MCQ's of Teaching Block 1 Flashcards
In applying the prudence concept, the accountant ensures that
All possible costs and losses are included
The business entity concept is based on the assumption that
a) the business exists separately from its owner(s)
b) the information recorded in the accounting system relates to the activities of the business
c) the business can enter into transactions with the owner(s)
What is an example of a non-current asset?
Buildings and equipment
The debit column of the trial balance shows
All the expenses and assets accounts
At the end of an accounting period, a credit on the bank account suggests that
There is an overdraft at the bank
What is the Going Concern Concept
Accounts should be prepared on the assumption that enterprise will continue in operational existence in the foreseeable future
What is the Accruals Concept
Revenue and costs are recognized as they are earned and incurred irrespective of when cash or received or paid
What is the Prudence Concept
An accountant must not overstate assets and income and must not understate expenses and liabilities
What is the Business Entity Concept
Business is a separate entity from its owner
What is the Comparability Concept
Similar transactions should be accounted for in the same way by an organisation
The accruals concept requires the income statement to be prepared on the assumption that
All revenue has been matched with associated costs and expenses
Name all the accounts that have debit balances
Trade debtors, Electricity costs, Office furniture
Define ‘useful life’
An estimate of the number
of years the asset will provide economic
benefits
Define ‘ residual life’
An estimate of the net
proceeds from the sale of the asset on
disposal
Examples of intangible non-current assets are
Computer software, patents, goodwill
