BCA-207 - Principles of Accounting - Important Reasoning-Based Questions Asked in Previous Years

Direction: State with reasons whether the following statements are true or false.

Q1. The basic function of financial accounting is to assist the management in performing functions effectively.

Q2. The convention of conservatism takes into account all prospective profit profits but leaves all prospective losses.

Q3. While posting transactions in the ledger, if an account is debited in the journal, it will be credited to the ledger.

Q4. The credit note is sent to a customer when goods are sold or returned by him.

Q5. All intangible assets are fictitious assets.

Q6. Inventory should be valued at the lower of historical cost and current replacement cost.

Q7. Ratio analysis is a technique of planning and control.

Q8. A company should keep large balances of cash in hand so it can meet all contingencies.

Q9. The difference between actual sales and breakeven sales is known as margin or safety.

Q10. Shares which are not preference shares are called equity shares.

Q11. The term bookkeeping, accounting and accountancy can be used interchangeably.

Q12. Repairs incurred before using a second-hand car purchase recently a capital expenditure.

Q13. A manual system of accounts is better than accounting software.

Q14. Journal is prepared on a yearly basis.

Q15. The profit and loss account shows the gross profit.

Q16. Sales tax collected is a liability.

Q17. It is on the basis of going concern that assets are always valued at a market price.

Q18. All sources of funds have the same cost for capital.

Q19. An outstanding rent account is a personal account.

Q20. The break-even is a point of maximum profit.

Q21. The LIFO method is suitable for items which are non-perishable and bulky items.

Q22. Journal proper is capable of recording every type of business transaction.

Q23. Closing stock and closing inventory are one and the same.

Q24. Some of the Accounting standards in India are mandatory.

Q25. The balance sheet is always balanced.

Q26. The profit and loss account shows the financial position of the concern.

Q27. "Separate Business Entity" entity refers to the separation of various businesses.

Q28. Accounting as a discipline is not related to another discipline like law etc.

Q29. Lower of cost or market value should be used in the valuation of fixed assets.

Q30. Cash account and cash book are one and the same.

Q31. Machinery accounts can have a net credit balance.

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