CBSE Class 11 Accountancy Theory Base Of Accounting MCQs Set B

Question: Central GST and Union Territory GST is applicable in such a way that if the prescribed rate is 18%, …… GST will be levied by centre and …… GST will be levided by the union territory.
a) 10%, 8%
b) 8%, 10%
c) 9%, 9%
d) Can’t be determined
Answer: c

Question: Which AS will be applicable to evaluate the reputation and brand value of firm?
a) AS-20
b) AS-26
c) AS-30
d) AS-2
Answer: b

Question: In how many categories is GST divided?
a) 2
b) 4
c) 3
d) 6
Answer: d

Question: According to the Duality Principle, Calculate the Owner’s claim, if the firms Outsider’s claim is Rs 20,000 and the net worth of the assets that business owns is Rs 70,000.
a) 50,000
b) 90,000
c) 70,000
d) 20,000
Answer: a

Question: Which of the following is correct about value of investments of a firm?
a) Market value of investments are not shown anywhere and only book value is shown in balance sheet
b) Both market value and book value is shown in balance sheet and the higher of the two is accounted for
c) Market value of investments is shown in balance sheet and book value is not shown anywhere
d) Market value of investments is shown in footnote and book value of investment is reflected in balance sheet
Answer: d

Question: As per the law, which of the following is the correct accounting period?
a) 1st April to 31st December
b) 1st April to 31st March
c) 1st January to 31st December
d) Both 1st April to 31st March and 1st January to 31st December
Answer: b

Question: AS does not apply to purely charitable organisations.
a) True
b) False
c) Partially true
d) Can’t say
Answer: a

Question: According to the Revenue Realization Concept the interest for Apr’18 received in March’14 will be taken in Profit/Loss A/c of the Financial Year
a) Beginning of Apr’18
b) Ending March’18
c) Beginning of March’18
d) Ending of Apr’18
Answer: b

Question: In accrual concept, revenue is recorded when ……… .
a) cash is received
b) sales are made
c) goods are delivered
d) None of the options
Answer: b

Question: For a large manufacturing, the costs of small tools used in not relevant whereas it is very relevant for a small roadside workshop. This fallacy can be explained by which principle?
a) Principle of conservation
b) Principle of full disclosure
c) Principle of materiality
d) Matching principle
Answer: c

Question: Due to which principle, contingent liabilities are shown in the balance sheet?
a) Dual aspect principle
b) Principle of full disclosure
c) Principle of materiality
d) Going concern concept
Answer: b

Question: An item is considered to be material if there is a reason to believe that knowledge of it would influence the decision of an informed investor.
a) True
b) False
c) Partially true
d) Partially false
Answer: a

Question: According to ……… principle, an event, even though it may be very important for the business, will not be recorded in the books of business unless its effect can be measured in terms of money with a fair degree of accuracy.
a) materiality
b) money measurement
c) full disclosure
d) dual aspect
Answer: b

Question: International Financial Reporting Standards (IFRS) are issued by ……… .
a) IFRS Committee
b) International Accounting Standards Board
c) international Accounting Committee
d) None of the options
Answer: b

Question: “They first expanded to Tamil Nadu and got great demand.” Which type of GST is applicable on this supply to Tamil Nadu?
a) Centre GST
b) State GST
c) Integrated GST
d) Both Centre GST and State GST
Answer: c

Question: Accrual concept is based on ……… .
a) matching principle
b) dual aspect principle
c) cost principle
d) going concern concept
Answer: a

Question: Calculate the owner’s equity as per the Business Entity Concept, if the owner commenced the business with the 2 acres of land worth Rs.3crore, building worth Rs. 5crore and Bank balance of Rs. 10 lacks.
a) Rs.8Cr 10 lacks
b) Rs.11crore 10 lacks
c) Rs.10 lacks
d) Rs. 9crore
Answer: a

Question: Which principle is highlighted in the line, ‘‘The machines were recorded at the price prevailing in 2004”?
a) Full disclosure principle
b) Conservatism principle
c) Duality principle
d) Historical cost principle
Answer: d

Question: Accounting concepts are basic assumptions which are taken for any business and business are considered to be following them. From the given options, identify which of the following cannot be considered a fundamental accounting assumption?
a) Going concern
b) Consistency
c) Accrual
d) Materiality
Answer: d

Question: Cash basis of accounting does not require the use of estimates and personal judgements.
a) True
b) False
c) Partially true
d) Can’t say
Answer: a

Question: As per principle of conservatism, which of the following is incorrect?
a) Provision for doubtful debts is created in anticipation of actual bad debts
b) Closing stock is always valued at the realisable value
c) Joint life insurance policy is shown at the surrender value
d) None of the options
Answer: b

Question: Going concern concept is indespensable for the proper working of the business. Which of the following events are based on the concept of going concern?
a) Outside parties purchase the debentures and shares of the enterprise
b) Prepaid expenses, which have no realisable value are shown as assets in balance sheet
c) Classification of current and fixed assets is made in accounting books
d) All of the options
Answer: d

Question: Pick the odd one out.
a) Accounting period principle
b) Financial period principle
c) Periodicity principle
d) Time period principle
Answer: b

Question: Incomes receivables must be …… in revenues and income received in advance must be …… from revenues as per matching principle.
a) deducted, added
b) ignored, added
c) added, deducted
d) None of the options
Answer: c

Question: Calculate the value of the asset at the time of preparing final account that is purchased for Rs. 5,00,000 ,if the market value is Rs. 7,00,000 as per the cost concept.
a) Rs. 5,00,000
b) Rs. 7,00,000
c) Rs.1,20,000
d) Rs. 2,00,000
Answer: a

Question: According to the Going Concern Concept calculate the value of the Computer which has been purchased for Rs 60,000 and estimated its life for five years,
a) Rs 3,00,000
b) 12,000
c) 6,000
d) 60,000
Answer: b

Question: The Prudence concept doesn’t implies when the
a) Closing stock is valued at lower cost or market price
b) provision for doubtful debts
c) Anticipation of the bad debts
d) disclosure of the material information.
Answer: d

Question: The proforma and contents of balance sheet and profit and loss account are prescribed by Companies Act so that companies show all the relevant information while preparing the financial statements. This is done to ensure that ……… is followed.
a) accrual concept
b) dual aspect principle
c) principle of full disclosure
d) principle of materiality
Answer: c

Question: When there are different alternatives for recording a transaction, the one having least favourable immediate effect on profits or capital should be adopted.
a) True
b) False
c) Partially true
d) Can’t say
Answer: a

Question: Which of the following is/are objectives of GST?
a) To maximise tax rate slabs
b) To restrict the movement of goods across the country
c) To eliminate classification dispute between goods and services
d) All of the options
Answer: c

Fill In The Blanks

Question: Bhushan is unaware about ___________ concept and preparing his books on quarterly basis.
Answer: accounting Period

Question: Rent is to be paid Rs 6,000 recorded as Outstanding Rent due to _________ concept.
Answer: accrual

Question: The fact that a business is separate and distinguishable from its owner is best exemplified by the ___________concept.
Answer: business Entity

Question: Rajawat Furnishing House purchased 10 tables @ Rs 2,000, 20 chairs @Rs 800 and 2 Sofa Set. He was not able to record the transaction of Sofa Set as it does not fulfil the condition of ____ concept.
Answer: Money Measurement

Question: __________ concept assumes that business would not be liquidated in the foreseeable future.
Answer: Going concern

Question: Summarizing means preparing of _______________ to check arithmetical accuracy.
Answer: Trial Balance

Question: Recording can be done in Journal and __________ books.
Answer: Subsidiary

Question: Karan started business with cash of Rs 3,50,000 which is borrowed from Dev. On one hand he has an asset of Rs 3,50,000 cash while on other hand, he has a liability towards Dev. Thus we can say accounting is done by _______ entry system.
Answer: double

True /False

Question: Ram, a sole proprietor of M/s Ram & company purchase a car for his personal use. The payment was made by issuing a cheque from the account of M/s Ram & company. His accounted debited to his Drawings Account due to the adherence of Business Entity Concept.
Answer: True

Question: While preparing financial statements Cooperative Society follows Accounting Standards.
Answer: True

Question: Accounting Standards helps in eliminating variations in accounting treatment to prepare Financial Statements.
Answer: True

Question: Under Accrual Basis of accounting, Expenses are recorded on being incurred.
Answer: True

Question: Cash basis of accounting is incompatible with matching principle.
Answer: True

Question: The Consistency concept requires that same method of charging deprecation on asset should be adopted year after year.
Answer: True

Question: According to Business Entity Concept, Capital is treated as liability of business.
Answer: True

Question: As per Income Tax Act, Accounting Period is from 1st January to 31st December.
Answer: False

Question: The market value of stock is increased but the firm not recorded its market value as the stock is not yet sold due to the adherence of Conservatism Concept.
Answer: True

Match The Following 

Question:
1. Mohan had cash sales of Rs. 90,000 and credit sales of Rs. 60,000:                        a) Rs. 50,000 as per cash basis
    and his expenses were Rs. 70,000 out of which 30,000 is yet to be paid.
    Find the profit earned if books are mentioned on cash basis. 
2. Mohan had cash sales of Rs. 90,000 and credit sales of Rs. 60,000:                        b) Rs. 60,000 as per cash basis
    and his expenses were Rs. 70,000 out of which 10,000 is only paid.
    Find the profit earned if books are mentioned on cash basis. 
                                                                                                                                         c) Rs. 80,000 as per cash basis
Answer: 1-a ;2-c

Question:
1. Life of the business is broken into small parts                                                              a) Matching principle
2. Purchase of Calculator/eraser/pencils will not be recorded as an assets                     b) Accounting period
                                                                                                                                          c) Business entity
                                                                                                                                         d) Materiality concept
Answer: 1-b; 2-d

Question:
1. Competency of the management will not be recorded                a) Prudence principle
2. Policy of playing safe                                                                   b) Revenue recognition principle
                                                                                                         c) Money measurement principle
                                                                                                         d) Going concern
Answer: 1-c; 2-a

Question:
1. Directors are interested to change the method of depreciation                    a) Revenue recognition principle
    from WDV to SLM on Machinery in the current accounting. 
2. At the end of the accounting period, factory rent of the company                 b) Consistency Concept
    is outstanding for Rs. 10,000 
                                                                                                                          c) Accrual concept
Answer: 1-b; 2-c