Which of the following statements is INCORRECT?
Depreciation is a cash item.
The correct answer is option 3. Depreciation is a non-cash expense. It represents the allocation of the cost of an asset over its useful life, and it does not involve any cash outflow. The other statements are correct: depreciation is debited to the depreciation account, it represents a decrease in the value of an asset, and under the reducing balance method, the amount charged to depreciation declines each year as the asset's book value decreases.
Similar Questions
Match the following accounting concepts with the meaning/implications.
Accounting
Concept
Meaning
Implication
(i)
Money
measurement
concept(a)
Capital of the proprietor is considered as a liability
(ii)
Business
entity concept(b)
Fixed assets are
valued on a cost basis(iii)
Going concern concept
(c)
Changes in purchasing power are ignored
In relation to the single-entry system, which of the following statements is INCORRECT?
A Trial Balance may be prepared according to Totals Method and ________ Method.
If the two sides of the Trial Balance tally, it is an indication that ______.
Kohler defines Single Entry System as, "A System of book-keeping in which as a rule only records of ____ and of personal accounts are maintained".
The technique of finding out the net balance of a ledger account, after considering the totals of both debit and credit sides, is known as ______.
Which of the following statements is INCORRECT?
Which of the following statements is correct?
______ is defined as a statement or a list of all ledger account balances taken from various ledger books on a particular date to check the arithmetical accuracy.
Which of the following are regarded as features of the single-entry system, generally maintained by small shopkeepers?
(i) Maintenance of transactions related to personal accounts on the double-entry basis and maintenance of transactions related to real and nominal accounts on the single-entry basis.
(ii) Maintenance of a cash book with mixed transactions. Normally, both personal and business transactions are mixed in a cash book.
(iii) Form and accounting accuracy of the single-entry system differ from firm to firm.
Important Questions from Basics of Accounting
Professional people like doctors, lawyers, etc., ascertain their profit or loss under
Prepaid Rent A/c is a
“Legal expenses incurred to defend a suit for breach of contract to supply goods” is
Which of the following statements are true?
1. Prepaid rent is a Personal A/c.
2. Interest on Drawings is an income for the business.
3. Accrued income and income due but not received are same.
4. Cost of obtaining licence to carry out business is a capital expenditure.
Match List I with List II.
List I (Accounting Concepts)
List II (Purpose/Applicability)
A.
Going Concern Concept I.
The same accounting method used by a firm from one period to another B.
Consistency II.
Relate to the relative size or importance of an item or event C.
Cost concept III.
This an inappropriate assumption for a firm undergoing bankruptcy D.
Materiality
IV.
The normal basis used to account for assets
Choose the correct answer from the options given below:
