Certificate in Credit T20 – 5R Strategic Consultancy Sdn Bhd

Name

Accounting Principles refers to

Procedures adopted by a firm in preparing and presenting financial statements

Concepts and ideas that are universal to the financial accounting process in business organisation

Rules and conventions that have been adopted as a general guide to companies in the treatment of financial transactions

Nine Principles to be used in preparing and presenting financial statements

What are the main areas of materiality that the accounting doctrine of materiality is concerned with

I. Materiality of information's
II. Materiality of time
III. Materiality of amount
IV. Materiality of importance

I and III

II and IV

III and IV

I and II

The accounting principles of Entity Principle is

Business unit is distinct from its owner. For accounting purpose, a firm exists in its own right.

The entity of business can be in the form of private limited or public limited company only

The entity of business can be in the form of a club, association or society only

The entity of business can be in the form of sole proprietorship or partnership only

The concept of materiality in accounting means

Material items refer only to tangible assets

Every minor items must be recorded in details

Materiality of information or account must be recorded

Only items that influence user's decision are reported

The following statements relating to financial accounting are true except

Financial report must comply with General Accepted Accounting Principles

The format of the financial reports are standardised

Users of this reports are free to specify the types of information required

Financial reports are prepared for use by parties external to organisation

Which of the normal basis in valuing the going concern of a business?

Earning power

Net worth of the business

Assets of the business

Sales growth

In order for shareholders and creditors to assess the financial performance and position of a business effectively and consistently, the preparation of business account must be based on certain accepted rules. The rules are referred as:

I. Management Accounting
II. Financial Accounting
III. Accounting Doctrines
IV. Accounting Principles

II and IV

All the above

I and II

III and IV

Monetary Principle is

A business unit that distinct from the business

Recording of the past happening

A recording and reporting of account information about a firm's event must be expressed in monetary term

A firm that want to perpetual its existence

Which transaction violates the entity principle?

The company business received payment from a debtor

The company pays supplier invoices

The owner withdraw cash for personal use but record it as a business expenses

The company repays a bank loan

The matching principle requires that

All revenue and expenses are differed until end of accounting period

Expenses are recorded only when paid

Revenues and related expenses are recognised in the same accounting period

Revenue are recorded only when cash is received

In accounting, the doctrine of "Disclosure" refers to

Full disclosure of all significant informations

Full disclosure regardless of materiality or significance of information should be made

Declaration by reporting Directors that what is reported is true

Full disclosure of items in financial statement

Under Doctrine of Conservatism, which statement is correct?

Ignore depreciation until assets are sold

Record assets at future expected values

Recognise revenue only when realised but provide for probable losses

Anticipate all profit but ignore losses

Doctrine of Consistency in accounting required that

The company must earn constant profit annually

The same accounting methods are applied from one period to another

Accounting policies in preparing and presenting financial statements remain the same

The same accountant prepares the account every year

Different companies have different income recognition method. This relates to which of the following accounting principles

Going concern principle

Accrual principle

Realisation principle

Historical principle

Which of the following is not accounting doctrines?

Disclosure

Conservatism

Prudence

Consistency

The following are considerations governing selection and application of accounting policies in a firm

I. Prudence (Discretion)
II. Objectively
III. Substance over form
IV. Materiality

I and II

I, III and IV

I and IV

All the above

If land purchased at RM1,000,000 is now worth RM1,500,000 the books will still show RM1,000,000. This due to

Dual aspect principle

Materiality principle

Conservative principle

Historical cost principle

Which of the following statements refer to Accounting Principle?

Rules and conventions that have been adopted as general guide to companies in the treatment of financial transactions

Procedures adopted by a firm in preparing and presenting the financial statements

Guideline to company with the Malaysian Accounting and Financial Reporting Standard (MFRS)

Concepts and ideas that are universal to the financial accounting process in business organisation

Which of the following best demonstrates full disclosure?

Omitting details of pending litigation

Reporting contingent liabilities in the notes to account

Excluding subsequent events

Hiding related party transaction

Under the realisation principle, revenue is recognised when

Cash is collected from customer

Production is completed

Orders are received

Goods or services have been delivered and the right to receive payment is established

Which are the following statements reflecting the Doctrine of Conservatism?

This doctrine requires all accounting statements to be scrupulously honest

The accounting policies should be continuously and consistently observed

This doctrine is ensuring accuracy and reliability of the accounting process

This is the policy of caution or playing safe

If assets increase by RM10,000 and liabilities decrease by RM4,000. What happen to owner's equity?

Remain unchanged

Increase by RM6,000

Increase by RM14,000

Decrease by RM6,000

If company is in financial distress and liquidation seems imminent. which principle may no longer hold?

Accounting period principle

Accrual or matching principle

Going concern principle

Disclosure principle

Under the monetary principle, which of the followings would not recorded?

I. Purchase a vehicle
II. Quantity of staff
III. Receipt of interest income
IV. Establish trade record

I and III

II and IV

I, II and IV

II, III and IV

The dual aspect states that

Debit and credit sentry to be applied in accounting transactions

Double entry must be used to recording business transaction

Asset = Liabilities + Equity

Every transaction affects at least two account: Debit and Credit

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