The accounting equation 'Assets = Liabilities + Capital' is based on which concept? MCQ with Answer and Explanation

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The accounting equation 'Assets = Liabilities + Capital' is based on which concept?

A. Money measurement concept

B. Going concern concept

C. Cost concept

D. Dual aspect concept

Answer: Option D

Solution (By JKSSB Mock Tests)

The dual aspect concept states that every transaction has two aspects, hence the accounting equation always balances.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

Under the 'Net Profit Method' of goodwill valuation, goodwill is:

A. Capitalised value of average profits less net tangible assets

B. Number of years purchase of super profits

C. Number of years purchase of average profits

D. Capitalised value of super profits

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Correct Answer: Option C

Explanation:
The net profit method uses a multiplier on average profits, not super profits. Capitalisation of super profits is different.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

Which of the following is typically maintained using the imprest system?

A. Purchase Day Book

B. Sales Ledger

C. Petty Cash Book

D. Main Cash Book

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Correct Answer: Option C

Explanation:
The Petty Cash Book uses the imprest system where a fixed float is maintained and actual expenses are reimbursed periodically.

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Question #3

Financial audit is conducted mainly to:

A. Detect frauds and errors

B. Calculate tax liability

C. Evaluate management performance

D. Express an opinion on the true and fair view of financial statements

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Correct Answer: Option D

Explanation:
The primary objective of a financial audit is to express an independent opinion on whether the financial statements present a true and fair view.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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