Tag: basis of accounting system

Questions Related to basis of accounting system

Which of the following is/are the essential features of accrual basis of accounting?
(I) Revenue is recognized only when cash is received.
(II) Costs are matched against revenues on the basis of relevant time period to determine periodic income.
(III) Costs which are not charged to income are carried forward and are kept under continuous review.
(IV) Receipts or incomes are recorded as and when cash is received or becomes due on the other hand payments are recorded only when cash is actually paid.
The correct answer is _________________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. (I) & (IV) only

  2. (I), (III) & (IV) only

  3. (III) & (IV) only

  4. (II) & (III) only

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Correct Option: D

According to which of the following concepts, revenue is recognised when it is earned rather than when it is collected and recognises when assets or benefits are used rather than they are paid for?

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Accrual concept

  2. Realisation concept

  3. Cost concept

  4. Money measurement concept

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Correct Option: A

Purpose of ac an accounting system include all the following except _______________________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Interpret and record the effects of business transaction

  2. Classify the effects of transactions to facilitate the preparation of reports

  3. Summarize and communicate information to decision makers

  4. Dictate the specific types of business enterprise transactions that the enterprises may engage in.

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Correct Option: D

______ is incompatible with the matching principle of income determination.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Accrual system of accounting.

  2. Cash basis of accounting

  3. Hybrid system of accounting

  4. None of the above

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Correct Option: B

Who among the following defined management as "The accomplishment of results through the efforts of other people"?

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. George Terry

  2. Lawrance Appley

  3. L.D. White

  4. Allen

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Correct Option: C

The characteristic feature of imprest system is ___________________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Fixed amount of cash is allocated to petty cash fund

  2. Cash distributed from petty cash fund is documented with receipts

  3. Both a&b

  4. Petty cash disbursement receipts are everyday replenishments of the petty cash fund

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Correct Option: C

Global depository receipts (GDRs) are issued by successful corporations with a view to attract ___________________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Overseas loan funds

  2. Remittances from NRIs

  3. Foreign equity capital

  4. Foreign direct investment

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Correct Option: C

Accrued income refers to that income which has been _______________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. received but not earned during the current accounting period

  2. earned but not received during the current accounting period

  3. earned but not earned during the previous accounting period

  4. received and earned during the current accounting period

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Correct Option: B

Materiality in accounting is decided __________________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. By the size of an item

  2. By the knowledge as to whether an individual item is having a significant influence on financial statement

  3. Solely by the discretion of the accountant

  4. By the physical volume of the transaction

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Correct Option: B

Whenever a company wants to alter its Memorandum of Association for changing the place of registered office from one state to another, it has to pass _________________.

commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

  1. Ordinary resolution

  2. Special resolution

  3. Resolution requiring special notice

  4. Unanimous resolution

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Correct Option: B