THEORY OF ACCOUNTS ACCOUNTING CONCEPTS 1. Which of the following st te!ents is" #e t#$e% I.

Acco$nting is se#&ice cti&it' inten(e( to f$lfill $sef$l f$nction in societ' II. Acco$nting in&ol&es the #t of #eco#(ing) cl ssif'ing n( s$!! #i*ing t# ns ction n( e&ents) n( inte#+#eting the #es$lts the#eof. III. Acco$nting is n #t ,$t not science I-. Acco$nting +#o&i(es .$ ntit ti&e fin nci l info#! tion inten(e( to ,e $sef$l in ! /ing econo!ic (ecisions . I) II) III) I,. I) II) III c. I, II, IV (. II) III) I-

0. The ,# nch of cco$nting conce#ne( with the +#esent tion of fin nci l info#! tion +#i! #il' fo# $se of thi#( +e#son o$tsi(e of ,$siness ente#+#ise. a. Financial Accounting ,. 1 n ge!ent Acco$nting c. Go&e#n!ent Acco$nting (. All of the ,o&e

2. Acco$nting is n #t ,ec $se . of the e3istence of ,o(' /nowle(ge go&e#ning cco$nting +# ctice ,. of cco$nting theo#' c. the necessity of applying creative skill and ability (. None of the ,o&e 4. Fin nci l cco$nting is the ,# nch of cco$nting th t foc$ses on . s+eci l +$#+ose #e+o#ts of fin nci l +osition n( #es$lts of o+e# tions ,. fin nci l st te!ents c. the & #io$s nee( of st te!ent $se#s d. general purpose reports of financial position and results of operations 5. Gene# l6+$#+ose info#! tion is a. not intended to satisfy the specialized needs of individual users. ,. inten(e( to s tisf' the s+eci li*e( nee(s of in(i&i($ l $se#s c. not inten(e( to s tisf' the co!!on nee(s of in(i&i($ l $se#s. (. P#o&i(e( ,' ! n ge#i l cco$nting. 7. Which of the following is not t#$e% . Acco$nting is conce#ne( +#i! #il' with .$ ntit ti&e info#! tion $se( ,' +e#sons who !$st ! /e econo!ic (ecisions !ong lte#n ti&e ctions. ,. Go&e#n!ent l cco$nting is lso /nown s !$nici+ l o# f$n( cco$nting

c. The ,# nch of cco$nting conce#ne( with the +#esent tion of fin nci l info#! tion to ssist ! n ge!ent in +l nning n( cont#olling o+e# tions is c lle( ! n ge#i l cco$nting. d. Financial accounting emphasizes special purpose information based on presumption that significant numbers of users need similar information. 8. The ,o(' of #$les n( +#inci+les which go&e#n cco$nting +# ctices is #efe##e( to s . Acco$nting +# ctice c. Acco$nting conce+ts ,. Acco$nting +#inci+les d. Accounting theory 9. The l 'e#s of the st#$ct$#e of cco$nting theo#' incl$(e the following e3ce+t . !etho(s n( +#oce($#es c. !e s$#e!ent n( #ecognition ,. +#inci+les (. +ost$l tes n( con&entions :. The , sic ss$!+tion o# +#e!ises on which cco$nting +#inci+les #est #e c lle( . cco$nting +ost$l tes c. cco$nting +#inci+les ,. cco$nting +#oce($#es (. cco$nting l ws 1;. The no#! ti&e ttit$(es o# i(e s of the cco$nting +#ofession s to wh t o$ght to #e+#esent goo( cco$nting +# ctice n( which !o(if' the ++lic tion of cco$nting +#inci+les #e /nown s . cco$nting +ost$l tes c. cco$nting +#oce($#es b. accounting conventions (. cco$nting +#inci+les 11. The gene# l g$i(elines $se( in cco$nting +# ctice th t #e , se( on s$,st nti l $tho#it ti&e s$++o#t #e c lle( . Acco$nting +ost$l tes c. cco$nting +#oce($#es ,. cco$nting con&entions d. accounting principles 10. The s+ecific !etho(s $se( ,' cco$nt nts in c ##'ing o$t t5he gene# l g$i(elines +#o&i(e( ,' GAAP) incl$(ing the n$!e#o$s #$les s+ecif'ing how fin nci l ( t sho$l( ,e #eco#(e() cl ssifie() s$!! #i*e( n( #e+o#te( #e #efe##e( to s . cco$nting +ost$l tes c. accounting procedures ,. cco$nting con&entions (. cco$nting +#inci+les 12. <The cco$nting entit' is ss$!e( to ,e se+ # f#o! the owne#s) ! n ge#s n( e!+lo'ees which #efe##e( to s . 1 tching ,. Going conce#n te n( (istinct f#o! othe# entities n( constit$te the fi#!=. This +ost$l te is c. Histo#ic l cost d. Specific-separate-entity

14. Unless the#e is s+ecific e&i(ence to the cont# #') the fi#! will contin$e to ,e in e3istence in the fo#esee ,le f$t$#e. This +ost$l te is #efe##e( to s . 1 tching c. Histo#ic l cost b. oing concern (. S+ecific6se+ # te6entit'

15. <1one' is the ,est !e s$#ing $nit of fi#!>s ssets) li ,ilities n( e.$it') s well s ch nges the#ein? its inst ,ilit' is i!! te#i l=. This +ost$l te is #efe##e( to s . Histo#ic l cost c. !oney-measuring unit ,. Re&en$e #ecognition (. Fisc l +e#io( 17. <Cost is no#! ll' the +#o+e# !one' !e s$#e!ent of fi#!>s ssets) li ,ilities) n( e.$it') n( ch nges in the! ,ec $se it is o,@ecti&e) &e#ifi ,le n( con&enient to o,t in) ++#o3i! ting & l$e t ti!e of c.$isition. < This +ost$l te is #efe##e( to s a. "istorical cost c. 1one' !e s$#ing $nit ,. Re&en$e #ecognition (. Fisc l +e#io( 18. <The life of ,$siness fi#! c n ,e seg!ente( into sho#t #$n ti!e +e#io(s in o#(e# to +#o&i(e ti!el' fin nci l info#! tion to i( in fin nci l (ecision ! /ing? hence) +e#io(ic #e+o#ting i!+lies the $se of cc#$ l cco$nting n( $se of esti! tes A ++#o3i! tionsB n( info#!e( @$(g!ent ,' cco$nt nts.= This +ost$l te is #efe##e( to s . Histo#ic l cost c. 1one' !e s$#ing $nit ,. Re&en$e #ecognition d. Fiscal period 19. <The +oint of s le when goo(s #e (eli&e#e( o# se#&ices #e #en(e#e() is the ti!e t which #e&en$e is to ,e #ecogni*e(.= This +ost$l te is #efe##e( to s . Histo#ic l cost c. 1one' !e s$#ing $nit b. #evenue recognition (. Fisc l +e#io( 1:.<Goo(s n( se#&ices $se( A<e3+enses=B ($#ing the fisc l +e#io( c n ,e ssoci te( with the #e&en$e e #ne( ($#ing the s !e fisc l +e#io(=. This +ost$l te #efe##e( to s a. !atching c. Histo#ic l Cost ,. Going conce#n (. S+ecific6se+ # te entit' 0;. <E3ce+tion to the ++lic tion of cco$nting theo#' #e +e#!itte( if the !o$nt in&ol&e is not ! te#i l? fin nci l #e+o#ting is conce#ne( onl' with info#! tion th t is signific nt eno$gh to ffect e& l$ tions o# (ecisions.= This con&ention is c lle( . Conse#& tis! c. Consistenc' ,. O,@ecti&it' d. !ateriality 01. <The s !e cco$nting +#oce($#es fo# gi&en entit' sho$l( ,e $se( f#o! one +e#io( to the ne3t. Ch nges ! ' howe&e# ,e ! (e if it will #es$lt in !o#e cc$# te o# $sef$l info#! tion fo# (ecision ! /ing +#o&i(e( it (isclose(=. The con&ention is c lle( . Conse#& tis! c. $onsistency ,. O,@ecti&it' (. 1 te#i lit' 00. <Fin nci l st te!ents of (iffe#ent fi#!s sho$l( ,e , se( on si!il # cco$nting +#inci+les n( +#oce($#es in o#(e# to i( $se#s of fin nci l st te!ents in fin(ing si!il #ities n( (iffe#ences !ong fi#!s fo# +$#+ose( of fin nci l (ecision ! /ing= This con&ention is c lle( . Consistenc' c. O,@ecti&it' b. $omparability (. Conse#& tis!

02. <Acco$nting !e s$#e!ent sho$l( ,e , se( on e&i(ence th t is &e#ifi ,le ,' co!+etent +e#sons=. This con&ention is c lle( . Consistenc' c. %b&ectivity ,. Co!+ # ,ilit' (. Conse#& tis! 04. <The cco$nt nt sho$l( #ecogni*e ll +ossi,le lte#n ti&e co$#ses of ction #e & il ,le) he f &o# ,le to owne#s> e.$it'. . Consistenc' ,. Co!+ # ,ilit' losses ,$t ntici+ te no +#ofit. Whe#e sho$l( choose the lte#n ti&e le st c. O,@ecti&it' d. $onservatism