Bases of accounting Quiz-1

Bases of accounting Quiz-1

Quiz

 

1. Which of the following businesses is most likely to use the cash basis of accounting?
   1.   A small business with a simple financial structure.
   2.   A large business with a complex financial structure.
   3.   A business that sells its products or services on credit.
   4.   A business that sells its products or services for cash.
2. The companies Act, 2013 requires companies to follow which basis of accounting
   1.   Cash basis
   2.   accrual basis
   3.   both the above
   4.   No mention is given under companies Act, 2013 regarding this.
3. Which of the following is a disadvantage of cash accounting?
   1.   It does not provide a complete picture of a company's financial performance.
   2.   It can be difficult to track cash flow under cash accounting.
   3.   It can be difficult to compare the financial performance of different companies that use different accounting methods.
   4.   All of the above.
4. Accrual basis of accounting recognises
   1.   outstanding salary
   2.   prepaid expense
   3.   accruid income
   4.   All of them
5. Which of the following is an example of a revenue that would be recognized under the cash basis of accounting?
   1.   A customer pays for goods that will be delivered next month.
   2.   A customer pays for goods that were delivered last month.
   3.   A customer signs a contract to purchase goods in the future.
   4.   A customer pays for goods that were delivered this month.
6. Under which basis of accouning adjustments are done:
   1.   Accrual basis
   2.   cash basis
   3.   Both
   4.   none of these
7. Which of the following is true about the accrual basis of accounting?
   1.   Revenue is recognized when cash is received.
   2.   Expenses are recognized when cash is paid.
   3.   Both revenue and expenses are recognized when cash is received or paid.
   4.   Revenue is recognized when it is earned, and expenses are recognized when they are incurred.
8. Which of the following is an advantage of using the accrual basis of accounting?
   1.   It provides a more accurate picture of a company's financial performance.
   2.   It is simpler to understand and use than the cash basis of accounting.
   3.   It is less time-consuming to use than the cash basis of accounting.
   4.   It is less expensive to use than the cash basis of accounting.
9. Which of the following is an example of a revenue that would NOT be recognized under the cash basis of accounting?
   1.   Sales that have been made but not yet collected.
   2.   Interest income that has been earned but not yet received.
   3.   Dividend income that has been declared but not yet paid.
   4.   Rent income that has been earned but not yet received.
10. Which bases of accounting violates GAAP?
    1.   Cash basis
    2.   accrual basis
    3.   both
    4.   none of these
11. Which of the following is NOT an advantage of using the cash basis of accounting?
    1.   It is simple to understand and use.
    2.   It is less time-consuming than other methods of accounting.
    3.   It is less expensive than other methods of accounting.
    4.   It provides a more accurate picture of a company's financial performance than other methods of accounting.
12. Other name of accrual basis of accounting is :
    1.   mercantile accounting
    2.   merchantile accounting
    3.   Both the above
    4.   None of these
13. Techniqual knowledge and skill in not important in case of:
    1.   cash basis of accounting
    2.   accrual basis of accounting
    3.   Both of the above
    4.   none of these
14. Which of the following is an example of an expense that would NOT be recognized under the cash basis of accounting?
    1.   Rent that has been paid for but not yet used.
    2.   Wages that have been earned but not yet paid.
    3.   Utilities that have been used but not yet paid for.
    4.   Depreciation on equipment.
15. Which of the following is an example of an expense that would be recognized under the accrual basis of accounting but not under the cash basis of accounting?
    1.   Rent that has been paid for but not yet used.
    2.   Wages that have been earned but not yet paid.
    3.   Utilities that have been used but not yet paid for.
    4.   Depreciation on equipment.
16. Which of the following is not a limitation of the accrual basis of accounting?
    1.   It can be more complex than the cash basis of accounting.
    2.   It can be more difficult to understand.
    3.   It can be more difficult to comply with tax laws.
    4.   It can provide a more accurate picture of a company's financial performance than the cash basis of accounting.
17. Which of the following businesses is most likely to use the accrual basis of accounting?
    1.   A small business with a simple financial structure.
    2.   A large business with a complex financial structure.
    3.   A nonprofit organization.
    4.   A government agency.
18. Which of the following is an example of an expense that would be recognized under the cash basis of accounting?
    1.   A business pays for rent that will be used next month.
    2.   A business pays for rent that was used last month.
    3.   A business signs a contract to rent office space in the future.
    4.   A business pays for rent that was used this month.
19. Which of the following is NOT a disadvantage of using the cash basis of accounting?
    1.   It can lead to inaccurate financial statements.
    2.   It can make it difficult to track inventory levels.
    3.   It can make it difficult to match revenues and expenses.
    4.   It can make it difficult to comply with tax laws.
20. Which of the following is not a limitation of the cash basis of accounting?
    1.   It does not match revenues and expenses.
    2.   It does not provide a complete picture of the financial position of a business.
    3.   It is not in accordance with generally accepted accounting principles (GAAP).
    4.   It is not useful for predicting future cash flows.
21. Which of the following is true about the cash basis of accounting?
    1.   Revenue is recognized when cash is received.
    2.   Expenses are recognized when cash is paid.
    3.   Both revenue and expenses are recognized when cash is received or paid.
    4.   Neither revenue nor expenses are recognized until the end of the accounting period.
22. capital and revenue are not distinguished under the :
    1.   Accrual basis of accounting
    2.   Double entry system
    3.   cash basis of acccounting
    4.   none of these
23. Which of the following is a difference between accrual basis and cash basis accounting?
    1.   Accrual basis accounting recognizes revenue when it is earned, while cash basis accounting recognizes revenue when cash is received.
    2.   Accrual basis accounting recognizes expenses when they are incurred, while cash basis accounting recognizes expenses when cash is paid.
    3.   Accrual basis accounting is required by generally accepted accounting principles (GAAP), while cash basis accounting is not.
    4.   Accrual basis accounting is simpler to understand and use than cash basis accounting.
24. Which of the following is an example of an accrual adjustment made under the accrual basis of accounting?
    1.   Recording cash received from a customer.
    2.   Recording the purchase of office supplies with cash.
    3.   Recognizing revenue for services provided but not yet billed.
    4.   Recognizing expenses for cash paid to suppliers.
25. Which of the following businesses is MOST likely to use the cash basis of accounting?
    1.   A large corporation with a complex financial structure.
    2.   A small business with a simple financial structure.
    3.   A nonprofit organization.
    4.   A government agency.