The foundational principle of Double Entry Bookkeeping is: MCQ with Answer and Explanation

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The foundational principle of Double Entry Bookkeeping is:

A. Cash received must equal cash paid

B. Assets must be greater than liabilities

C. Every debit has a corresponding credit

D. Expenses must equal incomes

Answer: Option C

Solution (By JKSSB Mock Tests)

Double entry bookkeeping relies on the dual aspect concept, meaning every transaction affects at least two accounts with equal debits and credits.

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

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Question #1

Which principle states that an asset must be recorded at the price paid to acquire it?

A. Realization Principle

B. Matching Principle

C. Historical Cost Principle

D. Conservatism Principle

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Correct Answer: Option C

Explanation:
The historical cost principle requires that assets be recorded at their original purchase price, irrespective of changes in market value over time.

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

Question #2

Under the Indian Companies Act, 2013, financial statements include:

A. Only balance sheet

B. Only profit & loss account

C. Only balance sheet and profit & loss account

D. Balance sheet, profit & loss account, cash flow statement, statement of changes in equity and notes

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Correct Answer: Option D

Explanation:
As per Companies Act 2013, financial statements comprise balance sheet, profit and loss account, cash flow statement, statement of changes in equity and any explanatory notes.

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Question #3

The 'Receipts and Payments Account' is prepared by:

A. Partnership firms

B. Non-profit organizations

C. Trading concerns

D. Companies

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Correct Answer: Option B

Explanation:
Non-profit organizations prepare Receipts and Payments Account as a summary of cash transactions.

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

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