CIE Accounting Paper-1: Specimen Questions 25 - 26 of 214

Question number: 25

MCQ▾

Question

Which concept ensures that the profit or loss shown is on the basis of full facts relating to all expenses and incomes?

Choices

Choice (4) Response
a.

Accrual Concept

b.

Matching Concept

c.

Cost Concept

d.

Periodicity Concept

Answer

a.

Explanation

Under accrual concept ensures that the profit or loss shown is on the basis of full facts relating to all expenses and incomes. This concept reveals the difference between the receipt of cash and the right to receive cash.

Question number: 26

MCQ▾

Question

How amount of depreciation is calculated?

Choices

Choice (4) Response
a.

AmountofDepreciation=SellingPriceEstimatedScrapValueNoofyearsofexpectedlife

b.

AmountofDepreciation=CostEstimatedScrapValueNoofyearsofexpectedlife

c.

AmountofDepreciation=MarginalCostEstimatedScrapValueNoofyearsofexpectedlife

d.

AmountofDepreciation=MarketPriceEstimatedScrapValueNoofyearsofexpectedlife

Answer

b.

Explanation

The asset’s life time can be estimated and wear or tear of the tangible assets are known as depreciation of the assets. This is a permanent decline in the value of the assets and reflects in the balance sheet.

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