Which of the following statements are FALSE?
I. Cash receipts are entered on the credit side of cash book.
II. Credit purchase of a land is entered in purchase journal.
III. Ledger is a subsidiary book.
IV. Petty cash book is a book having record of small payments.
Only I and II
The correct answer is option 1. - Statement I is true: Cash receipts are entered on the credit side of the cash book. - Statement II is false: Credit purchase of land is generally entered in the purchase journal, not as a land entry. - Statement III is true: The ledger is a subsidiary book, which records detailed entries. - Statement IV is true: The petty cash book does indeed have a record of small payments for day-to-day business expenses.
Important Questions from Basic accounting principles
The generally acceptable accounting principles (GAAP) fulfill the conditions of
(i) Relevance
(ii) Objectivity
(iii) Feasibility
A firm purchases a piece of land after making full payment to the seller. However, the legal formalities are yet to be completed. According to which principle does the firm record the transaction in its books of accounts though the legal formalities are NOT completed?
Which of the given options best describes the truthfulness of the following statements?
Statement-1: Generally Accepted Accounting Principles (GAAP) is to be followed by companies so that investors have an optimum level of consistency in the financial statements they use when analyzing companies for investment purposes.
Statement-2: Generally Accepted Accounting Principles (GAAP) cover aspects like revenue recognition, balance sheet item classification and outstanding share measurements.
________ convention underlines the prudence of understating rather than over-stating the net income of an entity for a period and the net assets as on a particular date.
______ convention proposes that while accounting for various transactions, only those which may have significant effect on profitability or financial status of the business should have special consideration for reporting.
