Conceptual Framework for Financial Accounting

Part-A
Brief Questions
5th Part

33.What bodies provide authoritative support for GAAP?
Ans:International Accounting standard Committee IASC (International Accounting standard Board-IASB) Financial Accounting Standard Board of U.S.A and Securities  and Exchange Commission-SEC.

34.Accounting Principles (________________________)
Ans:Often change to meet the needs of emerging and changing financial condition.

35.The accounting principle based on which fixed asset is shown in the Balance sheet is_______.
Ans:historical cost.

36.Fixed assets are recorded according to which accounting principle?
(a)Market Price.
(b)Full disclosure
(c)Consistency.
(d)Historical cost. -->> (ANS.)
(e)Conservatism.

37.For valuation of closing stock,'cost or market price' whichever is lower is taken-this indicates which of the principle?
(a)Cost principle.
(b)Consistency principle.
(c)Conservatism principle.--->>(ANS)
(d)Full disclosure principle.
(e)Liquidity principle.

38.The relationship among assets,  liabilities and capital is expressed in the form of:
(a)Dual Aspect.
(b)Balance Sheet.
(c)Accounting Equation--->> (ANS)
(d)Debit and Credit.
(e)None of the above.

39.Valuing assets at their Liquidation value rather than their cost is inconsistent with the __________.
a. Time period assumption.
b. Matching principle.
c. Going concern assumption.
d. Materiality constraint.

40.What is meant by full disclosure principle?
Ans:Full disclosure principle states that all events should be fully disclosed in financial reporting.