Commercial Applications
Which of the following is/are correct statement(s)?
Statement 1: The Money Measurement Concept allows for the recording of all significant events, irrespective of their monetary value.
Statement 2: The Dual Aspect Principle ensures that every financial transaction is recorded twice in the accounting records.
- Only Statement 1 is correct
- Only Statement 2 is correct
- Both Statements 1 and 2 are correct
- Both Statements 1 and 2 are false
Answer
Only Statement 2 is correct
Reason — Statement 1 is false because the Money Measurement Concept records only those transactions which can be expressed in terms of money — significant events that cannot be measured in monetary terms (e.g., retirement of a manager) are not recorded. Statement 2 is true because the Dual Aspect Principle states that every transaction has two effects — a debit and an equal credit — giving rise to the double entry system.
Related Questions
Book keeping is a part of accounting, therefore its scope is …………… where as scope of accounting is ……………
- Wider, narrow
- Narrow, wider
- More, less
- None of these
…………… is the art and science of recording transactions while …………… is the art and science of recording, classifying and summarising transactions.
- Book keeping, accounting
- Accounting, book keeping
- Financial recording, accounting
- Accounting, journalising
Which of these is not a purpose of financial recordings?
- Ascertaining financial position
- Making accounting information available to stakeholders
- Journal
- None of these
The accounting cycle consists of
- Journal
- Ledger
- Trial balance
- All of these