MCQs on Financial Accounting - 11

1. According to concept of conservatism, stock in trade is valued at

(a) cost price
(b) market price
(c) cost price or market price whichever is less
(d) cost price or market price whichever is higher.

2. Recording of capital contributed by the owner as liability ensures adherence to the principle of

(a) double entry 
(b) going concern
(c) separate entity 
(d)  materiality.

3. The basic concepts related to balance sheet are

(a) cost concept 
(b) business entity concept
(c) accounting period concept 
(d) all of the above.

4.The double entry concept is that

(a) assets + liabilities = capital
(b) capital – liability = asset
(c) capital = assets – liabilities
(d) none of the above.

5. Only the events that affect the business must be recorded, as per the principle of

(a) separate entity 
(b) accrual
(c) materiality 
(d) none of the above.

6.The accounting measurement that is not consistent with the going concern concept is

(a) historical concept 
(b) realization
(c) transaction approach
(d) liquidation value.

7. Accounting does not record non-financial transactions because of the concept of

(a) measurement  
(b) cost
(c) accrual 
(d) entity

8. Fixed assets and current assets are categorized as per the concept of

(a) separate entity 
(b) going concern
(c) time period 
(d) consistency.

9. If the total assets of the firm are Rs. 1,00,000, outside liabilities are Rs.40,000, the capital contributed by the owner is

(a) Rs. 1,00,000 
(b) Rs. 40,000
(c) Rs. 20,000 
(d) Rs. 60,000.

10. A business owes money to

(a) debtors 
(b) creditors
(c) investors 
(d) shareholders

More MCQs on Financial Accounting


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