The process of paying off debt over time in regular installment of interest & principal sufficient to repay the loan in fully by its maturity date.

The concept of conservatism will have the effect of______________?

A. Overstatement of Assets
B. Understatement of Assets
C. Overstatement of Liabilities
D. Understatement of Liabilities

The concept of conservatism will have the effect of understatement of assets since the financial statements are usually drawn up on rather a conservative basis. Window-dressing i.e., showing a position better than what it is, is not permitted.

Journal proper is meant for recording_____________?

A. Credit purchase of fixed assets
B. Return of goods
C. All such transactions for which no special journal has been kept by the business
D. None of these

A. Current Asset
B. Current Liability
C. Fixed Asset
D. Income

Prepaid insurance is the expense relating to the next accounting period but has been
paid in the current accounting period and hence it is a current asset. The adjustment would be to
deduct it from the respective expense account in the P&L A/c and show it as a current asset in the
Balance Sheet.

A. Replacement cost – Accumulated Depreciation
B. Historical cost – Salvage Value
C. Historical cost – Depreciation portion thereof
D. Original cost adjusted for general price-level changes

Goodwill A/c is a/an__________?

A. Nominal A/c
B. Tangible Asset
C. Intangible Asset
D. Fictitious Asset