Question

Valuation of stock is done at lower of cost or market value because of convention of *
1 point
a. Disclosure
b. Conservatism
c. Materiality
d. Consistency.

This is a required question
Following the written down value method of depreciation on a particular asset year after year is because of the convention of *
1 point
a. Materiality
b. Conservatism
c. Consistency
d. Full Disclosure.
Accounting principles are generally based on *
1 point
a. Practicability
b. Subjectivity
c. Objectivity
d. Convenience in recording.
The convention of conservatism when applied to the balance sheet results in *
1 point
a. Overstatement of assets
b. Understatement of assets
c. Understatement of liabilities.
d. Overstatement of liabilities.
Contingent liability shown in the balance sheet, arises due to the accounting convention of *
1 point
a. Consistency
b. Conservatism
c. Disclosure
d. Materiality.
According to money measurement concept the following will be recorded in the books of accounts of the business : *
1 point
a. Quality of Company Goods
b. Utility of Managers
c. Value of Plant and Machinery
d. Health of Director.
Which of the following is fundamental accounting assumption? *
1 point
a. Going Concern
b. Cost Concept
c. Materiality
d. None of the above
Revenue is generally recognized at the point of sale. Which principle is applied? *
1 point
a. Consistency
b. Money measurement
c. Materiality
d. Realisation.
Companies must prepare financial statement at least yearly due to the concept of *
1 point
a. Going Concern
b. Business Entity
c. Period
d. Consistency​

Answer 1

Explanation:

1, d

2. b

Answer 2

Answer:

1. b. Conservatism

2. c. Consistency

3. a. Practicability

4. b. Understatement of assets

5. c. Disclosure

6. c. Value of Plant and Machinery

7. a. Going concern

8. d. Realisation

9. c. Period

Explanation:

1. Valuation of stock is done at a lower cost or market value because of the convention of Conservatism. This concept requires to record all the possible losses which can arise in the future.
2. Consistency concept states that the same or consistent method of accounting should be used in a financial year and using different methods may result in wrong calculations and results.
3. Accounting principles are generally based on Practicability as we get to know about the principles when we do it practically or in real instead of just theoretically learning it.
4. The convention of conservatism when applied to the balance sheet results in the Understatement of assets. It means assets the value of assets are recorded in a lower value than their actual price.
5. Contingent liability shown in the balance sheet, arises due to the accounting convention of Disclosure. It means any potential liability which can arise in the future must be recorded in the balance sheet
6. Value of plant and machinery is recorded in the books of accounts of the business as the Money Measurement concept states that only money related transactions must be recorded.
7. Going concern is a fundamental accounting assumption as it assumes that business will run even in the future.
8. Realisation principle is applied as revenue is recognized when it is actually received.
9. Period concept tells that companies must prepare a financial statement at the end of every financial year.