Question 1

The accounting principle that revenue should be recorded only when earned, not necessarily when cash is received, reflects:

Accepted Answer

Accrual basis of accounting \u2014 Accrual accounting recognizes revenue and expenses when they are earned or incurred, regardless of when cash actually changes hands.

Question 2

u2018Tax incidenceu2019 refers to:

Accepted Answer

The actual economic burden of a tax, showing who ultimately bears its cost \u2014 Tax incidence analyzes who truly bears the economic burden of a tax, which may differ from who is legally responsible for paying it.

Question 3

A tax is called u2018progressiveu2019 when:

Accepted Answer

The tax rate increases as the taxable amount or income increases \u2014 A progressive tax imposes a higher rate on higher income or value brackets, so the average tax rate rises with the tax base.

Question 4

u2018Double-entry bookkeepingu2019 is based on the principle that:

Accepted Answer

Every transaction affects at least two accounts, with equal debits and credits \u2014 Double-entry bookkeeping requires that every financial transaction be recorded with corresponding debit and credit entries that keep the books balanced.

Question 5

u2018Value Added Tax (VAT)u2019 is primarily levied on:

Accepted Answer

The value added at each stage of production and distribution \u2014 VAT is charged incrementally on the value added at each stage of the supply chain, with businesses typically able to claim credit for tax paid on inputs.

Question 6

In public finance, u2018fiscal deficitu2019 refers to:

Accepted Answer

The excess of total government expenditure over total revenue (excluding borrowings) \u2014 Fiscal deficit is the gap in a given period between a governmentu2019s total expenditure and its total revenue, excluding borrowings, which must be financed by borrowing.

Question 7

u2018Depreciationu2019 in accounting represents:

Accepted Answer

The systematic allocation of an asset's cost over its useful life \u2014 Depreciation spreads the cost of a tangible fixed asset over its estimated useful life to match expense recognition with the assetu2019s use.

Question 8

A u2018regressive taxu2019 places a relatively higher burden on:

Accepted Answer

Lower-income individuals, since the tax takes a larger share of their income \u2014 A regressive tax (e.g., many indirect taxes on necessities) consumes a larger proportion of income for lower earners than for higher earners.

Question 9

u2018Customs dutyu2019 is best defined as a tax levied on:

Accepted Answer

Goods imported into or exported out of a country \u2014 Customs duty is a tariff imposed on goods crossing international borders, typically on imports, and sometimes on exports.

Question 10

The u2018matching principleu2019 in accounting requires that:

Accepted Answer

Expenses be recorded in the same period as the revenues they help generate \u2014 The matching principle requires expenses to be recognized in the same accounting period as the revenues they are associated with, to accurately reflect profitability.

Rajaswa Sewa/Lekha Sewa MCQ Questions with Answers – Practice Set 5

Rajaswa Sewa/Lekha Sewa MCQ Questions with Answers – Practice Set 5

More Rajaswa Sewa / Lekha Sewa (Revenue & Account Group) Practice Sets

Rajaswa Sewa/Lekha Sewa MCQ Questions with Answers – Practice Set 5