) Double Entry System
(d) Recording
Answer (b) Accounting
16. A firm follows the straight line method of depreciating fixed assets year after year due to:
(a) Objectivity
(b) Convenience
(c) Consistency
(d) Prudence
Answer (c) Consistency
17. A change in accounting policy is justified:
(a) To comply with accounting standard
(b) To ensure better presentation of the financial statements of the firm
(c) To comply with law
(d) All of the above
Answer (d) All of the above
18. Which of the following is fundamental accounting assumption?
(a) Accounting period
(b) Materiality
(c) Going Concern
(d) Full disclosure
Answer (c) Going Concern
19. Revenue Should be recognised at the point of sale. Which principle is applied here ?
(a) Consistency
(b) Cost Realization
(c) Marketing
(d) Realization
Answer (d) Realization
20. Which assumption says a business entity will not be sold or liquidated in the near future
(a) Conservatism
(b) Going Concern
(c) Periodic
(d) Separate Entity
Answer (b) Going Concern
21. Corporate must prepare financial statements by time to time due to
(a) Accrual concept
(b) Going Concern concept
(c) Period Concept
(d) Business Entity concept
Answer (c) Period concept
22. Which principle states that same accounting methods should be used from one
accounting period to the next.
(a) Consistency
(b) Accounting period
(c) Conservatism
(d) Materiality
Answer (a) Consistency
23. Expenses not yet paid still recorded in accounting according which concept ?
(a) Realisation
(b) Conservatism
(c) Money Measurement
(d) Accrual
Answer(d) Accrual
24. Classification of assets as current assets and fixed assets is as per…
(a) Going Concern concept
(b) Dual aspect
(c) Cost
(d) Money Measurement
Answer (a) Going Concern concept
25. The convention that sates that the accounting practice should be followed consistently over
(a) Consistency
(b) Full disclosure
(c) Conservatism
(d) Materiality
Answer (a) Consistency
26. Which Accounting Principles says personal expenses should be debited to Drawings Account.
(a) Money measurement concept
(b) Going Concern Concept
(c) Business entity concept
(d) Accounting Period Concept
Answer (c) Business entity concept
27. which principle says quality should not recorded in the book of accounts?
(a) Business entity concept
(b) Money measurement concept
(c) Going Concern Concept
(d) Dual aspect concept
Answer (b) Money measurement concept
28. Which concept assumes that a business entity will not be liquidated in the near future?
(a) Money measurement concept
(b) Business entity concept
(c) Dual aspect concept
(d) Going Concern Concept
Answer (d) Going Concern Concept
29. Which accounting concept requires that the life of a business be divided into smaller parts?
(a) Business entity concept
(b) Dual aspect concept
(c) Accounting Period Concept
(d) Matching Concept
Answer (c) Accounting Period Concept
30. Under which concept assets is recorded at cost, even if the market price is more or less?
(a) Accounting Period Concept
(b) Matching Concept
(c) Matching Concept
(d) Cost Concept
Answer (d) Cost Concept
31. Under which concept advance received against sale of goods is recorded as ‘Advance
against Sale’ and not Sales ?
(a) Dual aspect concept
(b) Cost Concept
(c) Revenue Recognition Concept
(d) Matching Concept
Answer (c) Revenue Recognition Concept
32. Which Accounting Principle is Applied for “Closing stock is valued at lower of cost or market price”
(a) Matching Concept
(b) Prudence Concept
(c) Matching Concept
(d) Money measurement concept
Answer (b) Prudence Concept
33. General Reserve is created on the basis of convention of
(a) Materiality
(b) Uniformity
(c) Prudence
(d) Account Period
Answer (c) Prudence
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