Tag: Accounting

The consistency concept means that…?

Select ONE answer:

1. when preparing the accounts of a firm, one should normally account for similar items in the same way from one accounting period to the next.
2. firms in the same industry must account for similar items in the same way.
3. firms may never change the way in which they prepare their accounts.
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct
2. The consistency concept requires consistency of treatment over time, not across firms.
3. Firms may change the way in which they prepare their accounts if the new way is more ‘correct’ than the old.
4. Not correct

 

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The effect of the prudence concept is that…?

Select ONE answer:

1. net profit is the difference between revenues and expenses rather than the difference between receipts and payments.
2. losses should be provided for as soon as they are foreseen and profit should not be recorded prematurely.
3. similar items should be treated in a consistent way from one accounting period to the next.
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 2

1. is the accruals concept.
2. Correct
3. is the consistency concept.
4. Not correct

 

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An accounting period is…?

Select ONE answer:

1. any period for which an entity chooses to prepare its accounts.
2. a calendar year.
3. any twelve-month period.
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct
2. An accounting period may be but does not have to be, a calendar year.
3. An accounting period can be of any duration. However, for tax purposes, as opposed to accounting purposes, accounts must be prepared for periods not exceeding 12 months.
4. Not correct

 

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The accruals concept…?

Select ONE answer:

1. applies to revenues and expenses only.
2. applies to assets and liabilities only.
3. applies to revenues, expenses, assets, and liabilities.
4. is not a fundamental accounting concept.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 3

1. It is true that the accruals concept applies to revenues and expenses but not exclusively so – it also applies to assets and liabilities.
2. It is true that the accruals concept applies to assets and liabilities but not exclusively so – it also applies to revenues and expenses.
3. Correct
4. The accruals concept is one of the fundamental accounting concepts, that is, those concepts referred to in SSAP 2.

 

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The effect of the accruals concept is that …?

Select ONE answer:

1. similar items should be accounted for in a similar way from one accounting period to the next.
2. revenue and profit should not be anticipated.
3. net profit is the difference between revenues and expenses.
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 3

1. is the consistency concept.
2. is one aspect of the prudence concept. The other aspect is that losses should be provided for as soon as they are foreseen.
3. Correct
4. Not correct.

 

This work is licensed under a Creative Commons Attribution 4.0 International License.