Accounting - Study Mode

Show All Answers

[#2421] In stock valuation, appilcation of the principle 'at cost price or market price whichever is lower' will result in the valuation of stock sometimes at cost price and at other times at market price. This is an application of the principle of:

(A) Consistency

(B) Materiality

(C) Conservatism

(D) Disclosure

Correct Answer

(C) Conservatism

[#2422] The purpose of depreciation is to:

(A) reduce fixed assets to market value each year

(B) save income tax and wealth tax

(C) reduce fixed assets to nil as soon as possible assets top expense over their working lives

(D) allocate the cost of fixed

Correct Answer

(D) allocate the cost of fixed

[#2423] Under purchase method of amalgamation, . . . . . . . . of the transferor company continues to appear in the balance sheet of the transferee company.

(A) capital reserve

(B) general reserve

(C) statutory reserve

(D) specific reserve

Correct Answer

(C) statutory reserve

[#2424] The single entry system is defective because- I. only one account is maintained II. the trial balance cannot be prepared III. the net profit cannot be accurately calculated IV. the possibility of fraud and misappropriation is great Select the correct answer from the following:

(A) I, III and IV

(B) I and II

(C) II, III and IV

(D) I only

Correct Answer

(C) II, III and IV

[#2425] Which of the following represents policy holders a/c?

(A) P/L a/c

(B) Revenue a/c

(C) Balance sheet

(D) None of these

Correct Answer

(B) Revenue a/c