Common Proficiency Test Study Material
Chapter.1. Unit. 1. [1].
1] Purpose of accounting is [1] interpret and record the effect of transaction [2] classify the transaction [3] summarize and communicate the information
[a] item 1 and 2 only [b] item 2 and 3 only [c] all of these [d] none of these
2] The characteristics of financial accounting information are:-
[a] historical [b] cannot be measured [c] does not require judgment to prepare [d] all of these
3] Bookkeeping is concerned with:-
[a] recording transactions [b] classifying transactions [c] preparing trial balance [d] all of these
4] Bookkeeping is not concerned with:-
[a] recording [b] classifying [c] interpreting [d] all of these
5] All of the following are the functions of accounting except:-
[a] decision making [b] measurement [c] forecasting [d] journalizing
6] Financial position is ascertained based on:-
[a] trial balance [b] balance sheet [c] profit and loss account [d] all of these
7] Accounting information is used by:-
[a] creditors [b] consumers [c] government [d] all of these
8] Financial accounting considers transactions which are:-
[a] non monetary [b] monetary [c] both monetary and non monetary [d] none
9] On March 31, 1990 after making a sale of RS 20000, the unsold goods are RS 5000. The unsold goods are:-
[a] a transaction [b] an event [c] both a transaction and an event [d] cannot say
10] Public sector enterprises do not need financial accounting:
[a] true [b]false [c] neither true nor false [d] none
11] The services of financial accountant are:
[a] statutory audit [b] internal audit [c] financial advise [d] all of these
12] The loyalty and skill of an employee is not reported in balance sheet because:
[a] not an asset of a business [b] not a liability of business [c] cannot be measured in money terms [d] none of these
13] Balance sheet is a:
[a] static statement [b] dynamic statement [c] both static and dynamic [d] none
14] Financial statements are subjective in nature because:
[a] based on historical data [b] based on personal judgments [c] neither [a] nor [b]
[d] None of these
15] Accounting is the language of business
[a] true [b] false [c] cannot say
16] Accounting is a service function
[a] true [b] false [c] neither true nor false
17] Accounting can be viewed as an information system which has its inputs, processing
methods and output
[a] true [b] false [c] can not say
18] Accountancy means recording transactions and events and not their interpretation
[a] true [b] false [c] can not say
19] Accounting records only those transactions and events which are of financial character
[a] true [b] false [c] can not say
20] An external event which involves the transfer or exchange of something of value between two or more entities is called a transaction
[a] true [b] false [c] can not say
Common Proficiency Test Study Material
Chapter.1. Unit. 2.[2].
State the concepts
1] Classification of assets into current assets and fixed assets
[a] going concern [b] accounting period [c] none of these
2] Appending notes to the financial statements
[a] objectivity [b] consistency [c] full disclosure
3] Accounting of a small calculator as an expense and not as an asset
[a] full disclosure [b] materiality [c] revenue recognition
4] In gold mining revenue is recognized in the accounting period in which the gold is mined
[a] consistency [b] materiality [c] revenue recognition
5] Following written down value method year after year for depreciating assets
[a] full disclosure [b] consistency [c] materiality
6] Valuation of stock at cost or realizable whichever is less
[a] conservatism [b] industry practice [c] revenue recognition
7] Making provision for bad and doubtful debts
[a] full disclosure [b] conservatism [c] none of these
8] Amount contributed by owner is treated as an obligation of business
[a] business entity [b] money measurement [c] none of these
9] The ill-health of managing director not recorded in the books of account
[a] business entity [b] conservatism [c] none of these
State true or false
10] Principles which have substantial support become a part of the generally accepted accounting principles
[a] true [b] false [c] none of these
11] Revenues are matched with expenses in accordance with matching principle
[a] true [b] false [c] cannot say
12] Materiality principle is an exception to the full disclosure principle
[a] false [b] true [c] cannot say
13] Accounting practices should be followed on horizontal basis from one accounting period to another period in accordance with the consistency principle
[a] false [b] true [c] may be true or false
14] When stock is valued at cost in one accounting period and at lower of cost and net realizable value in another accounting period. Conservatism principle conflicts with the consistency principle.
[a] true [b] false [c] neither true nor false
15] Relevance and reliability are the two primary qualities that make accounting information useful for decision making
[a] true [b] false [c] neither true nor false
16] Revenue is generally recognized at the point of sale in accordance with the matching principle
[a] true [b] false [c] neither true nor false
17] Accrual means recognition of revenue as it is earned and of costs as they are paid
[a] true [b] false [c] neither true nor false
18] Conservatism principle is an exception to the consistency principle
[a] true [b] false [c] neither true nor false
19] According to matching principle, - periodic profit = all revenue – all expenses
[a] true [b] false [c] neither true nor false
20] Prudence is the inclusion of a degree of caution in the exercise of judgment needed in making the estimates required under condition of uncertainty so that assets and income are not understated and loss and liabilities are not overstated
[a] true [b] false [c] neither true nor false
Common Proficiency Test Study Material
Chapter.1. Unit. 2.[3]
1] Cost concept creates a lot of distortion in an inflationary situation
[a] true [b] false [c] neither true nor false
2] Finished goods are normally valued at cost or market value whichever is higher
[a] true [b] false [c] neither true nor false
3] Prudence is a concept to recognize unrealized profit and not losses
[a] true [b] false [c] neither true nor false
4] Prudence is a concept to recognize realized losses and not profits
[a] true [b] false [c] neither true nor false
