1. Theoretical Framework 2010
Q.1 Q. 1 Which of the following practices is not in consonance with the convention of conservatism?
1. Creating provision for bad debts
2. Creating provision for discount on creditors
3. Creating provision for discount on debtors
4. Creating provision for tax
Q.2 Q. 2 Omission of paise and showing the round figures in financial statements is based on
1. Conservatism concept
2. Consistency concept
3. Materiality concept
4. Realisation concept
Q.3 Q. 3 Under which of the following concepts are shareholders treated as creditors for the amount they paid on the shares they subscribed to?
1. Cost concept
2. Duality concept
3. Business entity concept
4. Going concern concept
Q.4 Q. 4 Accounting does not record non-financial transactions because of:
1. Accrual concept
2. Cost concept
3. Continuity concept
4. Money measurement concept
Correct Answer: 4
Q.5 Q. 5 Which of these are is not a fundamental accounting assumption?
1. Going concern
2. Consistency
3. Conservatism
4. Accrual
Q.6 Q. 6 Fixed assets and current assets are categorized as per concept of:
1. Separate entity
2. Going concern
3. Consistency
4. Time period
Correct Answer: 2
Q.7 Q. 7 AS 2 is on:
1. Disclosure of Accounting Policies
2. Valuation of Inventories
3. Revenue Recognition
vxplain 2 score more-- post your doubts to us at vxplain@gmail.com Page 1

2. Theoretical Framework 2010
4. Depreciation Accounting
Q.8 Q. 8 Selection of an inappropriate accounting policy may lead to:
1. Understatement of Performance
2. Overstatement of Performance
3. Understatement or overstatement of financial position
4. None of the above
Q.9 Q. 9 Which AS is used for depreciation ?
1. AS2
2. AS1
3. AS6
4. AS3
Q.10 Q. 10 Proprietor (owner) is treated as creditor of business due to :
1. Periodicity concept
2. Materiality Principle
3. Entity Concept
4. Consistency concept
Q.11 Q. 11 Concept of conservation refers to taking into account
1. All
Profit
2. Only Cash Profit
3. Only Profits realized
4. Profits realized and all possible losses
Q.12 Q.12 Which concept supports the treatment of' Prepaid Expenses as assets?
1. Money Measurement Concept
2. Going Concern Concept
3. Realization Concept
4. Cost Concept
Q.13 Q. 13 Which of the following is an exception of ''Full Disclosure'' Principle?
1. Materiality
2. Conservatism
3.
Disclosure
4. All of the above
Q.14 Q. 14 Recording of Fixed Assets at Cost ensures adherence of :
1. Conservatism
2. Cost Concept
3. Going Concern Concept
4. Accrual Concept
vxplain 2 score more-- post your doubts to us at vxplain@gmail.com Page 2

3. Theoretical Framework 2010
Q.15 Q. 15 The accounting measurement that is not consistent with the going concern concept is
1. Historical cost
2. Realization
3. The transaction approach
4. Liquidation value
Q.16 Q. 16 If the going concern concept is no longer valid, which of the following is true?
1. All prepaid assets would be completely written-off immediately.
2. The allowance for uncollectible accounts would be eliminated.
3. Intangible assets would continue to be carried at net amortized historical cost.
4. Land held as an investment would be valued at its realizable value.
Q.17 Q. 17 The underlying accounting principle(s) necessitating amortization of intangible asset(s) is/are
1. Cost concept
2. Realisation concept
3. Matching concept
4. Both (1) & (3) above
Q.18 Q.18 Which of the following practices is not in consonance with the convention of conservatism?
1. Creating provision for bad debts
2. Creating provision for discount on creditors
3. Creating provision for discount on debtors
4. Creating provision for tax
Q.19 Q. 19 Recording of fixed assets at cost ensures adherence of
1. Conservatism Concept
2. Going Concern Concept
3. Cost Concept
4. Both (1) and (2) above
Q.20 Q. 20 X Ltd., purchased goods for Rs.5 lakh and sold 9/10th of the value of goods for Rs.6 lakh. Net expenses during the year were Rs.25,000. The
net profit as Rs.75,000. Which of the following concept is violated by the conlpany?
1. Realization
2. Conservation
3.
Matching
4. Accrual
Q.21 Q. 21 Mr, Rohit, owner of Rohit Furniture Ltd., owns a personal residence that cost Rs.6,00,000, but has a market value of Rs.9,00,000. During pre
statement for the business, the entire value of property was ignored and was not shown in the financial statements. The principle that was followed
1. The concept of the business entity
2. The concept of the cost principle
3. The concept of going concern principle
4. The concept of duality principle
vxplain 2 score more-- post your doubts to us at vxplain@gmail.com Page 3

4. Theoretical Framework 2010
Q.22 Q. 22 The expenses and incomes pertaining to full trading period are taken to the profit and loss account of a business, irrespective of their paymen
recognition of
1. Time period concept
2. Business entity concept
3. Going concern concept
4. Accrual concept
Q.23 Q. 23 Which of the following concepts assumes that a business will last indefinitely?
1. Business entity
2. Going concern
3. Periodicity
4. Conservatism
Correct Answer: 2
Q.24 Q.24 Which of the following is accounting equation ?
1. Capital = Assets + Liabilities
2. Capital = Assets - Liabilities
3. Assets= Liabilities - Capital
4. Liabilities = Assets + Capital
Q.25 Q. 25 An increase in one liability will lead to -
1. Increase in Asset
2. Increase in another Liability also
3. Increase in Capital
4. All of the above
Q.26 Q.26 If a Company follows the Written Down Value of depreciating Machinery year after year,
it is due to
1. Business entity
2. Consistency
3. Periodicity
4. Conservatism
vxplain 2 score more-- post your doubts to us at vxplain@gmail.com Page 4

5. Theoretical Framework 2010
vxplain 2 score more-- post your doubts to us at vxplain@gmail.com Page 5