Name of the Student: ____________________________________ Reg.No: ____________________

Part-A:
There are twenty (20) statements given below, with the space for explanations. You first have to indicate your choice by deleting what is incorrect; either True or False. For each statement provide an explanation subsequently.

If the owner withdraws cash, the business has less cash than what the owner has; the effect should therefore be technically inconsequential as to its presentation in the books of an entity.
True/False

False: The entity concept requires that any transaction between the business and the owner of the business must be recorded in the books of the business as the business has an identity of its own separate from that of the owner.

An entity in perpetuity, therefore it is presumed that the entity is not being liquidated, which by implied assumption would mean that accounting should therefore attempt to measure at all times what the entity is worth to a buyer.
True/False

False: According to the going concern concept the presumption of the entity being in perpetuity and not being liquidated is correct. Though the Cost concept explains that the assets must be recorded at their original cost less depreciation and not at their market value.

Accountants have a reasonable choice as to how a given event should be recorded, and they would ordinarily choose the alternative, which results in lower rather than a higher asset amount or equity amount.
True/False

True: As per Conservatism principle all events should be recorded at the lower rather than higher value. Anticipated losses should be provided for but not anticipated profits.

A balance sheet shows the position of an accounting entity and therefore it’s a flow report than a status report.
True/False

False: A Balance Sheet shows the position of the entity as on a particular date