Tag: commercial applications

Questions Related to commercial applications

Accounting policy for inventories of X ltd. states that inventories are valued at the lower of cost or net realizable value. Which accounting principle in followed in adopting the above policy?

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Materiality

  2. Prudence

  3. Substance over form

  4. All of the above

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Correct Option: B

The other name of merchantile system of accounting is _________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. cash system of accounting

  2. receipts & expenditure accounts

  3. accrual system of accounting

  4. all of the above

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Correct Option: C

GAAP tells _________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Accounting policies

  2. Accounting procedures

  3. Accounting statements

  4. Both a & b

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Correct Option: D

If rights and beneficial interest in a property is transferred but documentation and legal formalities are pending then seller & purchaser should record in their accounts sale & purchase. Which principle is applied here?

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Prudence

  2. Substance over from

  3. Materiality

  4. All of the above

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Correct Option: B

The notion that the life of a business is divisible into equal time periods of equal length is known as the _________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Continuing concern principle

  2. Time-period principle

  3. Business entity principle

  4. Recognition principle

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Correct Option: B

Goodwill should be tested for value impairment at which of the following levels?

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Each identifiable long-term asset.

  2. Each reporting unit.

  3. Each acquisition unit.

  4. Entire business as a whole

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Correct Option: B

Bank overdraft account is a _____________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Personal account

  2. Real account

  3. Nominal account

  4. Representative personal account

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Correct Option: A

Which one of the following statements correctly explain the term 'doctrine of Indoor Management? 

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. The doctrine seeks to protect the outsiders against the company

  2. Every person dealing with the company is presumed to have read and understood the contents of company's Memorandum and Articles of association

  3. If a person enters into a contract with the company which is contrary to the provisions of Memorandum and Articles of Association, he will not get any right under such contract

  4. It protects the company against the outsiders.

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Correct Option: B
Explanation:

Option B is correct.

Doctrine of indoor management is an exception to rule of constructive notice. According to this doctrine, persons dealing with company are entitled to presume that internal requirements prescribed in the memorandum and articles have been properly observed. 
They can assume that the members of the company are performing their acts within the scope of their apparent authority. 

Comparative financial statements are prepared at the end of __________ .

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. Each financial year

  2. Every six months

  3. Every quarter of a year

  4. At the will of management

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Correct Option: D
Explanation:

Comparative financial statements are the complete set of financial statements that an entity issues, revealing information for more than one reporting period. The financial statements that may be included in this package are: The income statement (showing results for multiple periods)


These statements can be prepared anytime at the will of management.

Latest generation of personal computers (PCs) being used in an office setup is _____________.

commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

  1. PC XT

  2. PC Pentium

  3. PC AT

  4. PC 486

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Correct Option: B