THEORY OF ACCOUNTS

ACCOUNTING CONCEPTS
1. Which of the following stte!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) clssif'ing n( s$!!#i*ing
t#nsction n( e&ents) n( inte#+#eting the #es$lts the#eof.
III. Acco$nting is n #t ,$t not science
I-. Acco$nting +#o&i(es .$ntitti&e finncil info#!tion inten(e( to ,e $sef$l
in !/ing econo!ic (ecisions
. I) II) III) I- c. I, II, IV
,. I) II) III (. II) III) I-
0. The ,#nch of cco$nting conce#ne( with the +#esenttion of finncil info#!tion
+#i!#il' fo# $se of thi#( +e#son o$tsi(e of ,$siness ente#+#ise.
a. Financial Accounting c. Go&e#n!ent Acco$nting
,. 1nge!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$nting theo#'
c. the necessity of applying creative skill and ability
(. None of the ,o&e
4. Finncil cco$nting is the ,#nch of cco$nting tht foc$ses on
. s+ecil +$#+ose #e+o#ts of finncil +osition n( #es$lts of o+e#tions
,. finncil stte!ents
c. the &#io$s nee( of stte!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 stisf' the s+ecili*e( nee(s of in(i&i($l $se#s
c. not inten(e( to stisf' the co!!on nee(s of in(i&i($l $se#s.
(. P#o&i(e( ,' !nge#il cco$nting.
7. Which of the following is not t#$e%
. Acco$nting is conce#ne( +#i!#il' with .$ntitti&e info#!tion $se( ,'
+e#sons who !$st !/e econo!ic (ecisions !ong lte#nti&e ctions.
,. Go&e#n!entl cco$nting is lso /nown s !$nici+l o# f$n( cco$nting
c. The ,#nch of cco$nting conce#ne( with the +#esenttion of finncil
info#!tion to ssist !nge!ent in +lnning n( cont#olling o+e#tions is clle(
!nge#il cco$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. !es$#e!ent n( #ecognition
,. +#inci+les (. +ost$ltes n( con&entions
:. The ,sic ss$!+tion o# +#e!ises on which cco$nting +#inci+les #est #e clle(
. cco$nting +ost$ltes c. cco$nting +#inci+les
,. cco$nting +#oce($#es (. cco$nting lws
1;. The no#!ti&e ttit$(es o# i(es of the cco$nting +#ofession s to wht o$ght to
#e+#esent goo( cco$nting +#ctice n( which !o(if' the ++liction of cco$nting
+#inci+les #e /nown s
. cco$nting +ost$ltes c. cco$nting +#oce($#es
b. accounting conventions (. cco$nting +#inci+les
11. The gene#l g$i(elines $se( in cco$nting +#ctice tht #e ,se( on s$,stntil
$tho#itti&e s$++o#t #e clle(
. Acco$nting +ost$ltes c. cco$nting +#oce($#es
,. cco$nting con&entions d. accounting principles
10. The s+ecific !etho(s $se( ,' cco$ntnts 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 finncil (t sho$l(
,e #eco#(e() clssifie() s$!!#i*e( n( #e+o#te( #e #efe##e( to s
. cco$nting +ost$ltes c. accounting procedures
,. cco$nting con&entions (. cco$nting +#inci+les
12. <The cco$nting entit' is ss$!e( to ,e se+#te n( (istinct f#o! othe# entities n(
f#o! the owne#s) !nge#s n( e!+lo'ees which constit$te the fi#!=. This +ost$lte is
#efe##e( to s
. 1tching c. Histo#icl cost
,. Going conce#n 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$#e. This +ost$lte is #efe##e( to s
. 1tching c. Histo#icl cost
b. oing concern (. S+ecific6se+#te6entit'
15. <1one' is the ,est !es$#ing $nit of fi#!>s ssets) li,ilities n( e.$it') s well s
chnges the#ein? its inst,ilit' is i!!te#il=. This +ost$lte is #efe##e( to s
. Histo#icl cost c. !oney-measuring unit
,. Re&en$e #ecognition (. Fiscl +e#io(
17. <Cost is no#!ll' the +#o+e# !one' !es$#e!ent of fi#!>s ssets) li,ilities) n(
e.$it') n( chnges in the! ,ec$se it is o,@ecti&e) &e#ifi,le n( con&enient to o,tin)
++#o3i!ting &l$e t ti!e of c.$isition. < This +ost$lte is #efe##e( to s
a. "istorical cost c. 1one' !es$#ing $nit
,. Re&en$e #ecognition (. Fiscl +e#io(
18. <The life of ,$siness fi#! cn ,e seg!ente( into sho#t #$n ti!e +e#io(s in o#(e# to
+#o&i(e ti!el' finncil info#!tion to i( in finncil (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$ntnts.= This +ost$lte is #efe##e( to s
. Histo#icl cost c. 1one' !es$#ing $nit
,. Re&en$e #ecognition d. Fiscal period
19. <The +oint of sle when goo(s #e (eli&e#e( o# se#&ices #e #en(e#e() is the ti!e t
which #e&en$e is to ,e #ecogni*e(.= This +ost$lte is #efe##e( to s
. Histo#icl cost c. 1one' !es$#ing $nit
b. #evenue recognition (. Fiscl +e#io(
1:.<Goo(s n( se#&ices $se( A<e3+enses=B ($#ing the fiscl +e#io( cn ,e ssocite( with
the #e&en$e e#ne( ($#ing the s!e fiscl +e#io(=. This +ost$lte #efe##e( to s
a. !atching c. Histo#icl Cost
,. Going conce#n (. S+ecific6se+#te entit'
0;. <E3ce+tion to the ++liction of cco$nting theo#' #e +e#!itte( if the !o$nt
in&ol&e is not !te#il? finncil #e+o#ting is conce#ne( onl' with info#!tion tht is
significnt eno$gh to ffect e&l$tions o# (ecisions.= This con&ention is clle(
. Conse#&tis! c. Consistenc'
,. O,@ecti&it' d. !ateriality
01. <The s!e cco$nting +#oce($#es fo# gi&en entit' sho$l( ,e $se( f#o! one +e#io(
to the ne3t. Chnges !' howe&e# ,e !(e if it will #es$lt in !o#e cc$#te o# $sef$l
info#!tion fo# (ecision !/ing +#o&i(e( it (isclose(=. The con&ention is clle(
. Conse#&tis! c. $onsistency
,. O,@ecti&it' (. 1te#ilit'
00. <Finncil stte!ents of (iffe#ent fi#!s sho$l( ,e ,se( on si!il# cco$nting
+#inci+les n( +#oce($#es in o#(e# to i( $se#s of finncil stte!ents in fin(ing
si!il#ities n( (iffe#ences !ong fi#!s fo# +$#+ose( of finncil (ecision !/ing= This
con&ention is clle(
. Consistenc' c. O,@ecti&it'
b. $omparability (. Conse#&tis!
02. <Acco$nting !es$#e!ent sho$l( ,e ,se( on e&i(ence tht is &e#ifi,le ,'
co!+etent +e#sons=. This con&ention is clle(
. Consistenc' c. %b&ectivity
,. Co!+#,ilit' (. Conse#&tis!
04. <The cco$ntnt sho$l( #ecogni*e ll +ossi,le losses ,$t ntici+te no +#ofit. Whe#e
lte#nti&e co$#ses of ction #e &il,le) he sho$l( choose the lte#nti&e lest
f&o#,le to owne#s> e.$it'.
. Consistenc' c. O,@ecti&it'
,. Co!+#,ilit' d. $onservatism