MCQ Question for Accountancy Class 11 With Answers Chapter 2 Theory Base of Accounting

Check the below NCERT MCQ Class 11 Accountancy Chapter 2 Theory Base of Accounting with Answers available with PDF free download. MCQ Questions for Class 11 Accountancy with Answers were prepared based on the latest syllabus and examination pattern issued by CBSE, NCERT and KVS. Our teachers have provided below Theory Base of Accounting

Theory Base of Accounting Class 11 Accountancy MCQs Questions with Answers

Refer below for MCQs Theory Base of Accounting with solutions. Solve questions and compare with the answers provided below

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

Question. The firm purchased the machine cost Rs. 10,000 and charged depreciation @ 10% according to the Straight line Method. After 2 years they switch to the Written down value method. At the time of sale of machine they calculated the depreciation as per the SLM. Which accounting principle is violated?
a) Historical cost
b) consistency
c) cost
d) money Measurement 

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.

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 

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 

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 

Question. According to Revenue Realisation concept
i) Credit sales are treated as revenue on the day sales are made and not when money is received
ii) Rent for the march 14 received in April 14 will be recorded in Profit and Loss A/c in the beginning of the Financial year April14
a) Option (i) is applicable
b) Option (ii) is applicable
c) Both Option (i) and (ii) are applicable
d) None of the options is applicable 

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 

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

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

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

Question. Which AS deals with ‘Financial Instruments: Disclosures’?
(a) AS-29
(b) AS-30
(c) AS-31
(d) AS-32

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

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 above

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

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 above

Question. i) As per the conservatism principle the valuation of stock is at lower of cost or net realizable value.
ii) The convention of conservatism takes all the prospective losses but leaves out prospective profits.
iii) The Dual aspect concept states the proprietor of a business is treated as External liabilities
a) Option (i) and (ii) is correct
b) Option (iii) and (ii) is correct
c) Option (i), (ii) and (iii) is correct
d) Option (i) and (iii) is correct

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

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

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 

Question. All anticipated losses and gains should be recorded in the books of accounts.
(a) True
(b) False
(c) Partially true
(d) Can’t say

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 above

Question. Which of the following will be recorded in the books of account?
(i) Competitor placing better product in market.
(ii) Strike by labour union.
(iii) Labours being pair.
(a) (i) and (ii)
(b) (ii) and (iii)
(c) Only (iii)
(d) All of these

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 (b) and (c)

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

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

Question. According to principle of prudence,
(a) outstanding expenses are accounted for
(b) provision for bad debts is created
(c) depreciation is charged on assets
(d) All of the above

Question. The junior accountant in a fortune 500 company decided to omit the ‘paisa’ in certain figures and showed the rounded off figures in financial statements. The act was found to be correct by senior accountant because of
(a) principle of full disclosure
(b) going concern concept
(c) materiality principle
(d) consistency concept

Question. Principle of …… is an exception to the principle of full disclosure
(a) money measurement
(b) materiality
(c) matching
(d) None of the above

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

Question. According to ………, the entire life of business should be divided into timeintervals for the measurement of the profits of business.
(a) going concern concept
(b) accounting period principle
(c) consistency concept
(d) principle of prudence

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 (a) and (b)

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

Question. Which principle/concept is highlighted in the line,” … and have been subjected to depreciation year on year based on written down value method.”?
(a) Full disclosure principle
(b) Business entity principle
(c) Consistency concept
(d) Accrual concept

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

Question. According to the cost principle, an asset bought is recorded in books at price ……… .
(a) at which it was acquired
(b) which is prevailing in market
(c) higher of (a) and (b)
(d) lower of (a) and (b)

Question. Cost/Historical cost principle means that assets will be continuously shown at their acquisition cost, even if the asset is depreciable.
(a) True
(b) False
(c) Partially false
(d) Can’t say

Question. Recognition of cost in the same period as associated revenues is called ……… .
(a) Cost principle
(b) Dual aspect principle
(c) Full disclosure principle
(d) Matching principle

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 these

Question. ‘Double entry system’ is based on which accounting principle concept?
(a) Going concern concept
(b) Business entity principle
(c) Matching principle
(d) Dual aspect principle

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

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

Question. Everything a firm owns, it also owes to somebody. This co-existence is explained by ……… .
(a) accrual concept
(b) dual aspect principle
(c) consistency concept
(d) matching principle

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

Question. In ………, unpaid expenses are recorded in books of accounts.
(a) cash basis of accounting
(b) accrual basis of accounting
(c) Both (a) and (b)
(d) Can’t be determined

Question. Which of the following methods of accounting is/are recognised by Companies Act, 2013?
(a) Cash basis of accounting
(b) Accrual basis of accounting
(c) Both (a) and (b)
(d) Can’t be determined

Question. Which basis of accounting makes a distinction between revenue and capital items?
(a) Cash basis of accounting
(b) Accrual basis of accounting
(c) Both (a) and (b)
(d) Can’t be determined

Question. Which of these is/are the objectives of accounting standards?
(a) Better understanding of financial statements 
(b) Minimise diverse accounting policies and practices with an aim to eliminate them to possible extent
(c) Enhance reliability of financial statements
(d) All of the above

Question. Accounting Standard-26 deals with
(a) inventories valuation
(b) plant, property and equipment
(c) consolidated financial statements
(d) intangible assets

Question. Serial number of AS and Ind-AS correspond with each other with respect to title.
(a) True
(b) False
(c) Partially false
(d) Can’t say

Question. Ind-AS 1 deals with
(a) statement of cash flows
(b) disclosure of accounting policies
(c) plant, property and equipment
(d) None of the above

Question. Consolidated financial statement is dealt under which IFRS?
(a) IFRS – 1
(b) IFRS -5
(c) IFRS – 10
(d) IFRS – 15

Question. On which of these items, GST is not applicable?
(a) Sanitary pads
(b) Medicines
(c) Alcoholic liquor
(d) Books

Question. ……… is levied in the course of interstate supply of goods and services.
(a) Central GST
(b) State GST
(c) Union Territory GST
(d) Integrated GST

Question. Identify the GST applicable in case X Ltd. sells goods from Naisk to a vendor in Mumbai.
(a) Central GST
(b) State GST
(c) Both (a) and (b)
(d) Integrated GST

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 above

Question. Which concept is highlighted in the fact that company made long-term contracts with the farmers?
(a) Going concern concept
(b) Accrual concept
(c) Consistency concept
(d) Both (a) and (b)

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

Question. The supplies of the company would be subjected to Integrated GST.
(a) True
(b) False
(c) Partially true
(d) Can’t say

Question. Which AS would have been followed by accountant to value inventories?
(a) AS-1
(b) AS-2
(c) AS-3
(d) AS-4

Fill In The Blanks

Question. Summarizing means preparing of _______________ to check arithmetical accuracy. 

Question. Bhushan is unaware about ___________ concept and preparing his books on quarterly basis.

Question. Ghanshyam and co. purchased machinery worth Rs 12,00,000. It further incurred transportation cost of Rs 2,00,000 and installation cost of Rs 5,00,000. The market price of the machinery at the end of the accounting year was Rs 25,00,000. Ghanshyam and co. should record the machinery price as Rs ____________ in the books .

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

Question. A Ltd. Purchased goods of Rs 5,20,000 during a financial year. His sales for the year were 6,00,000 and closing stock at the end was Rs 1,20,000. According to matching concept his profit during the year is Rs _______.

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.

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.

Question. Somya and Komal are manager in a company. Somya is more organised and systematic, but employer cannot record her Quality of work as her efficiency cannot be measured in terms of ___________.

Question. Accounting process ends on _____________.

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

Question. Accounting standards are not applicable on ________ organisations.

Question. Cash as well as credit transactions are recorded in _________ basis of accounting. 

Question. XYZ Ltd. Received an advance on sale in the month of January, 2019 for the sale made in May, 2019. The revenue should be recognised on __________.

Question. Ram made cash sales of Rs 2,50,000 and credit sales of Rs 1,50,000. His expenses for the year were Rs 50,000, out of which Rs 10,000 is yet to be paid. Ram’s income on the base of cash basis of accounting will be Rs____________.

Question. __________ concept assumes that business would not be liquidated in the foreseeable future.

Question. Recording can be done in Journal and __________ books.

True /False 

Question. Under Accrual Basis of Accounting, Only cash transactions are recorded.

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

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

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

Question. Recognition of expenses in the same period as associated revenues is called Objectivity concept.

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.

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

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

Question. M/s Future Ltd. has invested Rs 10,000 in the shares of Relicam Industries limited. Current market value of the shares is Rs 10,500. Accountant of Future Ltd. wants to show Rs 10,500 as value of investment in the books of accounts. Can he do so?

Question. Due to Materiality Concept the cost of small calculator is accounted as an expense and not shown as on Assets in a financial statement.

Question. Due to the adherence of Cash Basis system Firm created provision for doubtful debts @ 10 % on its Debtors Rs 2,00,000 .

Question. According to Accrual Concept, raw material consumed is matched against cost of goods sold.

Question. While preparing financial statements Cooperative Society follows Accounting Standards.

Question. Cash basis of accounting is incompatible with matching principle.

Question. Accounting Standards are applicable for purely charitable organizations.

Question. Rent for the month of March 2018, even if received in April 2019 taken into the financial year ending March 31, 2018 due to the adherence of Revenue Recognition Concept.

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.

Match The Following

Question.

1. Mohan had cash sales of Rs. 90,000 and credit sales of Rs. 60,000: 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 accrual basis	a) Rs. 78,000 .
2. Mohan had cash sales of Rs. 90,000 and credit sales of Rs. 60,000: and his expenses were Rs. 70,000 out of which 12,000 is only been paid. Find the profit earned if books are mentioned on cash basis.	b) Rs. 70,000 .
	c) Rs. 80,000 .
	d) Rs. 1,30,000

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

Question.

1. As per cost concept, calculate the amount to be recorded when 5 computers are purchased for Rs. 30,000 each and spend Rs. 2,000 each on installation and Rs. 1,000 as carriage to deliver 5 computers.	a) 50,00,500
2. As per Materiality concept, calculate the amount of assets, if firm purchased 20 acres of land for Rs.50,00,000 and 10 pencils for Rs. 50 .	b) 50,00,000
	c) 1,61,000
	d) 1,53,000

Question.

1. Mohan had cash sales of Rs. 90,000 and credit sales of Rs. 60,000: 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.	a) Rs. 50,000 as per cash basis
2. Mohan had cash sales of Rs. 90,000 and credit sales of Rs. 60,000: 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.	b) Rs. 60,000 as per cash basis
	c) Rs. 80,000 as per cash basis

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

Question.

1. Sale is recognized on the basis of cash memo which concept is applied.	a) Dual Aspect concept
2. Purchase of goods on credit from Raja will be debited to purchase and credited to Raja which concept is applied.	b) Verifiable evidence objective
	c) Materiality Concept
	d) Cost Concept

Question.

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

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