Accounting - Study Mode

[#2791] Based on which of the following concepts, is share capital account shown on the liability side of a balance sheet?
Correct Answer

(A) Business entity concept

Explanation

Solution: Based on Business entity concept, share capital account shown on the liability side of a balance sheet. The business entity concept also explains why owners' equity appears on the liability side of a balance sheet (i.e. credit side).

[#2792] Which of the following is not considered as Research & Development costs?
Correct Answer

(B) Legal work on patent application

Explanation

Solution: Legal work on patent application is not considered as Research & Development costs. Research and development (R&D) expenses are associated with the research and development of a company's goods or services.

[#2793] Amortization of unidentified intangible assets is in terms of
Correct Answer

(C) Matching concept

Explanation

Solution: Amortization of unidentified intangible assets is in terms of Matching concept. In the Matching Concept of Accounting, all the expenses matched with the revenue of an accounting period should only be taken into consideration.

[#2794] Declared dividend should be classified in the balance sheet as a
Correct Answer

(B) Current liability

Explanation

Solution: Declared dividend should be classified in the balance sheet as a Current liability. Dividends payable are dividends that a company's board of directors has declared to be payable to its shareholders. Until such time as the company actually pays the shareholders, the cash amount of the dividend is recorded within a dividends payable account as a current liability.

[#2795] If the opening inventory of a business is undercast, it will
Correct Answer

(D) Increase gross profit as well as net profit

Explanation

Solution: If the opening inventory of a business is undercast, it will Increase gross profit as well as net profit.